Sector stocks down between 1% and 4% amid murmurs the retailer may shut as many as 40 underperforming corporate stores.
It took just 13 words about Pick n Pay at the end of Hyprop’s trading statement for the first six months of the year and the wholly unexpected move by the retail-focused real estate investment trust to withhold an interim dividend to wake the market up to just how big the risks around Pick n Pay potentially are.
The news sent Reits lower on the day, with Hyprop dropping almost 7% before it recovered to close down 4%. Other Reits with a large retail focus ended down between 1% and 3%.This is not necessarily about Pick n Pay practically collapsing, as was the case with Edcon – there is likely far too much institutional support for that to happen. Rather, the supermarket group may well play hardball with landlords and demand rental concessions.
On 30 June last year, Hyprop disclosed that Pick n Pay comprised 7.5% of Hyprop’s gross lettable area in South Africa. With a total GLA of 658 698m², that equates to practically 50 000m² at its malls. The various listed Reits are inconsistent in disclosing their largest tenants . Some publish their largest tenants by GLA and others by “contractual rent” or gross monthly rent . ADVERTISEMENT CONTINUE READING BELOW Usefully, Redefine discloses both. Pick n Pay’s stores comprise 6.9% of GLA across Redefine’s retail portfolio – around 80 000m². On a rental basis, this is ‘just’ 4.9% – around 70% of the proportion of space occupied.
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