Specialised shopping centre fund Hyprop Investments has accelerated its African expansion strategy with a R3-billion boost over the next five years in an effort to become a dominant African shopping centre Real Estate Investment Trust, CEO Pieter Prinsloo said on Friday.

Speaking at the JSE-listed group’s financial results presentation in Rosebank, he outlined ambitions of injecting the significant funds into developments and acquisitions in various sub-Saharan African countries, excluding South Africa.

Hyprop had steadily gained exposure to malls in the rest of Africa through Atterbury Africa, a joint venture with real estate-focused capital growth fund Attacq, and the majority acquisition of African Land Investments in December.

Atterbury Africa has a 47% stake in the Ghana-based, 19 000 m² Accra Mall – the only income-producing property in the portfolio.

The group now planned to pour R1-billion – a rise from an initially committed R750-million – into Atterbury Africa to develop shopping centres in select African countries.

During the six months to December, Hyprop’s investment in Atterbury Africa increased to R579-million, up from the R337-million as at June 2013, owing to capital contributions for the West Hills development, also in Accra, and the acquisition of additional land in Ghana.

Construction on the 27 500 m² West Hills Mall was well-advanced and expected to be completed by October.

Following the acquisition of land rights, the design for a proposed 14 500 m² centre on the Achimota land, in Accra, was finalised and preletting had started, while the acquisition of land rights for the Kumasi land, on which Atterbury Africa planned a 27 800 m² retail centre, had also been concluded.

The portfolio also had development rights for retail and a hotel spanning 27 500 m² under the Waterfalls project, in Kusaka, Zambia.

Prinsloo said further opportunities in other African countries were being sought.

Hyprop, which currently boasted R25-billion in assets under management, including 12 prime shopping centres in South Africa, aimed to inject the remaining R2-billion into African Land to buy existing, high-quality, income-producing shopping centres.

In December, Hyprop bought an 87% stake in African Land, which currently owned the 43 400 m² Manda Hill Shopping Centre, in Lusaka, Zambia, for R768-million. The centre was expected to deliver a yield of 8.1%.

Attacq acquired 12.4% in Manda Hill for R110-million, while its current CEO Kevin Teeroovengadum held the remaining 500 000 shares.

However, in due course, the investment structure would be restructured, resulting in Hyprop owning 50% of African Land and Atterbury Africa the remaining 50%.

Sub-Saharan Africa would likely account for about 10% to 15% of Hyprop’s property portfolio over the next few years.

“The investment strategy into sub-Saharan Africa has been enhanced with the acquisition of African Land,” Prinsloo said.

“Taking into account the anticipated benefit from African Land for the rest of the financial year and strong net-income growth from the existing portfolio, Hyprop expects distribution growth of between 8.5% and 10.5% for the full year to June 2014,” the company said.

This was an upward revision from the guidance provided in June last year of between 6.5% and 8.5%.

FINANCIAL RESULTS
Hyprop on Friday declared a distribution of 231c a share for the six months to December – an increase of 9.5% when compared with the corresponding period in 2012 – on the back of strong performance from the group’s shopping malls.

“Excluding the recently acquired Somerset Mall, distributable earnings from the regional and super-regional malls increased by 9.6%, benefitting, in part, from extensions at Canal Walk and The Glen,” said Prinsloo.

The Canal Walk, Woodlands and Hyde Park shopping centres, as well as Clearwater Mall, in South Africa, delivered the highest net income growth of 11% during the period under review.

The value centres showed muted growth of 3.5%, while distributable earnings from Hyprop’s office portfolio were maintained, the company said.

“Demand from retailers at Hyprop’s regional shopping malls remains strong with vacancies of less than 1%. Retail vacancies across the portfolio improved from 2.1% [in the six months to June 2013] to 1.2% [during the six months under review],” Prinsloo noted.

Office vacancies, however, increased from 8.1% during the second half of last year, to 8.2% in the first half of this year. Overall, the portfolio was 98.2% let as at December 2013, compared with 97.3% as at June.