Hyprop Investments, the retail-focused listed property fund, delivered a strong interim performance, as its portfolio of dominant shopping malls shielded it from a weak economy.
Its dividend grew 13.4% in the six months to December, with its domestic asset portfolio performing especially well.
Analysts have said Hyprop’s defensive nature is well-positioned to generate returns amid difficult operating conditions.
“Distributable earnings for the period benefited from good growth from The Mall of Rosebank, following its redevelopment, additional income from the new sub-Saharan African investments, as well as from exchange rate gains of R8.1m due to rand weakness against the US dollar,” said CEO Peter Prinsloo on Thursday.
Zayd Sulaiman, an investment manager at Catalyst Fund Managers, said he was impressed at how successful Hyprop had been in the past few years, given its risk profile.
“Hyprop have been doing phenomenally well. They probably have the highest quality of domestic assets of any listed property fund on the JSE, and they make their assets work. These are strong results, as the group is being supported by malls that are trading well, while many of their peers are struggling,” he said.
Many South African property funds have increasingly invested offshore in the past couple of years, as they were lured by a lower cost of debt in Europe than in SA and promises of superior economic growth than that of SA. But, Sulaiman said, Hyprop had chosen to expand abroad more cautiously than its rivals, which was pleasing.
“While Hyprop have made some offshore acquisitions, they haven’t rushed abroad. Instead, they have made their malls relevant by investing in them and keeping tenant mixes strong. We like this approach, as we feel there are opportunities in SA right now. Too many funds are relying only on rand weakness to make returns offshore,” Sulaiman said.
Hyprop acquired Ikeja City Mall in Lagos, Nigeria and opened Achimota Mall in Accra, Ghana during the reporting period. Post-period, it made its first foray into Eastern Europe, buying significant stakes in a mall in Serbia and one in Montenegro for about R2bn.
Hyprop’s total revenue and distributable earnings from South African investment property increased 11.9% and 9.7% respectively, boosted by the inclusion of the recently revamped Mall of Rosebank for a full period.
Evan Robins, listed property manager of Old Mutual Investment Group’s MacroSolutions boutique, said Hyprop’s performance had been solid, and that the only mall in its portfolio that had seen its income growth decrease was The Glen, which had faced new competition from The Mall of the South, which is located in the south of Johannesburg.