Blue-chip listed property unit trust Sycom Property Fund reported a small distribution growth of 1,6% for the six months ended September.

While the increase in distributions was the second-lowest recorded in the sector so far this year, one of the reasons for this was Sycom's large development pipeline, which would benefit the fund in the medium to long term.

Sycom is involved in a number of promising development projects that make the fund's future prospects good. But these projects will have a short-term effect on distribution growth.

Sycom MD Gerald Nelson said growth in earnings for the year to March next year was still expected to be about 5% with "enhanced prospects thereafter".

Catalyst Securities MD Andre Stadler was "not completely surprised" by the low distribution growth.

Stadler said that in the comparable period last year, Sycom had a maintenance reserve that enabled it to boost its earnings.

"They (Sycom) did not have this benefit this year because they used it," said Stadler.

He said Sycom's development pipeline had long-term benefits for the fund in terms of the "quality of the portfolio and the sustainability of the income".

But Stadler said in the short term, developments could affect a company's performance.

He said Sycom was still a good long-term prospect, but in the short term there would be "disappointment on the income growth because of the development programme".

Business Day
 
Publisher: I-Net Bridge
Source: I-Net Bridge