In conversation with
Mr. Pieter Prinsloo
CEO | Hyprop Investments Limited
FDI Spotlight: How would you describe the DNA and the footprint of Hyprop?
Pieter Prinsloo: Hyprop is a specialist shopping centre Real Estate Investment Trust (REIT). We operate a portfolio of shopping centres in major metropolitan areas across South Africa, sub-Saharan Africa and South-Eastern Europe.
As a REIT, we are focused on income and capital growth. Hyprop does not retain any income in the fund; all the revenue generated is paid out to shareholders. The REIT structure is tax efficient, which means that Hyprop does not pay any corporate taxes in South Africa; instead, a tax is paid by our shareholders.
The REIT trust scheme has only been around for a couple of years but has been hugely successful. We had a previous dispensation that was similar in nature but was not as formalised. South Africa’s REIT investment structure is now recognised worldwide, and is in line with internationally recognised best-practice, and accepted by international investors. We currently have a few international fund managers invested in us, mainly due to our transparent and easy to understand structure.
For the readers of The New York Times, what are the advantages of that scheme?
Pieter Prinsloo: We offer shareholders access to income and capital growth through a portfolio of premium shopping centres in a transparent, sustainable investment vehicle. Hyprop’s strategy is to achieve long-term income growth; thereby maximising value creation for our stakeholders. People looking for annuity income would benefit from investing in Hyprop, especially those investors seeking yields on their investments and long-term growth.
Another benefit is that we are a niche specialist shopping centre fund. No matter where in the world we invest, we will only invest in shopping centres and specifically properties of the same type and quality. We do not aim to be the largest property fund, we rather focus on the quality of our assets.
Our shopping centres dominate in terms of average size, which attracts new concept and flagship stores, making our centres the preferred locations for local and international brands.
Our strategy is to own high-quality shopping centres in emerging markets, where such assets can be acquired or developed at attractive yields. At the moment we are in three developing market regions, namely South Africa, sub-Saharan Africa and South-Eastern Europe. We do not invest in developed markets, such as the United Kingdom or the United States.
Tell us about your approach to property management?
Pieter Prinsloo: Our company structure provides a sound foundation for the execution of group strategy, with capable and experienced teams and a hands-on approach enabling us to effectively manage our assets to achieve ongoing income and capital growth.
Discuss your approach to employee development?
Pieter Prinsloo: We take care of our people. We are committed to training our employees and look internally first when filling positions to give current employees access to opportunities. That way our employees are empowered and we can ensure skills are developed, retained and transferred.
Discuss your approach to sustainability?
Sustainability is very important to us. We strive to create sustainable value for our stakeholders by operating our business with tomorrow in mind. Our investment strategy focuses on long-term growth and investment; for example, we still own our original 1988 investment, Hyde Park Corner.
We achieve sustainable income growth through contractual rental escalations. Growth is ensured through tenant mix enhancement, reinvestment, extensions and refurbishments, supported by appropriate rental levels, plus control of tenant arrears and property expenses.
Hyprop proactively accommodates new retail and lifestyle trends to retain our loyal customer base across the portfolio. We continue to improve and invest in our assets: build them up and add value to them.
Retail changes rapidly, despite the fact that we focus on the long term, we still aim to keep up-to-date with the latest trends.
What are the new trends and developments that you are noticing?
Pieter Prinsloo: Changing lifestyles, convenience and technology are the main drivers changing everything. To succeed we look at online shopping and e-commerce and consider how we can integrate these trends into the business.
Hyprop wants shoppers to enjoy their experience when visiting our shopping centres. For this reason, we have introduced entertainment and lifestyle elements like food courts at our malls; we look for ways to improve accessibility and flow (how people can move through the centre), we also focus on tenant mix enhancements to ensure shoppers can access their favourite retailers.
Each shopping centre is unique and in South Africa every space and community are different. What may work for Rosebank Mall, may not necessarily work for Canal Walk. We try to involve the communities in the areas as much as we can. The Rosebank Mall, for example, has an African market which sells South African and African merchandise.
Social media is, of course, a very important trend to look at too, so we frequently communicate with customers on the various platforms. E-Sports is another new trend, with more people enjoying the gaming industry and virtual reality. Canal Walk has embraced this trend and has recently hosted its 3rd gaming tournament this year and installed virtual reality pods around the centre.
With South Africa’s burgeoning middle class and youth, can Hyprop stay current in 10 years?
Pieter Prinsloo: The world changes so quickly, so you cannot even really plan for four years from now let alone ten years from now. Things are continually changing, take Uber as an example, five years ago they did not exist. It is, therefore, difficult to know what to prepare for.
I believe consistency is our key to success. Despite changing trends and times, Hyprop must still offer the same quality of service to our retailers and shoppers. The retailers attract the customers to the malls. We have great South African retailers, we focus on them.
How are you approaching the BBBEE system and do you think there should be any changes made that could benefit what is already in place so that real growth can be seen?
Pieter Prinsloo: BBBEE is one of our top priorities. Transformation is one of our key performance areas that we measure. We still have some work to do, but transformation and education are extremely important to us. We strive to educate and bring people up through the ranks in the company.
The world is finally looking at South Africa and Africa as an investment opportunity of choice. What would be your message of confidence to the international investment community?
Pieter Prinsloo: Despite its political problems, South Africa’s financial systems are world-class. We have had slow economic growth this year, but South Africa remains positive. South Africans are also very positive and determined to make a difference and grow.