Hyprop delivered excellent investment returns to shareholders for the year to 30 June 2015, despite the low GDP growth in South Africa.


Pieter Prinsloo, chief executive officer

In line with our guidance to the market of a 12% to 15% increase in distributable earnings, 2015 earnings came in at the upper end at 543 cents a share.

Operational performance

Underpinning this higher return to shareholders was a solid operating performance from the core shopping centre portfolio. The occupancy rate improved to 98,0% (June 2014: 97,6%), reflecting continued demand for quality retail space. Trading density growth improved to 7,4% (2014: 7,0%), with a significantly stronger performance in the second half of 7,9%. Despite the slightly weaker rent ratio of 7,1% (2014: 6,9%), contractual rental remains very affordable across the portfolio.

Trading overview

Trading overview

Contractual lease escalation, which is the support base for annual distributable income growth, was maintained at 8,2%. Rental growth on new leases and renewals slowed to 7,6% (2014: 8,3%) due to the high vacancy and weak demand for space in the office portfolio. Excluding the office portfolio, rental growth was 8,1%.

Leasing terms

Leasing terms


2015 was a busy period with 576 leases signed in South Africa, representing 176 350m² (22,6% of total portfolio by rentable area). Significant focus is placed on the continuous improvement of the tenant mix, and the high renewal profile gave us the ideal opportunity to replace weaker tenants. The business failures of the African Bank/Ellerines Group and the LooknListen group enabled us to relet this space to much stronger and sought-after tenants. We increased the size of some local national tenants keen to expand their store sizes while capitalising on the interest from international brands seeking to establish their presence in South Africa. We concluded leases with international groups like H&M, River Island, Top Shop and introduced luxury brands in Hyde Park Corner’s new Cortina Court, including Versace, Longchamp and Armani.

Much has been reported in the media on the financial stability of the Edcon Group, which is the largest tenant group in our portfolio. The issues relate mainly to high debt levels in the group and its ability to provide credit to customers. On closer analysis, the performance of most of the group’s stores in our portfolio – in terms of trading density and profitability – ranges from average to good. We have prepared contingency plans and will closely monitor the situation.

The Platinum Group, with brands Jenni Button, Aca Joe, Hilton Weiner, Urban Degree and Vertigo, occupied 19 stores or 2 700m² in our portfolio. This group ran into financial trouble towards the end of the financial year. We have taken legal action to recover unpaid rent and, depending on the outcome of the court process, this group will probably be replaced with new tenants. Most of these stores occupy prime areas and replacing them with new tenants will not be unduly difficult.


After a two-year redevelopment period, Rosebank Mall was successfully relaunched at the end of September 2014, with the opening of the Woolworths store as the final phase. The shopping centre has won a number of design awards and has traded successfully since opening.

Various refurbishment projects were undertaken during the year, including:

Canal Walk   Mr Price relocation and introduction of Forever 21. Woolworths store extended.
Somerset Mall   Refurbishment of food court with new tenants. Extension to the Woolworths store.
Hyde Park   Relocation of Dion Wired and introduction of new luxury brands.
Willowbridge   Relocation of the Dis-Chem store.
CapeGate   Refurbishment of food court with new tenants.

Clearwater Mall’s R37 million upgrade and extension is under way and will house leading global fashion brands H&M, River Island and Top Shop.

For the financial year 2016, the focus will remain on further improvement and refurbishments, with R180 million already planned, while R93 million has been earmarked for equipment replacement. Security for our customers at our shopping centres remains a priority and, in line with our security strategies, additional capital will be spent to ensure we implement up-to-date technology. This cost has been included in the capital committed for 2016.

We continue to pursue a number of masterplan expansion opportunities at some of our shopping centres, but implementation remains subject to planning approvals by local councils and the commitment of key tenants.

Environmental sustainability

Hyprop is committed to implementing sustainable energy-saving initiatives, where possible. A number of projects to improve energy efficiency were completed during the year. To date, these have saved over 14 million kWh with cost savings of some R16 million, through the energy-efficient lighting replacement and solar PV projects.

We successfully installed the second phase of the solar photovoltaic plant at Clearwater Mall in August 2015. The total size of the plant (phases 1 and 2) is 1 500kW at peak, with generating capacity of 2,5GWh per annum.

Given the frequent electricity outages, new generators were installed at Hyde Park Corner for full back-up power. After minor further capital expenditure, all shopping centres in the portfolio will have sufficient back-up power.

Sub-Saharan Africa (excluding SA)

The economic environment in Ghana and Zambia deteriorated in 2015, partly due to falling oil and other commodity prices as well as fiscal and trade deficits. This resulted in depreciating local currencies and rising inflation. Both countries also experienced a severe shortage of electricity, which affected the consumer market. Subsequent to the implementation of an IMF loan package, the Ghanaian Cedi rebounded by 25%.

The performance of the dominant malls like Accra Mall and Manda Hill has remained resilient, despite the negative impact of the economic downturn.

Development properties

Centre name Rentable area
effective cost
Achimota Mall (Accra, Ghana) 14 624   28,1   27 101   Opened in October 2015  
Kumasi City Mall (Kumasi, Ghana) 18 360   28,1   48 658   Under construction, opening April 2017  
Waterfalls Project (Lusaka, Zambia)     9,4   1 031   Land holding  


With Hyprop having a 100% free-float market capitalisation, trading volumes in our shares increased significantly during the period, especially in the last quarter. This followed Hyprop’s inclusion in some of the MSCI emerging market indexes. Rising demand fuelled growth in our share price over the year, resulting in Hyprop significantly outperforming the SAPY index, as shown below.

Share price performance

Share price performance

A further result was foreign shareholding rising to 25% of total shares in issue, as at 30 June 2015.

Top 15 shareholders   %
Government Employees Pension Fund   13.9
Old Mutual   4.9
Vanguard   3.3
Investec   3.1
MMI Holdings Limited   2.8
Investment Solutions   2.6
Eskom Pension and Provident Fund   2.6
Prudential   2.3
BlackRock   2.3
Government of Singapore Investment Corporation   2.2
Sanlam   2.0
Yerranzano Property Investments Limited   2.0
Absa   1.8
Public Investment Corporation   1.7


Our focus on owning quality shopping centres, catering for middle to higher-income consumers, is demonstrating the resilience of our growth strategies.

Against low forecasts for economic growth in South Africa, trading conditions are expected to remain constrained in the new financial year. In line with a proven strategy, Hyprop will maintain its leading position by focusing on the quality of its core portfolio, disposing of non-core assets and maintaining our prudent debt management. Given the maturity of the shopping centre market in South Africa, we will also continue to explore emerging market opportunities to strengthen our solid pipeline.

Against this background, we forecast growth in distributions of around 10% for the financial year ahead.


I thank our board members for their wise counsel and support. Equally, my appreciation goes to our executive team and all our employees for their dedication and hard work, as well as our loyal service providers and tenants for their continued support.

Pieter Prinsloo
Chief executive officer


Registration number: 1987/005284/06
2nd Floor, Cradock Heights, 21 Cradock
Avenue, Rosebank, 2196
PO Box 52509, Saxonwold, 2132
Tel: +27 11 447 0090
Fax: +27 11 447 0092


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