Shopping centre income accelerates growth at Hyprop

Posted On Wednesday, 22 August 2007 02:00 Published by
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Blue-chip listed property loan stock company Hyprop Investments on Tuesday reported an 18,2% surge in distributions to 130c for the six months to June.

Pieter PrinslooThe growth was on an 11,7% increase in net income from its shopping centres, which include Canal Walk in Cape Town, Hyde Park, The Glen and The Mall of Rosebank in Johannesburg.

Interest was also received from the disposal of its interest in SA Retail Properties. Hyprop disposed of its 46% stake in listed property stock SA Retail earlier this year for R1,13 billion.

The proceeds were used to slash Hyprop's debt to minimal levels. Hyprop's net borrowings are R126 million, or 2% of total assets .

Hyprop has a market capitalisation of R6,3 billion and property assets worth R6,6 billion.

The company is predominantly exposed to regional shopping centres. About 94% of its portfolio consists of retail property, with offices making up the balance.

Hyprop MD Pieter Prinsloo said the property portfolio's vacancy level was virtually non existent at 0,5%.

He said Hyprop had also not seen any effect of the tighter interest rate environment on spending at any of its shopping centres.

"We operate mainly in the middle- to upper-income market and I think that segment of the economy has been less affected by interest rate hikes," he said.

Hyprop is also expecting solid distribution growth for the full financial year. "We are expecting growth of between 14% and 17% for the financial year ending December," said Prinsloo.

Hyprop has delivered distribution growth of more than 10% each year for the past 10 years.

Prinsloo said Hyprop was always on the lookout for new property acquisitions, but it was difficult to find quality properties.

Hyprop's new Stoneridge Centre in Modderfontein is under construction and due for completion in October next year. On completion, Hyprop will own 90% of the shopping centre, which is valued at R544 million.

Kundayi Munzara, a property analyst at Investec Listed Property Investments, said Hyprop had delivered top quartile distribution growth, with average distribution growth from the listed property sector forecast at about 13% for this year.

Munzara said that the "strong distribution growth" was slightly above Investec Listed Property Investments' forecast due to higher than expected interest income. He said R52 million of income was earned from cash held in a call account at just less than 9,5%.

"Overall contractual rental modestly grew at 4 % as a result of the sale of five office buildings to Hyprop's black economic empowerment partner Vunani Property Income Fund," said Munzara.

He said the retail assets showed strong growth of 11,7% mainly as a result of lower cost-to-income ratios, rentals being renewed at higher levels and lower vacancies.

Keillen Ndlovu, listed property analyst at Stanlib, said Hyprop's management had been "proactive in sweating the portfolio as seen with the very high yielding developments lined up".

Last modified on Wednesday, 23 April 2014 15:36
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