Sycom Property Fund achieved total returns of 47,44% for the financial year ended 31 March 2006. In line with Sycom’s forecast, distribution growth of 5,1% was achieved over the prior year, with distributable earnings amounting to 116,53 cents per unit.

Gerald Nelson, MD of Sycom, notes that earnings growth for the year to 31 March 2007 is expected to exceed that reported for year ended March 2006.

Sycom’s net asset value totalled 1,289 cents per unit at 31 March 2006, representing an increase of 19,5% from 31 March 2005.

“This increase is attributable to the value of physical properties reacting to market demand and the general lowering of capitalisation rates,” notes Nelson. Sycom’s property portfolio was independently valued at year-end resulting in a revaluation surplus of R386,4 million with a property value of R2,98 billion.

In terms of liquidity, 63% of Sycom’s units in issue were traded over the past year. This compares favourably with the listed property sector and overall JSE Limited liquidities of 49% and 48% respectively over the same period.

At 31 March 2006 Sycom’s borrowings amounted to R600,63 million. On completion of its developments in progress this will represent gearing of around 20% of the value of the fund’s assets, well within the maximum borrowing capacity which will be approximately R920 million.

Sycom’s developments include the R118 million extension of N1 City of which Sycom owns a 42% undivided share, at an initial yield of 10%, which is due for completion in June 2006 and the R50,4 million phase 6 of Harrowdene Office Park. Harrowdene Phase 6 comprises two buildings totalling 6,345m² which have been fully let to a single tenant on a five year lease. Completion is due in September 2006 and the anticipated initial yield is around 12%.

Developments completed during the year include the R325 million 36,500m² regional retail centre Paarl Mall, of which Sycom owns a 70% undivided share, which successfully opened fully let in October 2005 and is expected to show an initial yield of 11,9% and the R406 million 48,800m2 Vaal Mall which commenced trading, fully let, on 27th April 2006. Sycom will own a 51% undivided share in Vaal Mall, with an initial yield of 11%. 

In terms of the acquisition agreement for Vaal Mall, a 20% share in the ownership was under option to a local BEE consortium. This option has been exercised, as previously reported, which results in Sycom’s share reducing from 71% to 51%. The proceeds from this disposal will be determined on a cost recovery basis.

During the year under review Sycom also concluded an agreement for the sale of the Hewlett Packard Building in Rivonia for R56,8 million net, representing an exit yield of 8,8% and a surplus over book value of R3,8 million.

Sycom’s office portfolio now comprises ten A-grade, well-located properties with a predominance of large corporate tenants while its retail portfolio which predominantly comprises five regional shopping centres, accounting for 45% of net property income, has experienced good performance, with rental income in aggregate exceeding budget.

Vacancies in the retail portfolio remain low at 0,8% while the improvement in the office letting market has resulted in the office portfolio vacancy reducing from 6,9% at March 2005 to a current level of 1,2%. Overall vacancies at 31 March 2006 were 1,0%, down from 4,8% at 31 March 2005.

“The robust performance of retail property continues and the upturn in demand for office space should see further recovery in this sector and should impact positively on new leases and renewals for Sycom, contributing to growth in earnings” explains Nelson.

The distribution in respect of the six months to 31 March 2006 of 61,56 cents per unit will be made to unitholders on Monday 12, June 2006.

~ Ends ~

Issued on behalf of Sycom Property Fund

Gerald Nelson

(011) 775 6424

By Marketing Concepts

Bronwen Noble

(011) 783 0700

082 855 4349