The company declared a dividend of 0.33c per ordinary share (out of income reserves) and interest of 65.87c per debenture payable to linked unitholders recorded in the register on November 15 2013.The company said net asset value had increased by 19.3% to 2‚023c per linked unit.
Jeffrey Wapnick, Managing Director of Premium Properties, commented; "Premium continued to deliver strong earnings growth with a distribution increase of 10,3%, despite the lacklustre economy. Strong growth in the residential portfolio underpinned by low vacancies and high demand for quality and secure accommodation contributed significantly to the increase in rental income."
Premium invests in the retail‚ industrial and office property sectors and holds a large residential portfolio. The company has a great confidence in the future of the Pretoria and Johannesburg central business districts (CBDs). All rental income received by the group‚ less operating costs and interest on debt‚ is distributed bi-annually. The group does not distribute capital profits and fair value gains.
Rental income and net rental income increased by 10.5% and 6.4% respectively‚ compared with the previous comparative period. Economic and trading conditions and consumer confidence remained challenging during the financial period. The residential portfolio‚ comprising 28.0% of the total property portfolio by rental income‚ achieved strong growth in rental income. This was underpinned by low vacancies and strong demand for affordable and secure accommodation.
Bad debt write-offs and provisions decreased during the period from 1.4% to 0.4% of total tenant income. Arrears and doubtful-debt provisions remain at acceptable levels and no significant deterioration is expected.
Despite rapidly escalating utilities charges‚ the percentage of cost recovery from tenants has been maintained during the period. However‚ these escalating charges have affected the total occupancy costs of tenants.
A saving in finance costs was achieved mainly due to the establishment of a R1bn domestic medium-term note programme during March 2012.
Premium's loan-to-value ratio at August 31 2013 was 33.7% of the total value of the investment portfolio as against 31.5% at February 28 2013.
In August 2013 Global Credit Ratings upgraded the long- and short-term national scale issuer ratings of Premium to A- (ZA) and A1-(ZA) respectively.
The company is considering a number of redevelopment opportunities for certain existing properties‚ which will enhance the quality of the property portfolio and result in sustainable growing distributions in the future.
Growth in the local economy is expected to remain subdued in the short term. Despite this and barring unforeseen events‚ the company expects the percentage growth rate in distributions per linked unit for the full 12-month period to be in line with the sector average growth rate.
