SOUTH African shopping mall owner Hyprop Investments is making its first foray into Eastern Europe, buying significant stakes in a mall in Serbia and one in Montenegro for about R2bn.
Hyprop acquired a 60% interest in Delta City Belgrade, which it purchased from Delta Real Estate Group, a private Serbian company, and Delta City Podgorica, which it purchased from Hemslade Trading Limited Cyprus and Delta.
The total purchase consideration was €203m (about R3.68bn), of which Hyprop’s effective share would be €122m (R2.21bn). The Homestead Group, associated with South African property investor Louis Norval, a nonexecutive director of Hyprop, acquired the remaining 40% in both malls.
A newly formed UK-based company called Hystead, which will have Hyprop and Homestead as joint venture partners, will effectively own the 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," said Hyprop CEO Pieter Prinsloo.
"These acquisitions may be the first of further acquisitions in Central and Eastern Europe and enhance Hyprop’s shopping centre portfolio in SA 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 €1bn, within five years," said Mr Prinsloo.
He said Hyprop might list the portfolio as a separate Eastern European company.
Hyprop financial director Laurence Cohen 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, Mr Cohen said 100% offshore funding had been raised in euros, supported by guarantees from Hyprop.
Delta City Belgrade is 29,876m² in size and has 122 shops, located in New Belgrade, the most densely populated municipality in Belgrade.
The mall’s catchment area reaches 225,000 people.
Delta City Podgorica offers 23,608m² of retail gross letable area, with 80 shops. The mall is located on the main boulevard in Podgorica, the capital city of Montenegro, with a catchment area of about 210,000 people.