The owner of Hyde Park Corner and Canal Walk has sold one of its smaller malls, for R1.12 billion in a bid to strengthen its balance sheet by selling non-core assets.
Hyprop Investments announced on Monday that it has successfully concluded agreements to dispose of Atterbury Value Mart, the only remaining "value" shopping centres in its portfolio. The company said the centre, located in Pretoria, attracted a price tag that represented 4.6% discount to its current market valuation.
When Hyprop announced in September 2020 that it had received offers for two of its South African assets, analysts expected that the company probably put some of its best assets forward – like Rosebank Mall or Hyde Park Corner – as malls in good locations were likely to catch buyers' attention better in the current market. They also expected Hyprop to sell its assets at a premium.
Notwithstanding these expectations, it turned out that the Atterbury Value Mart was one of the properties Hyprop was speaking about.
While it is a "value" centre – often classified as smaller shopping centres who predominantly have essential services tenants – the centre has over 48 000 square metres of retail rentable area. It has a much bigger retail rentable area than Hyde Park Corner which has over the years converted over 10 000 square metres of its 38 000 square metres to office space.
Also contrary to market expectations that the properties could be snatched up by other listed property companies or private equity firms, Hyprop said Atterbury Value Mart was bought by three private parties who will each acquire a one-third undivided share in the property.
Hyprop CEO Morné Wilken said he was pleased with the outcome. "The team has made a lot of progress implementing the revised strategy in the last two years, and I must commend them for concluding the agreements in a challenging environment."
Wilken added that the conclusion of this transaction will reduce Hyprop’s see-through loan-to-value (LTV) ratio by 1.9%, to 39.5%. This LTV ratio sat at 41.4% in 30 June 2020.
The LTV ratios are used to gauge debt levels of listed property companies. The market was getting uncomfortable with the rise of these ratios beyond 40% as it is generally comfortable with debt levels below 40%.