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Hyprop Investments Limited (JSE:HYP) News - Acquisition of retail properties, posting of circular, financial information and withdrawal of cautionary
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")
ACQUISITION OF FOUR RETAIL PROPERTIES FROM HYSTEAD - POSTING OF CIRCULAR, FINANCIAL INFORMATION FOR THE TRANSACTION AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the proposed acquisition of four Eastern European retail properties from Hystead Limited
("Hystead"), in which Hyprop holds a 60% interest, (the "transaction") announced on SENS on 28 January 2022.
1. Posting of circular and notice of general meeting
Shareholders are advised that on 22 February 2022 Hyprop issued a circular to its shareholders regarding the
transaction (the "circular"), incorporating a notice of general meeting.
The general meeting of Hyprop shareholders will be held by way of electronic participation in accordance with
the provisions of section 63(2) of the Companies Act, 71 of 2009 and the JSE Listings Requirements, as read with
the company's memorandum of incorporation, at 10:00 am on Friday, 25 March 2022, to consider and, if deemed
fit, pass, with or without modification, the resolution required to be approved by shareholders in order to authorise
and implement the transaction (the "general meeting").
Copies of the circular are available on the Hyprop website at https://www.hyprop.co.za/circulars.php, and may
also be obtained at the company's registered office, 2nd Floor, Cradock Heights, 21 Cradock Avenue, Rosebank,
2196 during normal business hours from the date of issue of the circular to the date of the general meeting.
Terms defined in the circular will bear the same meaning in this announcement.
2. Forecast statement of profit or loss and other comprehensive income
Set out below are the forecast statements of profit or loss and other comprehensive income of the target group,
and the impact on the Group (the "Forecasts"), on a stand-alone basis for the 3-months ending 30 June 2022 (the
"FY22 Forecast period") and the year ending 30 June 2023 (the "FY23 Forecast period") (and collectively, the
"Forecast periods").
The Forecasts, including the assumptions on which they are based, are the responsibility of the Hyprop board.
The Forecasts must be read in conjunction with the circular, which, inter alia, contains the detailed notes and
assumptions relating to the forecasts in Annexure 4, and the Independent Reporting Accountant's report thereon
in Annexure 5, of the circular.
The Forecasts have been prepared:
– in relation to the transaction only;
– in accordance with Hyprop's accounting policies and in compliance with IFRS;
– in accordance with paragraphs 13.12 and 13.14 of the JSE Listings Requirements; and
– on the basis of the overriding assumption that the conditions precedent specified in the transaction
agreement will have been met by the effective date, being 31 March 2022, and therefore, the risks and
rewards of ownership will transfer to Hyprop on this date. As a result, Hyprop will be able to recognise
100% of the income and expenditure from the target group companies from 1 April 2022.
The forecasts for the 3-months ending 30 June 2022 and the year ending 30 June 2023 are set out below.
Forecast Forecast Forecast Forecast
3 months 12 months 3 months 12 months
ending ending ending ending
30 June 30 June 30 June 30 June
2022 2023 2022 2023
EUR'000 EUR'000 R'000 3 R'000 3
Revenue 15 993 65 708 293 298 1 225 661
Rental and other lease income 12 469 51 194 228 666 954 937
Straight-line rental income accrual (123) (181) (2 255) (3 382)
Non-lease income 264 1 146 4 842 21 377
Recoveries 3 383 13 549 62 045 252 729
Changes in expected credit losses - trade receivables (74) (278) (1 351) (5 179)
Property expenses (6 505) (26 548) (119 300) (495 211)
Net property income 9 414 38 882 172 647 725 271
Other operating expenses 1 (761) (2 967) (13 955) (55 338)
Operating income 8 653 35 915 158 692 669 933
Net interest (2 771) (10 922) (50 823) (203 724)
Profit before taxation 5 882 24 993 107 869 466 209
Taxation (567) (2 558) (10 396) (47 718)
Profit for the period / year of the target group 5 315 22 435 97 473 418 491
Other comprehensive (loss) / income
Items that may be reclassified subsequently to profit
or loss (net of taxation) - - - -
Total comprehensive profit for the period / year
of the target group 5 315 22 435 97 473 418 491
Incremental interest cost for the Group (30 530) (122 118)
Other incremental Group costs 2 (17 027) (6 382)
Profit and total comprehensive income for the
period/year for the Group from the transaction 49 916 289 991
Adjusted for:
Straight-line rental income accrual 2 255 3 385
Distributable earnings for the period/year for the
Group from the transaction 52 171 293 376
Net number of ordinary shares in issue (000) 341 828 341 828
Distributable earnings per share for the Group from the transaction (cents) 15.26 85.83
1 Other operating expenses include asset management fees of €527k (R9.7 million) (June 2022) and €2 108k
(R39.3 million) (June 2023) which will ultimately be paid to Hyprop.
2 Incremental Group costs for the 3 months ending 30 June 2022 include the transaction costs of R12.4 million.
3 Euro amounts have been converted to Rands at an exchange rate of R18.34/Euro (June 2022) and
R18.65/Euro (June 2023) (based on independent forecast rates).
Assumptions that are under the control of the Hyprop board relating to the target group
1. Rental revenue
Rental revenue has been forecast for each of the Hystead acquisition properties based on existing and new
individual leases, contractual rental indexations and step rental adjustments, and assumptions of future
occupancy rates, tenant retentions, market rentals and the impact of new competitors in certain of the
markets.
a) Categorisation of rental revenue
Forecast rental revenue comprises 77% and 78% of the total forecast revenue for the FY22 Forecast
period and the FY23 Forecast period, respectively, and non-rental revenue comprises 23% and 22%
of the total forecast revenue for the FY22 Forecast period and the FY23 Forecast period, respectively.
The forecast rental revenue is categorised as contracted, near-contracted or uncontracted, as follows:
FY22 Forecast FY23 Forecast
period period
(%) (%)
Contracted 85.7 77.2
Near-contracted 2.7 8.3
Uncontracted 11.6 14.5
TOTAL 100 100
b) Lease expiries, reletting, vacancies and tenant incentives
Specific assumptions have been made in respect of each lease over the Forecast periods, for each of
the Hystead acquisition properties.
– Reletting and lease incentives for expiring leases during the Forecast periods have been
assumed on a property-by-property basis, taking into consideration existing lease agreements
and draft terms being negotiated with potential tenants (including existing tenants);
– an assessment of the impact of the Covid-19 pandemic on tenant renewal and lease periods;
and
– available information on the relevant tenancy, such as current passing rent, market rent,
property, locality, and discussions with tenants and potential tenants.
Vacancies have been forecast on a property-by-property basis. Current vacant space has been assumed
to remain vacant unless it is deemed probable that such space will be let, in which case the rental is
forecast at prevailing market rates.
3. Salient dates
Set out below are the salient dates and times in relation to the transaction:
2022
Record date to receive the circular and notice of general meeting Friday, 11 February
Circular and notice of general meeting issued Tuesday, 22 February
Announcement relating to the issue of the circular and notice of general meeting Tuesday, 22 February
released on SENS
Last day to trade on the JSE in order to be eligible to participate in and vote at the Tuesday, 15 March
general meeting
Voting record date Friday, 18 March
Last day to lodge forms of proxy for the general meeting with the transfer Wednesday, 23 March
secretaries, by 10:00 am (forms of proxy not lodged with the transfer secretaries in
time may be handed to the chairperson of the general meeting immediately before
the commencement thereof)
General meeting held at 10:00 am Friday, 25 March
Results of the general meeting released on SENS Friday, 25 March
Notes:
1. All dates and times in this announcement are local dates and times in South Africa and are subject to
change. Any changes will be announced on SENS.
2. Hyprop shareholders should note that as transactions in shares are settled in the electronic settlement system
used by Strate, settlement of trades takes place three business days after such trades. Therefore, Hyprop
shareholders who acquire Hyprop shares after close of trade on Tuesday, 15 March 2022 will not be eligible
to vote at the general meeting.
3. No dematerialisation and/or rematerialisation of Hyprop shares may take place between Wednesday,
16 March 2022 and Friday, 18 March 2022, both days inclusive.
4. Withdrawal of cautionary announcement
Following the release of this announcement, the cautionary announcement released on SENS on 28 January 2022
is withdrawn and caution is no longer required to be exercised by shareholders when dealing in Hyprop securities.
22 February 2022
Corporate advisor and sponsor
Java Capital
Date: 22-02-2022 04:40:00
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