JSE-listed shopping centre fund Hyprop on Thursday reported distribution growth of 9.4% at 198c a unit for the six months ended June 30, while revenue surged to R1.06-billion from R563.8-million a year earlier.
Hyprop also dvanced its strategy of growing its asset base with the approval of the Rosebank Mall redevelopment, which would see the company invest R920-million, and by expanding into Africa through an investment in Atterbury Africa.
CEO Pieter Prinsloo said that Hyprop’s solid performance was motivated by a number of macroeconomic positives and operational successes - trading conditions were stronger, particularly at the larger malls, and it achieved savings on interest costs and a healthier performance from the Southern Sun Hotel. “In addition we derived greater benefit from our investment in Sycom on the back of its improved performance,” he noted.
Vacancy levels were lower at 3.8%. “Demand for shops remains healthy in the super regional and large regional malls, with virtually no vacancies,” said Prinsloo.
In line with Hyprop’s stated strategy to sell noncore assets, its 50% undivided share in Southcoast Mall was sold to Redefine Properties for R110.5-million in the period, while it disposed of its investment in Vunani Property Investment Fund for R101-million. An agreement was also reached in June for the sale of the Trade Centre property in the CapeGate precinct for R70-million. Subsequent to the period end, Hyprop also sold its investment in Acucap for R108-million.
Net borrowings at year-end totalled R5-billion, equating to a gearing ratio of 24.7%, which was notably down from 26.2% at December 2011. The lower gearing is a result of an increase in property valuations and the application of proceeds on disposals.
Hyprop’s development focus for the year ahead remained the Rosebank Mall refurbishment and extension. “Construction on the [Rosebank] Gardens site has started and the project is expected to take 24 months to complete,” Prinsloo confirmed.
This would almost double the Mall’s retail space from 36 000 m² to 62 000 m², substantially growing its tenant base. “The board has approved the redevelopment project, with an expected yield in the region of 7%,” he added.
Further development projects include planning for extensions to Canal Walk, in Cape Town, to meet rising tenant demand, and the upgrade of Willowbridge South. The Clearwater Mall extensions, specifically to the Edgars and Jet stores, were completed by the end of the period at a cost to Hyprop of R12.9-million and an incremental yield of 13.1%.
Regarding Atterbury Africa, in which Hyprop has co-invested together with the Atterbury Group, Prinsloo said: “Our main joint focus is to primarily develop and own quality shopping centres in Africa, which, as a growing emerging economy, offers substantial opportunities.”
Hyprop has an initial shareholding of 37.5% and has committed to invest R750-million over the next five years. “This is not a huge number, but it is a good start and we believe that it will develop in years to come,” he said.
Atterbury Africa recently purchased a 42.5% interest in the successful Accra Mall, in Ghana. “We intend developing further shopping centres in Ghana and other countries on the continent,” Prinsloo noted, adding that a number of companies were looking to invest in Africa at the moment.
On the back of improved distribution growth for the first six months, Hyprop had increased its distribution growth forecast to between 5% and 7% for the full year ending December 2012.
Combined units in Hyprop closed yesterday at R69.59.