Retail-focused listed property loan stock company Hyprop Investments, which yesterday posted a 7,3% increase in distribution per combined unit to 161c for the six months ended June, said it expected the same increase for the full year.

CEO Mike Rodel said yesterday the group did not expect any change in full-year results in the next six months, which was in line with the projection of a 6%-8% increase in distributions per unit this year.

“Barring a further deterioration in retail market conditions, Hyprop’s distribution for the six months ending December will be between 167c and 171c per combined unit.

“This forecast has not been reviewed or reported on by Hyprop’s auditors,” he said.

Rodel said the single-digit distribution growth was in line with expectations when seen in the context of the economic downturn and was following on five successive years’ strong growth in distributions, averaging 17% between 2004 and last year.

“National retail sales to June show a drop of 6,7%. In contrast, despite construction activity at three of our six centres, retail sales in Hyprop’s portfolio grew 1% in absolute terms,” he said.

Rodel said while this level of growth was not “optimal” for Hyprop, shopper flow into the centres improved in the second quarter, raising prospects.

“With developments at Canal Walk, Hyde Park and The Glen close to completion, and early signs of economic stability, if not recovery, we are confident of better trading conditions in the summer.”

He said the group’s R662m expansion programme was on track for completion by the end of the year and saw new retail space significantly let, which should boost earnings from next year.

Rodel said the group’s retail investments had proven resilient in tough trading conditions and had enabled the portfolio to withstand some of the pressures of the recession and declining national retail sales.

The group’s gearing remained at 12%, although Rodel said it was likely to increase as a result of the group’s expansion programme.

Current net borrowings of R1,16bn equated to a gearing ratio of 12,1%.

Long-term loans of R1,35bn, representing 96% of total debt, had been fixed for periods of between three and five years at an average rate of 9,38%, from 9,54% last year. In addition, Hyprop had R50m in floating debt.

“We have a defensive property portfolio with our net property income increasing 10%. Our expansion work is almost complete,” he said.

The net asset value per combined unit (NAV) at the end of June was R41,14, from R41,56 at the end of December.

Excluding deferred taxation, NAV was R49,19, a premium of 28% to Hyprop’s closing combined unit price of R38,55 on June 30.

Hyprop’s total assets were now R10bn.

The group declared an interim distribution of 16c per combined unit, an increase of 7,3% on the distribution for the comparable period.