AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010
Delivering a total return on investment of 32% and a distribution of 357 cents per combined unit, Hyprop maintained its performance for the year ended 31 December 2010 despite challenging retail conditions. At the end of the year Hyprop announced the proposed acquisition of Attfund Retail, which is set to create SA’s premier retail fund and almost double Hyprop’s asset base to around R20 billion from R11,5 billion at year-end.
Outgoing Hyprop CEO Mike Rodel says:“Given the continued tough retail environment in 2010 we delivered in line with expectations, benefiting from completed extensions at Canal Walk and The Glen.” The additionalretail space saw total shopping centre revenue increase 18%, with distributable earnings up 14%. He points out that even excluding the new extensions, revenue grew by 13,3% and distributable earnings by8,8%.
Net asset value (“NAV”) increased 6,7% to R47,26 per combined unit. Excluding deferred taxation NAV was up 7% to R57,01 per combined unit.
As expected fund management expenses reduced due to the internalisation of asset management following the termination of the consulting agreement with Redefine Properties Limited in August 2010.
Vacancies fell to 3,9% compared to 4,5% in the prior year, notwithstanding a continued difficult trading environment. “Vacancy levels at Stoneridge have improved slightly and our focus on enhancing the tenant mix has seen us replacea number of underperforming tenantswith stronger retailers. Since year-end we have also noted rising levels of interest from prospective tenants, which bodes well for Stoneridge going forward,” says Rodel. Stoneridge posted pleasing growth in turnover during the year.
Canal Walk continued to benefit from increased footfall, boosted in part by the newBoulevard Shopping.Rodel adds that the centre underwent an extensive lease renewal cycle and was successful in achieving good growth in a demanding economic environment. Extensions at The Glen boosted both footfall and turnover growth, while Southcoast Mall boasted increased footfall relative to local competitors.
At Hyde Park footfall normalised following the completion of the R37 millionrefurbishment in time for December trading. Renovations included upgrades to escalators,new energy-efficient skylights, enhanced security systems, improved parking access andlighting.
Rosebank remains the development focus for the year ahead. “In consultation with all interest groups in the Rosebank node we are seeking to extract the maximum valuefrom the refurbishment and extension of The Mall,” says Rodel. Hyprop is currently finalising the planning and design process.
A hard-hit global leisure sector saw a drop in income from the hotels in the group’s portfolio. “Although occupancy levels during the World Cup exceeded 90%at Southern Sun Hyde Parkwe anticipate occupancy levels to remain under pressure in the short- to medium term,”says Rodel.
The proposed Attfund Retail acquisition will add 22 properties to Hyprop’s portfolio including Clearwater Mall, Woodlands Boulevard, Atterbury Value Mart and Centurion Mall (25% undivided share) in Gauteng and CapeGate Retail Precinct,Somerset Value Mart, Willow Bridge Lifestyle Centre and a 20% indirect share in Garden Route Mall in the Western Cape. “The proposed transaction will not only see Hyprop complement its existing portfolio with a large, well-managed portfolio and strengthenmanagement, but will enable us to grow appropriately while remaining a retail-focused fund.” The acquisition is subject to unitholder and other regulatory approvals.
Looking ahead Rodel says steady growth in retail will continue to relieve the pressure on rental collections. “In addition we are seeing an upturn in demand from retailers withincreasedenquiries for space from prospective tenants across the portfolio.”Notwithstanding the continued impacton tenants of increased municipal costs, Hyprop expects to see improved leasing and rental prospectsin the year ahead.
Rodel will resign as CEO with effect from 3 March 2011. Former Hyprop CEO Pieter Prinsloo, who resigned in 2009 to take up a property development role at a private company, will return to the position with effect from 1 May 2011.
Combined units in Hyprop closed yesterday at R54,54.