PRETORIA – Listed specialist retail property fund Hyprop has terminated plans to separately list UK-based Hystead, the company housing its European investments.
Pieter Prinsloo, chief executive of Hyprop, said on Friday that the decision to terminate the planned listing was taken because of the relatively weak capital market conditions in South Africa and based on feedback from possible investors.
Hyprop was considering the possible inward listing of Hystead separately on the JSE.
“Hystead will be held in an unlisted format for the foreseeable future. Hystead will seek further acquisition opportunities for quality assets in the region at acceptable yields,” Prinsloo said.
Hyprop owns a 60 percent stake in Hystead, which owns a portfolio valued at €740 million (R12.6 billion), with Hyprop’s share valued at €444.4m at end-June this year.
Prinsloo said in March this year that the rationale for the listing of Hystead was to position it for future growth, without relying on Hyprop’s capital.
He added then that Hyprop would be unable to provide future funding to Hystead without it increasing its loan to value significantly and would probably be looking to raise €150m and €200m through the listing, with Hystead potentially listed within the next six months.
Despite the tough domestic economic conditions, Hyprop on Friday reported an 8.8 percent growth in total dividend a share to 756.5c in the year to June from 695.1c in the previous year.
Total distributable earnings grew by 10.5 percent to R1.9bn from R1.7bn, but the rate of growth was lower than the 13.2 percent achieved in the previous year.
Prinsloo attributed the growth largely to income from investments in South-eastern Europe, particularly the new acquisitions in Skopje, Macedonia, Sofia, Bulgaria and the two malls in Zagreb in Croatia.
He said the inclusion of distributable earnings from Ikeja City Mall in Lagos in Nigeria, which were excluded in the prior year because of constraints in the availability of US dollars, also contributed to growth for the year.
Prinsloo said Hyprop’s international investments contributed 14 percent of the fund’s distributable earnings compared to 11.3 percent in the previous year.
Prinsloo said the overall steady performance of the South African portfolio reflected the underlying centres’ defensiveness, with distributable earnings in the second half of the year increasing by 6 percent following the re-tenanting of the vacated Stuttafords stores and upgrade and extension work at The Glen and Rosebank Mall.
He said certain malls continued to record good trading density, such as CapeGate and Clearwater Mall, but trading density growth for the portfolio reduced to 0.5 percent for the year from 1.4 percent as declining consumer spend began to impact.
However, Prinsloo remains confident in the quality of the local retail portfolio, supported by positive trends, such as declining vacancies to 1.9 percent from 2.4 percent last year despite the challenging retail landscape.
Total new leases and renewals to the value of R1.9bn were signed in the year at an average rental escalation of 7.7 percent which was on a par with the previous financial year.