Listed property unit trust SA Corporate Real Estate, formerly Martprop Property Fund, said yesterday its distributions for the five-months to December had increased 18% to 12c over the previous comparative period.
The fund, which had reported sluggish distribution growth over the last year or so, seems to have turned its fortunes around due in part to "very strong growth in market rentals in the industrial and retail portfolios".
SA Corporate MD Roger Perkin said the fund's financial year end had been changed from July to December and that the results were for the interim period from August 1 to December 31 last year.
"Effectively what they are being compared against are the distributions for the same five month period ending December 31 2005," said Perkin.
He said that during that five month period to December 2005, the fund had experienced "big negative rental reversions coming through in a retail property in Durban and in two industrial properties in Johannesburg".
He said that the rental increases of the affected properties had been rising above what market rentals had been rising.
"When the leases came up for renewal, they were renewed at significantly lower rentals. The growth in distributions is a consequence of coming off a low base and very strong growth in market rentals in the industrial and retail portfolios," said Perkin.
He said SA Corporate was "well positioned to benefit" from the fact that rentals in the industrial market continued to show positive growth.
"There is currently no vacant space in the industrial portfolio and the average gross rental of R26/m² in the portfolio is considered to be below market. This gives rental upside on the expiry of leases," he said.
SA Corporate also planned to merge with sister company SA Retail Properties.
Craig Ewin, head of listed real estate at Old Mutual Investment Group and SA Corporate executive director, said that 70% of SA Retail's unit holders had irrevocably accepted the SA Corporate offer of 3,05 SA Corporate units for each SA Retail unit .
"Investors in both SA Corporate and SA Retail have clearly seen the benefit of the proposed consolidated portfolio with the SA Corporate price firming from R3,55 a unit when the SA Corporate offer was made to R3,99 a unit as at February 21 2007 (on Wednesday)," said Ewin.
He said the acquisition of SA Retail would be a "meaningful step" in SA Corporate?s objective of transforming the fund into a diversified property portfolio.
