Hyprop’s strategy of investing in shopping centres that dominate catchment areas has seen the real estate investment trust declare a dividend of 297.8c a share for the six months ended December 31 – up 13.4% from the comparative period.
“We maintained robust growth in all key indicators,” highlighted Hyprop CEO Pieter Prinsloo, adding that distributable earnings for the period benefited from Rosebank Mall’s positive growth, following its redevelopment. He also attributed the group’s positive results to additional income from the new sub-Saharan African investments as well as exchange-rate gains of R8.1-million, owing to the weakened rand.
The group had acquired Ikeja City Mall, in Lagos, and opened Achimota Mall, in Accra, during the period.
Total revenue and distributable earnings from the group’s South African investment property increased by 11.9% and 9.7%, respectively, also beneﬁting from the inclusion of income from Rosebank Mall for the full period.
Like-for-like revenue and distributable earnings from investment property, excluding Rosebank Mall, increased by 10.3% and 7.7%, respectively.
“Demand for retail space in our shopping malls is as strong as ever, as reflected in our improved vacancy percentage of 0.9% from 1.3% in June 2015, as a result of new lettings at Somerset Mall and Willowbridge,” commented Prinsloo.
He noted that vacancies in the office portfolio also improved, albeit marginally, to 7.2% from 8.3% in June 2015.
Meanwhile, several smaller projects relating to extensions and tenant refurbishments, totalling R141-million, were also completed during the period, including the Woolworths extension at Somerset Mall for R58.5-million and the H&M extension at Clearwater Mall for R37-million.
The eagerly anticipated opening of H&M at Clearwater Mall is set for April. In line with strategy to continuously improve the quality of the retail offering, additional developments at an expected cost of R87-million are being planned for this year?.
Hyprop’s loan-to-value ratio increased to 28.5% from 22.9%, owing to dollar-denominated bank debt increasing with the acquisition of Ikeja, and the rand’s depreciation against the dollar.
The group’s growing sub-Saharan footprint also contributed to net-income growth for the period, with distributable earnings from the investments in sub-Saharan Africa increasing by 68.2% to R35.3-million, in part owing to income from the Accra-based West Hills and Achimota malls, as well as Ikeja Mall.
Prinsloo added that Ikeja was trading well, and that it was fully let with a high average monthly footfall. Hyprop’s current investment in sub-Saharan Africa totalled R4.1-billion, which was financed with US dollar bank funding.
Notwithstanding difficult trading conditions in South African over the next 12 months, Hyprop expected dividend growth of between 13% and 15% for the full year to June 30. This forecast was an upward revision of the August 2015 guidance, which was about 10%.
Shares in Hyprop closed on Wednesday at R108.51 a share.