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Hyprop partnering with the Santa Shoebox Project

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Hyprop wraps up another successful year of partnering with the Santa Shoebox Project

Retail centre owner and manager supported over 30,000 children and 1,300 teachers
through this impactful initiative.

Hyprop is proud to celebrate another year of impactful partnership with the Santa Shoebox Project, one of South Africa’s most cherished charitable initiatives. Throughout 2024, Hyprop’s eight malls across the country played a key role in spreading festive joy, of the total 74 751 Santa Shoeboxes donated around the country this year, 23 636 of them came through Hyprop’s malls helping to positively impact disadvantaged children.

“The support of the Hyprop malls and the Hyprop Foundation enable our beloved Santa Shoebox Project to achieve its mission of providing equal access to quality education for all children in South Africa facilitated through acts of kindness. It is incredibly valuable to have a partner in Hyprop that shares our values,” shared Santa Shoebox Project spokesperson, Debbie Zelezniak.

Since its inception in 2006, the Santa Shoebox Project has transformed lives by delivering over 1.3 million personalised shoeboxes filled with essentials and gifts to underprivileged children across South Africa. Hyprop’s continued financial and community support has significantly enhanced the project’s reach and effectiveness.

Significant contributions over the years

Over the past three years, the Hyprop Foundation has contributed a total of R1.1 million to the Santa Shoebox Project, distributed as follows:

  • 2024: R400,000, benefiting 574 teachers and 12,048 children
  • 2023: R350,000, benefiting 238 teachers and 4,150 children
  • 2022: R350,000, benefiting 508 teachers and 14,442 children

This consistent financial investment has supported the training of teachers in Early Childhood Development (ECD) programmes, equipping them with essential skills such as perceptual training, learning through play, and creating toys from recyclable materials. Over the three years, Hyprop’s contribution has positively impacted the lives of 30,640 children and provided over 1,300 teachers with valuable skills.

A year of community and generosity

This year, Hyprop’s centres once again served as vibrant collection hubs for the Santa Shoebox Project, encouraging shoppers to participate by donating personalised shoeboxes filled with essential items such as toiletries, school supplies, clothing, toys, and treats.

Reflecting on the partnership, Leonie du Preez from the Hyprop Foundation commented, “The Santa Shoebox Project demonstrates the significant impact of collective giving. At Hyprop, we are dedicated to supporting initiatives that uplift communities and spread joy. Our financial contributions, along with the enthusiastic involvement of our shoppers, have made 2024 another successful year of giving.”

The annual participation of Hyprop’s centres has strengthened community ties and made it easier for the public to engage with this beloved initiative. Over the years, Hyprop has helped collect tens of thousands of shoeboxes, bringing cheer to children across South Africa.

A Lasting Legacy

Through the Hyprop Foundation, the group channels its Corporate and Social Investment initiatives aimed at fostering meaningful change by focusing on education and skills development, community upliftment, and enterprise development. The Santa Shoebox Project shares a broader mission that includes building pre-schools, training teachers, and creating reading corners, which aligns with Hyprop’s commitment to enhancing education and uplifting communities.

As 2024 draws to a close, Hyprop celebrates its continued role in supporting this important initiative and looks forward to its further impact in the coming years.

Hyprop set for growth given the reduced risks and financial strength

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Hyprop set for growth given the reduced risks and financial strength

Hyprop, a total returns-focused fund that specialises in retail property announced its operational update for the four months ended 31 October 2024. The Group’s dominant retail centres in South Africa and Eastern Europe continued to grow tenants’ turnover and trading density. This reflects management’s ongoing repositioning initiatives and leasing strategies, combined with better consumer sentiment.

“The pleasing performance reflects our investments over the last few years, not only in centre and tenant upgrades and improvements but also in energy and water projects at all our centres,” said Hyprop CEO Morné Wilken. “We have given particular attention to areas most affected by infrastructure decay, to ensure our tenants and shoppers can continue to trade without disruption.”

The company’s pre-close operational update showed a pro-forma improvement in the loan-to-value ratio (LTV) to 35.2% at end-October from 36.4% at end-June, and an increase in interest cover to 2.62 times from 2.5 times. This follows the completion of the disposal of the sub-Saharan Africa (SSA) portfolio to Lango Real Estate Limited. At the end of the period, Hyprop held R575 million cash on hand and R1.2 billion of available bank facilities, after paying the 2024 dividend.

Given factors such as the improvement in the overall risk environment, that Hyprop has caught up on historic capital underspending in SA, the sub-Saharan portfolio has now been sold and Hyprop’s balance sheet strength, the Board intends to review the dividend policy and payout ratio. Any changes will be communicated when the results for the six months ending 31 December 2024 are released in March 2025.

Operational performance

South Africa

In the four months to end-October, Hyprop welcomed several new stores to its centres in South Africa, some of which were “firsts” for the country. It also refurbished and “right-sized” (expanding some spaces and reducing others) stores, where necessary.

Tenants’ turnover in this period was 5.2% higher than in the same period in 2023 and trading density was 3.9% better. Foot count was flat (-0.2%). The improving trend in rent reversions continued, with a positive weighted average reversion rate of 6.7%. Retail vacancies, at 2%, were well controlled.

Some of the highlights were:

In the Western Cape, Canal Walk has been enhanced by some exciting new concepts. These include Old School, a retailer specialising in the sale of South African sports supporters’ jerseys and other merchandise; and the first South African store for Baseus, one of the world’s fastest-growing consumer electronics brands. Silki, which sells luxurious skin, hair and body care products, opened its first stand-alone store.

Hyprop is adding 5 500m² of GLA at Somerset Mall as a part of its redevelopment and expansion project. The project planning is progressing well with most council and other regulatory approvals obtained. Construction work will commence later this financial year and is expected to be complete at the end of July 2026. The project will add 50 new stores to the vibrant centre, focusing on affordable luxury and athleisure as well as family entertainment and food.

In Gauteng, new store openings in Rosebank Mall included the first Cable & Co (fashion and footwear) in Gauteng and Ajmaan, which sells modest clothing. Continental Linen, Waxit and Ribz N Wings all opened during the period. In July 2024, the Soko District became fully let.

The Glen welcomed Porter & Craft, a luxury leather goods retailer and Cannafrica during the period. While The Glen Continental Linen and Chateau Gateaux during the period.

There were exciting developments at Hyde Park Corner. The Forum (a new events venue) and Workshop 17 (flexible office space) both opened in October. The centre also welcomed new outlets for strong global brands such as Birkenstock and Ted Baker; Avenue 2A, which houses international luxury brands; Colourbox, an international and local luxury lifestyle brands retailer; Kids Around, a luxury and premium children’s fashion brand; and Health Works, a health store that offers both products and a blend of traditional healing and cutting edge services.

Eastern Europe (EE)

The EE portfolio continued to achieve strong operational results in these four months, notably in tenant turnover and trading density. Asset management initiatives and investments in upgrades have distinguished Hyprop’s centres from its competitors, allowing it to benefit from the overall growth in retail within the region.

As at 31 October 2024, the EE portfolio’s retail vacancy rate was an impressive 0.2%. Tenants’ turnover was up 11.5% for the four-month period compared with the same period in 2023 and trading density lifted by 9.4%. Foot count was 1.6% higher.

Some of the highlights were:

In Croatia, both City Center one East and City Center one West reported growth in all key metrics, including foot count, despite the non-working Sundays Trade Act, which allows retailers to operate only 16 Sundays per calendar year. Centres are not allowed to trade on public holidays.

In Bulgaria, The Mall’s new tenants included Jeff de Bruges, a new premium chocolatier concept; Intesa, a locksmith; Stilna jena, a Bulgarian ladies fashion brand; Sunday Habit, a Bulgarian influencers’ merchandise shop; and Elenski Balkandjii, a farmer’s deli shop.

In North Macedonia, Skopje City Mall continues to refine its tenant mix and will soon welcome Gerry Weber, M House Roastery Café and mobile operator M-tel. Cineplexx has undergone a comprehensive upgrade, and Skopje City Mall is now the only centre in North Macedonia with a state-of-the-art cinema as part of its entertainment offering.

Environmental initiatives

Hyprop has made progress on ensuring energy and water security for its centres in South Africa, with a gas and battery storage project underway at Rosebank Mall. Management is taking steps to source solar power through Power Purchase Agreements at The Glen and Cape Gate and is looking at wheeling green energy from a third party to Canal Walk and Somerset Mall. Projects have started to install potable water storage at Clearwater Mall, Woodlands and Hyde Park Corner and similar projects will begin at the Glen and Rosebank Mall in 2025.

Canal Walk, Somerset Mall, Woodlands, and The Glen have all achieved net zero waste status. The integration of Table Bay Mall with the Group’s waste management strategy is progressing.

Outlook

Wilken said management’s priorities in the current year and beyond would include driving the implementation of sustainable solutions to reduce the impact of the infrastructure challenges we face in South Africa, expedite organic growth opportunities, for example, the Somerset Mall expansion in the South African portfolio, reviewing the portfolios annually to evaluate the case for recycling of assets and to consider new growth opportunities, disposing of the shareholding in Lango and redeploying the capital into new growth opportunities, and maintaining the health of the balance sheet.

“With these priorities in place, we are well-positioned to pursue growth opportunities without being hindered by past structural, financial, and asset-related issues,” he said.

Hyprop exceptional performance from SA and EE portfolios

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Tuesday, 17 September 2024. Hyprop, the owner of dominant retail centres in South Africa (SA) and Eastern Europe (EE), reported distributable income for the year to 30 June 2024 that was better than its March guidance. Management is confident that it’s set for future growth as it delivers on a number of strategic priorities and anticipates an easing of the recent tough trading environment in the year ahead.

“Discernible green shoots in the global and domestic economies, combined with Hyprop’s sustainable business model, excellent property portfolios, strong balance sheet, prudent capital management, and continuous investment in keeping the portfolio relevant, in our human capital and environmental initiatives, should position us to deliver further growth and value for all our stakeholders over the long term,” CEO Morné Wilken says.

“The Group’s outlook is positive, despite the difficult global economic environment and unique challenges in each of the regions in which we operate. We are optimistic that the peak of inflation and interest rates is near, but the Group’s financial performance will still be negatively impacted in the short term by high interest costs and the timing of the implementation of the sale of the sub-Saharan Africa portfolio.”

Hyprop’s distributable income was 370.4c a share for the year to 30 June 2024, a reduction of 8.6% from 405.2c reported for the year to 30 June 2023. In March 2024, management warned shareholders there would be a 15-20% decrease, owing to higher interest costs for longer, an increase in issued shares due to the dividend reinvestment plan, further foreign exchange losses on its Nigerian properties and the acquisition of Table Bay Mall. The reasons for a better outcome included a strong operational performance from the SA and EE portfolios as well as improved cash management, lower hedging costs and reduced margins on refinanced borrowings, the impact of withholding the interim dividend and timing delays in capital projects, which all offset the higher interest costs.

A final dividend of 280c a share (2023: 299.3c a share) was declared in-line with the dividend policy being 75% of the distributable income from the SA and EE portfolios.

In the year under review, Hyprop acquired Table Bay Mall for R1.68 billion, and the centre is trading well as it is being integrated into the portfolio. Since year-end, the Group has signed binding legal agreements to dispose of its sub-Saharan Africa (SSA) portfolio (centres in Nigeria and Ghana) to Lango Real Estate Limited, in exchange for Lango shares. This will free Hyprop’s management to focus on the core portfolios in SA and EE.

Over the past five years, a number of steps have been taken to reinforce Hyprop’s balance sheet. The loan to value (LTV) ratio was maintained at 36.4% in June 2024, despite the debt-funded acquisition of Table Bay Mall and impairment of the SSA portfolio in line with the sale transaction. At end-June 2024, Hyprop was in a strong liquidity position, with R803 million of cash and R2 billion of available bank facilities. At present, 80% of the interest rate exposure is hedged.

SA portfolio
Despite a challenging domestic economic environment, the Group’s nine centres (four in the Western Cape and five in Gauteng), achieved higher tenant turnover, foot count and trading density. The overall rent reversion rate improved to positive 5.8% compared to negative 7% a year ago.

Canal Walk opened 20 new stores in the past year. Somerset Mall launched a new Checkers FreshX and upgraded Pick n Pay Hypermarket, while a key project to improve the food journey supporting Ster-Kinekor was completed. Somerset Mall is in the midst of a two-year expansion project which will add 5 400m² of GLA. Rosebank Mall is benefiting from an improved tenant mix, reporting a 10.9% increase in tenants’ turnover and 8.5% growth in foot count. Woodlands opened three new drive-thrus for Steers, Burger King and Chicken Licken, The Fun Company and W Cellar (as part of the Woolworths extension project).

At Hyde Park Corner, the renovation of the north office block and The Forum is progressing well. Workshop 17 and The Forum will open in October 2024 and Workshop 17’s offices are expected to have a positive impact on the centre’s trading.

The independent valuation of the South Africa property portfolio was R25.4 billion in June 2024 (2023: R23.03 billion). The revaluation includes the costs of acquiring Table Bay Mall and shows the result of higher net operating income.

EE portfolio
The EE properties delivered excellent results, as they benefited from wage escalations in Europe as well as lower inflation and electricity prices across the region. European team continued to optimise the tenant mix and invest in projects and upgrades to maintain the centres’ dominant market positions. Across the portfolio, trading density rose by 8.9% year-on-year and retail vacancies at period end were 0.1%, an improvement from 0.3% a year earlier.

The Mall in Bulgaria completed a new staircase link from the centre into the new food court, which should improve the performance of the food tenants. Despite new legislation in Croatia that limits trading hours, City Center one East grew tenant turnover by 10.9% and trading density by 11%. City Center one West’s tenants’ turnover increased by 11.4% and trading density by 12.2%. Skopje City Mall enjoyed its most successful year since opening, with tenant’s turnover up by 7.5% and trading density by 8% compared with 2023. This year, a project will be completed to centralise all the ATMs and upgrade the Cineplexx complex.

The valuation of the EE portfolio increased from €574.7 million (R11.8 billion) in June 2023 to €610 million (R11.9 billion) in June 2024.

SSA portfolio
Weak economic conditions in West Africa, particularly in Nigeria, affected the trading performance of the centres, as did the marked depreciation of local currencies against the dollar.
Ikeja City Mall in Nigeria has welcomed four new tenants, which reduces its vacancy rate to below 1% at present from 2.1% at end-June 2024. In Ghana, replacement tenants were secured for the space vacated by Game in December 2022: ten-year leases have been signed by Melcom and Decathlon in all three of the centres.
The transaction to dispose of the portfolio to Lango is expected to be completed before 31 December 2024.

Other significant developments
Hyprop spent R81 million on energy projects in the year, including the installation of solar PV at Woodlands, Rosebank Mall and Clearwater Mall, but excluding Table Bay Mall. This year, work will begin on installing new solar PV at The Glen and CapeGate. Various projects to conserve water are underway, and the installation of potable water storage at several centres is about to commence. The Group has also spent R21.7 million on various initiatives to minimise waste and increase recycling.
Outlook
“More positive sentiment is evident in businesses, consumers and retailers in South Africa as a result of the formation of the Government of National Unity and more stable electricity supply. Globally, interest rate cuts are anticipated from the US Federal Reserve, which should encourage the South African Reserve Bank to cut rates also, giving much-needed relief to consumers, in turn having a positive impact on our operations” says Wilken.

Hyprop anticipates that it will achieve a 4-7% increase in distributable income a share for the year to 30 June 2025 compared with 2024. This increase is conditional on, among other factors, contractual rental escalations and market-related lease renewals, no further deterioration in South African electricity supply or the economy, and no other regional or global disruptions.

Lango concludes retail acquisition from Hyprop and Attacq

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Lango concludes c.US$200 million Africa real estate acquisition from Hyprop and Attacq

In one of the largest real estate transactions in Africa over the past year, Lango Real Estate Limited has agreed to acquire the Africa (ex-South Africa) retail real estate portfolio ultimately owned by JSE-listed REITs Hyprop Investments Limited and Attacq Limited.

Lango, a leading real estate company focused on direct investments into prime commercial assets in key gateway cities across the African continent, agreed on the acquisition of a portfolio of four shopping malls located in Accra, Ghana and Lagos, Nigeria, with an attributable value in excess of US$200 million.

The assets acquired include three retail assets in Ghana, including the iconic Accra Mall, one of the leading retail assets on the continent, along with Kumasi City Mall and West Hills Mall. Ikeja City Mall, arguably the most successful retail asset in Nigeria, was also acquired. The portfolio was acquired via an issue of Lango shares to the vendors, along with part debt-finance, with RMB acting as lead arranger.

Launched in 2018, Lango was originally established by South Africa’s largest primary JSE-listed REIT, Growthpoint Properties Limited, and LSE- and JSE-listed global investment manager, Ninety One (previously Investec Asset Management). Growthpoint also has a c.20% shareholding in Lango, alongside other notable South African and international institutional investors.

Lango has an established track record in concluding successful and accretive transactions, such as the RMB Westport property portfolio, the largest portfolio acquisition on the continent (excluding South Africa), and has achieved further significant growth. It has successfully managed to aggregate a high-quality portfolio of commercial real estate assets to attain meaningful scale and relevance in the sector.

Lango focuses on prime income-generating office, industrial and retail assets spread across key gateway cities in four countries: Ghana, Zambia, Nigeria and Angola. Assets include landmark properties such as the Standard Bank (Stanbic) head office in Ghana, Standard Chartered Head Office in Ghana, Manda Hill Shopping Centre in Zambia, and The Wings, an A-grade office complex in Victoria Island, Lagos.

Thomas Reilly, CEO of Lango, says, “This transaction is a significant milestone for Lango and not only fits squarely into our growth strategy, but is also highly accretive. The scale achieved by Lango undoubtedly positions it as a leading Sub-Saharan African firm in the industry. Lango will now have c.US$875 million of assets under management across four countries, with arguably some of the best-performing landmark commercial properties across both the retail and office sectors in select growth cities. These assets are well-positioned to allow Lango to extract synergies and further enhance growth with a high degree of resilience to differing market cycles.”

Reilly adds, “We are excited to once again take advantage of a highly attractive entry-point in the cycle, adding quality yielding assets in select cities to our asset base at competitive prices, which we believe have the potential to offer strong growth prospects. The business continues to enjoy significant momentum, and we expect this to aid in the delivery of sustainable long-term investor returns.”

Morne Wilken, CEO of Hyprop, adds, “Hyprop management has previously committed itself to achieving several strategic initiatives, with the exit of Sub-Saharan Africa being one of the last remaining initiatives to be completed. The successful implementation of this transaction will achieve this initiative, and we look forward to working with Lango to completion.”

Attacq CEO, Jackie van Niekerk, comments, “Our Rest of Africa (ex-South Africa) investment has become a small component of Attacq’s real estate investments and has been earmarked as part of an exit strategy by way of an orderly disposal. We are delighted to reach a point where a transaction with a credible counterpart in Lango has been agreed.”

Reilly concludes, “The growth and scale that Lango has achieved, supported by our partners in this transaction, enhances Lango’s ability to further entrench and capitalise on its position as a dominant player in the African real estate market, and creates a platform to facilitate considerable future growth as it heads toward a listing on the LSE.”

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