JSE-listed specialist shopping centre real estate investment trust (Reit) Hyprop on Friday reported solid growth in distributions of 8.3% for the six months to December 31, which was driven by a stable performance from South African shopping centres and a strengthening South-Eastern European portfolio.

At a presentation of the Reit's results, Hyprop CEO Pieter Prinsloo said acquisitions in South-Eastern Europe concluded in the six months ended December 31, 2016, proved successful.

Hyprop declared a dividend of 376.3c a share for the period, compared with 347.3c for the prior comparable period.

Prinsloo further added that each of Hyprop's three core geographic portfolios contributed to the Reit's ongoing growth in distributable income.

"South African shopping centres achieved positive trading results in a tough market, recent acquisitions in South-Eastern Europe boosted consistently strong trading in the portfolio and the inclusion of Ikeja Mall, in Nigeria, also made a small difference in the period."

Retail vacancies in the South African portfolio dropped significantly, mainly due to the re-letting of a significant part of the three Stuttafords stores, despite a weaker retail environment, he added.

Excluding the Stuttafords vacancies and construction work, growth in distributable income from South Africa was 5.2%.  Actual distributable income growth was 2.1%.

Prinsloo pointed out that the benefits will be felt in the next six months, owing to most of the new lettings having only been income-producing from November 2017.

Construction work relating to the ongoing developments and extensions negatively impacted on certain malls' trading performances in the period, Prinsloo added.

However, Canal Walk is now benefitting from the successful opening of two new flagship stores in November 2017 in the reconstructed La Piazza area, and a new 4 600 m² H&M in the former Stuttafords store.

Prinsloo further noted that extensions at The Glen and Rosebank Mall are set to open from May 2018, with the full development and expansion programme estimated to total R290-million.

"Any short-term dilution will translate into an improved quality retail offering and sustainability in the medium to long term."

Meanwhile, he noted that the R20-million to be spent in the Western Cape is critical to increase independent water supply to Hyprop's centres there.

"The year-on-year reduction in water use at our Western Cape malls currently sits around 30%, which confirms we are on the right track."

Meanwhile, economic growth prospects in Nigeria and Ghana have improved and the company has seen a general increase in trading densities in Ghana, said Prinsloo.

In addition, in South-Eastern Europe, Hyprop continued to reap the extensive benefit of well-performing assets including recent acquisitions.

"All centres in the portfolio improved trading and maintained nearly full occupancy in the period.  Demand for space remains strong, while distributions benefitted from the inclusion of the Skopje City Mall in Macedonia and The Mall in Sofia in Bulgaria."

Looking ahead, Prinsloo said the promising retail environment in the region should continue to support growth.  

Prinsloo also welcomed the more positive sentiment and outlook in South Africa, which he said should lead to improved consumer confidence in the second half of the current financial year. He cautioned, however, that it would take time to translate into a turnaround in the economy.

Hyprop is forecasting growth of between 8% and 10% in dividends for the full year to June 30.