JSE-listed Hyprop Investments’ revised strategy, implemented during the financial year ended June 30 under a new executive team, enabled the company to grow distributable income from its South African and Eastern European portfolio, lower its vacancies and establish a strong liquidity position.
Hyprop has interests in a R51-billion portfolio of shopping centres in South Africa, Eastern Europe and sub-Saharan Africa (excluding South Africa).
A 6.5% growth in distributable income from the South African portfolio was achieved despite the challenging economic climate.
Growth in distributable income from the Eastern European portfolio was 13.5%.
Hyprop recorded very low vacancies of 0.8% in the South African retail portfolio and less than 0.5% in the Eastern European portfolio.
The company made progress in reducing its exposure to sub-Saharan Africa (excluding South Africa). Investments in this region were impaired by R1.46-billion during the financial year based on anticipated sales proceeds.
The company achieved a strong liquidity position and refinanced R8.5-billion of debt during the year.
There was a decrease in distributions per share of 1.5%.
Hyprop declared a final dividend of 359.34c a share for the six months ended June 30, taking the total dividend for the year to 744.9c a share, compared with the 756.5c a share declared for the previous financial year.
This dividend is based on cash earnings from the group’s operating portfolios.
PROSPECTS
In line with Hyprop’s revised strategic plan, it has set a number of key priorities for the next 18 months.
Firstly, it plans to reposition its South African portfolio, in the vein of increasing trading densities, increasing non-gross lettable area revenue and identifying alternative uses to create value.
The group will dispose of the remainder of its sub-Saharan African portfolio, while preserving value in the interim.
It is also aiming to improve the dominance of the Eastern European portfolio, through extensions to properties, asset management initiatives, and leveraging South African expertise and know-how.
Hyprop will finalise and implement the strategy for nontangible assets as a new focus area; and improve stakeholder communication, both internally and externally.
The board believes the new strategy and key priorities will create a more defensive balance sheet and a base for sustainable long-term growth.
Therefore, it expects that, following the reduction in distributable income of 10% to 13% in the 2020 financial year, it will achieve growth in distributable income in the 2021 financial year and beyond.