Nick Wilson
Property Correspondent
MARTPROP Property Fund has delivered the weakest performance of the listed property sector in the past year, reporting no growth in distributions for the six months to January compared with the same period the previous year.
The listed property unit trust yesterday announced a distribution of 1250c for the six months to January, the same amount delivered in the six months to January 2005.
The fund said the reversion to market of two substantial leases which had escalated beyond market levels over the past 10 years had “inhibited earnings growth in Martprop in the current financial year”.
Martprop MD Roger Perkin said the lease over its retail property, 425 West Street, in Durban, was 20 years old and had rentals which had been escalating for the past 10 years above market levels.
The property’s lease was reviewed and its rental had to be lowered to market levels with effect from June last year .
“The consequence was the rental was found to be significantly above market. On review, the rental from that property declined by about R500000 a month,” said Perkin.
He said the lease on the other industrial property had to be brought down to market levels with effect from January 1 and would “affect the second half distributions”.
Perkin said the extent of this reversion was “not nearly as significant” as 425 West Street.
But he said the fund was expecting the second-half distributions to be about 8% higher than the interim distribution.
Perkin said Martprop was expecting 8% distribution growth for the 2007 financial year.
Mariette Warner, head of property funds at Stanlib Asset Management, said this was the worst performance from a property fund in the listed property sector for the past year.
Warner said she was expecting 9% weighted average distribution growth from the listed property sector over the next year.
She said growth was curtailed by the two reviewed leases.
Martprop reported that during the period under review it acquired six properties for a total of R158,1m and disposed of properties for R39,6m.
Publisher: Business Day
Source: Business Day
