This despite higher vacancies, increasing bad debt and pressure on rentals.

Net rental income, exclusive of straight-line rental accruals, increased by 9.8% to R357.4 million compared to the same period in 2008.  If some repair and refurbishment projects had not been deferred, however, the increase would have been 6.4%, which the company said was in line with expectations, considering the difficult trading climate.  The distribution for the six months was increased by 6.6% to R138.9 million, or 47.0 cents per linked unit.

During the period, the company concluded new leases and renewals with a total area of more than 76 000 m² and a contract value of R185 million.  Vacancies as a percentage of gross rentals rose from 3.2% to 4.5%.

Vukile says one of the highlights of the year so far has been the conclusion of conditional agreements to acquire 13 properties from Sanlam at a cost of R780 million, which will be funded almost equally by debt and the issue of new linked units. Its existing property portfolio is valued at R4.55 billion.

Another highlight for the company is the finalisation of the transaction in terms of which it will acquire the property asset management business of Sanlam Properties relating to the property asset management of Sanlam’s property portfolio.  This transaction will be put to shareholders to vote upon early in December 2009.  The company has already, from 1 October 2009, assumed control of the property asset management of its own property portfolio which was previously handled by Sanlam Properties.

Chief executive Gerhard van Zyl said while there were some indications that the economy had turned the corner and was starting to improve, it would take some time for this improvement to impact positively on the property sector, which traditionally lags the general economy.

“We therefore expect trading conditions to remain difficult for the rest of this financial year, but we also believe that we will be able to achieve reasonable growth in distributions,” he said.