Containment of expenses, the restructuring of some debt and a solid performance from its property portfolio helped listed property loan stock company Redefine Income Fund's distributions surge 16% to 42,7c for the year to August.

Redefine Income Fund outperformed the listed property sector's average distribution growth of about 10%.

The company said its distributions for the year to August 2007 would be at least 10% higher than the distributions this year.

CEO Brian Azizollahoff said the "containment of expenses", some restructuring of a portion of "Redefine's debt at lower interest rates", as well as a good performance from the underlying portfolio had boosted results.

"Rentals have been firming," said Azizollahoff.

Redefine said its total return for the year was 35%.

Redefine's property assets increased 53,5% to R6bn while its net asset value for each linked unit increased 32,6% to R5,66.

The company said its operating costs as a "percentage of contractual rental income" had decreased to 19,1% this year from 23,3% last year.

Fixed property makes up 42,2% of Redefine's portfolio, with investments in other listed property stocks making up the balance.

The company had an occupancy rate in its portfolio of 97,3%.

"During the year 30151m² of vacant space was leased and leases in respect of 37486m² were renewed. As a result, Redefine's lease expiry profile has continued to outperform the sector average with 54,6% of leases expiring in 2010 and beyond," said Redefine.

Azizollahoff said Redefine intended holding on to its 18,1% interest in CIREF, a property fund listed on the London Stock Exchange's Alternative Investment Market (AIM) and managed by Corovest International.

The stake in CIREF, which was acquired for R111m during the year under review, represented Redefine's first foray into the overseas property market.

"It (CIREF) offers geographic diversification and a natural rand hedge," said Azizollahoff.

He said Redefine would continue acquiring investments in listed property and fixed property.

"We are opportunistic. Wherever we find good value we'll make an acquisition be it listed or direct," said Azizollahoff.

Redefine has also made a takeover bid for Cape Town-based listed property loan stock company Spearhead Property Holdings.

Redefine has made an offer to Spearhead's unitholders to acquire 100% of the company's linked units to be settled by the issue of 6,18 Redefine linked units or R31 in cash for each Spearhead linked unit held, provided that cash would be limited to 50% of the total payable.

Azizollahoff said the deal was subject to both companies' unitholder approval, as well as Competition Commission approval and high court sanction.

"We've got sufficient support from Redefine and Spearhead unitholders to indicate the transaction should go ahead," he said.

Business Day