Press Office


24 August 2010

Leading listed retail fund Hyprop Investments remained on a steady growth path with an 8,1% increase in interim distribution to unitholders for the six months ended 30 June 2010 and a total return of 13%. Reaping the benefits of expansions at Canal Walk and The Glen total asset value increased to R11 billion.

Hyprop CEO Mike Rodel says: “We have already seen the positive impact of the increased retail space and enhanced tenant mix flowing from the expansion and refurbishment programme, which translated into an increase in revenue from shopping centres of 19% with distributable earnings up 17%.” On a like-for-like basis (excluding additional retail at The Glen and Canal Walk) revenue from shopping centres was up 12% with distributable earnings up 9%. “Shopping centre income was negatively impacted by increased municipal rates and electricity costs – not all of which was recoverable from tenants.”

Rodel highlights that gearing remains well below industry norms at 13%. Excluding deferred taxation, net asset value per combined unit was up 4% to R55,06.

During the period management continued to focus on further enhancing the tenant mix as well as addressing vacancy levels. With the introduction of new tenants at Canal Walk offices, vacancies at 30 June 2010 were reduced to 3,9% from 4,5% at end of December 2009. Excluding Stoneridge vacancies for the entire portfolio were down to 1,3% from last year’s 1,9%. “We are consistently addressing vacancies at Stoneridge and have brought a number of new tenants into the centre during the period, including conference venue Scarlett Ribbon and factory store retailers such as Rage,” says Rodel.

Fund management expenses for the period fell 22%. “This was largely as a result of the internalisation of asset management, driven by our strengthened management team, and the implementation of a fixed-fee consultancy agreement,” says Rodel.

On the back of the successful completion of the 2009 expansion programme which added 19 000m² in additional retail space to The Glen and 15 500m² to Canal Walk, Hyprop commenced a R37 million refurbishment of Hyde Park. The renovations, due to be completed by December, will be implemented in phases and include upgrades to escalators and lighting, enhanced security, improved parking access and new skylights incorporating artwork by a distinguished artist. Planning has also commenced on the Rosebank precinct upgrade including the refurbishment and extension of The Mall of Rosebank and development of the adjacent Rosebank Gardens site.

Opening in the latter half of 2009 the Southern Sun Hyde Park Hotel was well-placed to benefit from the 2010 FIFA World Cup. Rodel says: “Occupancy levels during the tournament were encouraging with average occupation rates of 90%.” However muted occupancy levels are expected for the next 18 months due to lower global spending on corporate and leisure travel.

Following the approval by Redefine unitholders of the acquisition of just under 20 million Hyprop combined units from Coronation Asset Management, Redefine’s stake in Hyprop has increased to 45,2%. This triggered a mandatory offer to Hyprop minority unitholders which closes on 27 August. The board has determined that the offer of R50 per combined unit is not fair following an assessment of an independent review which determined a fair value range of R54 to R58 per Hyprop combined unit. The board accordingly recommended that Hyprop unitholders reject the offer.

Rodel concludes that with the additional retail space from the 2009 expansions and continued development and enhancement of the portfolio Hyprop is well-placed to benefit from the gradual upswing in the economy. “With our bolstered management team now well-established we will continue to focus on our trademark pro-active asset management helping to achieve an anticipated distribution of 181 – 185 cents per combined unit for the six months ending December 2010.”

Combined units in Hyprop closed yesterday at R52,51.