Roy Cokayne
HYPROP Investments planned to dispose of properties worth R1.7 billion, including its entire stand-alone office portfolio, the listed retail property fund said on Friday.
Chief executive Pieter Prinsloo said the stand-alone office portfolio comprised three office parks in Pretoria: Glenfield and Glenwood in Faerie Glen and Lakefield in Centurion.
Hyprop’s total office portfolio constitutes only 5 percent of the gross lettable area in its overall portfolio.
Prinsloo confirmed Hyprop was already talking to “interested parties” but declined to say whether they included other listed property funds.
He said the time it took to conclude the disposal of these properties would depend on the market but Hyprop would like to dispose of them over the next two years subject to getting the right price.
Prinsloo said Hyprop had a 9.5 percent vacancy rate in its office portfolio, which also included offices that were part of its shopping centres, such as Rosebank Mall, Canal Walk and Hyde Park.
He said the office segment was the only part of its portfolio where it had seen weakness and vacancies had risen to 13.8 percent at the end of June.
“Subsequent to our year-end we have seen quite a bit of leasing activity in our office portfolio, particularly in our Pretoria office parks. That has enabled us to reduce that vacancy rate to 9.5 percent.”
Prinsloo said retail centres that were held for sale were the Stoneridge Centre in Modderfontein and Willowbridge and Cape Gate Lifestyle Centre, both in Cape Town.
He said Hyprop saw limited growth from these and the intention was to eventually trade out of these assets. “This is in line with our strategy to focus on quality shopping centres.”
Hyprop on Friday reported an 11.3 percent growth in distributions to R4.72 a combined unit in the year to June, which was higher than the guidance provided earlier by the fund.
Prinsloo said this good performance was driven by strong distribution growth of 13.1 percent in the second half of the year, which was mainly attributable to a solid performance by the super and large regional shopping centres in Hyprop’s portfolio, savings on interest costs and the acquisition of African Land in December.
Excluding Somerset Mall, which was acquired in October last year, distributable earnings from regional, large regional and super-regional malls increased by 9.5 percent with average growth of 11 percent from The Glen, Clearwater Mall and Woodlands Boulevard.
Prinsloo said property expenses were well controlled with a cost-to-income ratio of 34.4 percent.
Occupancy levels across the portfolio remained high at 97.6 percent, with retail vacancies decreasing to 1.2 percent at the end of June.
Hyprop received dividends of R4.8 million from Atterbury Africa and R30.3m from African Land during the year from its investments in sub-Saharan Africa excluding South Africa.
Prinsloo said Hyprop’s total assets in sub-Saharan Africa excluding South Africa represented almost 10 percent of the fund’s total assets and this ratio could grow over time to about 15 percent to 20 percent but South Africa would remain the focus of the group.
Hyprop expected dividend growth of between 10 percent and 12 percent for the full year to June next year.
The shares rose 1.62 percent to close at R86.35 on Friday.