Still struggling to exit its poor-performing malls in the rest of Africa, JSE-listed retail property giant, Hyprop, now faces further headwinds closer to home.
The owner of well-known shopping centres like Canal Walk in Cape Town and Joburg’s Rosebank Mall, saw its South African property portfolio being devalued by R1.1 billion during its half-year to 31 December 2019.
Hyprop posted one of its worst sets of interim results after markets closed around 5:30pm on Thursday, with distributable income for the period decreasing 13% – from R985 million (HY2018) to R857 million (HY2019). This saw distributable income per share decreasing from 385.6 cents to 335.6 cents.
The decline was in line with the upper end of its guidance for the period. However, the fact that Hyprop decided to reduce its pay-out ratio to 92%, saw the group declare a dividend per share (DPS) of 308.7 cents. This effectively meant that DPS for the period was down by 20%.
Hyprop’s already under-pressure share price plunged around 10% (to R41.05) on the news in early trade at around 9:20am on Friday morning. However, the stock recovered to just over 3% down, at R45 a share, by 3pm. The share is down more than 18% this year.
A predominantly retail-focused Real Estate Investment Trust (Reit), Hyprop currently has interests in R48 billion worth of property assets in South Africa, sub-Saharan Africa (excluding South Africa), and Eastern Europe. Its local portfolio market value, as determined by the group’s independent valuers, decreased from R28.6 billion at its previous year-end in June, to R27.6 billion at 31 December 2019.
Hyprop blamed the devaluation on the impact of negative rent reversions on net property income and an increase in the discount rates and exit cap rates used by the property valuers to value certain properties.
The devaluation in its South African portfolio comes as the group is still struggling to deal with the disposal of its remaining poor performing malls in Ghana and Nigeria.
For its last financial year to June 2019, the group suffered a R1.45 billion impairment on its “rest of Africa” assets, which included stakes in the old AttAfrica retail portfolio and a stake in a mall in Nigeria. A few malls within the portfolio have since been sold.