Hyprop to focus on blue-chip centres
Expanding and refurbishing shopping centres to retain their status, positive trading conditions at Canal Walk, Hyde Park, Clearwater and The Glen
Retail-focused property company Hyprop Investments, which yesterday posted a 7,3% rise in distributions to 383c for the year ended December, this year plans to focus on expanding and refurbishing its shopping centres so they retain their status as blue-chip assets.
Hyprop, the fourth-largest listed property fund in SA with total assets of R20,2bn, benefited from positive trading conditions at its large shopping centres — Canal Walk in Cape Town, and Hyde Park, Clearwater Mall and The Mall of Rosebank and The Glen in Johannesburg.
Like-for-like growth from its shopping centres in revenue and distributable earnings was 8% and 7,4% respectively. Its flagship shopping centres, Canal Walk and The Glen, performed particularly well during the year, with distributable earnings growth of 9% and 10% respectively.
But distributable earnings from hotels reduced due to a net loss at The Grace — prior to sale — as well as an underperformance at the Southern Sun Hyde Park.
CEO Pieter Prinsloo said yesterday the company had no plans to sell the Southern Sun Hyde Park hotel because it was part of the Hyde Park Corner shopping centre.
"Trading in the first two months of this year has been good, but the hotel needs to increase its room rate prices," he said.
The company would continue with its strategy of investing in sizable shopping centres by refurbishing and expanding them.
"We are not restricted to any location and continue to look for opportunities locally and in the rest of Africa, especially where SA’s retailers are currently operating or expanding," he said. The aim was to grow the asset base through acquisitions or developments.
The planned redevelopment of The Mall of Rosebank has progressed further with the commencement of demolition on the Rosebank Gardens site.
Mr Prinsloo said the redevelopment of The Mall of Rosebank would start once town-planning approval had been received and letting requirements met. Construction is expected to start this year.
Hyprop would also spend R100m expanding the niche Willowbridge centre in Cape Town and another R100m reconfiguring the Canal Walk centre.
Mr Prinsloo said the company would also continue with the disposal of noncore assets and focus on large shopping centres. But Hyprop was not in a rush to sell its 34% stake in Sycom , its 2% in Acucap , or its 11,8% in Vunani.
"We will, of course, over time look at alternative investments, but for now there is no urgency to exit these investments in these companies. We would in the long term like to increase our gearing level from 26% to about 40% as we also look for alternative debt funding."
Alternative Real Estate Capital Management fund manager Maurice Shapiro said Hyprop, as a premium shopping centre-focused fund, had the best-quality assets in the listed property space.
"Recent corresponding period distribution growth of 10,4% and a long record of distribution growth demonstrate the robust and secure nature of income from such a premium-quality portfolio," he said.