The disposal strategy would reduce the portfolio’s properties from 183 to 125.

MD Len van Niekerk said the fund had a clear investment strategy to reshape the portfolio to improve its quality and earnings.

Several sale agreements had already been concluded, some now unconditional, with others pending the fulfilment of suspensive conditions. “Disposing of many of the smaller properties together with other noncore assets will improve focus and manageability,” he said.

The fund’s investment philosophy would place emphasis on the dominance and lettable strength of each asset in strong nodes and growing markets, he said.

SA Corporate’s rental income of R410m grew 6% and property expenses grew 26%, or R159m, contributing to the 3% rise in net property income of R366m.

Net industrial property income improved to R137,1m from R125m and net income from the office sector increased to R37,2m from R26,8m.

“The retail portfolio comprises 56% of the total portfolio value of R8,98bn and smaller retail centres make up more than two-thirds of that retail value,” Van Niekerk said.

“Tough retail conditions influenced the demand for space, causing a slower take up of vacancies and curtailing market rental growth. While the rental levels achieved on renewals were up an average of 10% on closing rentals, vacancies increased to 8% of the retail lettable space against 6% last year.”

The tough trading conditions were evident in the fund’s performance in the six months to June, with distributable income declining marginally to R301m from R306m.