JSE- and A2X-listed specialist property retail fund Hyprop Investments has achieved double-digit growth of 14.5% year-on-year in its distributable income to R765-million for the six months ended December 31, 2024.

Distributable income per share increased by 14% year-on-year to 201.4c.

Notably, the group declared an interim dividend of 113.43c apiece, which is an increased payout ratio at 95% of the South African portfolio’s distributable income.

Hyprop CEO Morné Wilken says the company has been advancing various transformative and strategic priorities since 2018, having resulted in improved trading metrics across its portfolio.

The company completed the sale of its sub-Saharan Africa portfolio to Lango Real Estate in the period under review, through an exchange of shares, which resulted in Hyprop being released from all guarantees and commitments to lenders relating to debt in this region.

As a result, Hyprop’s balance sheet reflects a steady loan-to-value ratio of 36.3%, which is also supported by 99.8% cash collections from tenants in South Africa and 100.8% in Eastern Europe – of net billings.

Net operating income of R800-million grew by 30% year-on-year from R613-million in the prior half-year, while headline earnings a share grew by 24% year-on-year, from 111.3c apiece to 138.1c apiece, in the reporting period.

Moreover, Hyprop is progressing various power purchase agreements for solar energy. The company managed to reduce its electricity use by 29.6% and its water consumption by 10.2% over the past five years.

Five of Hyprop’s centres have achieved net-zero waste status and diverted 544 t of organic waste from landfills.

SOUTH AFRICA

Hyprop’s South African portfolio, which comprises various large retail centres in the Western Cape – mainly in Cape Town – and Gauteng – mainly in Pretoria and Johannesburg, recorded an increase in vacancies to 2.4%, which is mainly owing to rightsizing of some anchor tenants’ stores such as Edgars.

The portfolio’s distributable income grew to R454-million in the six months under review.

Excluding Table Bay Mall, rental and other lease income increased by 4% compared with the same period in 2023 and total revenue was up 4.7%.

Utility costs were lower than in the comparable period, owing to the reduction in loadshedding and the additional solar plants commissioned at Woodlands, Clearwater and Table Bay Mall.

Net property income increased by 18.6% in the period, and by 10.7% when excluding Table Bay Mall. Hyprop acquired Table Bay Mall for R1.68-billion in September last year.

The company’s tenants’ turnover increased by an average 4.9% in the half-year, while trading density increased by 4.4%.

The group continues with the expansion of the Somerset Mall, having completed Phase 1 and progressing with Phase 2, as well as the development of satellite offices around CapeGate Shopping Centre on a leasehold basis with development partners.

The Somerset Mall expansion comprises an additional 5 500 m² of gross leasable area for 50 stores, the installation of 5 MW of solar panels and improvements to the centre’s flow and shopper experience.

At Canal Walk, Hyprop introduced the first JD Sports store in the country, as well as the first standalone Silki store in South Africa.

In the remainder of the South African portfolio, various new stores are under construction that are expected to enhance each retail centre’s tenant mix.

INTERNATIONAL

Hyprop owns four retail centres in Croatia, Macedonia and Bulgaria. These tenants’ turnover grew by an average 8.8% in the period under review, with trading density having increased by 7.1%.

The vacancy rate for these properties is at 0.2%.

Distributable income from the Eastern Europe assets grew by 34% year-on-year to R308-million, or by 11% in euro terms.

While property expenses increased by 9% year-on-year in this region, on the back of wage increases, Hyprop nonetheless reported a 12% increase in operating income.

OUTLOOK

Wilken says the group maintains focus on five strategic initiatives: pursuing new and organic growth opportunities; reportioning to maintain centres’ dominance and grow market share; recycling assets; implementing sustainable solutions; and protecting the robustness of the balance sheet.

He expects the group to meet the higher end of its distributable income growth guidance at between 4% and 7% for the full year ending June 30.

The group held R807-million of cash and R1.1-billion of available bank facilities at the end of December.

“We are confident in our ability to continue our growth trajectory, supported by the strength of our retail centres in South Africa and Eastern Europe. We are optimistic about exciting projects in our pipeline, which align with our strategic priorities and will drive sustainable value for all stakeholders,” Wilken concludes.