Director Steps Down as Hyprop Approaches Deal with Ellerine Brothers

Prolonged discussions between Hyprop and the Ellerine family concerning the Reit’s purchase of minority stakes in two of the largest shopping centers in the country seem to be coming to a close, especially after Kevin Ellerine stepped down as a non-executive director.

The official announcement stated that Ellerine, who will celebrate his 59th birthday in October 2025, would resign effective June 1, 2026, “to pursue personal interests” after a 17-year tenure on the board.

It has been widely recognized that Hyprop was negotiating to acquire the 20% stake in Canal Walk and 24.84% of The Glen that it does not currently own from the family entity, Ellerine Brothers, a detail confirmed by Hyprop CEO Morne Wilken in March.

Read: Hyprop divests half of Hyde Park Corner

As a co-owner of these properties, Ellerine was the only non-independent non-executive director. His position on the board’s investment committee could complicate finalizing any deal aimed at achieving complete ownership of both shopping centers.

His involvement could create an inherent conflict of interest, putting him on both sides of the transaction.

Hyprop, along with Ellerine Bros, purchased Canal Walk for R1.2 billion in 2003. This shopping center is among South Africa’s most valuable retail properties and is the largest mall in Cape Town. Hyprop CEO Pieter Prinsloo labeled Canal Walk as a ‘trophy’ asset at that time.

The consortium emerged victorious in a highly competitive bidding process led by Nedcor, aided significantly by the retail expertise of Hyprop non-executive member Wolf Cesman (former CEO of Redefine) and the Ellerine Brothers’ extensive experience in property and retail, spanning over five decades.

The super regional center features a gross lettable area (GLA) of 147,600m², and its acquisition effectively doubled Hyprop’s portfolio, which included only Hyde Park Corner, The Glen, and The Mall of Rosebank before this.

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Wilken has chosen not to disclose the valuation of Canal Walk. However, in light of its significant size and prime location, along with its status as a ‘flagship’ property (which would suggest a tighter cap rate), knowledgeable estimates place its value between R8 billion and R8.5 billion. This implies that the 20% stake held by Ellerine Brothers is valued at around R1.6 billion to R1.7 billion.

In the six-month period from July to December, Canal Walk welcomed 10.2 million visitors, boasting a retail vacancy rate of just 1.4%, one of the lowest nationwide. Recently, several brands have launched stores at the mall, including Hisense, Chanel, Incredible, Curve Gear, JD Sports, Silki, Shift Espresso Bar, Baseus, Refinery Junior, Sea Weeds & Sea Storm, Whitehouse, iStore Pre-owned, Bootlegger, Paul, Home.Tech.Sleep, and Jet. Some of these retailers occupied spaces vacated by the Edgars store, which was downsized from 11,000m² to 5,400m².

Read: Major mall landlord moving from Gauteng to Cape Town

In FY2025, Hyprop reported R485 million in net property income from its 80% stake in Canal Walk, while the income from its 75.16% stake in The Glen (with a total GLA of 78,600m²) amounted to R123 million.

Ellerine also holds a 3.4% interest in Hyprop, valued at R771 million, which he possesses indirectly through off-market derivative transactions including long and short calls (pertaining to 6,872,660 shares) at strike prices of R31.48 and R47.22, respectively.