JSE-listed real estate investment trust (Reit) Hyprop’s interim results demonstrate progress in implementing its new strategy, with the trading density of its South African portfolio having increased by 0.6% for the six months ended December 31 and by 1.4% over the past 12 months.

The trading density of its Eastern European portfolio also increased by an average of 3% over the six months to December 31.

CEO Morné Wilken on Friday noted that Hyprop had adopted a multifaceted approach and completed a full market study and nodal analysis on its portfolio.

“The profiles and footprints of our tenants are evolving and customers no longer visit malls to purely buy and transact. Our malls are morphing into community spaces that offer a wider range of social experiences and amenities.

“Hyprop also launched a detailed feasibility study on its new technology-based retail concept that will allow tenants to source and rent space on a flexible basis, thereby enhancing the company’s nontangible asset focus,” he said.

Hyprop reduced its Edcon exposure by 18%, from 66 781 m² in December 2018 to 54 569 m² by February 2020, in line with its strategy.

The introduction of the new Checkers FreshX stores at The Glen, which opened in November 2019, and Rosebank Mall, which will open in December, is expected to enhance customer experience and choice at those malls.

The exposure to Edcon will reduce by a further 4 400 m² as Checkers will take up the space currently occupied by Edgars in Rosebank Mall.

Hyprop also acquired a standalone office, 17 Baker street in Rosebank, owing to its strategic location adjacent to the Rosebank Mall, and in line with its strategy to own and manage mixed-use precincts underpinned by dominant retail centres in key economic nodes.

South African retail vacancies increased from 0.8% as at June 30, 2019, to 1.6% as at December 31.

Wilken indicated that despite rent reversions, a reality in the current economic environment, Hyprop malls have proved to be resilient. Fifty per cent of the total portfolio has been re-let/renewed in the current cycle of reversions and the company has retained 98% of its tenants.

Hyprop’s focus on enhancing the dominance of its malls in Eastern Europe through asset management initiatives, securing new tenants, rightsizing tenants and extending the malls where possible was also noted as progressing well.

The Reit is optimistic that the company will restore its investment grade credit rating over time. Its current loan to value ratio is 34.2%, with an interest cover level at 3.8 times. Seventy-eight per cent of the company’s borrowing costs are hedged.

Distributable income a share was reported in line with guidance given for the year ended June 30, which remains unchanged.

In terms of future sustainability of the business, Hyprop is installing solar at six malls and back-up generators at two malls in South Africa.