Hyprop acquires 60% interest in two South-Eastern European malls
Hyprop Investments Limited (Hyprop), the specialist shopping centre REIT (Real Estate Investment Trust) today announced that it has acquired a 60% interest in Serbian mall,
Delta City Belgrade purchased from Delta Real Estate Group (Delta), a private Serbian company and Montenegrin mall, Delta City Podgorica, purchased from Hemslade Trading Limited Cyprus (Hemslade) and Delta. Homestead Group Holdings Limited (Homestead), a company associated with Louis Norval, a non-executive director of Hyprop, has acquired the remaining 40% in both malls.
The total purchase consideration is €202 750 000, of which Hyprop’s effective share is €121 650 000. Delta City Belgrade has been purchased for €127 750 000, of which €111 942 332 is payable to Delta and €15 807 668 will be used to settle the existing bank loans.
Delta City Podgorica has been acquired for a price consideration of €75 000 000, of which €60 147 681 is payable to Delta and Hemslade and €14 852 319 will be used to settle bank loans.
A newly formed United Kingdom company called Hystead Limited (Hystead) will effectively hold the ownership in both shopping centres. Hyprop has elected to acquire the shopping centres in an offshore joint venture with Homestead as it is of the view that Homestead has significant value to contribute as a result of its knowledge of the area and its access to other potential transactions.
Pieter Prinsloo, Hyprop CEO says that “these acquisitions are an attractive investment which complements our strategy to acquire or develop high quality, income-producing shopping centres in emerging markets”. Prinsloo revealed that “these acquisitions may be the first of further acquisitions in Central and Eastern Europe and enhance Hyprop’s shopping centre portfolio in South Africa and sub-Saharan Africa. Hyprop’s objective is to have partial ownership of a high quality shopping centre portfolio in these regions, with a value of approximately €1 billion, within five years”.
As an income-focused REIT, Hyprop achieves sustainable distribution and capital growth by owning large, quality shopping malls that dominate their catchment areas. Both acquisitions were finalised after a comprehensive due diligence exercise, ensuring that each mall meets Hyprop’s strategic objectives. Laurence Cohen, Hyprop FD said that “both malls will enhance Hyprop’s distributions, as funding rates in Europe are comparatively low and the acquisitions offer a healthy net income return in excess of 8%”. In order to mitigate currency risk, Cohen said that “100% off-shore funding has been raised in Euro, supported by guarantees from Hyprop.”
Delta City Belgrade is a modern and well-established shopping centre with 29 876 m² of GLA and 122 shops and located in New Belgrade, the most densely populated municipality in Belgrade. The mall’s catchment area reaches 225 000 people, many located within walking distance to the centre. “With its high occupancy and footfall, plus its balanced tenant mix, including key retailers H&M and Zara, Delta City Belgrade is an attractive purchase for Hyprop” says Prinsloo.
Delta City Podgorica is a contemporary and dominant shopping centre offering 23 608 m² of retail GLA, with 80 shops including Zara, Guess, Tommy Hilfiger, Bata, Aldo, Gant, and Orsay. The mall is located on the main boulevard in Podgorica, the capital city of Montenegro, with a catchment area of over 210 000 people.
For a period of 12 months, Delta will oversee the management of both malls on behalf of
Hystead, with the existing mall staff continuing their employment with the newly acquired companies. Asset management responsibilities will be performed by Hyprop and Homestead. Over this period Hystead will consider the establishment of a local management office in Belgrade.