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Retail property shows no signs of slowing down

Posted On Wednesday, 25 February 2004 02:00 Published by
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Hyprop reports 97% increase in turnover

Property Reporter

PROPERTY loan stock heavyweight Hyprop Investments yesterday reported a 7,7% increase in its total distributions to combined unitholders for the year to December 31.

Hyprop attributed the positive results to good performance in the retail property sector and reduced interest rates. It reported that its total distribution for the year was 140c, compared with 130c in 2002.

Hyprop has been on the acquisition trail, acquiring Canal Walk shopping centre in Cape Town, the Rosebank Mall, JHI House and the Grace Hotel and offices in Johannesburg, which resulted in a 97% increase in turnover to R316,7m from R160,7m the previous year.

Its operating income also rocketed 85% to R195,3m from R105,6m.

Hyprop's acquisition of an 80% stake in Canal Walk was probably one of the single biggest property transactions in SA. It has also disposed of eight of its smaller commercial properties to Prima Property Trust for R66,5m, settled by a cash payment of R43,2m and the rest in Prima units.

Hyprop MD Pieter Prinsloo said the company was planning another disposal of smaller commercial or office properties during the year.

It s Hyde Park shopping centre in Johannesburg reported a 9% increase in net income growth. The company said the 1700m² extension to Woolworths and the split-level adjacent parking garage, due to be launched in the first half of the year, would enhance the centre's market position.

The Glen shopping centre, also in Johannesburg, reported a 20% rise in net income. Hyprop said that because of the demand from national and smaller tenants, it was considering the development of 5000m² of unused retail rights. Hyprop would contribute R41m to the proposed R81m cost.

Hyprop's net borrowings amounted to R1,16bn, equating to a 51% debt to open market value ratio. It announced its intention to issue more units this year to reduce the ratio to less than 45%.

Manager of the Standard Bank Property Income Fund Mariette Warner said Hyprop had "excellent retail property", which had "more than compensated for the weak office market".

"What is good for earnings going forward is the extension to Woolworths and additional parking (at Hyde Park). "

Warner said Hyprop would have the best results of the listed property companies with large exposure to retail in the medium term because of expected turnover growth at Canal Walk, which was based on increased market share and residential developments in the vicinity of the shopping centre.

Managing director of listed asset management company Provest Angelique De Rauville said the results "reflect a robust retail market".

"It confirms to us that exposure to the top-performing direct property market, being retail, translates directly to the performance of the listed property company," De Rauville said.

She said the results would translate into an increase in its combined unit price, which would be favourable for Hyprop's plans to issue more combined units. "At current share price they are trading at a 10% yield. If they issue new linked units at anything below 11% or R12,75 this would be earnings enhancing for the company."

The Bottom Line: Page 14

Feb 25 2004 07:30:46:000AM Nick Wilson Business Day 1st Edition

Publisher: Business Day
Source: Business Day
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