Property investment holding company Growthpoint Properties on Wednesday reported that its distribution per linked unit for the year ended June 2009 was at 114.6 cents, up 7.6% from the 106.5 cents reported last year.

Revenue for the period was at R3.430 billion, up from the R2.920 billion reported before. Operating profit at R2.597 billion was up from the R2.184 billion reported in 2008.

In spite of difficult economic conditions that prevailed since the last quarter of 2008, Growthpoint said it had delivered growth in distributions for the year ended June 30 2009 of 7.6%.

The group said that distribution growth was slower than it had been in the last two years, mainly due to the impact of the global economic recession that resulted in a slowdown in demand for new space.

Although, in general, existing tenants have continued to renew their leases on expiry, there were a number of new developments that came on stream over the last nine months in the office and industrial sectors, which have proven difficult to let in the current economic environment, the group said.

Growthpoint said at June 30 2009 it had entered into an agreement to acquire one industrial property in Stormill for a total cost of R50 million with a one-year rental guarantee at an initial yield of 11.3%. Transfer of this property is expected by October 2009.

It said the outstanding expenditure in respect of developments in progress reflected above, amounted to R173.6 million.

It also noted that five properties were disposed of in the current period for R122 million.

Sale agreements have been entered into for the sale of a further six properties valued at R573.7 million which no longer meet Growthpoint's investment criteria.

Looking ahead, Growthpoint said it had a large, diversified, quality property portfolio and solid tenant base combined with conservative gearing policies and prudent financial management that should enable the company to continue achieving its mission of providing sustainable, growing income streams and long-term capital appreciation.

It said since the latter half of 2008, the impact of the global economic recession and financial crisis began to be felt quite markedly in South Africa and it was not immune to this.

"However, it was mostly the impact of new developments that came on stream in the last nine months in weak economic conditions that has caused Growthpoint's distributions to grow at a slower rate than what would otherwise have been the case," said Growthpoint.

Growthpoint's view is that economic activity would continue to be subdued for the next year until the effects of lower short-term interest rates and stable and slowly improving global economic conditions bring some relief.

This, together with the impact of anticipated higher margins on the refinancing of debt and certain non-interest-bearing liabilities becoming repayable, could result in distributions for the year to June 30 2010 not growing at the same rate as in 2009, it said.

"However, provided that no major unforeseen events occur, we expect to continue showing positive growth in distributions in the next financial year," said Growthpoint.