JSE-listed Hyprop Investments says it is well positioned to weather the economic headwinds of rising interest rates and inflation thanks to improved trading at its malls and a strong balance sheet.
In a pre-close update on Monday, Hyprop said all of its dominant retail centres in SA and Eastern Europe have continued to enjoy more buoyant trading conditions over the past few months.
“We continue to focus on generating sustainable total returns for shareholders, reducing debt, and allocating capital prudently to diversify risk,” said CEO Morné Wilken.
He said that demand in SA for retail space is high with low vacancies of 1.3%. Many retailers are trading better than before the pandemic.
Foot count rose 7.1% in the four months to end-October over the matching period’s in 2021. On Black Friday, foot traffic was 8% higher than in 2021, while tenant turnover for the four-month period rose 16.9%.
New retailers who recently opened stores include Scape Goat Gallery, George’s Grill House and Versailles Luxury at Hyde Park Corner, Huawei, Cosmic Comics and Freedom of Movement at Clearwater Mall, and at Canal Walk, SA’s first Nike Live store as well as the Western Cape’s first Xiaomi and SPCC outlets.
Outside SA, Hyprop said it is working with Actis, a private equity firm to implement the sale of Ikeja City Mall in Nigeria, and is considering various options, including a partial sale of its investment.
Hyprop owns and manages a portfolio of mixed-use precincts underpinned by dominant retail centres in key economic nodes in SA and Eastern Europe. In SA, its shopping centres include Cape Gate, Canal Walk, Hyde Park Corner, Rosebank Mall, Somerset Mall, The Glen and Woodlands.
Retail vacancies in Eastern Europe were 0.5%. The Black Friday weekend saw foot count rise 19.6% on the Friday and 23.1% on the Saturday compared with the previous year.
Tenants at many of its centres continue to renovate their stores, while six new stores opened at The Mall in Sofia. However, increased costs of electricity, fuel and gas are driving inflation in the region, and this affects tenant occupation costs, said Wilken.
“We are closely monitoring tenant performance on a monthly basis, and have granted temporary rent relief to some tenants in exchange for future rental escalations and longer lease tenure,” he said.
Up to October 31 Hyprop had R2.4bn of unutilised revolving credit facilities and R814m cash with a loan-to-value (LTV) of 38.2%.
Hyprop will release its six-month results for the period ending December 31 in March 2023. At the JSE’s close on Monday, the share price had gained 0.63% to R33.69.
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