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Aug 23, 2007:
Canal Walk at Century City in Cape Town has turned out to be a great cash cow for listed property fund Hyprop.
Not only is the mega-mall Hyprop's single biggest investment - its 80% undivided share in the R3,75bn (R3bn) mall represents 43% of Hyprop's R7bn portfolio - it's also the star performer in its stable.
In recent years, Canal Walk has outperformed Hyprop's other shopping centres - such as Hyde Park, Rosebank Mall and The Glen in Johannesburg - both in terms of income and capital growth. And despite SA's five interest rate hikes since mid-2006, retail trade at Canal Walk is still pumping. Analysts expect Canal Walk's net income to rise to around R220m this year, up 13% from 2006. That means revenue at Canal Walk would have exactly doubled since 2003 when Hyprop's asset managers Marc Wainer and Wolf Cesman acquired the shopping centre for R1,165bn.
The capital value of Canal Walk surged 30% last year to R3,25bn (end-December) on the back of higher rental income and lower yields. The centre was revalued at R3,75bn this June, up another 15% in six months.
Although Hyprop's interim results to end-June will only be announced next week (20 August), the market expects distribution growth of around 16% to 18%. That will entrench Hyprop's position as one of the sector's top performers in terms of income growth.
The counter has also delivered impressive share price growth over the past few years. Investors who bought the stock four years ago when the Canal Walk acquisition was announced would have more than doubled their money. The stock is up from 1800c in mid-2003 to the current 4250c/share.