Capital’s total return of 27,2% can be attributed to both the income return and capital appreciation being higher than the index average. The index measures returns on direct investment in property of 21 separate portfolios consisting of 2,052 properties and with a capital value of R60.1 billion, which is estimated to represent 70% of the total institutional investment market.

The IPD benchmark total return across all properties of 15,1% is the highest return since 1994.  The calculation of total return consists primarily of two components, income return and capital appreciation of the properties themselves. Contributors to the index ascribe to common valuation guidelines laid down by the index as well as using accredited property valuers.

The 2003 index was boosted by the continued strong performance of large regional shopping centres and the recovery in the industrial sector as well as the reduction in vacancy levels across all property types, down from 13% to an average of 10.8%.

JHI Real Estate, the asset and property managers for Capital Property Fund report that key areas of focus have been the reduction of vacancies and keeping operating costs in check. Over the past three years continued attention to retaining existing tenants as well as targeting vacant space has seen vacancies drop from 15% at the beginning of 2002 to current levels of 6,5%, which compares favourably to the index average vacancy rate of 10,8%. The portfolio has also been upgraded through sales of underperforming properties and selected purchases

Andrew Teixeira, director of property management at JHI Real Estate, comments that demand for industrial premises remains strong. The lack of adequate supply in the newer primary industrial nodes has resulted in demand for space in the secondary nodes being taken up and enhances potential for selective new development. The office market remains extremely competitive but it is pleasing to note that there has been a take up of space in the primary nodes and a modest take up of space in the secondary nodes.

Capital has advised that it is negotiating with various parties and is currently trading under a cautionary. Resilient Property Income Fund has announced that it has acquired a 25% stake in each of Capital and in its management company.

Issued by :  Rosemary Roberts of JHI Real Estate
Tel (011) 441-0339
Cell 082-7769555
Fax (011) 441-0172
22 April 2004