SA Corporate Real Estate Fund retains distribution growth

SA Corporate Real Estate Fund Managing director Rory Mackey.

JSE-listed SA Corporate Real Estate Fund (SAC) on Monday reported 7.3% year-on-year growth in distributions to 16.28c per unit for the six months ended June.

The listed property unit trust‚ whose real estate investment trust (Reit) status will come into effect in January 2014‚ owns a portfolio of retail‚ industrial and commercial buildings located primarily in SA’s major metropolitans.

The fund said its industrial rental growth of 7.3% was underpinned by positive rental reversions and good tenant retentions of 65.1%.

Meanwhile‚ retail rental income decreased by 15.3%‚ which was attributable to a combination of the effect of disposals in 2012 and 2013‚ and a 1.3% increase in vacancies.

Retail rental income on the standing portfolio improved from 4.7% growth as at June 2012 to 6.2% growth as at June 2013‚ “arising from strong tenant retentions of 87.4% and positive reversions of 0.9%”.

Commercial rental income decreased by 11.7%‚ attributable to a combination of the impact of disposals and a 5.4% increase in vacancies relative to the comparable period.

Property expenses decreased by 4% compared with June 2012 thanks to the effect of the disposals. Property expenses in respect of the standing portfolio increased by 9.4%. The standing portfolio municipal costs‚ which represents 59.7% of property expenses‚ increased by 10.7%‚ due to an increase in electricity‚ rates and water costs.

The fund’s gearing level was low at 14.5%.

The fund expected a similar level of distribution growth to be achieved for the full financial year.