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Johannesburg - Premium Properties [JSE:PMM] on Tuesday posted a 5.2% rise in distribution to 116.90 cents per linked unit for the year ended February 2011, compared with the previous corresponding period.
The property fund said this was achieved in a "difficult" trading environment with tenants' total cost of occupation increasing as utility costs and assessment rates increased significantly.
"While our commercial leases do provide for the recovery of the cost of utilities and rates and taxes, these increased costs impact negatively on new rentals on expiry of leases. Our residential leases do not provide for the recovery of rates and taxes," Premium said.
Net rental income increased by 12.5% to R271.1m compared with the previous period. Operating profit was up 12% to R248.4m. Investment assets during the period under review exceeded R3.8bn.
The core portfolio, representing those properties held for 12 comparable months and with no major development activity, reflected rental income growth of 5.3%.
The residential portfolio - which represented 29.0% of the portfolio by rental income - achieved growth of 6.0%, underpinned by low vacancies and strong demand for affordable and secure accommodation, the fund said.
Property expenses dropped to 40.0% compared with 41.1% in 2010, with bad debts decreasing during the period.
Premium said the upgrading of its properties would continue to be the major driver for the group and this should provide investors with improved distribution growth in the medium to longer term.
"It is anticipated that the growth in the economy will remain subdued in the short term. Notwithstanding this environment, and barring unforeseen events, Premium anticipates that the distributable income of the current year should be maintained in the forthcoming year," it said.
The property fund said this was achieved in a "difficult" trading environment with tenants' total cost of occupation increasing as utility costs and assessment rates increased significantly.
"While our commercial leases do provide for the recovery of the cost of utilities and rates and taxes, these increased costs impact negatively on new rentals on expiry of leases. Our residential leases do not provide for the recovery of rates and taxes," Premium said.
Net rental income increased by 12.5% to R271.1m compared with the previous period. Operating profit was up 12% to R248.4m. Investment assets during the period under review exceeded R3.8bn.
The core portfolio, representing those properties held for 12 comparable months and with no major development activity, reflected rental income growth of 5.3%.
The residential portfolio - which represented 29.0% of the portfolio by rental income - achieved growth of 6.0%, underpinned by low vacancies and strong demand for affordable and secure accommodation, the fund said.
Property expenses dropped to 40.0% compared with 41.1% in 2010, with bad debts decreasing during the period.
Premium said the upgrading of its properties would continue to be the major driver for the group and this should provide investors with improved distribution growth in the medium to longer term.
"It is anticipated that the growth in the economy will remain subdued in the short term. Notwithstanding this environment, and barring unforeseen events, Premium anticipates that the distributable income of the current year should be maintained in the forthcoming year," it said.
