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Hyprop Investments Limited (JSE:HYP) News - 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 Annual Results for the year ended 30 June 2021 on
15 September 2021, the Company hereby provides an operational update for the four months ended
31 October 2021.
Hyprop remains committed to creating 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 South-Eastern Europe.
Repositioning the South African portfolio, increasing the dominance of the properties in the South-Eastern
European portfolio, pursuing the non-tangible asset strategy, exiting the sub-Saharan Africa (excluding South
Africa) investments, and strengthening the balance sheet remain key priorities for the Group.
BALANCE SHEET AND CAPITAL MANAGEMENT
At the 30 June 2021 year end the Group reported a loan to value ratio ("LTV") of 37.2% and an interest cover
ratio ("ICR") of 3.0 times. Post year end we have implemented the sale of Atterbury Value Mart for
R1.1 billion and Delta City Mall in Belgrade, Serbia ("Belgrade") for EUR115 million. These two transactions
improved the LTV, on a like-for-like basis, to 34.0%. The disposal of Belgrade realised circa EUR33 million
of cash which will be used to reduce a portion of the Euro equity debt.
As previously reported, we have also received a non-binding offer to sell Hystead's entire shareholding in the
entity that owns Delta City Mall in Podgorica, Montenegro, based on a gross property value of EUR95 million.
The sale agreement is currently under negotiation, and we are confident that the transaction will be
implemented during the first quarter of the 2022 calendar year.
R876 million was raised through the FY2021 dividend reinvestment alternative (an uptake of 85%), resulting
in the issue of 34 368 864 new Hyprop shares. The Group's liquidity position remains strong, with R900
million of unutilised revolving credit facilities and R1 586 million of cash on hand at 30 November 2021.
Agreements for the new bank facilities secured post the 30 June 2021 year end are also being finalised.
SOUTH AFRICA PORTFOLIO
Development of our Digital and Omnichannel strategy is progressing well. The first phase of this strategy is
the re-design and re-engineering of our centres' websites (certain of which have been completed), which will
be integrated with our digital mall application ("App"). The App will enhance our ability to communicate with
shoppers and provide a range of unique services, including in-centre directions, targeted advertising, loyalty
programs, gift card purchases, cinema and other booking services as well as hassle-free paid parking
capabilities.
The second phase of our Wi-Fi installation was completed, providing more capacity and faster, free and
uncapped Wi-Fi to users. This will provide us with a better understanding of the movement of our shoppers,
their profiles and behaviour, elements that are crucial in creating a roadmap to reach consumers effectively
and improve the performance of our centres.
A key priority is to ensure we have functional malls by minimising vacancy levels - our retail vacancy was
2.6% at 31 October 2021. Footcount is slowly recovering and tenant turnover for October 2021 was 5.3%
above the 2019 figure.
Total for 4-
Trading Metric Year Jul Aug Sep Oct month
period
Tenant Turnover 2019 1 603 482 1 633 447 1 525 500 1 556 223 6 318 652
(R'000) 2020 1 273 983 1 372 555 1 325 706 1 468 887 5 441 131
2021 1 423 040 1 458 772 1 509 055 1 638 111 6 028 978
Variance % 2021vs 2020 11.7% 6.3% 13.8% 11.5% 10.8%
Variance % 2021 vs 2019 -11.3% -10.7% -1.1% 5.3% -4.6%
Trading Density (R) 2019 2 820 2 866 2 681 2 715 2 771
2020 2 414 2 559 2 371 2 659 2 501
2021 2 567 2 584 2 663 2 905 2 680
Variance % 2021vs 2020 6.3% 1.0% 12.3% 9.3% 7.2%
Variance % 2021 vs 2019 -9.0% -9.8% -0.6% 7.0% -3.3%
Footcount ('000) 2019 7 013 7 129 6 903 6 927 27 972
2020 4 931 5 404 5 560 5 985 21 880
2021 5 371 5 614 5 628 6 267 22 880
Variance % 2021vs 2020 8.9% 3.9% 1.2% 4.7% 4.6%
Variance % 2021 vs 2019 -23.4% -21.3% -18.5% -9.5% -18.2%
Retail Vacancy (%) 2019 0.8% 0.8% 0.8% 1.0% -
2020 2.7% 3.3% 3.6% 3.1% -
2021 3.1% 3.1% 2.7% 2.6% -
Collections (R'000) 2019 295 938 348 247 260 624 307 222 1 212 031
2020 246 783 230 889 273 563 322 473 1 073 708
2021 251 172 224 470 265 946 300 735 1 042 323
Variance % 2021vs 2020 1.8% -2.8% -2.8% -6.7% -2.9%
Variance % 2021 vs 2019 -15.1% -35.5% 2.0% -2.1% -14.0%
Certain prior period amounts have been updated with the most recent information received.
It is encouraging to see an improvement in the trading performance of our Travel and Entertainment, as well
as Luggage and Jewellery tenants, albeit off a very low base. We are currently only providing rental relief to
a number of smaller restaurants and the cinemas. The performance of the cinemas has improved since new
content has become available to them.
PNA has expanded its footprint in our portfolio and opened stores in Clearwater Mall and Woodlands
Boulevard. The new Checkers FreshX in Woodlands Boulevard is trading well, and the Checkers Liquor has
commenced trading. In response to customer demand, Juniper & Jasmine and The Golden Goose Artistry have
opened at the centre.
The expanded and upgraded Checkers FreshX at Capegate opened at the end of November 2021. The project
included the refurbishment of the House and Home store which is also complete. The centre welcomed a new
Volpes store in the previous CNA space, and @Home took up more space. In addition, Pick n Pay has started
planning an upgrade of its store.
Canal Walk celebrated its 21st birthday in October 2021 and is trading well - testimony to how our centres
have evolved over time, remained relevant, and are supported by, and play an important role in, their
communities, even after two decades. New stores that opened post year end include Nicci Boutique,
Aeronautiqua and Birkenstock. A new flagship @Home store has opened, and Zara is scheduled to open during
the first half of 2022.
Somerset Mall added Starbucks and Kingsley Heath to its tenant mix and Totalsports launched its new mega
concept store in September 2021. The ceiling replacement project will be completed in the latter part of
December 2021 and will modernise the aesthetics of the centre.
In Rosebank Mall, demand from tenants for space in the SOKO District remains strong. The centre is trading
well, and we are in the process of relocating certain tenants to improve the flow within the centre. theStorage
is performing well and we plan to roll-out further storage facilities in the portfolio.
KoL, a Japanese restaurant that offers curated contemporary Japanese cuisine and flexible co-working space,
opened in Hyde Park Corner. The upgrade of the Tashas Le Parc restaurant was completed. A new entrance
directly from the parking area is being constructed adjacent to Clicks to improve flow as well as activate this
area of the centre.
DisChem, Game and Woolworths have recently completed their store revamps at The Glen. Tenant demand
remains strong, and the centre continues to perform well.
Sustainability is central to the environments in which we operate, the people we work with and serve, and the
norms, values and rules by which we conduct business. Sustainability initiatives include improving recycling,
reducing waste, managing assets to be more energy and water efficient and reducing carbon emissions in line
with national targets. We have completed our waste audits and are finalising our energy audits. The data
obtained from these audits will aid us in improving the sustainable management of our malls.
Hyprop is committed to five of the Sustainable Development Goals (SDGs) to steer, communicate and report
on our sustainability strategies. The SDGs include:
- End poverty in all its forms everywhere;
- Ensure availability and sustainable management of water and sanitation for all;
- Ensure access to affordable, reliable, sustainable and modern energy for all;
- Ensure sustainable consumption and production patterns; and
- Take urgent action to combat climate change and its impact.
This commitment provides a basis from which to advance our sustainable development through the
investments we make, the solutions we develop, and the business practices we adopt. Our commitment to the
sustainability goals aids us in reducing the negative impact our business might have on the environment, while
enhancing our positive contribution to the global sustainable development agenda.
SOUTH-EASTERN EUROPE
Europe experienced a 4th wave of Covid-19 infections in the fourth quarter of the 2021 calendar year, with
significantly higher rates of infections compared to the first three waves. Several measures and restrictions
were introduced by governments in order to curb the spread of the virus, the most restrictive of which is that
only vaccinated shoppers, or shoppers with a negative antigen test, are allowed to enter our malls, other than
Delta City Mall Podgorica, Montenegro, where these restrictions were lifted a few weeks ago.
The restrictions negatively impacted tenants' operations, however, tenant turnovers from July to October 2021
are better than in the corresponding period in 2020 and in line with 2019, and there was an improvement in
footcount compared to 2020. Hystead will continue to evaluate requests from tenants for rent relief and support
in the context of occupancy cost ratios and the need to retain functional malls.
Evidence of the dominance of our malls is reflected in the low vacancy rate of only 0.2%. The refurbishment
project at Skopje City Mall is progressing well. The food court upgrade and internal pause areas will be
completed by the end of December 2021 and the outside playground and landscaping will be completed by
the end of Q1 2022. The Mall Sofia's food court refurbishment is complete and has improved the mall's
dominance in Sofia. The phased upgrading of the bathrooms will commence in Q1 2022.
The roll-out of vaccines in Europe is progressing and we are optimistic that restrictions will be relaxed and
footfall should recover in Q1 2022.
Total for 4-
Trading Metric Year Jul Aug Sep Oct month
period
Tenant Turnover 2019 51 359 49 492 56 557 56 210 213 618
(€'000) 2020 42 716 41 161 48 852 51 568 184 297
2021 52 531 47 724 50 465 56 676 207 396
Variance % 2021 vs 2020 23.0% 15.9% 3.3% 9.9% 12.5%
Variance % 2021 vs 2019 2.3% -3.6% -10.8% 0.8% -2.9%
Trading Density (€) 2019 242 232 264 263 250
2020 202 194 230 242 217
2021 247 224 233 262 241
Variance % 2021 vs 2020 22.3% 15.5% 1.3% 8.3% 11.1%
Variance % 2021 vs 2019 2.1% -3.5% -11.7% -0.4% -3.6%
Footcount ('000) 2019 3 691 3 593 3 669 3 739 14 692
2020 2 550 2 513 2 861 2 889 10 813
2021 3 052 2 768 2 673 3 043 11 536
Variance % 2021 vs 2020 19.7% 10.2% -6.6% 5.3% 6.7%
Variance % 2021 vs 2019 -17.3% -23.0% -27.2% -18.6% -21.5%
Vacancy (%) 2019 0.5% 0.4% 0.4% 0.3% -
2020 0.8% 0.6% 0.6% 0.5% -
2021 0.3% 0.3% 0.2% 0.2% -
Collections (€'000) 2019 9 283 8 539 8 758 9 190 35 770
2020 8 833 8 194 9 098 8 746 34 871
2021 8 289 7 802 8 699 8 514 33 304
Variance % 2021 vs 2020 -6.2% -4.8% -4.4% -2.6% -4.5%
Variance % 2021 vs 2019 -10.7% -8.6% -0.7% -7.4% -6.9%
Certain prior period amounts have been updated with the most recent information received.
SUB-SAHARAN AFRICA (EXCLUDING SOUTH AFRICA)
There are signs that the Sub-Saharan Africa portfolio is recovering from the Covid-induced challenges. Most
metrics for the period July to October 2021 are tracking well ahead of the same period last year, albeit
marginally behind the pre-Covid figures.
Trading density (excluding Ikeja) increased by 11.3% y-o-y as a result of a strong recovery at Kumasi City
Mall and West Hills Mall in the last few months. Vacancies reduced from 13.2% to 10.6%, driven by a 14%
relative reduction in vacancy in the Ghana malls. Footcount increased by 12.9% y-o-y and encouragingly is
only 5% below the 2019 equivalent. Collections increased by 18.5% y-o-y as a result of management's focus
on this key performance area.
Ikeja City Mall in Nigeria is celebrating its 10-year anniversary this month and remains a prime shopping
destination in Lagos. As has been the case for some time, the centre remains fully let, with a waiting list of
strong prospective tenants. New tenancies include Nike (replacing Vento Furniture and Dune), and Aldo and
Mothercare are currently fitting out their new stores. Restaurants and the cinema are restricted to 33% and
50% of their seating capacities respectively. We have not been able to repatriate any USD from Nigeria, due
to the two-year Dollar liquidity crisis in the country.
In Ghana, cinemas have reopened and are trading at 50% seating capacity, while restaurants are trading at
reduced seating capacity. New tenants in Accra Mall include Levi's, FastForward and Yves Rocher, improving
the tenant mix. New tenants in West Hills Mall include DoK Shoes, Nat-1 (health and beauty), Sonotech
Medical Diagnotics Centre and Jays Auto Spa Carwash. At Kumasi City Mall, Hubtel Limited is a new tenant
and Compu Ghana, an electronics store, opened a second shop.
Fin Total for 4 -
Performance measure Year Jul Aug Sept Oct month period
Turnover (GHC"000) 2019 41 014 46 261 43 040 37 565 167 881
2020 35 152 38 310 40 351 39 761 153 574
2021 42 815 48 511 44 055 45 398 180 779
Variance % 2021 vs 2020 21.8% 26.6% 9.2% 14.2% 17.7%
Variance % 2021 vs 2019 4.4% 4.9% 2.4% 20.9% 7.7%
Turnover (US'000) 2019 7 309 8 497 7 840 6 825 30 471
2020 6 019 6 573 6 910 6 786 26 288
2021 7 170 7 864 7 955 7 382 30 371
Variance % 2021 vs 2020 19.1% 19.6% 15.1% 8.8% 15.5%
Variance % 2021 vs 2019 -1.9% -7.5% 1.5% 8.2% -0.3%
Trading Density GHC 2019 962 1 070 1 025 895 988
2020 970 1 048 1 129 1 068 1 054
2021 1 198 1 246 1 121 1 216 1 195
Variance % 2021 vs 2020 23.5% 18.9% -0.8% 13.9% 13.4%
Variance % 2021 vs 2019 24.4% 16.5% 9.3% 35.9% 20.9%
Trading Density USD 2019 172 196 187 163 179
2020 166 180 193 182 180
2021 201 202 202 198 201
Variance % 2021 vs 2020 20.8% 12.3% 4.6% 8.5% 11.3%
Variance % 2021 vs 2019 16.9% 2.8% 8.4% 21.6% 11.9%
Footcount (Ikeja incl.) ('000) 2019 2 223 2 517 2 030 1 978 8 749
2020 1 882 1 987 1 697 1 797 7 363
2021 2 059 2 142 1 945 2 169 8 315
Variance % 2021 vs 2020 9.4% 7.8% 14.6% 20.7% 12.9%
Variance % 2021 vs 2019 -7.4% -14.9% -4.2% 9.7% -5.0%
Vacancy (Ikeja incl.) (%) 2019 10.9% 9.7% 10.0% 9.1%
2020 13.8% 13.7% 13.5% 13.2%
2021 11.2% 11.1% 10.8% 10.6%
Collections (Ikeja incl.) 2019 3 611 3 322 3 006 3 279 13 218
($'000) 2020 2 638 2 653 2 589 2 567 10 448
2021 3 308 2 764 3 225 3 083 12 380
Variance % 2021 vs 2020 25.4% 4.2% 24.6% 20.1% 18.5%
Variance % 2021 vs 2019 -8.4% -16.8% 7.3% -6.0% -6.3%
Certain prior period amounts have been updated with the most recent information received.
Hyprop will continue to pursue the exit strategy for its sub-Saharan Africa assets while driving value creation
through active asset and property management initiatives. Implementation of the sale of Ikeja City Mall is
delayed due to the USD liquidity crisis in Nigeria, however, we are making progress towards disposing the
remaining three Ghanaian assets.
IN CLOSING
The emergence of the new variant of Covid-19 will impact the economies and trading conditions in most
jurisdictions in which the Group operates. We are confident that the Group's strategy and key priorities remain
relevant, even in a prolonged Covid-19 environment, and will continue to focus on the following:
1. Completing negotiations and implementing the Hystead liquidity event;
2. Strengthening the balance sheet by:
- Reducing the Euro equity debt;
- Exiting sub-Saharan Africa (Excluding South Africa);
- Completing the disposal of Delta City Podgorica; and
- Recycling assets that do not accord with the Group's long-term strategy.
3. Repositioning the SA portfolio for sustainable growth;
4. Increasing the dominance of the properties in the Eastern European portfolio; and
5. Pursuing the non-tangible asset strategy.
Hyprop's interim results for the six months ended 31 December 2021 are scheduled to be released in March
2022.
Hyprop will hold a virtual presentation at 14:00 this afternoon to discuss this operational update. Please contact
Lizelle du Toit at lizelle@hyprop.co.za should you wish to join the presentation. A recording of the
presentation will be available on Hyprop's website thereafter.
6 December 2021
Sponsor
Java Capital
Date: 06-12-2021 08:00:00
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