Hyprop, owner of premier retail properties in South Africa, Eastern Europe and the rest of Africa, has strengthened its balance sheet post its year-end, 30 June 2021, as a result of asset sales and shareholder reinvestments. It currently holds R1.6 billion of cash and R900 million of unutilised revolving credit facilities.
The strong liquidity position reflects the completion of the sales of Atterbury Value Mart in South Africa and Delta City Mall in Belgrade, Serbia, as well as R876 million received through an 85% uptake by shareholders of the share reinvestment alternative. As a result, Hyprop’s loan to value (LTV) ratio has firmed to 34%, on a like-for-like basis, from 37.2% at year-end.
In a financial and operating pre-close update for the four months to 31 October 2021, the Group warned that the emergence of a new variant of Covid-19 was likely to have an impact on most jurisdictions where Hyprop operates.
“We are confident that the Group’s strategy and key priorities remain relevant, even in a prolonged Covid-19 environment,” CEO Morné Wilken said. “Our priorities over the next months are to complete negotiations on the Hystead liquidity event, continue strengthening the balance sheet, reposition the South African portfolio for future growth, increase the dominance of the Eastern European properties in our overall portfolio, and pursue our non-tangible asset strategy.”
Operational performance
Hyprop was pleased to report a 4.6% increase in visitors to its South African malls and a 6.7% increase in Eastern Europe in the four months to end-October 2021 compared with the same period in 2020.
However, in both areas footfall has not yet reverted to pre-Covid levels. In Eastern Europe, the various restrictions imposed by governments to control the fourth wave of infections have had a negative effect on operations.
In South Africa, the group plans to launch its digital mall application in some of its malls in 2022. This will enhance its ability to communicate with shoppers and offer a range of unique services. There has been a visible improvement in the performance of travel and entertainment tenants, as well as luggage and jewellery. Only a few smaller tenants and cinemas are still receiving assistance.
Hyprop’s retail vacancies in South Africa were 2.6% in October, having shown a steady month-on-month improvement since end-June.
In Eastern Europe, tenant vacancies remained low at 0.2%, and the seven stores vacated by Inditex were successfully re-let – proof of the dominance of Hyprop’s malls in the region. Refurbishments of Skopje City Mall and the Mall Sofia are progressing well.
As the roll-out of vaccines in Eastern Europe advances, Hyprop is optimistic that restrictions will be further relaxed, and footfall will recover further in the first quarter of 2022.
In the sub-Saharan Africa (excluding South Africa) portfolio, most metrics are tracking above the same period last year. In Ghana, footfall is almost back to pre-Covid levels.Hyprop continues to pursue an exit from the sub-Saharan assets, while actively managing them to create value. Because of the US dollar liquidity crisis in Nigeria, it has been impossible to close out the sale of Ikeja City Mall, but progress is being made in disposing of the remaining three malls in Ghana.
Hyprop is pursuing a number of sustainability initiatives, including improving recycling, reducing waste, becoming more water- and energy-efficient and reducing carbon emissions in line with national targets. It has completed its waste audits and is finalising its energy audits.
“This data will aid us in ensuring that we manage our malls in the most effective way,” said Wilken.
“We remain committed to creating safe environments and opportunities for people to connect and have authentic and meaningful experiences, by owning and managing dominant retail centres in mixed-use precincts in key economic nodes in South Africa and Eastern Europe,” Wilken closed.
