Sycom on Thursday posted a 4.2% increase in distributions to 84.43c per unit for the six months ended September.

According to I-Net Bridge data, Acucap owned a 17% interest in Sycom last month.

Sycom said demand for A-grade offices continued to improve during the period, with the vacancy rate declining from 5.1% at the end of March to 3.7% at the end of September.

Leases were concluded on 14,787m² of gross lettable area during the period, at an average net rate of R136.83/m². This was 9.1% lower than the average net expiry rental of R150.59/m² on the 12,584m² which terminated over this period.

Sycom said the extent of the negative reversion was slightly better than the forecast decrease of 10.5% that was disclosed in Sycom's March results announcement.

In the next six months, leases for 11,207m² would expire at an average net rental of R143.62/m², and these are expected to be renewed at R139.71/m², representing a 2.7% negative reversion.

Sycom said the sharp decline in the vacancy rate from its peak 18 months ago had been pleasing, but to some extent its effects had been offset by the continued trend in rental reversions.

With the average net rental of the Sycom office portfolio now at R134.87/m², the board expected negative reversionary effects to reduce as the divergence between contractual and market rentals diminished, the fund said.

"Sycom's management have demonstrated that even in a tough office market if you have the right A-grade properties, you can continue to grow earnings. Management's hands-on approach has ensured that they have been able to continue to reduce their vacancies in their office portfolio from 5.1% to 3.7% and total vacancies from 3.7% to 2.9%," Alternative Real Estate fund manager Maurice Shapiro said.

He said Sycom was "well-positioned" to grow its portfolio with yield-accretive acquisitions, such as its recent acquisition of the remaining 60% undivided share in The Woodlands Office Park from the AECI Pension Fund.

"This put the company in a unique position to exceed growth expectations, while acquiring new assets into the property sector," he said.

Source: BD