Release Date: September 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hyprop Investments Ltd (JSE:HYP, Financial) successfully implemented the Hystead Liquidity Event, acquiring core assets in Eastern Europe valued at EUR610 million, up from EUR575 million.
- The company reduced its consolidated loan-to-value (LTV) ratio from 52% in June 2020 to 36.4%, indicating improved financial health.
- Tenant turnover increased by 31% across the portfolio, surpassing 2019 levels and reaching ZAR26.9 billion.
- The South African portfolio saw positive rent reversions of 5.8% and maintained low vacancies at 1.8%.
- Hyprop Investments Ltd (JSE:HYP) improved its BEE status from non-compliant to level three over five years, demonstrating commitment to inclusivity.
Negative Points
- Group distributable income decreased by 3.1% to ZAR1.4 billion, and distributable income per share (DIPS) fell by 8.6% to 370 cents.
- The acquisition of Table Bay Mall, although strategic, had a negative impact on yields and funding rates.
- The company faced significant challenges including the Ukraine war, Israel-Hamas conflict, and hyperinflation in Ghana and Nigeria.
- Interest costs increased due to higher borrowings and interest rates, impacting overall financial performance.
- The Sub-Saharan Africa portfolio experienced difficult trading conditions, with high inflation and currency devaluation affecting performance.
Q & A Highlights
Q: What are you seeing on the ground regarding the positive rental reversions and the health of the consumer in South Africa?
A: We are still seeing positive growth specifically in our portfolio, with growth in tenant turnover across all our malls.
Q: Can you provide more detail on the 10% exposure to monthly leases in the lease expiry profile for South Africa?
A: The 10% monthly leases are mainly due to ongoing negotiations with tenants. The bulk of these relate to Game and Edgars at Somerset Mall, where we are right-sizing Edgars and relocating Game. These have been subsequently signed, so the percentage will reduce.
Q: How did Table Bay Mall contribute to net rents and distributable income in FY24?
A: Table Bay Mall contributed ZAR30 million in net operating income for the three months it was included. The weighted cost of debt for South Africa is forecasted at roughly 9.7%, and for Eastern Europe, it is around 4.8% to 4.9%.
Q: Can you quantify the impact of the absence of load shedding in the last six months?
A: The direct cost of load shedding reduced from ZAR103 million in 2023 to ZAR57 million in 2024, reflecting savings on diesel and generator maintenance.
Q: What is your targeted LTV in Eastern Europe, and under what scenario would you consider increasing the payout ratio?
A: We aim to reduce the LTV in Eastern Europe to around 40%. We will stick with the existing dividend policy to continue reducing debt in the region.
Q: Does the ZAR15 million credit from reduced council tax billing relate to previous years, or can the FY24 operating cost run rate be used as a base for future forecasts?
A: Some of the ZAR15 million credit relates to historic periods, but it is net of the portion that must be passed back to tenants. It is not a significant number for future run rates.
Q: Can you provide further details on the one asset you'd like to dispose of in South Africa?
A: We cannot disclose the specific asset at this time, but we are in discussions. No binding agreements have been made yet.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
