JSE-listed Hyprop Investments on June 30 entered into a sale of rental enterprise agreement with MEP SPV 3, a wholly-owned subsidiary of Millennium Equity Partners, to dispose of a 50% undivided share of the shopping centre Hyde Park Corner, together with the rental enterprise conducted thereon, for R805-million.

Hyprop has also concluded an agreement which provides for the option to dispose of the remaining 50% of the property.

Millennium is a property private equity fund, the general partner of which is beneficially owned by Stanger Enterprises, TF Holdings and Nisela Private Equity, none of whom are related parties of Hyprop.

Hyprop is a retail-focused real estate investment trust that owns and manages retail centres in mixed-use precincts in key economic nodes within South Africa and Eastern Europe.

The transaction is consistent with the company’s strategy to allocate more capital to the Western Cape and Eastern Europe and focus on regional malls rather than mid-sized malls.

The proceeds will be allocated to reducing debt in the short term and for asset management initiatives, organic growth opportunities, further solar PV projects and new investments within Hyprop’s existing operations.

The initial consideration will be paid to the company in cash on the date of registration of transfer of the 50% undivided share in the property into the name of the purchaser, following the fulfilment or waiver of the conditions precedent to the transaction.

Hyprop will have the right to terminate the sale agreement if the transfer date has not occurred by November 30.

Following the implementation of the transaction, the buyer and Hyprop will become co-owners of the rental enterprise with effect from the transfer date.

Accordingly, the parties have concluded a co-ownership agreement to govern this relationship.

The property is internally asset managed by Hyprop and the property management function is about to be outsourced to JHI.

The buyer will acquire the 50% undivided share in the rental enterprise on the basis that Hyprop will continue to provide asset management services for as long as it is co-owner of the property.

Accordingly, it has entered into an asset management agreement with Hyprop to provide asset management services in respect of its interest in the undivided share of the rental enterprise to be acquired.

The co-ownership agreement provides for a put option in favour of Hyprop and a call option in favour of the purchaser which, if either is exercised, could result in the purchaser acquiring the remaining 50% undivided interest in the property and the rental enterprise for an amount equal to the final consideration.

These options must be exercised by the relevant party by notice in writing at any time during the period from August 31, 2027, to November 30, 2027.

The value of the net assets and the profits attributable to the net assets of 100% of the rental enterprise are R1.6-billion and R465-million, respectively, according to Hyprop’s unaudited interim results for the six months ended December 31, 2024.