Hyprop reports improved interim period

3rd December 2020 By: Tasneem Bulbulia - Creamer Media Reporter

Retail-focused real estate investment trust Hyprop reported in a December 3 pre-close statement ahead of its December 31 interim closed period that most of its key trading metrics in South Africa have improved since it reported its results for the financial year ended June 30.

“We are encouraged by the relaxation of lockdown restrictions in South Africa over the last five months, which is helping to normalise trading. With restaurants and other entertainment tenants able to operate at higher capacity, we expect further improvements in footfall and rental recoveries over the medium term.

"The repositioning of our local malls is progressing well and we are continuing to focus on creating safe environments and spaces where people can connect and form part of a community while staying abreast of changing retail trends,” said Hyprop CEO Morné Wilken.

In the South African portfolio, most of the key trading metrics have improved since the end of June. 

Although some tenants, mainly in the travel, leisure, health and beauty, and entertainment sectors, continue to require rent relief in the short term, most rental relief negotiations have been resolved and cash collection rates are expected to increase going forward, Hyprop said.

It noted strong interest in the company’s malls from tenants wishing to take up space and leasing strategies were in place to address high-risk tenancies.

"A core part of our strategy is the repositioning of the South African portfolio. The Covid-19 pandemic has reaffirmed that people are social beings, which supports our vison of creating safe environments and opportunities for people to connect and have authentic and meaningful experiences. We are mindful of the changes in consumer spending as a result and are continuously in the process of evolving and adapting our centres to address shoppers’ needs,” commented Wilken.

Management is pursuing several projects to assist it to embrace changing retail trends. These include launching high-speed uncapped WiFi connectivity at all nine of the group’s malls in South Africa; piloting a new digital offering, SOKO District, which will allow online retailers to integrate with bricks and mortar; piloting a new residential self-storage facility at Rosebank Mall; and launching a click-park-and-collect service, Pargo.

Various countries have introduced new lockdown restrictions in response to the second wave of Covid-19 infections, with the strictest restrictions in Bulgaria, where malls must close from  November 28  to December 21, with only essential stores allowed to continue operating.

“Negotiations with potential tenants to replace seven Inditex brand stores earmarked for closure are progressing very well. Reserved, part of the LPP group, will open a 1 700 m² shop in August 2021 in Skopje City Mall, Macedonia and the construction of the outside cafeĢ terraces area is ongoing, with the opening planned for the first quarter of 2021. The renovation, relocation and extensions of certain existing tenants are progressing well, while the upgrade of the food court at The Mall, Sofia is 95% complete.”

“Our liquidity remains strong within the group with R1.15-billion of unused revolving credit facilities and R433-million of cash as at November 30. The process of recycling some of our local assets is progressing well and any proceeds realised through this process will be used to further reduce debt,” said Wilken.

Hyprop will publish its results for the six months to December 31 in March 2021.