Property Reporter

PROPERTY unit trust Sycom Property Fund yesterday announced a 7,3% improvement in distributable income for the six months to September, which was higher than the market expected.

Sycom's distributable income amounted to 52,46c a unit compared with 48,89c a unit in the corresponding period last year.

MD Gerald Nelson attributed the higher than expected earnings to an extraordinary income item in terms of lease settlements.

The fund said earnings were enhanced by payments received from tenants in respect of settlements negotiated for early termination of leases over its Boart building in Fredman Drive, Sandton.

This building and the adjoining FNB building were currently undergoing a "major refurbishment", according to Sycom.

Nelson said retails had been stable, and that had underpinned the positive results.

Sycom said that although the high level of vacancies in the decentralised office market continued to hit achievable rentals and occupancy levels, there were signs of recovery with increased letting activity in this sector.

The fund's office vacancy levels had experienced some improvement over the past six months to levels of about 13%, which could fall to about 9,8% after the transfer of 11 buildings which were sold.

Of Sycom's remaining 10 office buildings, six were fully let on reasonably long-term leases, with aggressive marketing and leasing strategies being implemented on the remaining four.

The fund reported retail properties had continued to perform well with net income generally exceeding budget.

Vacancies in the retail portfolio also remain low at 1,6% on average resulting in an overall vacancy level of 9,4% for the fund.

Sycom's revenue increased to R132,3m from R113,5m for the same period last year, while its rental income surged to R127,09m from R108,6m in the previous period.

Sycom was presented with two Investment Property Databank (IPD) Listed Property Performance Awards in the office and retail categories on Tuesday night.

The awards recognise consistent top performance of the underlying property assets of listed property funds in the IPD database.

Awards were presented for the highest three-year total return in each of the retail, office and industrial categories.

Sycom had a fund return of 25,1% for retail compared with the benchmark return of 19,0% and a return 19,4% for offices compared with the 12,7% benchmark in that category.

Nov 06 2003 07:38:25:000AM Nick Wilson Business Day 1st Edition

Publisher: Business Day
Source: Business Day