The fund, which owns a portfolio of retail, industrial and office properties primarily located in the major metropolitan areas of SA, on Friday posted a distribution of 14,24c per unit for the six months to June, falling 1,5% compared with the corresponding period last year.
For the first six months of this year, the performance of the fund’s portfolio was characterised by a decline in vacancies from 8% of gross lettable area at the end of December last year to 6,7% at the end of June, primarily due to a 3,4% decrease in industrial vacancies.
The sale of a large vacant industrial property after June lowered industrial vacancies to 1,3%.
Retail vacancies remained stable, albeit at a high level of 8,3%, but it was office vacancies that saw a large increase, rising six percentage points to 19,4%.
The fund was still grappling with arrears, which stabilised during the interim period at R79m. The provision for bad debts rose by R1,1m, to R49m from R48m.
Rental income growth (excluding recoveries) of 4% — after property sales — reflected tough conditions putting pressure on market rentals.
Property expenses grew 17,9%, while electricity costs increased 27,7%, but were fully recovered.
Driven by higher municipal property valuations, combined with an increase in the municipal charge, rates and taxes increased 30,5%.
In the retail sector, 48% of the vacancies were attributed to Northpark Mall, Musgrave Centre, St Georges Square, Forest Road Design and Decor, and Comaro Crossing.
The fund attributed the increase in vacancies partly to redevelopment at the properties as well as to the retail trading environment.
It said progress has been made in efforts to reduce the vacancies at half-year and vacancy levels are expected to fall by year-end.
The upgrade of Musgrave Centre, which accounted for 14% of office vacancies, includes a refurbishment of the common areas and external facade of the office tower.
The revamp is expected to support efforts to reduce vacancies.
About 43% of the office sector’s 19% vacancy at the end of June represented office space in retail centres, notably Northpark Mall and Musgrave Centre.
The letting of 6400m2 at 1 Holwood Park from next month, together with other lettings, would see vacancies decrease to 13%, of which 64% is in retail centres.
The industrial sector had a vacancy factor of 3%, of which 61% related to the property 106-109 Bain Street, which has been sold and is awaiting transfer.
The fund said it continued to pursue its objective of disposing of noncore assets. Transferred and unconditional sales totalling R262m were affected during the six months to June, including the disposal of 25% of Umlazi Mega City.