Our opinion on the current state of HYP

Dec 1, 2023

Hyprop (HYP) is a leading property real estate investment trust (REIT) that specialises in high-quality shopping malls in South Africa and some interests in Eastern Europe and Africa to the North. It owns some of South Africa's best-known shopping malls like Rosebank, Canal Walk, Hyde Park, and Clearwater. It has been impacted to some extent by the fall-off in consumer spending through lower trading densities. This share is currently trading at close to half of its net asset value (NAV) of R63.39 - which in our view makes it a good buy. The new CEO, Morne Wilken, is intent on building roof-top gardens and offering shared workspaces to lure customers back to its shopping malls. In its results for the year to 30th June 2023 the company reported an 18% increase in distributable income per share and a loan-to-value (LTV) of 36,3%. The company said, "Tenant turnover increased by 12.8% and 15.9% in SA and EE, respectively - Retail vacancies maintained at very low levels of 1.2% in SA and 0.3% in EE - Trading densities grew by 11.8% in SA and 16.9% in EE". In a pre-close update on 30th November 2023 the company reported that in the 4 months to 31st October 2023 the vacancy rate was 1,4% and foot count was up 6,8%. The company said, "At Somerset Mall, the new Checkers Fresh X opened in November 2023 and Pick n Pay simultaneously completed the revamp of its store to a Pick n Pay Compact Hypermarket. "Cinema Connect", a new compact food offering to support the Ster Kinekor reconfiguration project experienced some delays and will launch during Q3 of 2024". Technically, the share found support at 2562c and looks like good value. We see it as a buying opportunity.