How low can Hyprop fall?

The share price has dropped nearly 20% since March, creating a relatively cheap entry point for patient punters

Skittish investors seem to be bailing out of retail-focused property stocks as SA mall owners face the threat of struggling retailers closing underperforming stores.

The recent demise of Stuttafords and the exit of international fashion brands such as Mango, Nine West and River Island have already led to greater vacancies in malls.

Perennial market darling Hyprop Investments, the JSE’S largest purely Sa-based retail property play, has been particularly hard hit by negative investor sentiment in recent months. The share price has dropped nearly 20% from its March high of R135.45, which has wiped more than R4bn from the company’s market cap.

Though Hyprop is one of fewer than a handful of property stocks that managed to deliver double-digit dividend growth (12.1%) for the year to June, tough trading conditions are starting to filter through to key trading metrics in its R27.7bn portfolio of upmarket malls. This includes Canal Walk in Cape Town, Somerset Mall in the Cape Winelands, Rosebank Mall and Hyde Park Corner in Johannesburg, and Clearwater Mall on the West Rand. Hyprop also has stakes in seven malls across Zambia, Ghana and Nigeria, and four in Southeast Europe.

Trading densities (turnover/m²) slowed to 1.4% in Hyprop’s SA portfolio for the year to end-june. That’s down from 5% a year earlier