R3 billion earmarked for Sub-Saharan Africa shopping centers

Hyprop Investments will invest R3 billion (approx. $272m) in Sub-Saharan Africa excluding South Africa through Atterbury Africa and African Land says CEO Pieter Prinsloo.

Seen as the next growth point, Sub-Saharan Africa is in for a commercial transformation, with Hyprop Investments, SA’s third-biggest property company by market value, planing to invest over R3 billion (approx. $272m) developing and acquiring shopping centers.

Briefing SA Commercial Prop News on their half year financial results announced today, the JSE-listed retail-focused property group will invest in the continent excluding South Africa market through Atterbury Africa and African Land.

Hyprop has allocated R1 billion to Atterbury Africa, in which it holds 37.5 percent, and R2 billion to African Land, a subsidiary of the company. The investment will be spread over the next five years.

“Hyprop will continue to invest in large, quality shopping centers, improve the tenant quality across the portfolio and dispose of non-core assets,” Hyprop Investments CEO Pieter Prinsloo said.

“These African investments are already contributing to distributable earnings”, says Prinsloo referring to the R2,5 million and R3,8 million received from Atterbury Africa and African Land, respectively.

The real-estate investor owns 12 shopping centers among assets of R25 billion. Amid a slowing economy in South Africa, Hyprop is seeking growth on the continent, targeting fast-growing economies such as Ghana, Nigeria and Kenya.

Hyprop currently owns assets, including malls and land, valued at $240 million in Ghana and Zambia.

Hyprop today posted 9,5% rise in distributions for the six months ended December 2013 to 231c per unit, and had significantly "bulked up" its asset base.

During the trading period, its portfolio value grew from R22,5 billion to R25 billion, primarily due to developments, the acquisition of African Land and a fair value adjustment of R658 million.

Giving an analysis on the results, Stanlib Head of Listed Property Funds Keillen Ndlovu points out that the distribution growth of 9.5% surprised us on the upside. "We were looking for about 7.5%," he said.

"Hyprop is our preferred pick for metropolitan retail shopping centres in the listed property space. It has dominant shopping centres that are likely to fare better in a slowing consumer environment and also in an environment where the number of shopping centres is increasing across South Africa," Ndlovu said.

Grindrod Asset Management’s chief investment officer Ian Anderson said the results highlight the quality and defensive nature of Hyprop’s predominantly super and large regional shopping centre portfolio.

"The results continued a trend seen in the listed property sector so far this year of distribution growth rates exceeding market expectations. However, this trend has gone largely unnoticed by investors who continue to sell the stocks aggressively in anticipation of higher official interest rates," Anderson said.