How Hyprop’s dividend growth tumbled
The results stand out amid hard operating conditions for the listed property sector
Shopping malls owner Hyprop Investments expects 5%-7% dividend growth for the 2019 financial year, but CEO Pieter Prinsloo said even though this may be disappointing, it was still well ahead of its peers.
Hyprop, which owns nine premium SA shopping centres including The Mall of Rosebank, Clearwater Mall, Hyde Park Corner and Canal Walk, declared a total dividend per share of 756.5c for the year to June, up 8.8%.
"Our investors may have become used to us growing our dividends in the double digits and this forecast is very conservative and could be disappointing, but it’s still ahead of market averages," Prinsloo said.
A number of real estate investment trusts are forecasting dividend growth of 1%-4%, with some warning their income payouts will not grow at all, or they will shrink.
Hyprop also has exposure to African and southeast European shopping centres.
Earnings increase substantially
The company said "against the backdrop of a pressured consumer environment", distributable earnings increased substantially, by 10.5%, on strong organic growth, successful acquisitions in southeast Europe and the improvement of assets in SA in the second six months of the year.
In the second half of the year distributable earnings increased 6% following the occupation of stores vacated by the defunct retail group Stuttafords, and completed upgrade and extension work at The Glen and The Mall of Rosebank.
"Certain malls continued to record good trading density, especially CapeGate and Clearwater Mall, but trading density growth for the portfolio reduced to 0.5% for the year from 1.4% as declining consumer spend began to come through," Prinsloo said.
Hyprop has shelved the separate listing of its East European assets, which it holds in a joint venture known as Hystead, with the company PDI.
Evan Robins, listed property manager of Old Mutual Investment’s MacroSolutions boutique, said that Hyprop’s results stood out amid very difficult operating conditions for the listed property sector.
"Times are difficult and that is reflected in the results. But Hyprop has once again shown that it is a quality company and it has delivered a solid result considering the environment" Robins said.
However, Jay Padayatchi, a director at Meago Asset Managers, said Hyprop might have been too prudent for some investors’ liking.
Hyprop had guided for dividend growth of 7%-9% in its 2018 financial year, having delivered 12.1% growth in 2017.
"These results were not what [the] market was expecting but they are within guidance.
"The outlook I think is what may be surprising many analysts. Perhaps too prudent?
"I do believe that with the recent results and lower growth guidance from many of its peers, Hyprop may be managing risk," Padayatchi said.
The Hyprop share price declined by 2% to close at R102 on Friday.