Listed property fund Paramount Property Fund (Paraprop, PRA) has declared a fourth and final distribution of 15.5 cents per linked unit, bringing the fund's total distribution for the year to end- October 2005 to 54.5 cents, a 6.9% increase on the 51 cents per linked distributed in 2004.

Announcing its final results on Monday, Paraprop said the size of the portfolio had doubled over the year to 2.12 billion rand. The group also recently announced the acquisition of another 839.5 million rand of new properties, most of which would be transferred into the fund by end-December, pushing its market capitalisation to over 1.1 billion rand and positioning it as a "mid-cap" fund.

Fully diluted headline earnings per linked unit improved to 41 cents from 35 cents the previous year, while net profit was higher at 109.4 million rand from 23.6 million rand in 2004.

Fully diluted net asset value per linked unit was reported at 516 cents, up from 435 cents the previous year.

The fund's total return for the year was reported at 50%, comprising 37% capital appreciation and 13% income.

Paraprop's debt-income ratio reduced to almost 50% during the year, with managing director Rodney Squire-Howe saying it was the group's intention to main the ratio at around 50%.

"We continued with our approach of active asset management, and 19 properties with a total book value of 146.88 million rand were sold during the year," said Squire-Howe.

"These achieved good prices, resulting in a substantial profit for the fund. The sales, mainly small industrial and office properties in Gauteng, served to consolidate our portfolio and reinforce the quality of our asset base."

"A total of 14 properties with a total value of 1.02 billion rand were acquired over the 12 months, including blue-chip properties, properties where we identified we can add value, and solid cash-flow streams."

Refurbishment was undertaken at seven properties in order to maintain or enhance their income-earning capacity. At the same time, Paraprop completed two new developments - the Mr Price Home Store in Tyger Valley, and the "34 St Georges" project which entailed the conversion of an office block in the Cape Town CBD to apartments.

The group had a further three major redevelopment projects on the drawing board at existing properties, he added.

Squire-Howe noted that the property portfolio performed well over the period, showing attractive growth in net rental income.

"This growth in income comes after several years of negative or static growth and shows a significant improvement in the fundamentals of the underlying property rental market," he commented.

"The positive market, combined with our hands-on property management approach, saw vacancies reduced to 2.5% at year end."

Commenting on the year ahead, he added that the outlook for the property market for 2006 was good. Paraprop's earnings growth for the year was expected to be 8%.

"Low interest rates, strong consumer demand, and high levels of business confidence are causing the economy to grow at an increasing pace. This growth requires increasing amounts of commercial space, which is currently led by the retail and industrial sectors, with the office sector rapidly catching up."

"Barring unforeseen changes, the industry can therefore look forward to further decreasing vacancies, increasing rentals and a spate of new developments. We anticipate that this will be reflected in Paraprop's portfolio where we expect to see the trend of growth in rental income continuing in the year ahead."