Retail-focused REIT, Hyprop Investments Limited, has recorded positive progress in its key strategic priorities during the first four months of 2021, including taking steps to strengthen its balance sheet.
The company reported a R358 million raise through an accelerated bookbuild in May in its operational update period between January 2021 to end-April 2021 with more than R1 billion in proceeds from the sale of Atterbury Value Mart which is expected to transfer before July 2021. Hyprop’s loan-to-value (LTV) ratio is expected to improve to 35.8% by year-end from 38.8% as at the 31st of December 2020.
“The group’s key priorities are repositioning the South African portfolio, increasing the dominance of the properties in the South-Eastern European portfolio, pursuing the non-tangible asset strategy, strengthening the balance sheet and preserving cash” comments Hyprop CEO, Morne Wilken.
“We are encouraged by the positive signs of improvement of the trading conditions of some for our South African tenants, although we are still cautious about the outlook as Covid-19 infection rates are increasing and the impact of a third wave is uncertain”.
“The roll-out of vaccines in Europe is progressing well and we are optimistic about further relaxation of restrictions, and in a recovery of footfall. There is an expectation that herd immunity in Europe will be reached through vaccinations by the end of October 2021.”
In South Africa, the group’s vacancy rate across its well-positioned malls has improved to 2.6% at end-April from 3% at end-December. Turnover and trading density have recovered relative to 2020, but growth in foot count remains muted.
Some of the highlights in the South African portfolio include the opening of iconic brand stores, such as Superga, Fabiani, Wellness Warehouse and MRP Sport at Somerset Mall, which remains fully let. Rosebank Mall more than halved its vacancies and the first storage facility in the Hyprop portfolio as well as the first SOKO District will open in July. Hyde Park Corner has attracted new tenants and concepts, such as The Finish Line, which offers a range of athleisure brands and Swiss-engineered performance running shoes, ON. The mall will also welcome KōL, a Japanese restaurant that will offer curated contemporary Japanese cuisine and flexible co-working space.
“Consumer behaviour continues to evolve, and we will continue to reposition our centres to navigate through these challenges,” says Wilken.
In Eastern Europe, strict lockdown measures imposed by most governments in the first quarter of 2021 to combat rising Covid-19 rates had a significant impact on trading in most of Hystead’s malls. Overall, vacancies remain below 1% and cash collections are being monitored closely. Management took the opportunity presented by lockdowns to accelerate the completion of capital projects, prior to re-opening the malls. Refurbishment of Skopje City Mall has progressed well, and the food court at the Mall Sofia is now complete.
In the African portfolio, vacancies have remained relatively unchanged, despite continued subdued trading. Ikeja Mall in Nigeria is fully occupied, and continues to be highly cash-generative, but shortages of US dollars make it difficult for retailers to import stock and for mall owners to repatriate dividends. While Ghana has made good progress in rolling out vaccines, there are still some lockdown restrictions in place. However, trading density in Cedi was up 18.5% (+16% in US dollars) in the first four months of 2021 compared with the same period in 2020.
“While the operating environment remains challenging and many uncertainties remain around the speed of halting the spread of infections, we are pleased to note early signs of stronger consumer spending in many of our malls”.
“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 Eastern Europe” he concludes.