Property group Vukile on Monday reported that its headline earnings per linked unit for the 6 months ended September 2009 were at 49.60 cents compared to the 46.22 cents reported for the same period in 2008.

The board has approved an interim distribution of 47.0 cents per linked unit, an increase of 6.6% or 2.9 cents per linked unit over the comparable period.

Property revenue for the period was at R357.4 million, up from the R321.4 million reported previously.

Profit from property operations at R225.7 million was up from the R207.8 million reported in 2008.

Operating profit for the period was at R215.5 million, up from the R199 million.

The group said its net rental income, exclusive of straight-line rental accruals, increased by 9.8% over the comparable period.

"However, part of the increase is attributable to the delay in the completion of maintenance and refurbishment projects beyond September 30.

"If this deferred expenditure is taken into account, the increase in net revenue over the comparable period reduces to 6.4%.

"This is in line with expectations following a period characterised by increasing vacancies and rising bad debts," it said.

The combined property portfolio currently comprises 74 properties with a gross lettable area of 920,233 m2.

The sectoral spread by gross rentals comprises 28% commercial, 56% retail and 16% industrial.

During the 6 month period under review, new leases and renewals with a total area of 76,486 m2 and a contract value of R185 million were concluded, it said.

Since 1 October 2009 leases and renewals with a total area of 8.407 m2 (18.4% of the total vacant area) and a contract value of 28.2 million rand have been concluded," it said.

Another highlight for the company was the finalisation of the transaction in terms of which it will acquire the property asset management business of Sanlam Properties relating to the property asset management of Sanlam's property portfolio.

This transaction will be put to shareholders to vote upon early in December 2009.

The company said it had already, from October 1 2009, assumed control of the property asset management of its own property portfolio which was previously handled by Sanlam Properties.

The group noted that the major revamps/income protecting capital projects relating to Dobsonville Shopping Centre and Phoenix Plaza had been completed within budget and timeously.

Looking ahead, Vukile said trading conditions during the reporting period were difficult and characterised by increasing vacancies, higher bad debts and very little scope for higher rentals.

"More and more companies had to close their doors and a record number of jobs were lost in the economy.

"There are, however, some indications that the economy has turned the corner and that economic growth is starting to increase, albeit at a slow rate," it said.

Vukile said that due to the fact that the property cycle lagged the general economy, it would take some time before any economic growth filters through to the property sector.

Chief executive Gerhard van Zyl said while there were some indications that the economy had turned the corner and was starting to improve, it would take some time for this improvement to impact positively on the property sector, which traditionally lags the general economy.

"We therefore expect trading conditions to remain difficult for the rest of this financial year, but we also believe that we will be able to achieve reasonable growth in distributions," he said.

At 12.54pm, shares in Vukile were trading up 35 cents, or 3.17%, at R11.40.