Hyprop’s plan to reduce exposure to the rest of Africa (beyond South Africa) is gaining momentum with it having finalised the sale of its only asset in Zambia – the 42 000m² Manda Hill Shopping Centre in Lusaka – to Growthpoint Investec African Properties (GIAP).
This is the second African property to be sold by JSE-listed shopping centre specialist Hyprop to the unlisted GIAP joint venture in just over a month, as it looks to cut losses in the poor-performing ‘rest of Africa’ portfolio.
Neither Hyprop nor GIAP would reveal the value of the sale, which was announced on Monday.
Hyprop said in a statement that the disposal was in line with what was communicated to market in March this year at the group’s interim results announcement, where it stated its intention to reduce exposure to sub-Saharan Africa (excluding South Africa) to “focus attention and capital on the SA and Eastern European businesses”.
Hyprop owned the Zambian mall jointly with AttAfrica. Fellow JSE-listed real estate investment trust (Reit) Attacq also has a stake in the AttAfrica portfolio, which has been put up for sale in its entirety. This follows Hyprop reporting an impairment of R1.07 billion on its ‘rest of Africa’ property portfolio, which also includes a stake in Ikeja City Mall in Nigeria.
The remaining assets put up for sale by Hyprop in the region include Accra Mall, West Hills and Kumasi City Mall in Ghana; and, the Ikeja City Mall in Lagos.
The latest sale follows Hyprop confirming in a pre-close briefing on June 28 that it had sold Achimota Retail Centre in Ghana to GIAP. Moneyweb had earlier reported that GIAP was the suitor of assets within the AttAfrica portfolio.
Speaking about the Zambian deal, Morné Wilken, Hyprop’s CEO, said the disposal of Manda Hill Shopping Centre would reduce Hyprop’s US dollar debt and impact positively on the group’s loan-to-value (LTV) ratio.
Asked what its LTV now stands at following the sale of the Achimota and Manda Hill malls, Wilken said: “Hyprop’s LTV, on the basis that Moody’s calculates it, will drop from 43.0% to 41.7%. LTV on the basis that Hyprop calculates it will drop from 34.2% to 32.4%.”
Hyprop has been looking to bring down its debt, following ratings agency Moody’s downgrading the group’s credit score earlier this year.
Wilken said the Manda Hill sale represents “the next step in implementing Hyprop’s strategy of exiting sub-Saharan Africa, repositioning its South African portfolio and retaining dominance in the Hystead portfolio in Eastern Europe through active asset management”.
The sale of South African assets to reduce debt further would only happen if made strategic sense, he said. He added that while there is interest in the remaining four assets for sale in Ghana and Nigeria, Hyprop is yet to conclude transactions on these properties.
Moneyweb understands that GIAP remains one of the main suitors for some of the remaining properties.
GIAP is a joint venture between JSE-listed Growthpoint Properties and Investec Asset Management. The pan-African real estate investment fund has secured capital commitments of more than $212 million from several large institutional and international investors including the World Bank’s International Finance Corporation investment arm.
Thomas Reilly, London-based managing director of GIAP, says the acquisition of Manda Hill marks the fund’s second key acquisition in Africa as it steps up its investment drive.
“Together with the Achimota Retail Centre acquisition in Ghana, GIAP now has a presence in two jurisdictions. Manda Hill is a flagship retail property in Zambia’s capital Lusaka, which we have acquired at an excellent 9% yield,” he adds.
Reilly says that the purchase is also “well-timed” for GIAP as it looks to scale up its investments to 10 properties in four countries in Africa by the end of this year.