The property fund - which owns a portfolio of retail, industrial and office buildings located primarily in the major metropolitan areas of SA - said revenue increased to 605.8 million rand from 573.5 a year ago. Operating income rose to 322.4 million rand from 315 million rand a year earlier.

Industrial rental grew 14.5% during the period, underpinned by the take-up of 1.7% vacant space, 85.1% retention ratio on expiries combined with 8.3% positive rental reversions.

The fund said retail rental income decreased by 3%, partially attributable to the sale of retail properties and negative rental reversions.

Office rental income decreased 7.1% mainly attributable to disposals.

Rental growth - excluding recoveries - in respect of the standing portfolio amounted to 1.6% driven by a gradual reduction in vacancies and marginal positive rental reversions of 1.1%.

SA Corporate said property expenses increased by 10.9% from previously, while municipal costs increased by 16% due to an increase in electricity and water of 32% and 21%, respectively. Bad debts increased by 25% to 13.7 million rand from 11.0 million rand previously.

"The board believes that the fund could deliver distribution growth of between 1% and 3% in financial year 2011," the fund said.

Rental growth in the retail portfolio was expected to be muted while tough trading conditions persist compounded by large increases in tenants' electricity expenses.

"The fund's quality industrial portfolio is expected to continue to produce pleasing results. Capital expenditure and prudent repairs and maintenance will improve asset quality and income sustainability but comes at the cost of short-term distribution growth," the fund said.