South African REIT seeks to exit six sub-Saharan malls

South African real estate investment trust (REIT) Hyprop Investments and its partners Attacq and Atterbury Group are seeking a buyer for the six malls they own in sub-Saharan Africa.

Hyprop has an interest in four Ghanian malls (Accra, West Hills, and Achimota in the capital, as well as Kumasi City), in addition to Ikeja City in Lagos and Manda Hill in Lusaka – a total gross leasable area of almost 148,000m². It has written down the value of its investment in these malls by just over 20% (from ZAR5 billion to ZAR3.9 billion – USD344 million to USD268 million).

“Trading conditions in Nigeria, Ghana and Zambia remain difficult, with low economic growth, weakening currencies and political instability. Challenges for tenants include logistical constraints in importing stock and maintaining stock levels and increases in effective occupancy costs as a result of currency devaluations. Landlords face a shortage of high quality retailers following the withdrawal of a number of South African retailers from these markets, leading to growing vacancy levels,” Hyprop noted in its interim results for the second half of 2018.

“Getting African commercial real estate to work in a South Africa-listed fund is very difficult. There are cash flow issues which don’t work when you have to meet shareholders’ demands and pay out income on a regular basis,” chief investment officer Wilhelm Nauta told South African newspaper Business Day.

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