STRONG RESULTS AGAIN FROM HYPROPíS RETAIL PORTFOLIO
Property loan stock Hyprop Investments Limited is still leading the listed retail property funds with its strong retail portfolio driving a 17% increase in distributable earnings to 93 cents a unit for the six months to June 2005. Hyprop’s portfolio, focussed predominantly on regional shopping centres, is reaping the benefits of ongoing growth in rentals.
Since December 2004 net asset value has risen by 10% to R19,54 a unit off the back of an 8% increase in the fund’s portfolio valuation to almost R4 billion. The higher portfolio value helped to maintain gearing at 28% in the face of a slight increase in borrowings to R972 million.
Hyprop has already paid its distribution for the six months of 91 cents a unit giving its unitholders an 18% increase over the same period last year. Non-recurring income of around 4 cents a unit contributed to the exceptional growth in distributions, arising from a reversal of a previous bad-debt provision at Canal Walk and distributions received by Hyprop on its 14,9 million linked units in SA Retail Properties.
Hyprop MD Pieter Prinsloo says that “the retail portfolio continues to strengthen with 23 million visitors to Hyprop’s centres in the six months since December, 10% higher than the number of patrons in the same period last year”.
With retailers booming off the back of buoyant consumer spend Hyprop maintained low vacancies at its shopping centres. Only 1.6% of its retail portfolio was available for letting at June 2005. “The increasing demand for retail space is helping to further boost rental levels,” says Prinsloo highlighting the benefit for Canal Walk where a large portion of leases are due for renewal in the next six months.
The office portfolio continued to recover and vacancies were again down to 4% of the commercial portfolio as tenant demand for premises improved in the previously saturated market.
Maintaining its focus on retail properties, Hyprop sold two office buildings for R14.2 million and completed the R91 million extension to the Glen Shopping Centre. In addition Hyprop’s and Redefine’s Southcoast Mall in Shelly Beach, KZN should open as scheduled in November 2005. Prinsloo is positive about the centre’s prospects in light of the ongoing residential developments in the area.
Hyprop’s offer to SA Retail’s unitholders of one combined unit for every 2,7 SA Retail linked units, or R8 cash for every SA Retail unit, is set to open as soon as Hyprop has competition authorities’ approval. In addition to its 14,9 million linked units in SA Retail, Hyprop also has an undertaking that Redefine Income Fund will accept the swap of its 55,9 million linked units in SA Retail into Hyprop combined units, giving Hyprop 31% in SA Retail. Prinsloo says that the acquisition of an increased stake in SA Retail 2 will be income-enhancing for Hyprop. He also emphasises that the offer is an opportunity for SA Retail unitholders to upgrade their investment in the listed retail property sector to Hyprop’s higher yielding stock .
Hyprop’s units closed yesterday at R26,50 a unit.