Retail boost for listed stocks

Posted On Wednesday, 03 March 2004 02:00 Published by eProp Commercial Property News
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HIGHER retail rentals and low interest rates have helped some listed property companies to turn in profits well ahead of forecasts.

Mariette WarnerLen van Niekerk, property analyst at Andisa Securities, says that among the groups showing real growth are property loan stocks Hyprop Investments and Growthpoint Properties. Van Niekerk says the lower interest rate environment allowed them to fix loans at lower rates. Lower rates also assist the groups' tenants and reduce the effect of bad debt.

Mariette Warner, head of fund management at Standard Bank Properties and manager of the Standard Bank Property Income Fund, agrees the strong performance of retail is enabling some listed companies to beat their forecasts.

Last week Hyprop reported a 7,7% increase in its total distributions to combined unitholders for the year to December 31 2003. Its total distribution for the year was 140c, compared with 130c in 2002.

Apart from the acquisition of an 80% stake in the Canal Walk shopping centre in Cape Town, which is expected to ensure earnings growth for Hyprop, its Hyde Park and The Glen shopping centres, both in Johannesburg, reported a 9% and 20% rise in net income respectively.

Growthpoint, which also announced results last week, reported a 4,7% increase in the interim distribution to 33,5c for each linked unit for the six months to December 31 2003. The company also highlighted that this was due to the performance of the physical property portfolio, particularly retail.

Van Niekerk expects the forecast for the year to June to be higher than the official forecast of 67c.

Growthpoint also achieved better rentals than expected when leases expired in some of its larger properties, such as Brooklyn Mall in Pretoria.

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