Hyprop raises dividend 9.9% as it explores further opportunities in Eastern Europe

Hyprop, the South African retail-focused real estate investment trust (REIT), has announced a sturdy 9.9% increase in its dividend, buoyed by robust earnings growth from its portfolios in South Africa and Eastern Europe.

The dividend of 307.7 cents per share, announced for the financial year ending June 30, 2025, comes on the back of an impressive recovery that saw distributable income per share (DIPS) rise to 378.8 cents, exceeding initial guidance of a mere -1% to 2% growth.

CEO Morné Wilken expressed satisfaction with the financial performance during a recent telephone interview: “We were on track and in line with expectations. We are starting to see the benefits of the last few years of repositioning and improvements in our portfolio starting to bear fruit.”

Notable shopping centres within their South African portfolio include the iconic Rosebank Mall, Table Bay Mall, Canal Walk, and Somerset Mall, each contributing to the company’s strong financial outcome.

For the past year, Hyprop recorded a 7.5% increase in distributable income, totalling R1.51 billion, with Eastern Europe's performance particularly strong. In euros, that distributable income swelled by 24%, while in rands it rose by 20.5%.

Income from South Africa also saw an 11% uptick, supported by the full-year contributions from the Table Bay Mall, showcasing the effectiveness of Hyprop’s strategic enhancements.

In their pursuit of growth, Hyprop earlier in the year made an initial bid to acquire Eastern European property group MAS, although the deal did not come to fruition. Wilken noted that opportunities in Eastern Europe remain a focus, with a commitment to exploring potential further expansions, though details are currently undisclosed.

The company also secured a solid financial position, holding R1.2bn in cash and having access to R2.5bn in undrawn bank facilities by financial year-end. This follows a successful capital raise of R808m in June, initially intended for the MAS acquisition.

“We are pleased with the support shown by shareholders for our recent capital raise. These funds will be used to reduce debt and to fund asset management initiatives, organic growth opportunities, additional solar PV projects, investments in existing operations as well as acquisitions,” said Wilken.

A recent transaction involved the sale of a 50% stake in Hyde Park Corner, Johannesburg, to a subsidiary of Millennium Equity Partners, with a put and call arrangement for the remaining stake to be executed in two years. This deal underscores Hyprop's strategy to refresh its portfolio and optimize operations.

Despite some challenges, including an increase in retail vacancies to 4.2% largely due to the rightsizing of Edgars and Pick n Pay, the company has positioned itself to welcome new brands into its centres. The average monthly foot traffic across Hyprop’s nine South African centres remained stable at 7.2 million, a positive sign for retailers and investors alike. Tenant turnover has also surged, increasing by 5.5%, outpacing the previous year’s growth of 5.1%.

One of the key developments in the South African landscape includes the ongoing expansion of Somerset Mall, where a second phase set to add 5,500 square metres is on schedule for completion.

The project will introduce new attractions including family entertainment options and a food court, projected to début in July 2026. Additionally, new retail offerings featuring brands like JD Sports, Lego, and premium athleisure and luxury names promise to enhance consumer engagement.

Across the group’s Eastern European portfolio, financial performances have also been impressive, with tenants’ turnover rising by 6.6% and a minimal vacancy rate of just 0.1%. Skopje City Mall has made headlines with innovative offerings like a rooftop cinema, capitalizing on market trends to attract consumers and improve foot traffic.

In summary, Hyprop has placed itself firmly on the path of sustainable growth with a keen eye on future opportunities. As it forecasts DIPS growth of 10% to 12% for the upcoming financial year, the company is well-poised to navigate both the local and Eastern European markets with confidence.

Visit:www.businessreport.co.za