Shopping centre REIT Hyprop has released results for the six months to December 2021. You know it’s been a tough time for a company when the first two bullets of the announcement are related to the balance sheet.
Since June 2021, Hyprop has reduced borrowings by around R1 billion. It held on to R876 million in equity via the 2021 dividend reinvestment plan, a clever way for a REIT to hang on to cash.
If you read further, you’ll see why all the focus has been on the balance sheet. The loan-to-value ratio was at a dangerously high 45.8%. It has since been reduced to 41.5%.
In case you haven’t noticed or don’t get out much, the shopping centres are busy again. I’m not surprised to see a 21% growth in like-for-like distributable income vs. the comparable period. Importantly, tenant turnover and trading density in the South African portfolio has reached pre-Covid levels.
The group is busy with a rework of the portfolio in Europe. The Delta City property in Serbia was disposed of and Hyprop is in the process of acquiring the four remaining Hystead assets for EUR193 million, subject to shareholder approval.
Assuming this goes ahead, Eastern Europe will represent around a third of Hyprop’s investment portfolio.
Net asset value (NAV) per share has decreased to R58.97, so yesterday’s closing price of R32.08 is a substantial discount of 45.6% to the NAV.
The share price fell 3% in response to this announcement and is up just 12% in the past year, so Hyprop hasn’t experienced the significant recovery that some other property counters have achieved.
