Hyprop's first Moody's rating unlocks the door to future growth
Pieter Prinsloo, Hyprop CEO
JSE premier shopping centre fund, Hyprop, is well positioned to access alternative funding markets following today’s rating by Moody’s Investor Services (“Moody’s”) of national scale long-term issuer A3.za and a short-term rating of Prime-2.za.
In summary the ratings indicate that Hyprop is a mid- to upper- grade investment for global institutional investors and support the fund’s strong liquidity position and ability to repay debt. Moody’s classified the fund’s rating outlook as ‘stable’, putting Hyprop on an equal footing with larger domestic property funds.
CEO Pieter Prinsloo says: “This milestone rating will enable Hyprop to enter the debt capital market in the next two months, to seek alternative funding to bank finance and to reduce the overall cost of funding.” At year-end Hyprop’s gearing levels stood at 26,2% with net borrowings of R5,2 billion. The weighted average interest rate is at 8,3% with 70% of debt fixed for an average duration of five years. Moody’s confirms that Hyprop has ‘good headroom’ in its convenants with local banks and has a record of successfully renegotiating bank facilities.
Moody’s expressed confidence that Hyprop’s high quality, well-located properties, low vacancy rate and recurring income position the fund to perform even in the face of a challenging economic environment.
The ratings incorporate relatively strong credit metrics as measured against debt:assets and supported by Hyprop’s conservative approach to development risk.
Hyprop is the fourth South African listed property loan stocks to obtain a Moody’s credit rating and compares favourably to larger peers Growthpoint Properties Limited (Baa3/A2.za stable) and Redefine Properties Limited (A3.za stable).
Prinsloo concludes: “The rating affirms Hyprop’s ability to provide recurring income and distribution growth to unitholders and will provide us with the opportunity to explore a wider range of funding options.”
Hyprop’s portfolio, valued at year-end December 2011 at R20 billion consists mainly of super and large regional shopping centres located in Cape Town and Gauteng.
