Johannesburg - Vukile Property Fund [JSE:VKE] announced on Monday that its distributions for the six months ended September 2010 increased by 7.5% to 50.525 cents from 47 cents a year ago.
The group's net rental income, excluding straight line rental accruals, increased by 9.25% over the corresponding period while net profit available for distribution increased by 13.2% from 49.27 cents per linked unit to 55.77 cents per linked unit.
Profit from property operations was R270.4m versus R225.7m previously.
Headline earnings per linked unit were 59.05 cents compared with 49.60 cents previously.
The property loan stock group attributed an increase in net profit to a timing diference, as sales commission from the asset management business is not earned equally over the 12-month period.
If this and other timing differences are taken into account, the increase in net profit over the comparable period reduced to 8.1%, which the company said was in line with expectations, given the tough trading conditions and increasing vacancies.
The vacancy profile - percentage of gross rentals - increased from 4.1% at 31 March to 5.3% at 30 September 2010.
Bad debt write offs were in line with expectations for the six-month period and the provision for doubtful debt as at 30 September 2010 was R7.4m.
The fund said its highlight of the year was the acquisition of nine properties for R537.8m taking Vukile's combined property portfolio to 82 properties with a gross lettable area of 1.010 million square metres.
The sectoral spread by gross rentals comprises 28% commercial, 54% retail and 18% industrial.
Vukile also has the option to acquire certain properties valued at approximately R500m from Sanlam Life, which has to be exercised before 31 December 2010.
Another highlight, it said, was the refinancing of R462m securitisation debt which generated a reduction of 0.5% on the cost of the debt.
During the period under review, new leases and renewals to the contract value of R756m were concluded.
The company said that a recovery in the property market would take longer than originally expected and that trading conditions would remain tough with little growth in rentals.
"However, given the inherent quality of the Vukile portfolio and its astute management by our management team and service providers, we are of the opinion that the company will again be able to deliver reasonable growth in distribution for the year ending 31 March 2011," said CEO Gerhard van Zyl.