By Nick Wilson

Listed property unit trust Capital Property Fund has reported lower growth in distributions for the year to December, saying it had sold properties at higher yields than its new acquisitions.

Capital said its board of directors had resolved in 2004 to reposition it as a "robust, quality growth fund" and that this decision necessitated aggressive changes to Capital's property portfolio.

"Although this process was facilitated by a strong property market, the bulk of the properties sold were at higher yields than new acquisitions," said the fund.

As a result, Capital's growth in distributions for the 2006 financial year was limited to 7,6%, to 37,15c.

Its distributions had surged 13,5% for the year to December 2005. At the time the fund attributed this performance to an aggressive asset management policy.

The distribution growth for the year to December 2006 was also lower than the double-digit distribution growth that has on average been coming out of the listed property sector in recent months.

But CEO Barry Stuhler said Capital was expecting a better set of results this year.

"We continue to acquire A-grade new buildings in the office and industrial sectors. We are looking at some other exciting prospects to acquire further A-grade industrial properties."

Stuhler said Capital had just signed an agreement to acquire four A-grade industrial buildings in Longmeadow and Meadowdale, both in Johannesburg. The property deal was worth about R130 million.

"We're positioning the fund as a growth fund rather than a yield fund. The better the quality of the properties, the lower the acquisition yield. "We're (also) embarking on a programme of disposing of properties to ultimately reduce debt and increase our earnings," said Stuhler.

Trading conditions "in all sectors and geographies" of the Capital portfolio remained positive, the fund said.

"The retail centres are participating in the current boom and the industrial space is fully let," it said.

"While the office market is softer, office buildings in well-located growth nodes, such as Cape Town, have been improving steadily, resulting in a significant decrease in vacancies in the office portfolio."

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