Jeffrey Wapnick, Managing Director of Premium, assigns this positive performance to strong demand for its property portfolio, the performance-enhancing contribution of redevelopments and a diverse tenant base. Thirty-five per cent of Premium's investment is in residential property, which is unique to the SA listed property sector.

"Premium hand selects its properties for location and the potential to unlock value through development, redevelopment, refurbishment and conversion. This strategy continues to deliver real performance for our investors," says Wapnick.

Wapnick says Premium's investors can expect similar distribution growth from its second half performance, despite the subdued growth outlook for the local economy.

Premium invests in offices, retail, industrial and residential properties, comprising mainly multi-tenanted buildings in the Pretoria CBD as well as Hatfield, Silverton and the Johannesburg CBD. Premium invests in high-growth areas, and in properties with turnaround potential or redevelopment prospects.

Growth in Premium's unit price from R15,00 to R17,50 at 31 August 2012 gave investors capital growth of 16,7% for the interim period. Its 60,0 cents per linked unit distribution represents an income yield of 4% with a total return of 20,7% for the six-month period.

With investment assets above R4,5 billion, Premium's property assets increased in value by R141,5 million to R4,2 billion, giving rise to an increase in net asset value of 4,3% to 1,651 cents per linked unit during its first half.

Accessing the debt capital market for the first time, Premium achieved a noteworthy 8,8% annual weighted average cost of debt, supported by a decrease in the prime lending rate. It launched a successful R1 billion Domestic Medium Term Note Programme in March 2012, issuing R196 million 90-day commercial paper.

"Our success in the debt capital market provided Premium with access to the most affordable funding in the current market. It also diversified our sources of funding, which include long-standing relationships with SA's banks," notes Wapnick.

Remaining stable, Premium's gearing at 31 August 2012 was 30,9% of the total value of the investment portfolio, against 30,7% at 29 February 2012.

Premium's investment in IPS continued to deliver positive performance for investors with its profits earned by Premium, excluding capital profits, increasing to R10,3 million – up a substantial 31,5% on the prior year. IPS is an associate property company with over 50% investment in residential property.

Rental income and net rental income from Premium's properties increased by 12,4% and 11,0% respectively, compared with the prior interim period. It's core vacancies reduced to 11,4%.

Despite soaring rates and utilities charges placing pressure on tenants' occupancy costs, Premium's recovery of costs from tenants remained constant during the year.

These costs, however, had a knock-on effect for property expenses, which increased to 43,8% of Premium's revenue, from 43,1% in its 2011 financial year. Premium's bad debt write-offs and provisions increased from 0,7% to 1,4% of revenue during the period. However, Wapnick says that no further significant deterioration is expected.

During the period, Premium improved tenant vetting and credit control to guard its rental incomes.

Residential property comprises 29,3% of the portfolio by rental income, and performed positively driven by low vacancies and strong demand for affordable, secure accommodation. Vacancies in this portfolio, below 2%, are almost all to allow the imminent upgrade of Premium's Demar building.

"We will continue to grow our residential property portfolio, which shows strong potential. Premium has established a proud reputation of providing well-managed, desirable residential units," says Wapnick. "Our residential development model is ideally matched to demand. We introduce new residential units while minimising vacancies."

Five development projects, all in Pretoria, were underway during the period and earmarked for completion in the 2013 and 2014. Together they represent an investment of R196,9 million by Premium.

The projects include the R63,5 million development of residential apartments at The Fields in Hatfield, the R15,9 million upgrade of Protea Towers office block and the R50,4 million upgrade of Die Meent where Pick n Pay will be anchor tenant of the 5,258m2 retail component which is over 95% let.

Wapnick notes The Fields is showing good form with increased demand for this mixed-use development, superbly placed next to the Hatfield Gautrain Station and The University of Pretoria. "The City Lodge Hotel at the Fields is settling down well and its residential apartments are proving desirable student accommodation," says Wapnick.

Premium also upgraded The Pavilion for R9,3 million and is redeveloping the mixed-use Eastway Centre for an estimated R57,8 million which created 104 new residential units, when its first phase was completed in April 2012. The second phase, upgrading existing residential units, will be finished by November 2012.

Committed to delivering sustainable earnings growth for investors by creating value from properties in key CBD locations, Premium will continue to identify prospects to redevelop its properties. "The markets our properties serve have proven less susceptible to the effects of current economic pressures. This puts Premium in a unique position to unlock new opportunities in CBDs and create profitable property assets that better serve those who live, work and shop in our cities," says Wapnick.