This resulted in an annual distribution of 175.03 cpu‚ an increase of 5.02% over the 2012 financial year. The "A" grade office market continued to improve during the period under review‚ with the vacancy rate declining from 5.1% at March 31 2012 to 3.1% at the end of the current financial year. Leases were concluded on 43‚271 square meters during the year‚ comprising 3‚376 square meters of new leases on previously vacant space‚ and 39 895 square meters of leasing on space that expired during the period.
These leases terminated at an average net rental of R147.10/m2 and were renewed or contracted at an average net rate of R129.25/m2‚ representing a 12.1% negative reversion. However‚ the achieved rate of R129.25/m2 is 3.8% higher than the average rate of R124.54/m2 achieved in the 2012 financial year‚ a good indication of rental growth returning to the 'A' grade office market.
Against a backdrop of increasing household debt to disposable income levels‚ increasing inflation and declining consumer expenditure‚ Sycom's SA retail portfolio has continued to yield positive results for the period under review‚ the company said.
Vacancy levels remained constant over the year at just below 2% of leasable area with the centres witnessing an increase in shopper volumes of 3% year on year. Against a total increase in retail turnovers of 6.5%‚ the total cost of occupation by retailers including rent‚ turnover rent‚ operational cost‚ marketing‚ municipal and rates recoveries increased 8.4% year on year to 6.1% of their total reported sales.
A circular will be posted on Friday‚ June 14 2013 convening a general meeting of Sycom unitholders for Tuesday‚ July 16 2013. Sycom successfully completed a fully underwritten rights offer on May 17 2013‚ raising R900m.
In terms of its strategy‚ Sycom continues to seek opportunities that will enhance shareholder value‚ including the expansion of retail assets that are performing well and have further bulk rights‚ acquiring additional shares in co- owned assets as opportunities arise‚ and by acquiring good quality office and retail properties that offer sound long-term growth prospects.
Underlying rental growth remains sound in the retail portfolio‚ and whilst office rentals are still under pressure (with downward reversions on renewals dampening contractual rental growth)‚ there are definite signs of a firming in 'A' grade office rentals over the last 12 months.
The board expects distribution growth for the next financial year to be in the order of 6%.
