The company will sell R450m of five-year notes in a private placement by the end of the week and issue R500m of similar debt next year, CEO Pieter Prinsloo said on Monday.

Hyprop estimates it will sell the securities at less than 150 basis points over the Johannesburg interbank agreed rate (Jibar), or a coupon of about 6.625%. That compares with 6.725% for bonds maturing in March 2018 sold last month by Redefine Properties, the JSE's second-biggest property company.

Hyprop is seeking to take advantage of low interest rates to rebalance its portfolio away from bank loans to bonds as it expands to other markets on the continent and attracts international brands such as Spanish fashion chain Zara to its malls. The company plans to reach a 50-50 split of loans and bonds by 2015 to reduce borrowing costs, Mr Prinsloo said.

About 80% of its R5bn debt is in bank loans charging an average interest rate of 8.4% as of December 31, he said.

"Having a diversified mix of sources of capital is certainly the best way to go forward from a property company's perspective," Ian Anderson, chief investment officer at Durban-based Grindrod Asset Management, said on Monday. "Reducing costs of capital is important. Property companies are capital hungry."

Hyprop, the JSE's third-biggest property company by market value, owns shopping centres including Canal Walk in Cape Town. Its clients include South Africa's largest retailers such as Woolworths Holdings and Truworths International, and the company is in talks with Zara to open outlets, according to Mr Prinsloo.

While Hyprop should have no trouble finding investors, it may have to settle for a more expensive coupon than it hoped for, Marshall Brown, a portfolio manager at Cape Town-based Investec Asset Management, said on Monday. "We see fair value closer to a range of 225 basis points to 240 basis points" above Jibar.

"Sizeable shopping centres give us better returns on investments," Mr Prinsloo said. "They retain their value during economic recession. When there is economic uplift, they tend to give us the best growth as well," he said.

Hyprop is using some of its borrowings to expand on the African continent in partnership with Atterbury group. The two companies are building a $90m shopping mall in Accra, the capital of Ghana, which would be their second complex in the city, Mr Prinsloo said. The company is also considering opportunities in Zambia and Mozambique

"Right now non-banking debt is very good, and therefore they will get extremely competitive prices," said Mr Anderson.