Acucap Properties distribution lifts 5.1% to 307.22cpu

Acucap Properties MD Paul Theodosiou said the group had achieved a credible result in a difficult market with more headwinds than tailwinds.

JSE-listed retail-focused property fund, Acucap Properties (ACU) has reported a distribution of 156.22 cents per unit (cpu) for the six months ended March 2013‚ representing growth of 6.0% over the same six-month period last year.

Together with the interim distribution of 151.00 cpu‚ this gives unitholders an annual distribution of 307.22 cpu‚ a growth rate of 5.1% over the previous financial year.

Bad debts written off of R2.26 million were higher than the R1.27m written off in the prior year‚ while the provision for impairment of tenant receivables also increased to R3.6m from R2.9m. This negative shift in bad debts is attributable to an individual tenant failure‚ however‚ and is not an indication of a general deterioration in the credit environment‚ it said.

The company said its new 22‚000 m2 retail centre in Somerset West has been under construction since January 2013. The centre will be anchored by a Checkers Hyper and will accommodate a further 5‚500 m2 of ancillary retail and a 7‚500m2 self-storage facility. The estimated final capital cost of the development remains at R210m with a projected first year yield of 9‚1%. The centre is scheduled to open for Easter trade in April 2014.

Construction of the first phase of the planned 43‚500 m2 Watercrest Mall regional shopping centre in the Waterfall area of Durban has commenced and is scheduled for completion by the end of September 2013.

The Key West upgrade and extension program commenced in March 2012 and the current phase‚ comprising the upgrade of the malls and the entertainment area‚ and the completion of additional parking decks‚ is due for completion by 1 September 2013.

The Randfontein Village Square upgrade and extension of approximately 3‚500m2 GLA is practically complete at a total capital cost of R45millon and a first year yield of 9.5%.

Acucap’s retail portfolio yielded positive results for the period under review despite concerns over rising household debt to income levels.

Vacancy rates throughout the portfolio are low at 1.6% by GLA and 1.8% by income‚ and shopping centres have experienced stable and consistent shopper volumes.

The retail portfolio showed reported tenant sales revenue of R 7.3 billion for the 12 month period‚ up 4.8% on the prior year.

Leases for 44‚440 m2 expired during the year and were renewed or relet at rates 6.7% higher on average than terminating rentals. There was a strong tenant retention ratio of 70% of the GLA.

In its Office portfolio‚ vacancies remained low‚ ending the year at 2.0% (2012: 3.3%). Rental rates‚ however‚ remained under pressure. Leases totalling 23‚187 m2 expired during the year at an average rental of R141.21/m2‚ and leases totalling 24‚412 m2 were entered into at an average of R130.36/m2‚ a negative reversion of 7.7%. The tenant retention ratio was 63% with a negative reversion of 1.6% on those leases.

Leases for 24‚796 m2 are due to expire in the 2014 financial year at an average rental of R150.30/m2 and current expectations are for renewals to be concluded approximately 12.7% lower at an average of R131.20/m2‚ at the same time maintaining the high retention ratio that has characterised Acucaps office portfolio.

Looking ahead‚ the group said its property portfolio has remained defensively positioned throughout a prolonged period of weak economic growth in SA. The portfolio has been continuously refreshed‚ individual assets have been recapitalised as necessary‚ and tenant profiles optimised and remixed across the retail portfolio.

The board expects distributions for 2014 to increase by 5% to 6%. Longer term‚ growth in distributions can be expected to move into the 5% to 8% range‚ in line with the potential of Acucap’s high quality property portfolio.