Hyprop Investments CEO Pieter Prinsloo. Picture: FINANCIAL MAIL
Hyprop Investments CEO Pieter Prinsloo. Picture: FINANCIAL MAIL

Hyprop Investments has continued its offshore push by acquiring an interest in two shopping centres in Croatia.

Hyprop and its partner PDI Investment Holdings co-own Hystead, which announced it had acquired a 90% interest in City Centre one West and City Centre one East in the capital Zagreb.

The purchase consideration net of €154.4m asset-based finance is €129.1m, of which Hyprop’s effective share is approximately €77.5m, or R1.12bn. The transaction is conditional on approval by the Croatian competition authority and is expected to close at the end of March 2018.

Hyprop’s south-eastern Europe strategy is to acquire dominant shopping centres through Hystead. Hyprop has a 60% interest in Hystead and PDI, a company associated with Louis Norval, a non-executive director of Hyprop, holds the remaining 40%. After the completion of this transaction Hystead will own six shopping centres in five countries, with a gross asset value exceeding €740m.

Hyprop wants to secure a separate listing of Hystead on the Euro MTF market of the Luxembourg Stock Exchange and on the main board of the JSE within the next six months.

The other 10% would be retained by WKB 3, an Austrian-based company that developed, and has been the property and asset manager of, the two shopping centres, through their operating company CC Real.

Hyprop CEO Pieter Prinsloo said the deal was positive for Hyprop shareholders. "The shopping centres were acquired at a combined property yield of approximately 7%. Asset-based funding with a loan-to-value of 55% has been secured on a five-year term, and a bridge loan facility for the purchase consideration, payable by Hystead, has been secured until the listing occurs."

City Centre one West has potential to add 13,600m² gross leasable area (GLA); City Centre one East has an additional 10,000m² GLA.

Croatia’s economy is supported by a strong tourism sector, rising real wages and improving regional trade, according to Prinsloo. "This is Hystead’s second entry into an EU country, following our acquisition in Bulgaria last year, and further enhances the overall quality and profile of the Hystead portfolio."

After the completion of the transaction Hystead would own six properties in south-Eastern, the other four being Delta City Podgorica in Montenegro; Delta City in Belgrade, Serbia; Skopje City Mall in Macedonia; and The Mall in Sofia, Bulgaria.