JSE-listed real estate investment trust Hyprop's current consolidated loan-to-value (LTV) is about 40%, down from a historic 47%, the company said in a pre-close update on June 29.
This is owing to several interventions, including the completion of the disposal of the Delta City Mall in Podgorica, Montenegro. The disposal resulted in proceeds of €70-million, which, with other debt repayments, helped to reduce Hyprop’s euro-denominated equity debt to €110-million from €373-million.
The company's in-country euro debt was reduced to €285-million from €365-million.
Hyprop manages retail centres in mixed-use precincts in key economic nodes in South Africa, Eastern Europe and sub-Saharan Africa.
“We intend to continue reducing our euro equity debt, recycling assets that do not fit our long-term strategy and securing new growth opportunities. We are making progress on the exit of our sub-Saharan African centres and continue to manage these assets effectively while busy with this process,” Hyprop CEO Morné Wilken said.
The group had undertaken an in-depth analysis of all environmental, social and governance factors on its South African business and would extend this to its Eastern Europe portfolio, which had helped in formulating a sustainability framework.
"Hyprop is fulfilling its responsibility to address some of the world’s priority challenges by creating spaces and connecting people, partnering for climate resilience, and ensuring it pursues an inclusive value chain," the company said.
Meanwhile, Hyprop made good progress with the repositioning of its South African retail portfolio for sustainable growth, with an increase in its tenant turnover of 16% in the last five months, compared with 2021, while foot count across the portfolio was 8.6% higher.
Retail vacancies are down to 1.4% at the end of May, which is the lowest level since the start of the Covid-19 pandemic.
"The group is also pleased to report a remarkable improvement in the trading performance of its entertainment tenants," the company said.
Hyprop has taken full control of the remaining four centres in the Eastern Europe portfolio, consisting of City Centre One East and City Centre One West both in Zagreb, Croatia; The Mall in Sofia, Bulgaria; and Skopje City Mall in Skopje, North Macedonia.
In Eastern Europe, vacancies are a low 0.8%, which compares well with 1.3% two years prior. The group successfully completed the two-year refurbishment project at Skopje City Mall and the four centres’ trading performance is back to pre-Covid levels after all the Covid-19 restrictions were lifted.
In the five months to the end of May, tenant turnover from Eastern Europe was 15.4% higher than in the same period in 2021 and foot count was 11.7% better.
Wilken said trading in the Eastern European centres has not been directly impacted by the Russia/Ukraine war, but higher electricity and fuel prices may affect retail spending and tenant occupancy costs. Some tenants are cautious about expansions at this time.
Meanwhile, during the first few months of the year, Hyprop has attracted a number of exciting new tenants to its properties in South Africa and Eastern Europe.
Additionally, at Canal Walk in Cape Town, the first Zara and Ted Baker stores in the Hyprop portfolio have now opened, as well as two new concept stores, including Woolworths’ Quick Service Restaurant, NOW NOW and Retail Box.
At Rosebank Mall, the tenant mix was strengthened with the opening of an iStore for new products complementing its pre-owned store and a TechMarkit.
Further, Skopje City Mall opened new Intimissimi, N Fashion and Amanti Pasta Bar outlets, while The Mall in Sofia secured Ikigai, which is a new restaurant, Salad Box, Next Kids, 1001 Pantofki, Al Amar perfumes and AC&Co as new tenants.
Hyprop is continuing to pursue an exit from its sub-Saharan assets, while driving value creation through active asset management. Most of the Covid-19 restrictions in Nigeria and Ghana have been lifted, allowing restaurants and cinemas to operate at full capacity.
Turnover in Ghanaian cedi was up 7.4% in the four months to end-April, compared with the same period in 2021, but, owing to the depreciation of the cedi, it was down 12.1% in dollar terms. By the end of April, foot count from both the Nigerian and Ghanaian assets for the four months was 0.7% lower than a year before.