Mall values still rising
RETAIL-FOCUSED ????? Hyprop’s annual report is a telling reminder of just how important timing is in the real estate game. The acquisition of Cape Town mega-mall Canal Walk is a case in point.
When Hyprop’s asset managers, Marc Wainer and Wolf Cesman, bought the centre from Nedbank for R1,165bn in 2003, many believed the deal-making duo had lost their marbles. At the time, about 12% of Canal Walk’s floor space was empty, interest rates had rocketed, retail spending was in the doldrums and the centre’s location at Century City on the northern outskirts of Cape Town’s CBD wasn’t yet established.
But the deal turned out to be one of the biggest property coups of the decade. Hyprop’s latest annual report shows that by end-2008, Canal Walk’s value had surged nearly fourfold to R4,21bn – that’s a capital gain of more than R3bn within five years.
The mall, which is 80% owned by Hyprop, is today the fund’s biggest single money-spinner, accounting for about 45% of the company’s total revenue of R658,6m in 2008.
With a total floor space of 135 000sq m, Canal Walk is also SA’s biggest shopping centre, which was visited by about 20,4m people in 2008. And another 15 500sq m of retail space is currently under construction at the mall at a cost of R91m.
Chairman Michael Aitken suggests in his overview that the value surge of Canal Walk as well as that of Hyprop’s other malls – including Hyde Park, The Glen and the Rosebank Mall in Johannesburg and Southcoast Mall in Shelley Beach – is a reflection of both scarcity value and continued income growth.
Despite the overall slowdown in retail sales last year, Hyprop still managed to grow its income payouts (distributions) by a healthy 14,1% in 2008. The R7,1bn shopping centre portfolio recorded average rental growth of 14%, which Aitken attributes to “consistently high” occupancy rates and ongoing demand for space despite a tough trading environment.