Hyprop Investments pleased investors by meeting its guidance, delivering 12.1% dividend growth in the year to June.
The specialist shopping centre owner with a R36.8bn portfolio of premium shopping centres in SA, sub-Saharan Africa and southeastern Europe, declared a total dividend of 695.1c per share for the reporting period. The balance sheet was strengthened with a 5.6% rise in net asset value to R99.78 per share and a 6.1% decrease in loan to value to 28.1%.
Its European portfolio was included for the first time for a full year. This helped drive distributable earnings up to R1.7bn, from R1.5bn at June 2016.
Hyprop’s South African portfolio continued to perform well to withstand the recessionary economy, according to CEO Pieter Prinsloo.
"There has been slowing growth in trading densities across malls in SA, but Hyprop centres continued to enjoy good rental growth and above-
inflation rental escalations with low rental arrears," he said.
"Vacancies increased to 1.9% for the year, still within the market average, and dropped to 1.7% post year-end. This reflects continued strong demand for space at Hyprop’s centres."
Hyprop had identified replacement tenants for major spaces vacated by Stuttafords at Canal Walk, Clearwater Mall and Rosebank Mall, which would in future improve trading densities in these stores. International fashion retailer H&M would start trading at Canal Walk in November.
Clearwater Mall, Hyde Park Corner, CapeGate and Somerset Mall performed well, with an average weighted growth in net income of 8.6% for the year, Prinsloo said.
Hyprop spent R178m on refurbishments, tenant installations, new equipment and technology, of which R15m
went towards phase three of Clearwater’s solar photovoltaic project, which is expected to generate about 15% of the centre’s electricity requirements from September. Extensions and refurbishments are under way at Rosebank Mall, The Glen and Canal Walk, at a total cost of R260m, to accommodate key retailers and strengthen the retail offering, while achieving an estimated combined average forward yield of 7%.
Hyprop guided for dividend growth of 7% to 9% for the financial year to June 2018.
Evan Robins, listed property manager of Old Mutual Investment’s MacroSolutions boutique, said a more difficult retail environment was evident from Hyprop’s results but its forecast for 2018 was disappointing, "Their guidance of 7% to 9% dividend growth in the new financial year disappointed many in the market who are used to double-digit growth from Hyprop, but current conditions are far more trying," he said.
The company disposed of R867m worth of noncore assets in the year. After the year-end, Hystead, the company housing Hyprop’s European investments, acquired a mall in Bulgaria for €155m. Hyprop owns a 60% stake in Hystead, and Prinsloo said he intended to list it separately in 2018.