Premium Properties full-year distribution down 0.9%

Premium Properties on Thursday posted a 0.9% decline in distributions to 115.8 cents per linked unit in the year ended February, from the same period a year ago.

Net rental income from properties was up 9.6% to R297.2 million.

Jeffrey Wapnick, MD of Premium Properties, said the results were in line with market expectations, but were achieved in a difficult trading environment with tenants' total occupation costs increasing as utility costs and assessment rates in SA continued to soar.

"Leases allow us to recover utilities and rates and taxes, however higher costs constrict new rentals when leases expire," said Wapnick.

Premium - which invests in offices, retail, industrial and residential properties - said the year under review signified an intense upgrade phase in its portfolio. Premium invested R102.1 million in upgrades.

The property fund said the redevelopment capital spend during the past year had improved the quality of its buildings and attracted new tenants, including large national businesses, at higher rentals.

"This should provide investors with improved distribution growth in the medium to longer term, despite expected subdued short-term economic growth," said Wapnick.

Premium expected growth in distribution per linked unit for its current financial year to be on par with the listed property sector average, subject to no further decline in market conditions.

This would be achieved by introducing new lettable space to market, increased occupancies and growth in rental income.

Premium's portfolio vacancies decreased by 2.3% from the prior year. During the year Premium acquired six properties for a total amount of R176 million, and disposed of one at a profit of R3.9 million.

It reported a 97.6% occupancy level in its industrial portfolio, 95.0% in its retail portfolio and 87.5% in its office portfolio.

Premium's residential properties, which comprise 29.6% of its total portfolio by rental income, achieved growth of 7.5% and impressive 99.1% occupancy levels.