By Suren Naidoo
Hyprop posted distributions today of 8,3% for the six months to December 2017, a strong showing for the JSE-listed specialist shopping centre real estate investment trust (REIT), under poor economic conditions in locally.
The group, which owns flagship retail properties like Canal Walk in Cape Town and Rosebank Mall in Johannesburg, said the solid growth was driven by a stable performance from its South African shopping centres and a strengthening South-Eastern European (SEE) portfolio. Hyprop declared a dividend of 376,3 cents per share for the period (Dec 2016: 347,3 cents).
Hyprop said prior-year acquisitions in the SEE region proved successful, with its acquisition trail continuing post its half year period. The group’s CEO, Pieter Prinsloo, said each of Hyprop’s three core geographic portfolios contributed to the REIT’s ongoing growth in distributable income.
“South African shopping centres achieved positive trading results in a tough market, while recent acquisitions in South-Eastern Europe boosted consistently strong trading in the portfolio and the inclusion of Ikeja Mall in Nigeria also made a small difference in the period,” said Prinsloo.
Retail vacancies in Hyprop’s South African portfolio dropped significantly, despite a weaker retail environment. This was mainly due to the re-letting of a significant part of the space vacated by Stuttafords at three of Hyprop’s major shopping centres.
Prinsloo points out that the benefits will be felt in the next six months as most new lettings were only income-producing from November 2017. Excluding the Stuttafords vacancies and construction work, growth in distributable income from South Africa was 5,2%. Actual distributable income growth was 2,1%.
Hyprop said that construction work relating to the ongoing developments and extensions negatively impacted on certain malls’ trading performances in the period. Canal Walk is now benefitting from the successful opening of two new flagship stores in November 2017 in the reconstructed La Piazza area, and a new 4 600m² H&M in the former Stuttafords store.
The extensions at The Glen and Rosebank Mall are set to open from May 2018. The full development and expansion programme is estimated to total R290 million and Prinsloo says any short-term dilution will translate into an improved quality retail offering and sustainability in the medium- to long-term.
Hyprop has upped its forecast for the full year to 30 June 2018, saying it expected 8%-10% dividend growth. In September 2017, its forecast was 7% to 9%.
For the next six months to year-end, Prinsloo welcomes the more positive sentiment and outlook for South Africa which should improve consumer confidence. However, he cautions that this will take time to translate into a turnaround in the economy.
- More to come on this developing story…