Despite the toughest market conditions experienced in the Fund's seven year history, VPIF maintained its excellent rating in all of its key performance indicators. Distribution growth increased by 24.4% for the six months ended 31 December 2012, resulting in an interim cash distribution of 38 cents per linked unit (December 2011: 30.54 cents - annualised).

CEO of VPIF, Rob Kane, commented, "We are pleased with the results, which are at the top end of our forecast. Despite tough market conditions, prudent management of existing assets and two yield enhancing acquisitions during the reporting period formed the beachhead of our performance."

The Fund's portfolio comprises 28 strategically located, high quality buildings with a gross lettable area of 145 202 m2, independently valued at R1.5 billion. No fair value adjustments on the properties were made during the reporting period. The portfolio is 80% occupied by blue chip tenants at weighted average lease escalation of 7.2%.

"Our strategy has remained largely unchanged from inception in 2006, and we will continue to extract value from our chosen market of A+, A and some B-grade offices, whilst avoiding trophy assets. The value of a focused, experienced management team in unlocking value for unitholders is reflected in our performance. We are particularly pleased with our tenant retention of 95%" Kane continued.

Refurbishment of existing stock continues to enhance earnings, and the Fund took transfer of two yield-enhancing properties during the review period. The 5 251 m2 GLA Brickfield Property in Salt River was acquired for a purchase consideration of R20 million and an acquisition yield of 10.0%. The lease runs for 10 years and is triple net. VPIF also expanded its portfolio in Gauteng with the acquisition of the Business Centre property in Rivonia Boulevard, Sandton with an acquisition yield of 9.6%. The 4 886 m2 GLA property is single tenanted under a 10 year triple net lease.

The Fund remains well capitalised to take advantage of yield enhancing acquisitions. At the reporting date, VPIF had a loan to value of 35.0% (30 June 2012: 31.4%). The blended average cost of debt is 8.7% with 67% of outstanding debt hedged through the use of interest rate swaps. Total arrears decreased from R5.6 million at 30 June 2012 to R3.7 million for the period, as a result of cautious management.

The Company boasts a stable occupation level of 94.2% across the portfolio as a result of its tenant focus consisting predominantly of national government departments, listed and blue chip entities. 0.2% of vacancies are in the retail portfolio (30 June 2012: 0.1%) with 5.6% in the office portfolio (30 June 2012: 5.7%), which includes a vacancy that was acquired, but not paid for at the Foretrust building. If the Foretrust vacancy is excluded, the portfolio vacancy is 3.5%.

VPIF's refurbishment according to green principles was further recognised with the award of the prestigious Eskom Energy Efficiency Forum Award 2012, for 14 Loop Street, a heritage building.

"We expect market conditions to remain difficult for the remainder of 2013. Our focus is to continue growing the Fund with yield enhancing assets without compromising on quality. Management is confident that the portfolio's exceptional performance will continue in the second half of the financial year." Kane concluded.