Retail income accelerates growth at Hyprop Investments

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Hyprop said the redevelopment of Rosebank Mall reached final completion at the end of September 2014‚ with the successful opening of Woolworths. The centre recorded good trading results during the holiday period. Hyprop said the redevelopment of Rosebank Mall reached final completion at the end of September 2014‚ with the successful opening of Woolworths. The centre recorded good trading results during the holiday period.

SA’s third largest listed property fund, Hyprop Investments says its buoyant retail property portfolio has boosted its distribution to unitholders to 262.7c a unit for the six months to December, a 13.7% increase on the 231c distribution for the corresponding period last year.

The company reported the increase on Monday, and Hyprop CEO Pieter Prinsloo attributed the surge in distributions to revenue and distributable earnings from its investment properties.

Revenue collected excluding Somerset Mall, which was acquired on October 1 2013, increased by 11.1% from R1.17 billion to R1.3 billion.

Prinsloo says this increase was positively marked by the completion of Rosebank Mall’s redevelopment project in September 2014 “with the mall subsequently posting good trading results in the holiday period.” 

Vacancies in the group’s retail portfolio increased marginally to 1.4% from 1.2% in June 2014, mostly due to an increase in vacancies at the value centres.

Demand for retail space in the shopping malls remains strong, with the retail portfolio constituting 91% of the total portfolio by rentable area.

Office vacancies fell to 6.6% from 13.8% in June 2014.

Smaller refurbishment projects at Hyde Park, Canal Walk, Willowbridge and CapeGate were completed during the period totalling R54,8 million. The extensions of the Woolworths’ stores at Canal Walk and Somerset Mall, including additional parking, has commenced at a combined cost of R112 million and an average forward yield of 8.3%.

Hyprop’s African strategy was also progressing, with the successful opening of West Hills Mall in Accra, Ghana.

Following the restructure of African Land from 1 July 2014, Hyprop’s investments in sub-Saharan Africa amount to R2 billion and consist of Accra Mall and West Hill Mall in Ghana and Manda Hill in Zambia. The 13 400m² Achimoto Centre also located in Accra, Ghana is on track for opening in October 2015.

The total cost-to-income ratio for the fund reduced to 34,9%, in part due to timing differences and the deconsolidation of fund management costs relating to African Land, following its restructure.

Net borrowings dropped slightly to R6,9 billion from R7,1 billion, also as a result of the African Land restructure and a reduced shareholding in Manda Hill, Zambia.

The total portfolio value increased 2,7% to R27,1 billion from R26,4 billion in June 2014.

In response to load-shedding, Hyprop will be installing additional back-up generators at some of its shopping centres to ensure uninterrupted trading.

Stanlib listed property Funds head Keillen Ndlovu says these are great results and above market expectations.

"It's a company that we like and that we have called as one of our top picks over the last couple of years. It continues to deliver and we like its dominant shopping centres and the expansion to the rest of the continent," he said.

Old Mutual Investment Group portfolio manager Evan Robins said Hyprop remained a core holding for many property investors despite its price.

"Hyprop is expensive but it offers focused exposure to some of the best malls in metropolitan SA. This provides defensive income," he said.

Hyprop’s share price recently breached R100 for the first time in its history. The share closed at R106.82, 2.92% higher on Monday.


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