Octodec distribution growth up 9.5% to 71.2c

Octodec Investments on Thursday posted a 9.5% growth in distributions per link unit to 71.20 cents in the six months to February, from the same period a year ago.

Octodec - which invests in retail, industrial and office property - reported a 15.9% rise in net rental income to R111.5 million. Property expenses increased slightly from 48.4% to 48.6% of revenue.

Jeffrey Wapnick, MD of Octodec, said the rental income resulted from the successful upgrade of properties and aggressive leasing initiatives.

"Strong results have been achieved despite economic conditions and consumer confidence which remained weak during the financial period.

"Hard work has gone into upgrading and extracting value from the portfolio," said Wapnick. "We are optimistic that, with these strategies in place, Octodec will deliver similar results for the full year."

During the period, Octodec expanded its property portfolio in the Johannesburg and Pretoria CBDs. It also continued to redevelop and refurbish its properties.

It bought two properties for a combined R178.6 million, providing an average weighted yield of 10.3%.

The property fund invested R36.2 million in property upgrades with a combined 9.9% yield, and has further projects earmarked for completion in the 2012 financial year.

Vacancies dropped by 1.4% during the period to 14.5% of total lettable area. Office vacancies came down from 9.3% to 7.0% and industrial vacancies reduced from 2.8% to 2.5%.

Completed residential units in the portfolio remain virtually full at any given time, driven by strong demand. Retail vacancies were 0.2% in shopping centres and 3.4% in freestanding shops.

Wapnick said Octodec's aim to transform vacant space to a desirable lettable condition with refurbishments and upgrades had resulted in the overall strengthening of the group's portfolio with more sought-after buildings.

This has increased tenancies and rental growth. "We are seeing positive performance across the portfolio, which continues to deliver sustainable distribution growth for investors."