Hyprop delivers strong first half results to December 2013

Posted On Friday, 21 February 2014 10:18 Published by
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Continuing its trend of sustainable distribution growth, Hyprop Investments Limited today announced interim distribution of 231 cents per unit for the six months to December 2013, up 9,5% on the corresponding period in 2012. 

 Pieter Prinsloo

Operating performance

CEO Pieter Prinsloo says the portfolio's resilience was driven by the continued strong performance at Hyprop's shopping malls. Distributable earnings from regional and super-regional malls(excluding Somerset Mall)was up 9,6% benefitting in part from extensions at Canal Walk and The Glen. The property cost-to-income ratio improved to 33,1% from 34,4% due to timing delays in operating cost expenditure.

Ongoing demand for space at Hyprop's shopping malls remains strong with vacancies of less than 1%. Occupancy levelsin the total portfolio increased to 98,2% (June2013: 97,3%),reducing retail vacancies to 1,2%. Office vacancies saw a slight increase from 8,1% to 8,2%. "In line with our strategy to maximise opportunities in the portfolio, extensions were completed to Edgars and other stores at The Glen and Canal Walk, on time and within budget."

Property portfolio

The total portfolio value grew from R22,5 billion to R25 billion, primarily due to developments, the acquisition of African Land and a fair value adjustment of R658 million. Excluding Somerset Mall, the value of investment property increased by 4,9%, driven by income growth,supported by strong demand for quality shopping centres.

Developments

Prinsloo says he is pleased with the progress of the Rosebank Mall redevelopment, which remains on track for completion in September 2014, with lease commitments at 98% and 30 new stores already open.

Sub-Saharan Africa (excluding South Africa)

During the period Hyprop made further strides in its investment strategy in the rest of Africa with the acquisition of 87% in African Land for R768 million gaining exposure to Manda Hill in Lusaka, Zambia.

In line with Hyprop's strategy to become a dominant African shopping centre REIT, Hyprop intends to invest up to R3 billionin sub-Saharan Africa (excluding South Africa) over the next five years, up from the original R750 million. "These African investments are already contributingtodistributable earnings", says Prinsloo referring to the R2,5 million and R3,8 millionreceived from Atterbury Africa and African Land, respectively.

Borrowings

Net borrowings increased to R6,7 billion, mainly due to the acquisition of African Land, capital expenditure on the Rosebank Mall redevelopment and developments in Atterbury Africa. Hyprop's debt capital markets issuances stand at R2,1 billion, or 30% of total borrowings, following the issuance of a R450 million six-year bond in November 2013.

Energy saving initiatives

As part of its Green Design and Environmental Strategy, Hyprop commenced with an R11,5 million electricity reduction project. "Once completed, the projectis estimated to save Hyprop around R9,7 millionin electricity cost annually," says Prinsloo.

Prospects

Looking ahead Prinsloo saysthe challenging economic environment is expected to decreaseconsumer spend. However, he is confident that Hyprop with quality assets, strongcontractual lease escalations and soundbalance sheetis well-positioned to withstand any negative impact."

Hyprop has improved its distribution growth forecast to between 8,5% and 10,5% for the full year to June 2014 primarily due to the anticipated benefit from African Land for the rest of the financial year and strong net income growth from the existing portfolio.

Combined units in Hyprop closed yesterday at R73.79.

HIGHLIGHTS

  • Distribution up 9,5% to 231cpu
  • Total property assets up to R25 billion
  • Acquired Manda Hill in Zambia (87% of African Land)
  • Somerset Mall included from 1 October 2013
  • Rosebank Mall redevelopment remains on track
Last modified on Friday, 21 February 2014 11:54

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