Although property loan stock company SA Retail Properties reported marginally lower distributions for the six months to September, it is confident lower interest rates will have a favourable effect on the trading conditions of its small retailers in the next six months .

SA Retail reported last week that its distributable income amounted to 31,25c, a slight decline on the 31,50c for the same period last year.

"This distribution is in line with management's expectations, and reflects the difficult trading conditions experienced by small retailers within the portfolio," the company said.

SA Retail MD Peter Sparks said the high interest had affected the small retailers.

"In a lower interest environment, which is now prevailing we are upbeat about likely trading success of line shop operators," he said.

Sparks said that the company was "bullish about the next six months" because of this.

"We expect an improvement in distributions," said Sparks.

The company reported that in April this year it acquired Westwood Village Shopping Centre in Boksburg for R14,5m at an initial yield of 14%.

SA Retail reported that significant upgrades had also begun in the period under review, which included a R4,5m refurbishment of Eikestad Mall, the construction of a R1,8m Woolworths Food Store at Highland Mews, Witbank, and the conversion of the Pick 'n Pay at Coachman's Crossing from a Pick 'n Pay Fresh to a Pick 'n Pay Family Store at a capital cost of R2,9m. A R40m redevelopment of Tokai Shopping Centre, Cape Town, in which SA Retail had a 50% undivided share, had also begun. The company also reported vacancies of 5,6%, which compared favourably with the industry average of 6,6%.

Since the review period SA Retail also acquired the Town Square Shopping Centre in Constantia Kloof, Gauteng, for R49m at an initial yield of 11,5%.

The company also recently disposed of two properties that failed to meet its investment criteria. These included The Circle in Somerset West and the Witbank Centre. These properties would realise R44,4m.

Business Day