Resilient costs rise more than rents

Posted On Thursday, 10 February 2011 02:00 Published by eProp Commercial Property News
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Resilient Property Income Fund posted a 9,12% increase in distributions to 211,83c per linked unit for the year to December.

Des de BeerRetail-focused listed property company Resilient Property Income Fund posted a 9,12% increase in distributions to 211,83c per linked unit for the year to December as the non-metropolitan retail centres in its property portfolio continued to outperform those in metropolitan areas.

However, Resilient experienced property operating cost increases of 19,9% in its portfolio, against growth in gross rentals and recoveries of 12,3%. The company said the bulk of the cost increases were in administered prices, particularly rates and utilities, over which management had limited control.

Resilient remained concerned about these costs increasing at a higher rate than gross rentals, which limits growth in distributions.

However, the Mall of the North, which opens in Polokwane in April, is expected to positively affect distributions. Growth in distributions of 8% is forecast for this year.

Resilient said the growth projection was based on the assumptions that a stable macroeconomic environment would prevail, no major corporate failures would occur, and that tenants would be able to absorb the recovery of rising utility costs.

The company has based its rental income growth on contractual escalations and market-related renewals.

Resilient Property Income Fund was the only listed firm with major retail developments, such as the Mall of the North and Brits Mall, that had had “exceptional letting progress”.

Last modified on Friday, 18 April 2014 18:07

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