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 interim results for the six months ended 31 December 2023 ("HY2024")
on 13 March 2024, the Company hereby provides an operational update for the five months ended
31 May 2024 ("the period").
Progress continues to be made in achieving the Group's key priorities for FY2024 set out in the HY2024
interim results. In line with our strategic objectives, the acquisition of Table Bay Mall was implemented on
28 March 2024, increasing the Group's exposure and footprint in the Western Cape, and internal approvals
have been obtained to expand Somerset Mall by an additional 5 400m2 of GLA. The risks associated with
the Group's investments in Nigeria remain elevated, however, progress is being made with the disposal of
the Group's investments in sub-Saharan Africa ("SSA"), as noted below.
The Group's operational performance continued to improve steadily over the period, with all portfolios
showing improvements in key trading metrics. These improved trading metrics are attributed to the
repositioning strategy in South Africa ("SA"), the good tenant mix and increased footfall across the SA and
Eastern Europe ("EE") portfolios, and improved asset management in the SSA portfolio.
SOUTH AFRICA PORTFOLIO (to 31 May 2024)
Foot count increased 5.7% compared to the prior comparable period and tenant turnover increased by 2.1%.
The vacancy rate was 1.7% (1.9% including Table Bay Mall) at 31 May 2024. There were several
refurbishments, relocations and new store openings across the portfolio.
Canal Walk
Canal Walk welcomed Freedom Adventure Park, a 2 356m² flagship all-in-one indoor adventure park with
trampolines, a running obstacle course, a wall mount rope course and zip line, pedal carts, netball/basketball,
toddler play area, as well as free private work pods, and a Bootlegger Coffee outlet and pizzeria. Turkish
Doner Haus opened and refurbishments were undertaken for Bride & Co, Eurosuit, New Balance, Game4U,
Forever New and Truworths.
CapeGate
iStore is a new tenant in CapeGate and Bootlegger Coffee will be opening in September 2024.
Refurbishments were undertaken by Ocean Basket, Clicks, Toys R Us and Hungry Lion. Part of the parking
area will be re-purposed as storage facilities in June 2024.
Clearwater Mall
Under Armour, Sorbet Hair Bar, The San Hair and Curve Gear opened new stores. ABSA, Dynamic Vision
and Old Mutual relocated to new positions, the Inky Shop was refurbished and the Crazy Store was
expanded.
Hyde Park Corner
The centre signed a 10-year lease with Workshop 17, an innovative co-working space operator, who will
occupy the entire North Office Tower, with the first three floors due to be operating by October 2024 and the
remaining two floors by October 2025. Tsogo Sun will start upgrading to a new five-star hotel in the next few
weeks, and we have secured an events operator, The Forum, to occupy the old cinema space opposite the
hotel. A new Birkenstock store opened in the retail mall.
Rosebank Mall
Edgars and the Rosebank Management District are new tenants in Rosebank Mall while Ribz N WingZ and
WaxIt are due to commence trading in July 2024.
Somerset Mall
New stores were opened for Checkers Liquor, Milky Lane, Free Bird (a new premium free-range crispy
chicken burger concept) and Romens (a premium men's fashion wear store). New leases were concluded
with Steve Madden, Samsonite and Hi-Tec and the mall continues to focus on the strategic replacement of
underperforming tenants. The project to refurbish the food offering supporting Ster-Kinekor has been
completed and relaunched as "Cinema Connect".
Hyprop's Investment Committee has approved a two-year expansion project for Somerset Mall, which will
add 5 400m2 of GLA, improve the flow of the mall, right-size some tenants, introduce new affordable luxury
and ath-leisure brands, and create a new food court to enhance the food and entertainment experience. The
dated restrooms and mall tiles will also be replaced.
Table Bay Mall
We took transfer of Table Bay Mall on 28 March 2024 and remain optimistic about its prospects. Feedback
from the Table Bay Mall retailers is positive and we have completed the on-boarding of the property
management team and systems. The immediate focus is on implementing the "quick wins", for example,
installing solar and full back-up power, filling vacancies, opportunities to improve parking income and non-
GLA revenue, as well as finalising the leasing strategy to right-size tenants and to optimise the tenant mix.
The Glen
The Glen welcomed 22 Jump Street, Colors of India and Faro to the mall.
Woodlands Boulevard
The Fun Company and W Cellar opened at Woodlands and the Forever New store was refurbished.
The SA portfolio key trading metrics for the period are detailed below:
Historic - Excluding Table Bay Mall
Total for
5-month
Trading Metric Year Jan Feb Mar Apr May period
Tenant Turnover 2022 1 669 542 1 578 484 1 736 314 1 851 768 1 822 315 8 658 422
(R'000) 2023 1 857 698 1 765 695 1 900 957 2 000 229 1 986 975 9 511 553
2024 1 921 350 1 859 294 1 990 835 1 962 919 1 977 658 9 712 056
Variance % 2023 11.3% 11.8% 9.5% 8.0% 9.0% 9.8%
vs 2022
Variance % 2024 3.4% 5.3% 4.7% -1.9% -0.5% 2.1%
vs 2023
Trading Density 2022 2 912 2 762 3 061 3 269 3 200 3 040
(R) 2023 3 210 3 062 3 298 3 477 3 461 3 301
2024 3 299 3 200 3 403 3 359 3 391 3 331
Variance % 2023 10.2% 10.8% 7.7% 6.3% 8.2% 8.6%
vs 2022
Variance % 2024 2.8% 4.5% 3.2% -3.4% -2.0% 0.9%
vs 2023
Foot count ('000) 2022 6 123 5 452 5 988 5 894 5 930 29 386
2023 6 405 5 603 6 271 6 299 6 143 30 721
2024 6 794 6 197 6 800 6 289 6 400 32 480
Variance % 2023 4.6% 2.8% 4.7% 6.9% 3.6% 4.5%
vs 2022
Variance % 2024 6.1% 10.6% 8.4% -0.2% 4.2% 5.7%
vs 2023
Retail Vacancy 2022 1.9% 1.4% 1.5% 1.6% 1.4% -
(%) 2023 1.5% 1.4% 1.5% 1.8% 1.5% -
2024 1.3% 1.4% 1.4% 1.6% 1.7% -
Collections 2022 229 561 271 178 284 008 301 862 230 535 1 317 144
(R'000) 2023 233 189 285 638 322 134 286 955 259 228 1 387 144
2024 262 864 304 810 311 642 310 989 303 944 1 494 248
Variance % 2023 1.6% 5.3% 13.4% -4.9% 12.4% 5.3%
vs 2022
Variance % 2024 12.7% 6.7% -3.2% 8.4% 17.2% 7.7%
vs 2023
Positive rent reversions for the 11 months ending 31 May 2024 were +3.7% compared to +3.0% for HY2024.
While there has been a reduction in loadshedding, it remains a concern, as does the security of potable water
supplies at our Gauteng centres, given the deterioration in municipal infrastructure in the province. All of our
centres continued to trade during loadshedding with full back-up power at all our sites, except at Table Bay
Mall which will complete installation of new generators in September 2024. Initiatives to maintain four days'
supply of potable water for the Gauteng malls are underway.
EASTERN EUROPE PORTFOLIO (to 30 April 2024)
The EE portfolio achieved strong operational results to 30 April 2024. Compared to the previous period, there
was an 8.7% increase in tenant turnover and a 0.5% improvement in foot count as we enhanced the tenant
mix and the food and entertainment offerings in the centres to maintain their dominant market positions. The
foot count was impacted by the limitation on Sunday trading in Croatia, while the vacancy rate remained
stable at 0.2% on 30 April 2024.
City Center one East
A new fashion tenant, Dune London, which sells women's handbags and related accessories was added to
the tenant mix, replacing Moje Cipele. The OVS and Calzedonia stores were refurbished.
City Center one West
Tom Tailor, a fashion retailer, started renovations and the luxury crystal jewellery brand, Swarovski, and Ritual
Hair&Shop completed their upgrades. The extension and upgrade of the food court (which introduces five
new food operators) are in their final stages. From July 2024 visitors will enjoy an extensive food offering.
The Mall
The Mall welcomed several new tenants, including JD Sports' first store in Bulgaria, a new Casio shop and
an elegant Carpisa store, broadening the diversity of the retail offerings and enhancing visitors' shopping
experience.
Ongoing projects, such as replacing all interior and exterior lights with LEDs, introducing the first internal slide
in a shopping mall in Sofia, and building a new staircase connecting the first level with the food court, will
elevate the aesthetic and functional aspects of The Mall. These projects reflect our commitment to providing
a premier shopping experience.
Skopje City Mall
The new H&M store opened in Skopje City Mall in March 2024, and in May, the mall celebrated the openings
of the country's only Lacoste and Karl Lagerfeld stores. Other notable new stores include Granoff, S'Oliver,
Samsonite and B&G, all of which were operational by May 2024. Waterdrop, endorsed by brand ambassador
Novak Djokovic, opened its first kiosk in North Macedonia at Skopje City Mall. LC Waikiki completed a full
refurbishment in May.
Cineplexx is undertaking a comprehensive upgrade of its offering at Skopje City Mall, to be completed by end
August 2024. It will add leather and additional reclining seats, along with enhancing the concession desk and
the foyer. This renovation is expected to boost the mall's reputation and attract a larger audience, reinforcing
its status as the premier shopping and entertainment destination in North Macedonia.
The EE portfolio key trading metrics for the four months ended April 2024 are detailed below:
Total for
4-month
Trading Metric Year Jan Feb Mar Apr period
Tenant Turnover (€'000) 2022 32 532 30 121 34 205 41 205 138 063
2023 40 763 36 880 41 889 47 007 166 539
2024 42 945 40 248 47 180 50 586 180 959
Variance % 2023 vs 25.3% 22.4% 22.4% 14.1% 20.6%
2022
Variance % 2024 vs 5.4% 9.1% 12.6% 7.6% 8.7%
2023
Trading Density (€) 2022 194 180 205 246 206
2023 246 224 251 283 251
2024 257 242 280 300 270
Variance % 2023 vs 26.8% 24.5% 22.7% 14.9% 21.8%
2022
Variance % 2024 vs 4.3% 7.8% 11.3% 6.0% 7.3%
2023
Foot count ('000) 2022 1 776 1 682 1 917 2 040 7 415
2023 2 242 1 999 2 167 2 245 8 653
2024 2 182 2 027 2 243 2 245 8 697
Variance % 2023 vs 26.2% 18.8% 13.0% 10.1% 16.7%
2022
Variance % 2024 vs -2.7% 1.4% 3.5% 0.0% 0.5%
2023
Vacancy (%) 2022 0.3% 0.4% 0.4% 0.4% -
2023 0.6% 0.6% 0.4% 0.8% -
2024 0.3% 0.2% 0.2% 0.2% -
Collections (€'000) 2022 7 287 7 589 7 860 7 040 29 776
2023 7 343 8 134 8 669 7 454 31 600
2024 7 798 7 642 8 728 8 458 32 626
Variance % 2023 vs 0.7% 7.2% 10.3% 5.9% 6.1%
2022
Variance % 2024 vs 6.2% -6.0% 0.7% 13.5% 3.2%
2023
The weighted average rent reversion rate for the 10 months ending 30 April 2024 was +3.7%.
SUB-SAHARAN AFRICA PORTFOLIO (to 30 April 2024)
Nigeria
Between January and April 2024, a further significant devaluation of the Naira affected every aspect of the
Nigerian economy. The official exchange rate depreciated from N950/$1 in January 2024 to its weakest level
of N1 620/$1, before closing at around N1 200/$1 at the end of May 2024. Fuel prices soared to a new record
at the end of April due to currency weakness and shortages, after the government removed the fuel subsidy
in June 2023.
On 30 April 2024, the inflation rate peaked at 33.7%, with food inflation recorded above 40%. The Nigerian
Monetary Policy Rate remains high at 26.25%. The devaluation of the Naira continues to place severe
pressure on both Nigerian retailers and consumers.
Rentals at Ikeja City Mall are indexed to the US dollar which places pressure on tenants' affordability. To
alleviate some of the financial pressures, Ikeja City Mall provided assistance in January, February and March
to tenants in good standing.
Ghana
Ghana continues to face macroeconomic challenges, given the local currency's depreciation, muted
economic growth, high inflation, and steep government debt. Despite these challenges, key trading metrics
of the assets in Cedi terms reflected growth compared to the prior year.
Significant progress has been made in securing replacement tenants for the 13 164m² previously occupied
by Game. We have concluded 10-year leases with Decathlon and Melcom on this space, and the vacancy
rate should reduce to 8.3% by 30 June 2024.
We continue to focus on protecting the value of the SSA centres by managing the impact of Ghana's and
Nigeria's difficult economic conditions. The key trading metrics for the SSA portfolio for the four months ended
April 2024 are presented below in local currency and US dollars, with the latter impacted by the noticeable
depreciation of the local currencies against the US dollar.
Total for
4-month
Trading Metric Year Jan Feb Mar Apr period
Turnover (GHC'000) 2022 50 239 44 783 50 002 48 879 193 903
(Ikeja excl.) 2023 61 688 55 038 65 552 63 523 245 802
2024 66 515 66 512 81 914 75 531 290 471
Variance % 2023 vs 2022 22.8% 22.9% 31.1% 29.9% 26.8%
Variance % 2024 vs 2023 7.8% 20.8% 25.0% 18.9% 18.2%
Turnover (USD'000) 2022 7 964 6 445 6 622 6 175 27 205
(Ikeja excl.) 2023 4 986 4 382 5 219 5 421 20 008
2024 5 486 5 313 6 322 5 603 22 723
Variance % 2023 vs 2022 -37.3% -32.0% -21.2% -12.2% -26.4%
Variance % 2024 vs 2023 10.0% 21.3% 21.1% 3.4% 13.6%
Trading Density GHC 2022 1 135 1 063 1 205 1 170 1 143
(Ikeja excl.) 2023 1 745 1 562 1 812 1 752 1 719
2024 1 607 1 476 1 796 1 662 1 637
Variance % 2023 vs 2022 53.7% 46.9% 50.4% 49.8% 50.4%
Variance % 2024 vs 2023 -7.9% -5.5% -0.9% -5.2% -4.8%
Trading Density USD 2022 180 153 160 148 160
(Ikeja excl.) 2023 141 124 144 150 140
2024 133 118 139 123 128
Variance % 2023 vs 2022 -21.6% -18.7% -9.6% 1.2% -12.7%
Variance % 2024 vs 2023 -6.0% -5.1% -3.9% -17.6% -8.5%
Foot count (Ikeja incl.) ('000) 2022 2 134 1 783 1 838 1 851 7 606
2023 2 024 1 405 1 626 1 963 7 019
2024 2 034 1 656 1 913 2 012 7 615
Variance % 2023 vs 2022 -5.2% -21.2% -11.5% 6.1% -7.7%
Variance % 2024 vs 2023 0.5% 17.9% 17.6% 2.5% 8.5%
Vacancy (Ikeja incl.) (%) 2022 11.3% 11.0% 11.4% 10.8% -
2023 23.2% 23.0% 22.5% 22.9% -
2024 17.2% 11.6% 12.0% 11.8% -
Excl. Game 2024 7.3% 6.1% 6.5% 6.3% -
Collections (Ikeja incl.) (USD'000) 2022 3 535 3 330 3 262 3 968 14 095
2023 2 957 2 705 3 447 2 947 12 055
2024 2 660 3 020 2 691 2 548 10 919
Variance % 2023 vs 2022 -16.3% -18.8% 5.7% -25.7% -14.5%
Variance % 2024 vs 2023 -10.0% 11.6% -21.9% -13.6% -9.4%
Nigeria
Ikeja City Mall
Footfall for the four-month period grew by 5.5% year-on-year. The centre achieved a 3% decline in arrears.
Ikeja City Mall remains almost fully let, with a vacancy rate of 1.7%. All of the vacant space has been re-let,
but the tenants have not yet opened for trade.
Ghana
West Hills Mall
Melcom opened a flagship outlet in West Hills Mall on 1 February 2024 as a second anchor tenant. In addition,
Decathlon has signed a lease over 675m² and is scheduled to open on 1 September 2024.
Accra Mall
Orca Deco will continue to trade in the space previously occupied by Game until end June 2024, after which
the premises will be subdivided to mitigate tenant concentration risk. Melcom will occupy 2 662m² and
Decathlon 1 879m². Both stores are expected to trade from 1 December 2024.
Kumasi City Mall
A lease was concluded with Melcom on the entire 5 017m² previously occupied by Game. Space will also be
reconfigured to accommodate Decathlon elsewhere in the mall. Both tenants are expected to start trading by
the last quarter of 2024.
BALANCE SHEET AND CAPITAL MANAGEMENT
The Group's balance sheet remains healthy, as do its key treasury metrics and liquidity.
The acquisition of Table Bay Mall was financed utilising R500 million of available cash, R250 million of
revolving credit facilities and R900 million raised through the issue of two unlisted bonds (with durations of
two and three years) under the Domestic Medium Term Note Program (DMTN). R500 million of DMTN bonds
matured in March 2024 and two new DMTN bonds were issued in April 2024 at attractive margins of 120 bps
for three years and 130 bps for five years.
In addition to the amortisation of in-country borrowings in the EE portfolio, €20 million of equity debt was
settled in April 2024, and a new €10 million revolving credit facility secured, which is undrawn.
Following the acquisition of Table Bay Mall, the Group's LTV increased to 40.2% from 37.4% in December
2023. The Group's interest rate exposure is currently 85% hedged.
The in-country bank loans for the SSA portfolio are in the process of being refinanced ahead of their maturity
dates in December 2024 and February 2025. An additional $8 million of the AttAfrica Group debt has been
guaranteed by Hyprop.
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
Hyprop's environmental sustainability strategy continues to be centred around the improved use and
management of electrical, water and waste resources. Over the past six months, in response to the rapidly
changing South African environment, and the increased pressures resulting from the lack of basic municipal
services, a focus on energy and water security has become more urgent and better aligned with the Group's
economic and operational objectives. The energy and water security strategy aims to ensure security of
supply and uninterrupted access to affordable sources during disruptions. We are also engaging with local
authorities in SA to better understand the state of repair of the municipal infrastructure and identify proactive
measures to prevent failure and the inevitable impact on our properties.
Energy
An R80 million solar project was approved for CapeGate which is awaiting approval from the City of Cape
Town. In addition to the gas/battery energy solution project approved for Rosebank Mall, which is underway,
feasibility studies for battery storage solutions were undertaken at Clearwater Mall and Table Bay Mall, and
are under review. We are endeavouring to use power purchase agreements with reputable third parties for
our solar energy projects rather than our own capital allocations.
Water
Monthly monitoring of the water consumption at SA sites has been increased in the light of growing concerns
about water security. Water recycling feasibility studies have been undertaken for grey water treatment plants
at Hyde Park Corner, Clearwater Mall and Canal Walk. In addition, feasibility studies for four-day potable
water storage are underway in all Gauteng malls.
Waste
With the organics diversion projects now fully established in the SA portfolio, the overall diversion rate from
landfills held steady at around 69% across the eight Hyprop SA sites. The total waste comprised 14% wet
waste and 86% dry waste. Four of the eight SA sites are now eligible for Net Zero Waste Level 2 certifications
by the Green Building Council.
IN CLOSING
Notwithstanding the difficult global economic environment and specific challenges in each of the regions in
which the Group operates, our portfolios remain well positioned with improving operational performance
metrics and are making headway towards achieving the Group's key priorities and strategic objectives.
In South Africa, despite the power and water supply concerns, and the challenges of the tough economic
conditions, there is renewed optimism following the elections in May 2024 and the formation of a government
of national unity.
The delay in central banks starting to reduce interest rates globally is impacting the cost of debt across our
portfolios, despite some mitigation from our hedging policy and reductions in borrowings.
Implementation of Hyprop's strategic objectives, prudent capital allocation and risk diversification should
perpetuate the trajectory of the Group's operational performance, as evidenced by the improved trading
metrics above, and allow the Group to seek opportunities to grow, while delivering sustainable long-term
returns for stakeholders.
The conditions precedent to the sale of 50% of Ikeja City Mall referred to in the HY2024 interim results have
not been fulfilled by the longstop date. However, we have signed a letter of intent with another party for the
sale of the entire SSA portfolio and will provide further information in due course.
The dividend for the 2024 financial year will only be considered by the board on finalisation of the financial
results for the year ended 30 June 2024 ("FY2024 results").
Hyprop will host an online presentation at 10:00 on Monday, 24 June 2024 to discuss this operational update.
Please click https://events.teams.microsoft.com/event/2ffa8ca8-fe7b-42aa-be00-4134e550c4c6@5be1f46d-495f-465b-9507-996e8c8cdcb6
to pre-register. Participants will receive the webinar link on registration. The presentation and recording will
be available on Hyprop's website thereafter.
Hyprop's FY2024 results are scheduled to be released in September 2024.
24 June 2024
Sponsor
Java Capital
Date: 24-06-2024 07:45:00
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