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Hyprop Investments Limited
Integrated annual report and consolidated financial statements
2017
Business
model
Inputs
Outputs
Outcomes
Business activities
Product and services delivered
Sustainable value creation from business
activities
Financial capital
Responsibility: Income growth and capital appreciation
Financing activities
Invest capital received from
equity investors
Obtain capital from debt
funders
Reinvest capital received from
disposals
Total investment returns to investors
Sustainable dividend growth over the
long term
Distribution growth up 12,1%
Increase in NAV of 5,6%
Loan to value of 28,9%
R696 million equity raised
Disposal of non-core properties for
R867 million
Manufactured capital
Responsibility: To ensure manufactured capital generates capital appreciation and income growth
Own and invest
Own high-quality, dominant
shopping centres in large
metropolitan areas
Seek expansion and
redevelopment opportunities
Pursue appropriate yield-
enhancing acquisitions
Effective capital and debt
management
Ownership of quality shopping centres
providing sustainable income
Reinvest through developments and
refurbishments
Geographic diversification in other
markets
Leverage our industry relationships to
secure off-market transactions
Utilise strong balance sheet to negotiate
favourable financing terms
Acquired a 60% interest in Skopje City
Mall, Macedonia
Agreement to acquire a 60% interest
in The Mall in Sofia, Bulgaria
Developments under construction –
R178 million spent on extensions and
refurbishments
Average interest of 6,7% excluding Euro
debt
Financial covenants well within required
ratios
Intellectual capital
Responsibility: Intellectual property and corporate culture are critical to preserve, grow and retain skills
Leasing
Lease administration and
management of tenants
Manage occupancy levels
Manage tenant arrears
Manage bad debts
Above-inflation contractual rental
escalations
Optimal tenant mix to meet customer
demands
Growth in turnover densities
Strong internal team with established
relationships with tenants
Contractual rental escalations of 7,9%
Occupancy rate of 97,6%
Arrears at 0,4% of rent roll
Reduction in bad debts written off
compared to previous year
1,4% increase in trading densities
Asset management
Internal asset and property
management focusing on
value-adding opportunities
and achieving key
performance deliverables
Hands-on decentralised teams at each
shopping centre supported by specialised
and experienced executive management
Increasing property values
Cost efficiencies through:
Standardised internal processes
National service level agreements
with suppliers
Using specialists and technology for
effective utilities management
Proactive maintenance planning
Property value increased by 5,1%
Investment property (SA) cost-to-income
ratio of 33,3% (2016: 33,2%)
Exceeded budget on operating income
by 1,1%
Achieved maintenance targets
89% of procurement from companies
with a BBBEE level between 1 and 4
Investment of R44,9 million in
replacement of equipment and
technology
Information
management
Secure operating systems
Integrated electronic property
management system
Integrated electronic human resource
system
Electronic email contingency system
Back-up cloud storage facilities
Continuity in operations
Improved synergy between teams located
in multiple locations
Increased productivity
Creating value for stakeholders: inputs, outputs and outcomes defined
As an income-focused REIT, Hyprop creates value for investors and other stakeholders by owning and investing in quality shopping centres, benefiting from
active asset management based on ethical leadership and sound corporate governance principles. This results in sustainable real estate investments, which
generate long-term capital and income growth.
Material issues that could impact our ability to create value are detailed in our risk and opportunity management section on pages 32 to 35.