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Hyprop grows its Eastern Europe footprint but faces pressure back home


Hyprop Investments (JSE:HYP), the owner of blue chip malls such as Johannesburg’s Rosebank Mall, Hyde Park Corner and Canal Walk in Cape Town, is actively expanding its Eastern European property business.

UK-based Hystead, which is co-owned by Hyprop and PDI Investment, announced recently the €156m acquisition by its subsidiary Balkan Retail of all the shares in Bulgarian company AP Retail, which owns The Mall shopping centre in Sofia.

This is Hystead’s fourth southeastern European acquisition, growing its portfolio to a gross asset value of €460m.

Hyprop CEO Pieter Prinsloo said the acquisition meant that about 10% of the assets were in eastern Europe.

"This acquisition is Hystead’s first entry into an EU country, which will enhance the quality and profile of the Hystead fund. 

Our ultimate intention is to dual list Hystead and we believe this acquisition will add substantial critical mass to our portfolio.

"The Mall is the dominant shopping centre in Sofia and is regarded as one of the best centres in Bulgaria. It has 52,000m² of gross lettable area, with about 200 tenants," said Prinsloo.

A shopping centre team of 23 would remain in place to retain critical skills.

Peter Clark at Investec Asset Management said Hyprop’s acquisitions could be assessed only after a while.

"South African investors have not yet experienced a bear market in eastern Europe.

"The size of these markets, such as Sofia, make them extremely illiquid when the cycle turns, and so investments have to be viewed with a very long-term mind-set," he said.

Hyprop Investments plans to list its eastern European assets separately in the near future, following its first acquisition in Bulgaria.

Meanwhile back home, the shopping centre owner is also facing pressure following the tenant failure of department store chain Stuttafords at three of its malls and the possible closure of some of Edcon’s retail outlets.

Hyprop said last month that it expected to take six months to find new tenants for the 11,000m² of space left empty after the closure of Stuttafords stores.

The Edcon group, which is the largest occupier of retail space in SA could also close some of its CNA, Edgars, Jet, Jet Mart and other stores within the next year.

The closures would affect dividend payouts to shareholders for the financial year to June 2018, the extent of which was yet be determined.

In March, it reported that it had grown its dividend 16.6% in the six months to December 2016 compared with the six months to December a year before.