RETAIL-focused Hyprop Investments yesterday reported a disappointing set of interim results to June, dragged down by the underperformance of its hotel portfolio and listed property unit trust Sycom, in which it owns a significant stake.

However, the owner of Canal Walk shopping centre in Cape Town, which has been traditionally retail-focused with only two hotels in its portfolio, intends to continue selling noncore assets such as The Grace Hotel and focus exclusively on large, prime shopping centres in key urban sites.

Hyprop CEO Pieter Prinsloo said yesterday the local downturn in the hospitality industry had negatively affected the performance of the fund’s hotels — The Grace and the Southern Sun Hyde Park — resulting in a net loss for the period and the imminent closure of The Grace Hotel at the end of this month.

Hyprop’s hotel division posted a net loss of R3,5m as a result of the underperformance of the hotels.

“We have been approached by various interested parties for The Grace Hotel premises and are optimistic of announcing a solution in this regard in due course,” Mr Prinsloo said.

Hyprop was in negotiations with Sycom to sell its 34% stake, but wanted to acquire certain retail assets from Sycom as part of its exit strategy, he said.

The short- to medium-term development focus of Hyprop remained The Mall of Rosebank and Rosebank Gardens, in Johannesburg. The fund is planning for the redevelopment of The Mall of Rosebank and Rosebank Gardens. Mr Prinsloo said most town planning requirements had been completed, with final approval expected next month.

Subject to obtaining the requisite approvals, the project was anticipated to start next year.

He said the acquisition of Attfund for R9bn next month would ensure that Hyprop gained critical mass while maintaining its specialist retail focus and quality of assets, and would also further bolster the fund’s asset management team.

The acquisition includes shopping centres across Gauteng and the Western Cape, two of the more economically active regions in the country.

Hyprop yesterday posted a disappointing distribution growth of only 4% to 181c per unit, and a 9,7% rise in net income from shopping centres for the six months to June on the comparable period in the first half of last year.

Source: Business Day

Publisher: I-Net Bridge
Source: I-Net Bridge