Retail-focused listed property loan stock company Hyprop Investments delivered the highest distribution growth in the listed property sector so far this year, announcing a 16,6% increase in distribution growth for the year to December yesterday.

Hyprop said the increase to 190c a unit was also the highest the company had achieved.

MD Pieter Prinsloo attributed the performance to "rental escalations", strict expense control and a declines in vacancies to 2,7%, compared with 3,7% in December 2004.

Prinsloo said the growth was also boosted by distributions received from Hyprop's interest in SA Retail Properties, a R4,1m profit from the sale of units in Prima Property Trust and Freestone Property Holdings, and a reduction in the interest rate margin.

The value of Hyprop's fixed property portfolio rose R1,4bn during the year to R5,2bn. The valuation gain, with Hyprop's 45% interest in SA Retail and its holding in Freestone, has seen total assets grow 63% to R6,2bn.

Angelique de Rauville, MD of Investec Listed Property Investments, described the results as "excellent". She said: "From a distributable earnings point of view, they are the highest we've seen this year."

The substantial write-up in net asset value implied the company was trading at about a 15% premium to net asset value.

But De Rauville said that because investing in listed property was preferable to investment in physical property, and Hyprop was arguably one of the best-quality portfolios in the listed sector, this premium was "more or less justifiable particularly as the valuations are still considered to be fairly conservative".

First South Securities property analyst Leon Allison said Hyprop had recorded the highest growth of the larger property funds so far this year and that this growth was in line with his forecast.

"It may have been marginally ahead of consensus," said Allison.

"It's another good result from Hyprop. Over the past few years Hyprop has tended to surprise on the upside."

Allison said that the retail property market continued to do well, and that Hyprop's flagship shopping centre, Canal Walk in Cape Town, was still "performing strongly".

Prinsloo said the retail portfolio's performance had exceeded expectations, with R4,6bn being spent by 50-million visitors to Hyprop's centres last year. "In total over two years, shoppers' spend increased 42%."

Canal Walk's net income rose 22%, while its Gauteng centre, The Glen, increased net income by 30%. Hyde Park shopping centre and Rosebank Mall delivered increases of 12% and 13% respectively.

Business Day
 
Publisher: I-Net Bridge
Source: I-Net Bridge