Hyprop only expects distribution growth in 2021 as it battles debt mountain
Hyprop Investments, the owner of malls including Rosebank, Hyde Park Corner and Canal Walk, trimmed its distribution by 1.5% for the year to end-June, largely as a result of a poor performance in sub-Saharan Africa.
Hyprop, which plans to divest from the rest of Africa within the next 18 months, said distributable earnings from its SA malls rose 6.5% and 13.5% from its Eastern European assets. The group only expects to return to distribution growth in 2021 as it focuses on divestments in order to pay off its R7bn in debt.
The group’s performance to end-June was offset by a 174% slump in distributable earnings in the rest of Africa amid a depreciating rand and interest payments for Hyprop Mauritius.
Distributable income decreased 0.1% from R1.9bn in the previous year. Distribution per share decreased 1.5% to 744,9c.
The company said on Wednesday it planned to divest from the rest of Africa within the next 12-18 months, saying while this could weigh on distributions in its 2020 year, it was expecting growth in 2021.
Distributable income per share would slump by between 10% and 13% in 2020, partly as a result of an additional R145m in additional interest payments as it refinances its debt.
Ratings agency Moody’s Investors Service had downgraded Hyprop to junk status in February, citing an increase in debt after a spending spree funded new acquisitions in Eastern Europe.
Hypop said on Thursday it was seeking to return to investment-grade status by December 2020.
Hyprop intends to use the proceeds from the forthcoming sales of its assets, including Ikeja City mall in Nigeria, to reduce its debt.
The group’s net asset value at June 30 2019 was R95.78 a share, equating to a premium of 37.1% to the share price of R69.87 on that date.
The company’s share price slipped 5.66% on Thursday morning to R63.45, having given up 22.13% so far in 2019.