Robust growth in retail portfolio boosts Sycom earnings

Posted On Monday, 10 May 2004 02:00 Published by Commercial Property News
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LISTED property unit trust Sycom Property Fund, one of the largest listed property funds, has reported distributable earnings for the year to March of 107,02c a unit

LISTED property unit trust Sycom Property Fund, one of the largest listed property funds, has reported distributable earnings for the year to March of 107,02c a unit, an increase of 3,28% over the previous 15-month period's annualised distribution of 103,62c a unit.

Sycom with a portfolio consisting of a retail property component of about 50%, the remainder consisting of office properties said that while the fund's retail portfolio reflected robust growth in capital values, this was somewhat offset by a marginal drop in the overall office portfolio value.

Angelique de Rauville, MD of listed asset management company Provest, which is part of the Investec Property Group and does monthly overviews of the listed property sector, said the 3,28% increase was "much in line" with their forecasts.

De Rauville said that in respect of the fund's strategy, a lot of its property portfolio was in the final stages of refurbishment and development and that, once it was completed, Sycom should boast one of the better quality physical property portfolios listed in the real estate sector.

"Provest's analysis proves that quality assets translate into above-average earnings and share price performance. On this basis Sycom is likely to continue outperforming its peers and should form part of a long-term investor's listed property portfolio," she said.

Sycom changed its year-end from December to March at the end of 2002, so any comparison between its results for the year to March 31 this year and the 15 months to March 31 last year has to be on an annualised basis.

The fund said that as far as its retail portfolio was concerned, the sharp drop in interest rates during the second half of last year, combined with lower inflation, resulted in "consistent improvements in real disposable income for consumers" and benefited the retail sector in improved turnovers for retailers in general.

"This has had a positive effect on the performance of retail property," the fund said.

Sycom MD Gerald Nelson said vacancies in the retail portfolio sat at only 1%.

Even though the fund said the performance of its office portfolio over the past year was affected by an oversupplied office market with year-on-year income returns remaining relatively flat, it was upbeat about future prospects.

The recent improved take-up of offices in the Johannesburg decentralised office market was encouraging, as evidenced by the fund's office portfolio vacancy dropping to 9,1% from more than 12% over the past 12 months.

Sycom's total vacancy level including retail and offices was 5,9% at March 31, down from 10 % at March last year.

Last modified on Friday, 14 June 2013 22:31

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