In the tenth episode of The REIT Report on Classic Business (Fine Music Radio), Brett Till, Financial Director of Hyprop Investments, joins host Alistair Anderson, editor-in-chief of Property Flash, to unpack the retail REIT’s oversubscribed accelerated bookbuild and what the return of growth capital signals for the sector.

For much of the past decade, raising fresh equity as a South African REIT was, in Anderson’s words, rather like trying to sell an umbrella after the rain had stopped. Companies traded well below their underlying asset values, investors worried about dilution and management teams were told to sell properties, reduce debt and wait for their share prices to recover. Hyprop appears to have reached a different point in the cycle. The company went to the market for roughly R500 million and closed on R739 million, issuing shares at R58.50 each at a 1.4% premium to its 30-day volume-weighted average share price. Anderson’s read is that while the pricing is a premium to the recent traded price rather than to net asset value, it remains a meaningful signal that investors are once again prepared to fund a South African property company for growth rather than for balance sheet repair.

Till explains that the raise is the third in eight months, following R400 million of equity raised at R54.50 a share in December 2025 and a R580 million bond auction in April 2026 that was more than five times oversubscribed. With the share price re-rating between raises, capital has become progressively cheaper. His preference is to raise smaller amounts frequently while market conditions are favourable rather than attempt a single large raise. The proceeds are earmarked for acquisition and expansion opportunities in Eastern Europe, solar and battery projects at Canal Walk and Somerset Mall and expansions at Somerset Mall and City Center One East in Croatia.

On what sustains investor appeal, Till points to asset quality and financial strength. Hyprop owns nine malls in South Africa and four in Eastern Europe with a fifth in progress. Its June pre-close update showed continued growth in tenant turnover and footfall. The group has cut its payout ratio from 100% to 82.5%, follows a conservative approach to accounting and transactions and has reduced its loan-to-value ratio to the low 30% range from a peak above 50%.

The conversation turns to how accretion is judged. Using Table Bay Mall as the example, Till notes the funding cost initially exceeded the acquisition yield, diluting distributable income in the early years, but the group evaluates transactions on total return over five to ten years against its weighted average cost of capital. The centre’s independent valuations have risen since purchase. Cash drag from the latest raise is neutralised by paying down revolving credit facilities from day one, with the acquisition of Galleria Burgas in Bulgaria expected to complete by the end of July subject to competition approval.

On where a rand works hardest,Till is clear that Eastern Europe currently offers better risk-adjusted returns, with higher acquisition yields, euro-denominated income in Bulgaria and Croatia and in-country funding costs roughly half South African levels. At home the growth focus is the Western Cape, through Table Bay Mall and the Somerset Mall and Cape Gate expansions, while investment in Gauteng has turned defensive, with solar now installed at all the group’s South African malls saving at least R1 million a month per centre and water backup systems keeping centres trading through municipal service failures.

The discussion closes on the future of retail, which Till describes as increasingly experience-led and multi-generational, with online retail complementing physical stores rather than replacing them and artificial intelligence being explored cautiously for shopper insight and operational efficiency. Anderson’s conclusion is that access to equity capital has returned for at least some of South Africa’s strongest property businesses. The test now is deploying it into projects that produce sustainable growth in income and value across South Africa and Eastern Europe.

The REIT Report is a twelve-part podcast series produced in partnership with the SA REIT Association and Property Flash.

Listen to Episode 10:  https://iono.fm/e/1696759