Impact of Covid-19 still felt but Hyprop makes very good progress implementing revised strategy

Hyprop, the retail-focused REIT with a R45.4 billion portfolio of shopping centres in South Africa, Eastern Europe and sub-Saharan Africa, improved its distributable income by 18% in the six months to 31 December 2020 compared with the six months to 30 June 2020.

Distributable income was R473 million for the period, after the direct impact of Covid-19 which was R244 million across the total portfolio. Hyprop extended a lower level of Covid-19 related discounts to tenants in the second half of calendar 2020 than in the first half, with R104 million of rental discounts on the South African portfolio granted in the second half of calendar 2020.

“Trading conditions continued to be difficult, especially in December 2020, as lockdown restrictions affected trading hours, seating capacity and the psyche of many shoppers. As a Group we focus on the things we can influence and we are making good progress implementing our strategy,” says CEO Morné Wilken.

“The support we provided for our tenants has strengthened our partnerships with them and other service providers, helped us to manage vacancy levels, retain key tenants and ensure that our malls continue to be functional and serve their communities.

“Hyprop remains committed to creating safe environments and opportunities for people to connect and have authentic and meaningful experiences. While Covid-19 has changed our operating environment, we have ensured that our strategies and key priorities remain relevant.”

Hyprop reduced interest-bearing debt by R942 million in the last six months, settled all its dollar equity debt, and strengthened its balance sheet even further by retaining R777 million from its distributions for the 2020 financial year. The loan to value (LTV) ratio has reduced from 41.4% as at 30 June 2020 to 38.8% and ICR remains healthy at 2.6 times.

At the end of December, Hyprop had R528 million of cash on balance sheet and undrawn facilities of R1,15 billion.

Regional overview

South Africa

In South Africa (SA), vacancies in the retail portfolio increased to 3%, which is still well below the average of its peers in the market. Rental increases remain under pressure and tenants are showing a reluctance to commit to long-term leases until conditions improve. This may however be beneficial in the long run as the impact of Covid-19 dissipates, and the benefits of repositioning the SA portfolio accrue to justify higher rentals on future renewals.

We have completed phase one of installing free, high-speed Wi-Fi at all our South African malls and will shortly begin phase 2.

New lettings included the opening of a Checkers FreshX in Rosebank Mall in December 2020. The old Game premises at Woodlands Boulevard is being replaced by a Checkers FreshX store and a Stax. We have also agreed terms with Checkers to upgrade their store at CapeGate to the Checkers FreshX specification. There is heightened interest in Hyde Park Mall, where we have, among other new tenants, secured Tshepo Jeans, a fast-growing brand with a large social media following that marks the emergence of new, entrepreneurial retailers. KOL, a new restaurant and co-working space established by the founders of Willoughby’s, will open at Hyde Park Corner in March 2021.

Emphasising the importance of relevance and sustainability of Hyprop centres as key, Wilken comments: “We are currently piloting several initiatives to improve foot count, one of which includes the Pargo collection points at Canal Walk and The Glen. It is encouraging to see that collections at these points are steadily increasing. A number of these collections are for products not sold in our malls, meaning that we are broadening our customers’ choices without increasing lettable area. Parkupp is a parking app that gives users the ability to secure parking on a flexible basis and is being tested at Canal Walk and Rosebank Mall.

“The first SOKO district pilot at Rosebank Mall is on schedule to open in June 2021. SOKO means “market”, and the SOKO District will be a marketplace where retailers can rent space and reusable shop fittings via a flexible digital leasing platform, without the significant financial commitments that exist in the traditional retail environment. The leasing platform is powered by data driven shopper, product and trend analyses, that will result in location recommendations that match retailers, products and shoppers, across our portfolio.”

Eastern Europe

Our interests in Eastern Europe (EE), held through a 60% stake in UK-based Hystead Limited, reflect a continued difficult trading environment. Recovery from the first wave of lockdowns was slow and in November 2020, when a second wave of infections hit the region, restrictions were re-imposed. However, with the roll-out of vaccines in Europe, we expect conditions to improve in the second half of 2021.

The vacancy in the EE portfolio was 0.4% at end-December. 23 new stores were opened in the six-month period, and another 23 are planned for the first quarter of this year. Replacement tenants have been secured for six of the seven stores to be vacated by the Inditex Group as part of their restructuring. The countries where our malls are located were in good economic standing before Covid-19 and we believe our malls will bounce back quickly as vaccines are rolled out and the impact of Covid-19 dissipates.

Sub-Saharan Africa

Hyprop has previously announced plans to reduce its exposure to sub-Saharan Africa. The previously announced disposal of our 75% interest in Ikeja City Mall in Nigeria remains subject to the fulfilment of certain conditions.

Since the relaxation of trading restrictions in Nigeria and Ghana, key metrics have improved and trading densities for 2020 are higher than in 2019.


In the short-term, Hyprop’s strategy will centre around reducing its debt further, limiting capital expenditure to projects already committed or essential, continuing the disposal of assets such as those in the sub-Saharan portfolio and Atterbury Value Mart, as well as recycling other assets that do not fit into our long-term strategy.

On a longer-term basis, the Company will continue to reposition the SA portfolio, increase the dominance of the properties in the European portfolio, and pursue the non-tangible asset strategy.

“Although we expect to face further challenges in the next two years, we believe the strength of our dominant retail centres in mixed-use precincts in key economic nodes within South Africa and Eastern Europe, our partnerships with our tenants and the agility of our responses will enable Hyprop to meet and overcome these challenges,” says Wilken.

“Our initiatives to grow the group’s non-tangible asset base are being intensified and we are making good progress.”

Hyprop concludes agreements to dispose of Atterbury Value Mart

Hyprop, a South African listed retail-focused REIT, today announced that it has successfully concluded agreements to dispose of Atterbury Value Mart for an aggregate consideration of R1.12 billion; 4,6% below the current market valuation. The Company has reached agreements with three private parties who will each acquire a one-third undivided share in the property.

Hyprop’s strategy is to create 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. The disposal of Atterbury Value Mart is in line with this strategy and its key priorities to recycle non-core assets and strengthen its balance sheet.

Hyprop CEO Morné Wilken said he was pleased with the outcome. “The team has made a lot of progress implementing the revised strategy in the last two years, and I must commend them for concluding the agreements in a challenging environment.”

“Balance sheet strength remains a core focus for us and the conclusion of the transaction will result in Hyprop’s see-through loan to value ratio of 41.4% at 30 June 2020 reducing by 1.9% to 39.5%.”

Hyprop recently also announced that 82% of shareholders elected to accept the dividend reinvestment alternative recently offered to shareholders through which it retained R777 330 708 of cash as new equity as well, strengthening the Company’s financial position. The retained cash will be used to reduce the Group’s LTV further.

Hyprop Investments Limited +27 (0) 11 447 0090
Morné Wilken (CEO)
Brett Till (CFO)
Lizelle du Toit (Investor Relations) +27 (0) 82 465 1244

Equites Sells Two UK Logistics Properties to Real Estate Fund Managed By Blackstone

The JSE listed specialist logistics property fund, Equites, today officially announced that it has sold two high-quality UK distribution warehouses to real estate funds managed by Blackstone for £43,400,000, being a 4.79% net exit yield and 6% premium to Equites’ book value.

The sale proceeds will be re-invested into the development of prime distribution warehouses by the Equites/Newlands JV, with the new warehouses let on 20- and 15-year leases to Hermes and Amazon. This transaction will realise net cash proceeds of £23,679,779 to Equites, while lowering the loan-to-value ratio across its portfolio.

The newly formed strategic partnership with Newlands in the UK has gained significant momentum and the proceeds of this sale will be invested into the premium logistics products that will be developed by the Equites/Newlands partnership. The partnership has recently concluded two development agreements with Amazon and Hermes, with total development costs of £41 million and £72 million, respectively. The two facilities that Equites will ultimately hold will be brand-new premium logistics facilities, built to institutional standards and let to high-quality tenants on long-term leases.

Link to Equites’ stock exchange notice here.

Andrea Taverna-Turisan, the CEO of Equites, commented:

“We have curated a high-quality UK logistics portfolio since we entered the UK market in 2016, which today has a total portfolio value in excess of £320 million. We look forward to re-investing the proceeds from these disposals into our partnership with Newlands, which currently affords Equites an attractive pipeline of world-class logistics developments in the UK.”

For further information, please contact:
Laila Razack (Chief Financial Officer)
Tel: +27 21 460 0404;

Equites Property Fund Limited (“Equites”) is a South African REIT, with a clear focus on being a market leader in the logistics property market by developing and acquiring A-grade, modern logistics facilities in prime locations in South Africa and the United Kingdom. Equites listed on the Johannesburg Stock Exchange (“JSE”) on 18 June 2014 with a portfolio value of R1 billion and has since grown to a portfolio value to R16 billion at August 2020. The group continues to grow its portfolio through a significant development pipeline and high-quality acquisitions. Equites is the only listed property entity on the JSE to provide shareholders with pure exposure to prime logistics assets.


Real estate has long been a rewarding sector of the financial markets. Like all sectors, share prices and the underlying fundamentals of commercial property assets weakened in early 2020, as South Africa and the rest of the world came to grips with managing through the pandemic, with some sectors suffering more than others…

Chairman’s Message and 2021 Sector Outlook

Estienne de Klerk

Chairman, SA REIT Association

Real estate has long been a rewarding sector of the financial markets. Like all sectors, share prices and the underlying fundamentals of commercial property assets weakened in early 2020, as South Africa and the rest of the world came to grips with managing through the pandemic, with some sectors suffering more than others.

SA REITs recovered somewhat in the final months of 2020, indicating the potential start of a long-term uptrend in the real estate sector. The outlook for 2021 remains uncertain, in part because the global Covid-19 crisis is anything but over. The pace and extent of the sector’s improvement rely on the availability of vaccines and the effectiveness of vaccination programmes locally in the first instance, but also globally. REITs stand to reap significant benefit from a potential rebound in economic activity once vaccines become widely available. The result is likely to be a stronger latter-half for the sector, gaining momentum towards a more complete recovery in 2022.

Whilst the pandemic exacerbated South Africa’s underlying economic weakness, and much rests on an improvement in economic conditions, it is encouraging to witness how property owners who are key contributors across the whole South African economic value chain have demonstrated their commitment to the country, and SMMEs in particular, by providing Covid-19 related rent relief that has helped thousands of businesses stay afloat.

With 2021 now firmly underway, sanity is slowly returning to the investment markets. For now, many REIT counters remain mispriced and offer excellent value propositions for investors, while being underpinned by quality assets, driven by skilled and experienced leadership and fuelled by the proven agility and tenacity of the REIT sector and SA Inc.

The significant reduction in short term interest rates will also provide some support for further recovery in the economy as well as the SA property sector. The tailwind of lower interest rates not only reduces the cost of capital to the SA REITs but should also play a role in the rental demand dynamics for space over the medium term.

While the lockdown pushed pause on corporate activity and deal-making last year, we may see some corporate action like takeovers and mergers as this year progresses, as well as some de-listings in the sector. Balance sheet strength, regulatory compliance, quality lease covenants and strong leadership will continue to come under the spotlight for SA REITs in 2021.

The SA REIT Association and its members continue to play an active part in supporting the sector through ongoing engagements with stakeholders that have recently resulted in a number of milestones. Following lengthy and robust consultations with The Commissioner for the South African Revenue Service (SARS), a resolution was finalised on the VAT Apportionment matter, meaning that REITs may determine the extent to which VAT may be deducted as input tax on mixed expenses based on a varied turnover-based method of apportionment. Additionally, the National Appeals Committee and SARS no longer regard tenant deposits as gross income and agrees that tenant deposits can be excluded from taxable income. These are significant developments for the sector that will benefit all members during these challenging times and beyond.

We have no doubt that in 2021 the sector will reaffirm to investors, funders, regulators and other key stakeholders that SA REITs remain a well governed and attractive asset class. SA REITs remain the most accessible liquid and cost-effective way to own property which is a key pillar of every Diversified Investment Portfolio.