Wrap Text
Pre-close operational update
HYPROP INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/005284/06)
JSE share code: HYP ISIN: ZAE000190724
JSE bond issuer code: HYPI
(Approved as a REIT by the JSE)
("Hyprop" or "the Company" or "the Group")
PRE-CLOSE OPERATIONAL UPDATE
Further to the publication of Hyprop's annual results for the year ended 30 June 2023 ("FY2023") on
20 September 2023, the Company is pleased to provide an operational update for the four months ended
31 October 2023 ("the period").
Hyprop remains committed to delivering its purpose of creating spaces and connecting people, by owning and managing
retail centres in mixed-use precincts in key economic nodes in South Africa and Eastern Europe.
SOUTH AFRICA (SA) PORTFOLIO
Hyprop's SA portfolio continues to deliver growth in key trading metrics. The solid operational performance is reflected
in the steady increase in foot count of 6.8%, which is a result of the centres' repositioning strategies, improvement in
tenant mix and ability to trade during loadshedding, and thereby attracting new shoppers and increasing our market
share.
Occupancy within the SA centres remains high, with the retail vacancy rate at a low 1.4% at the period end.
At Somerset Mall, the new Checkers Fresh X opened in November 2023 and Pick n Pay simultaneously completed the
revamp of its store to a Pick n Pay Compact Hypermarket. "Cinema Connect", a new compact food offering to support
the Ster Kinekor reconfiguration project experienced some delays and will launch during Q3 of 2024. "Nooka Space"
work pods, a tech-enabled network of proximity offices for remote working have been well received and plans are
underway to roll out the concept at other Hyprop centres. The holistic lifestyle shopping centre remains fully occupied
given the strong demand for retail space.
Clearwater Mall is already experiencing an energised atmosphere in previously quieter areas on the first floor following
installation of the new escalators near entrance 4, which link the ground and first floors. The centre welcomed
Yogurtland in August 2023, while Xpresso Café, Nomination (a jewellery and watch retailer) and Sleepmaster (a bed
store) opened in October 2023. During the period, Crazy Store, Catherine Walk (an evening dress and accessories store)
and Samsung relocated into fresher-looking stores. Capitec Bank relocated to bigger premises at the end of October
2023 and several stores, including H&M, Cotton On and Burger King completed revamps between July and August
2023.
Rosebank Mall's trading continues to improve on the back of its enhanced tenant mix and the return-to-office trend.
Bubble Bee, a bubble tea store, Chekich, a fashion and footwear retailer, and Computer Mania launched and commenced
trading in August 2023. UNIQ Clothing and Toys R Us opened in September 2023. The centre has outsourced the
management of the self-storage units to Flexistore, effective from November 2023. Specsavers and The Cross Trainer
relocated to renovated stores in August and September 2023, respectively. The new e-hailing zone project is underway
and scheduled to be completed in December 2023, while The Mall Offices' upgrade is on track for completion in
February 2024.
Canal Walk continues to bolster its tenant mix and enhance shoppers' experiences. Some of the new retailers include
Calvin Klein Underwear and Booba Beautea, a premium bubble tea and dessert shop that commenced trading in August
2023. The new concept health store, Futurelife opened in October 2023, as well as Studio 88, Fitz Jewellery and Gelato
Mania which have been trading well since they launched. As part of Canal Walk's repositioning strategy, Freedom of
Movement and The North Face (their only store in South Africa) relocated to their new stores in September and October
2023, respectively.
The Glen welcomed, amongst others, G-star Raw, Cosmic Comic (a comic bookstore), Arthur Ford (fragrances,
cosmetics, personal care products retailer) and Nail Bar. The Cross Trainer and Chateau Gateaux both completed their
store revamps in July 2023. Absa also completed its upgrade in July 2023 and now occupies a more suitable and
modernised branch.
CapeGate continues to attract families looking for an experiential retail offering and recently won a silver SACSC
Footprint Award in the Community Relations Category following the centre's successful Princess Project, where
shoppers donated 318 dresses to young girls in need for their Matric dances. In September 2023, CapeGate launched its
new Suzuki dealership, the first-of-its-kind at the centre, with full sales, services, accessories, parts, and repairs
offerings. Krispy Kreme, Nando's and Bagworld (a travel and leather goods store) opened at the end of November 2023.
Hyde Park Corner will upgrade its north office towers to a modern, premium aesthetic that is more appropriate following
agreement with a new tenant to lease the entire space for 10 years. The upgrade will be completed in two phases and is
planned to commence in Q2 of 2024. Flight Centre commenced trading in October 2023, while D'ORE (a high fashion
boutique) opened in November 2023. Alchemy (a luxury activewear and athleisure store) relocated and opened in
September 2023, while Porter & Craft (premium quality and bespoke accessories store) moved to fresher, larger
premises, and Absa completed its mini revamp in October 2023.
Woodlands Boulevard, our only centre in Tshwane, should open its three new drive-thrus (Burger King, Steers and
Chicken Licken) in time for the festive season. Additionally, Woolworths is undergoing an expansion and upgrade
aimed at offering customers an enhanced experience with a bigger, better W Café and Tshwane's first W Cellar. The
new W Café will open in December 2023 and the W Cellar once the liquor license is secured. The construction of a new
Fun Company is in progress and is planned to start operating before the end of FY2024. Woodlands welcomed a new
Ackermans Women store in September 2023 and relocated Queenspark and Miladys to fresher-looking stores during
the period.
SA portfolio key trading metrics for the period:
Total for the
Trading Metric Year Jul Aug Sep Oct period
2021 1 424 864 1 464 246 1 513 825 1 643 876 6 046 810
Tenant Turnover
2022 1 834 768 1 693 726 1 724 138 1 818 801 7 071 432
(R'000)
2023 1 940 657 1 815 937 1 858 733 1 833 383 7 448 711
Variance % 2022 vs 2021 28.8% 15.7% 13.9% 10.6% 16.9%
Variance % 2023 vs 2022 5.8% 7.2% 7.8% 0.8% 5.3%
2021 2 555 2 577 2 654 2 896 2 671
Monthly trading
2022 3 226 2 980 3 026 3 174 3 102
Density (R)
2023 3 384 3 161 3 236 3 184 3 241
Variance % 2022 vs 2021 26.3% 15.6% 14.0% 9.6% 16.1%
Variance % 2023 vs 2022 4.9% 6.1% 6.9% 0.3% 4.5%
2021 5 371 5 613 5 628 6 267 22 879
Footcount ('000) 2022 6 320 5 829 5 910 6 434 24 493
2023 6 878 6 262 6 445 6 572 26 156
Variance % 2022 vs 2021 17.7% 3.8% 5.0% 2.7% 7.1%
Variance % 2023 vs 2022 8.8% 7.4% 9.0% 2.1% 6.8%
2021 3.1% 3.1% 2.7% 2.6% -
Retail Vacancy (%) 2022 2.0% 1.5% 1.3% 1.3% -
2023 1.4% 1.6% 1.7% 1.4% -
2021 251 172 224 470 265 946 300 735 1 042 323
Collections (R'000)
2022 255 298 279 779 313 384 248 591 1 097 053
2023 250 677 290 193 311 921 273 013 1 125 805
Variance % 2022 vs 2021 1.6% 24.6% 17.8% -17.3% 5.3%
Variance % 2023 vs 2022 -1.8% 3.7% -0.5% 9.8% 2.6%
The improving trend in rent reversions continued, with a weighted average reversion rate of -0.1% (FY2023: -9%)
during the period and a tenant retention rate of 91.8%.
EASTERN EUROPE (EE) PORTFOLIO
The EE portfolio continued to deliver strong operational results, with tenant turnover increasing by 10% and foot count
by 3.4% relative to the comparative period.
The vacancy rate was stable at 0.4% at 31 October 2023.
City Center one East welcomed two new tenants, The Bank of Gold (a Croatian financial institution specialising in gold
trading) as well as Zlatarna Dodi? (a jewellery store) between July and October 2023. Existing tenant Posteljina.hr (a
bed and bathroom home décor store) relocated to new premises, while CATCH (urban fashion clothing and footwear)
moved into the vacated Posteljina.hr space.
City Center one West completed several refurbishments during the period. These include Europa 92, a fashion retailer
and Tezenis, a lingerie store, as well as coffee shops, Torterie Macoron and Living Room which relocated to their
respective new design concept spaces.
At The Mall, the German value retailer TEDI opened its flagship store in July 2023 which is their top-performing store
in Bulgaria. H8S, the new brand by popular former Bulgarian football player, Hristo Stoichkov opened in October 2023.
New leases were signed with jewellery retailers My Silver and Zen Diamonds, Knigomania, a bookstore, and Smoke, a
BBQ food services offering, all of which opened in November 2023. Kolev & Kolev, a kid's shoe store was relocated
and rightsized in September 2023.
The Mall had several refurbishments, including H&M which is in progress. Playground, a bowling alley and arcade
offering, Billa, an international supermarket, Capella Play, a kids centre, Guess and Teodor, a men's clothing, shoes and
accessories store, all completed major upgrades in line with each retailer's new look and feel store designs.
Skopje City Mall enhanced its tenant mix by welcoming new brands such as Comodita Home, a home décor store,
Storybox, a kids concept store, and Ambar which offers a diverse range of low-price teen fashion apparel. Fashion &
Friends, a multi-brand apparel retailer, Arthur's, a sport and lifestyle wear store and Women's Secret, a lingerie retailer,
all completed their refurbishments. Additionally, food services brands, Mr. Hot Dog and Sarajeva Grill are new additions
to centre's upgraded food court. The H&M project is progressing well and is on schedule for its grand opening in March
2024.
EE portfolio key trading metrics for the period:
Total for
Trading Metric Year Jul Aug Sep Oct the
period
2021 38 594 34 055 38 315 42 017 152 982
Tenant Turnover
2022 40 190 36 866 44 794 43 990 165 840
(€'000)
2023 43 968 41 300 46 882 50 426 182 576
Variance % 2022 vs 2021 4.1% 8.3% 16.9% 4.7% 8.4%
Variance % 2023 vs 2022 9.4% 12.0% 4.7% 14.6% 10.1%
2021 234 206 229 251 230
Monthly trading
2022 241 221 272 268 250
Density (€)
2023 264 250 285 304 276
Variance % 2022 vs 2021 2.9% 7.1% 19.1% 6.7% 8.8%
Variance % 2023 vs 2022 9.8% 13.3% 4.7% 13.6% 10.3%
2021 2 091 1 812 1 878 2 106 7 886
Footcount ('000) 2022 2 139 2 030 2 245 2 335 8 748
2023 2 179 2 104 2 279 2 483 9 044
Variance % 2022 vs 2021 2.3% 12.0% 19.6% 10.9% 10.9%
Variance % 2023 vs 2022 1.9% 3.7% 1.5% 6.3% 3.4%
2021 0.3% 0.4% 0.3% 0.3% -
Vacancy (%) 2022 0.9% 0.9% 0.9% 0.5% -
2023 0.4% 0.4% 0.4% 0.4% -
2021 6 297 6 166 6 561 6 612 25 636
Collections (€'000) 2022 6 854 7 133 7 606 7 042 28 635
2023 6 818 7 485 7 783 7 617 29 703
Variance % 2022 vs 2021 8.9% 15.7% 15.9% 6.5% 11.7%
Variance % 2023 vs 2022 -0.5% 4.9% 2.3% 8.2% 3.7%
SUB-SAHARAN AFRICA (SSA) PORTFOLIO
Nigeria
The effect of the devaluation of the Naira continues to negatively impact retailers and consumers. The gap between the
NAFEX rate (N728/$1) and the parallel market rate (N1 000/$1) widened to an average of 28% in October 2023. In
addition, the high inflation rate is placing pressure on consumers' disposable income. Tenant relief measures are being
implemented to assist deserving tenants.
Ikeja City Mall was fully let at 31 October 2023. The previous vacant space of 16m² was taken up by Istanbul Hareem
Limited. The centre continues to have strong demand for retail space, with international brands on its waiting list.
Ghana
Ghana continues to face extraordinary macroeconomic challenges, given the local currency's depreciation, muted
economic growth, high inflation and steep government debt. Notwithstanding these challenges, the key trading metrics
in Cedi terms reflected growth in the period under review.
Significant progress has been made in securing replacement tenants for the 13 164m2 previously occupied by Game.
Replacement tenants have commenced trading or are fitting out on 63% of the ex-Game space and leases for a further
11% have been signed. Negotiations to fill the remaining 26% are in progress.
At West Hills Mall, a lease has been concluded with a major anchor retailer in Ghana, Melcom Group to take up the ex-
Game space, as well as some additional space. Melcom is scheduled to start trading in mid-December 2023.
Orca Deco took up the ex-Game space at Accra Mall in June 2023. Negotiations are at an advanced stage to reduce the
space occupied by Orca Deco to accommodate Decathlon and mitigate tenant concentration risk.
At Kumasi City Mall, a lease has been concluded with Decathlon on 1500m² of ex-Game space. Initial discussions have
been held with other tenants to take up the remainder of the ex-Game space.
SSA portfolio key trading metrics for the period:
Total for 3-
Performance measure Year Jul Aug Sep month
period
2021 42 815 48 511 44 055 135 381
Tenant turnover (GHC'000) 2022 49 734 52 034 55 324 157 092
2023 60 883 60 576 62 181 183 640
Variance % 2022 vs 2021 16.2% 7.3% 25.6% 16.0%
Variance % 2023 vs 2022 22.4% 16.4% 12.4% 16.9%
2021 7 170 7 864 7 955 22 989
Tenant turnover (US'000) 2022 5 968 5 926 5 478 17 372
2023 5 278 5 304 5 397 15 979
Variance % 2022 vs 2021 -16.8% -24.7% -31.2% -24.4%
Variance % 2023 vs 2022 -11.6% -10.5% -1.5% -8.0%
2021 1 198 1 246 1 121 1 187
Monthly trading density
2022 1 112 1 170 1 297 1 208
GHC
2023 1 704 1 715 1 837 1 751
Variance % 2022 vs 2021 -7.2% -6.1% 15.7% 1.7%
Variance % 2023 vs 2022 53.3% 46.6% 41.7% 45.0%
2021 201 202 202 202
Monthly trading density
2022 133 133 128 130
USD
2023 148 150 159 152
Variance % 2022 vs 2021 -33.5% -34.0% -36.5% -35.4%
Variance % 2023 vs 2022 10.7% 12.7% 24.2% 16.9%
2021 2 059 2 142 1 945 6 146
Foot count (Ikeja incl.)
2022 1 929 1 957 1 902 5 788
('000)
2023 1 792 1 812 1 834 5 438
Variance % 2022 vs 2021 -6.3% -8.6% -2.2% -5.9%
Variance % 2023 vs 2022 -7.1% -7.4% -3.6% -6.0%
2021 11.2% 11.1% 10.8%
Vacancy (Ikeja incl.) (%) 2022 10.2% 10.1% 9.4%
2023 16.8% 17.0% 16.9%
Excl Game 2023 7.1% 7.1% 7.1%
2021 3 308 2 764 3 225 9 297
Collections (Ikeja incl.)
2022 3 488 3 454 3 227 10 169
($'000)
2023 2 002 2 747 2 774 7 523
Variance % 2022 vs 2021 5.5% 25.0% 0.1% 9.4%
Variance % 2023 vs 2022 -42.6% -20.5% -14.0% -26.0%
Vacancies for all four assets combined increased from 9.4% a year ago to 16.9% currently. Excluding the impact of
Game, vacancies would have improved to 7.1%. The decrease in collections is due to the loss of Game from
1 January 2023 and the impact of the currency devaluations.
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
Waste
Hyprop remains committed to its 'zero-waste' journey aimed at optimising waste diversion. A new milestone was
achieved as the Group reached 1000 tons of organic waste diverted from landfills and saved 700 metric tons of carbon
dioxide equivalents from being emitted into the atmosphere since the start of its 'zero waste' journey. For the period,
the average total organic waste diverted from landfills was 64.10 tons/month across the eight SA centres (up 3.85
tons/month on FY2023).
Water
As South Africa's water security worsens, Hyprop is investigating various water management initiatives to ensure a
stable and reliable water supply for its SA centres. An estimated 20 213 kl of water was saved in the period as a result
of the Propelair toilets at Clearwater, Rosebank Mall and Offices, Hyde Park Corner and Woodlands Boulevard.
Energy
We continue to prioritise energy solutions projects to enable our centres to trade during loadshedding. The integration
of diesel generators and solar plants at our SA centres is now complete and the fourth phase of the Clearwater Mall solar
PV project (total 7 047 kWp) was completed at the end of September 2023. New solar PV projects at The Glen (further
3 854 kWp) and Cape Gate (5 532 kWp) have been approved and implementation is planned to commence in Q2 of
2024.
BALANCE SHEET AND CAPITAL MANAGEMENT
68.5% of shareholders elected to reinvest their FY2023 cash dividend in return for additional Hyprop shares through the
dividend reinvestment alternative ("DRIP"), amounting to an aggregate reinvestment value of R731 million. The
dividend reinvestment elections were reduced equitably for all shareholders on a pro-rata basis, resulting in the issue of
20 832 563 new Hyprop shares and R500 million of cash being retained by Hyprop as new equity.
During the period, the Company secured a new R750 million loan facility and refinanced the bank loan which matures
in January 2024 in two tranches for 3.75 and 4.25 years respectively, at lower margins. R1.3 billion (notional principle)
of new ZAR interest rate hedges were concluded with an average fixed/cap rate of 7.97%. In the current interest rate
environment our interest rate hedging strategy favours caps to ensure we are protected against interest rate increases
with the potential to participate in favourable interest rate movements. 83% of the Group's interest rate exposure is
hedged.
The Group's liquidity position remains healthy, with R2.1 billion of undrawn facilities and R1.0 billion of cash. The
LTV ratio, after payment of the FY2023 dividend and DRIP, is 37.8%. The Company expects the LTV to increase to
circa 40.3% post the Table Bay transaction as further detailed below, which is in line with our internal target range.
The forecast capital expenditure for FY2024 remains at circa R500 million, including the R140 million of projects rolled
over from FY2023. In the medium term, the Company anticipates allocating approximately R350 million to R400
million annually towards capital expenditure, funded mainly from retained distributable income. This includes both
defensive and yield-enhancing projects such as ongoing energy security solutions (generators and solar), minor
redevelopment projects, upgrades and repositioning initiatives – which should bolster our centres' competitiveness. This
estimate excludes the initial solar projects in the Western Cape, corporate transactions and any major extensions and/or
redevelopments.
TABLE BAY TRANSACTION
On 17 October 2023, Hyprop announced the conclusion of an agreement to acquire Table Bay Mall. The transaction
presents a unique opportunity for the Group to acquire a relatively new centre with good growth prospects compared to
the remainder of the SA portfolio and is in line with the Group's strategy to increase its exposure to the Western Cape,
whilst pursuing recycling opportunities.
The transaction is still subject to the competition authority's approval and the effective date is anticipated to be no later
than 30 April 2024.
IN CLOSING
Trading performance and leasing activity in the SA and EE portfolios are improving, and the Group's centres continue
to demonstrate their strength and relevance in their markets. These provide a solid base from which we will continue to
execute our key strategic objectives to deliver long-term sustainable growth for all stakeholders.
Given the current high levels of inflation and interest rates, Hyprop still anticipates that its financial performance will
be negatively impacted in the short-term by higher interest costs as borrowings are refinanced and interest rate hedges
mature and are replaced at the prevailing rates, as outlined in its FY2023 financial results.
Hyprop's interim results for the six months ended 31 December 2023 are scheduled to be released in March 2024.
A virtual presentation and Q&A session will be hosted by Investec Securities on Thursday, 30 November 2023 at 14:00.
Please email Khanyisani.Kubheka@investec.co.za if you wish to join the presentation. A recording of the presentation
will be available on Hyprop's website thereafter.
30 November 2023
Sponsor
Java Capital
Date: 30-11-2023 12:45:00
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