Emira Property Fund announces lower op profit

Posted On Thursday, 17 February 2011 02:00 Published by eProp Commercial Property News
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Emira Property Fund announced an operating profit of R221.824m for the six months ended December 2010, from R345.111m previously.

James TempletonEmira Property Fund on Wednesday announced an operating profit of R221.824 million for the six months ended December 2010, from R345.111 million previously.

Revenue advanced to R610.125 million, from R585.204 million earlier.

The group announced a distribution of 55.21 cents per Emira participatory interest. "This represents good growth in distributions of 6.5% on the previous comparable period, in line with the prospects statement in the fund's final results announcement released in August 2010," it said.

Emira Property Fund declared a distributable income of R280.5 million.

Emira participatory interest holders enjoyed a total return of 15.7%, comprising capital appreciation of 11.2% and an income return of 4.5%, which represented the distributions actually paid out during the period under review. Capital values in the listed property sector benefited from a search for yield from investors, while lower than expected domestic inflation also benefited bond yields, to which property yields are closely related.

Emira said the main highlight during the period was the announcement by the Fund in September last year that the conditions precedent required for the amendments to the Trust Deed had been met.

The amendments would enable the scheme to extend the ambit of the manager's investment policy so that the Fund can invest in a broader class of assets, among other things. The fund also acquired a further 9.1 million stapled securities in Growthpoint Properties Australia (GOZ) for R116.8 million.

Emira said the period under review was characterised by tough underlying trading conditions in the physical portfolio, mitigated by the benefits of the amendments approved by PI holders in September 2010 and the fund's investment in GOZ.

"Despite the rising vacancies, with a substantial portion of Emira's portfolio on long-term, escalating leases, property income continued to grow," it said.

The income from the Fund's holding in GOZ of R14.7 million represented the distributions from GOZ for the period to 30 June 2010 and the recently announced distribution to 31 December 2010.

CEO James Templeton said though there were signs that tenant interest in rental space was picking up, this had not yet been translated into a decline in vacancies.

Vacancies across the portfolio were up from 9.2% in June last year to 11.4% in December. However, if the vacancies in the unlet buildings currently under refurbishment are excluded, the adjusted vacancy level drops to 10%.

Office vacancies during the period rose from 16.2% to 18% (15.1% adjusted); industrial property vacancies rose from 5.1% to 8% and retail vacancies increased marginally from 5.3% to 6.9%.

Given the flat market conditions Templeton expects the level of distribution for the current period to be similar to that achieved in the previous six months.

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