ANNUAL HIGHLIGHTS

o        Distributions of 54,5c, representing a 6,9% increase

o        Total return of 50%, comprising 37% capital appreciation and 13% income

o        Portfolio valued at R2,12-billion

o        Borrowings reduced to 52,2%

o        Market cap - as at end December 2005 - will exceed R1,1-billion

o        Earnings growth for the year ahead anticipated at 8%

JSE-listed Paramount Property Fund (Paraprop) has declared a fourth and final distribution of 15,5 cents, bringing the Fund’s total distribution over the past 12 months to 54,5 cents (2004:51 cents). This translates into a 6,9% increase which is higher than anticipated. The distributions consist of 3 quarterly payments of 13 cents each with a final “top up” payment of 15,5 cents. 

The size of the portfolio has grown dramatically to R2, 12-billion, doubling in size from the previous year.  Paraprop recently announced the acquisition of R839,5-million of new properties, most of which will be transferred into the fund by end-December.  This will push the fund’s market capitalisation to over R1-bilion, a major milestone which positions it as a “mid-cap” fund, and increases its appeal to larger investors.  The acquisitions were a good balance of retail, office and industrial in South Africa’s 3 major metro areas.

Paraprop’s debt ratio reduced to almost 50% during the year and MD of Paraprop, Rodney Squire-Howe says “it is our intention to maintain the ratio at around 50%.”

“We continued with our approach of active asset management, and 19 properties with a total book value of R146, 88-million were sold. These achieved good prices, resulting in a substantial profit for the fund. The sales, mainly small industrial and office properties in Gauteng, served to consolidate our portfolio and reinforce the quality of our asset base.  A total of 14 properties with a total value of R1-021-billion were acquired during the year under review and included blue-chip properties, properties where we identified we can add value, and solid cash-flow streams.  Refurbishment activity was undertaken at seven of our properties, in order to maintain or enhance their income-earning capacity. 

Two new developments were successfully completed, being the Mr Price Home Store in Tyger Valley, and the ’34 St Georges’ project which entailed the conversion of an office block in the Cape Town CBD to apartments, and we have a further three major redevelopment projects on the drawing boards at existing properties”

Squire-Howe noted that the property portfolio performed well over the period, showing attractive growth in net rental income.

“This growth in income comes after several years of negative or static growth and shows a significant improvement in the fundamentals of the underlying property rental market.  The positive market, combined with our hands-on property management approach, saw vacancies reduced to 2, 5% at year end.”

Commenting on the year ahead, he added that the outlook for the property market for 2006 was good. 

“Low interest rates, strong consumer demand, and high levels of business confidence are causing the economy to grow at an increasing pace.  This growth requires increasing amounts of commercial space, which is currently led by the retail and industrial sectors, with the office sector rapidly catching up.  Barring unforeseen changes, the industry can therefore look forward to further decreasing vacancies, increasing rentals and a spate of new developments. We anticipate that this will be reflected in Paraprop’s portfolio where we expect to see the trend of growth in rental income continuing in the year ahead.”

ends

Contact:
Rodney Squire-Howe
Managing Director
Paramount Property Fund         
(021) 659-5945; 083-251-9537

Bruce Kerswill
Executive Director
(021) 685-4020
083-409-7050

Issued by:            Nicola Nel; Atmosphere PR: 461-2117; 082-459-2288