Hyprop waivers dividend as liquidity crunch continues

Hyprop SENS statement: 

Condensed consolidated interim results for the six months ended 31 December 2020

Balance sheet strengthened and see-through LTV ratio reduced from 41.4% at 30 June 2020 to 38.8% at 31 December 2020:

  • Reduction of R942m in interest bearing debt, including $117m of US Dollar equity debt
  • All US Dollar equity debt ($289m) settled over the last 18 months
  • Retention of R777m from 2020 distributions, post 31 December 2020

Diluted distributable income of 161 cents per share. Covid-19 impact reduced distributable income by R244 million, equivalent to 83 cents per share

  • R112m in rental discounts granted to tenants
  • R113m reduction in dividends from Hystead
  • R19m reduction in parking income in South Africa

Net operating income (R’000): R408 234 – 2019: R679 116, down 40%

Headline earnings per share (cents): 114.9 cps – 2019: 329.9 cps, down 65%

Distributable income per share (cents): 186.1 cps – 2019: 335.6 cps, down 44%

Net asset value per share (Rand): 74.48 – 2019: 91.07, down 19%

Dividend declaration

Given the ongoing uncertainty related to Covid-19 and Hyprop’s established objectives to reduce debt and strengthen the balance sheet, the Board considers it prudent to defer any decision on the declaration of a dividend to shareholders until publication of Hyprop’s annual results in September 2021.

Outlook and prospects

In the short-term Hyprop will continue to focus on preserving cash and strengthening the balance sheet through the following:

  1. Utilising dividends declared by Hystead to reduce Euro dominated debt;
  2. Disposing of the S-SA assets in line with the exit strategy and applying the net proceeds to settle debt;
  3. Limiting capital expenditure to projects that are already committed and those that are a necessity;
  4. Implementing the disposal of Atterbury Value Mart; and
  5. Recycling assets that do not accord with the long-term strategy.

On a longer-term basis, the Company will continue to reposition the SA portfolio, increase the dominance of the properties in the European portfolio, and pursue the non-tangible asset strategy.

The Hyprop team is committed to creating long-term sustainable value for all stakeholders, having regard to prevailing market conditions and industry risks. We remain focused on our purpose of creating safe environments and opportunities for people to connect and have authentic and meaningful experiences.

A third Covid-19 wave remains a risk, as do the long-term effects of the pandemic on an underperforming local economy. We anticipate further negative rent reversions and increases in costs, particularly administered costs such as municipal and utility charges, at rates exceeding CPI. Consumer spending is expected to remain under pressure and consumer behaviour will continue to evolve. We believe that our strategy and positioning will enable Hyprop to successfully navigate these challenges.

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