Property Fund Managers (PFM) expect a modest increase in earnings for Capital Property Fund unit holders in 2003.   This will counter the adverse trend experienced in 2002 when headline earnings declined by 8.4%.

Capital comprises 63 properties and is a broadly based commercial portfolio incorporating offices, industrial and retail properties. Vigorous asset management reduced vacancies from 13% at the end of 2001 to 10% at the end of 2002.   A program has also commenced to improve the quality of the portfolio and a number of older properties were sold during the year.   Offers totaling R68 million have been made for the purchase of 2 Long Street, an office block in Cape Town and Southway Mall, a retail center in Durban, to be settled through the issue of units at 180 cents each.

Charles Ryan, a director of PFM said, “In addition to a rejuvenation of the portfolio through sales of older under performing properties and acquisition of better quality properties in order to achieve a better balanced sectorial spread, options to enhance the risk, profile earnings and liquidity are being explored through the creation of a substantially larger Fund.”

Although the valuers’ opinions of market valuations of the portfolio showed a decrease from 253 cents to 221 cents, Ryan said that he expected an improvement in asset values in the future as market conditions improved and the effects of management action became apparent.   The current price at 185 cents reflects a 16% discount on the asset value as assessed at 30 June 2002.   Trading in Capital’s units in 2002 increased to 20% which was double that of 2001.