The second quarter distributions of 92,50 cents (2007: 83,00 cents) comprise the A units receiving 33,75 cents (2007: 33,75 cents), the B units receiving 41,25 cents (2007: 41,25 cents) and the C units 17,50 cents (2007: 8,00 cents).

ApexHi unit prices strengthened considerably in the six month period, resulting in a total return of 33% for the combined units compared to a return of 29% for the Property Loan Stock Index (J256) over the same period. The A units generated a return of 37%, the B units 29% and the C units 35%.

ApexHi CEO Gerald Leissner says revenue increased as forecast by 11%. “Despite the downturn in the economy and the loss of income as a result of the refurbishments being undertaken on a number of the company’s retail centres, the letting activity has been positive, with rentals per square metre on the total portfolio increasing by 14%, and vacancies reducing to 6%.

“Leases for 288 229m2 expired in the six month period, of which 86% were renewed. Rentals on these renewals increased 15% from an average of R49,59/m2 to R57,25/m2. New leases for a further 50,000m2 were concluded at an average rental of R70,52/m2. This letting activity, together with the disposal of underperforming properties, reduced the vacancy level from 7% to 6%,” he says.

The interim results were muted by the anticipated 15% increase in property expenses. The company predicted a cost growth at a rate higher than revenue growth primarily as a result of increases in assessment rates and electricity costs. In addition, to maintain the quality of the portfolio, additional amounts were spent on repairs and maintenance, and tenant installation and letting costs increased to achieve new lettings and retain existing tenants.

Non-core income of R10-million, representing 2% of the total distribution, was generated from the Clearwater guarantee fee and development profits from the sale of sectional title units in the Berea Centre in Durban.

Borrowings increased by R553,8-million to R1,9-billion as a result of the  acquisition of 34,8% of Ambit Properties.  The R1,9-billion in borrowings represents 20,5% of the property portfolio, valued at R9,3-billion, and is 100% fixed at a weighted average all inclusive rate of 9,97% for nine years.  ApexHi has indicted that it wishes to acquire 100% of Ambit.

Leissner says taking account of a slowdown in net rental growth in the core portfolio and reduced return on the residential portfolio, growth in distributions for the full year is expected to be 10%.

Going forward, ApexHi unit holders will be required to vote on the proposal by Redefine to acquire all the issued units in ApexHi. Should the transaction be approved by all parties, ApexHi unit holders will swap their units for Redefine units, and ApexHi will be delisted.