Net rental income from properties increased to R130.2 million from R115.7 million previously. Operating profit was up 11.5% to R118.7 million.

Premium said its distribution growth was positively impacted by the mixed-use Hatfield development in Pretoria due to the improved occupancy levels.

The group said it continued to focus on its strategic objective of acquiring and redeveloping properties in the Pretoria and Johannesburg CBDs and surrounding areas.

During the period four properties were acquired but not transferred for a total purchase price of R205.5 million. A further two properties were acquired and transferred during the period for a total purchase price of R8.3 million.

Vacancies as at 31 August 2010 amounted to 25.2% of total lettable area compared with 21.8% in the corresponding period last year.

"Vacancies have increased due to a slow-down in economic activity during the period which is affecting the letting of vacant space. A large percentage of the vacancies is in respect of properties that are undergoing redevelopment or that were recently acquired," the group said.

Borrowings increased by 115.2 million rand during the period, primarily due to the amounts spent on phase II of The Fields and other acquisitions and upgrades.

Premium's gearing as at 31 August 2010 was 34.7% of the total value of the portfolio against 33.3% as at 28 February 2010.

Looking ahead, the fund said the second half of the current financial year would be negatively impacted by increased costs of funding as a result of interest rate swaps entered at a premium to floating interest rates.

"The company will continue to benefit from upgrades and redevelopment activities. The board believes that distributable earnings for the second six-month period should be on par with the distributable earnings reported for the six months ended 31 August 2010," it said.