Distribution growth of 7,5% for Premium's investors

Jeffrey Wapnick‚ managing director of Premium‚ assigned the positive performance to strong demand for its properties‚ the performance-enhancing contribution of re-developments and a diverse tenant base. Premium has a 35% investment in residential property.

"Premium hand selects its properties on the basis of location and the potential to unlock value through development‚ re-development‚ refurbishment and conversion. This strategy delivers real performance for our investors‚" claimed Wapnick.

Wapnick said Premium's investors could expect similar distribution growth during the second half of the year‚ despite the subdued outlook for the local economy.

Premium invests in offices‚ retail‚ industrial and residential properties‚ comprising mainly multi-tenanted buildings in the Johanesburg and Pretoria central business district as well as in Hatfieldand Silverton.

Growth in Premium's unit price from R15 to R17.50 at the end of August 2012 gave investors capital growth of 16.7% for the interim period. Its 60 cents per linked unit distribution represents an income yield of 4% with a total return of 20.7% for the six-month period.

Premium's property assets increased in value by R141.5m to R4.2bn‚ giving rise to an increase in net asset value of 4.3% to 1‚651 cents per linked unit during the six month period.

Accessing the debt capital market for the first time‚ Premium achieved an 8.8% annual weighted average cost of debt‚ supported by a decrease in the prime lending rate. It launched a R1bn domestic medium term note programme in March 2012‚ issuing R196m 90-day commercial paper.

"Our success in the debt capital market provided Premium with access to affordable funding in the current market. It also diversified our sources of funding‚ which include long-standing relationships with South Africa's banks‚" said Wapnick.

Premium's gearing remained stable at 30.9% of the total value of the investment portfolio‚ compared with 30.7% at in February this year.

Premium's investment in IPS continued to deliver positive performance for investors with its profits earned by Premium‚ excluding capital profits‚ increasing to R10.3m - up a substantial 31.5% on the previous year.

Rental income and net rental income from Premium's properties increased by 12.4% and 11% respectively‚ compared with the previous interim period. It's core vacancies reduced to 11.4%.

Higher rates and utilities costs‚ however‚ had a knock-on effect for property expenses‚ which increased to 43.8% of Premium's revenue‚ from 43.1% in the previous financial year. Premium's bad debt write-offs and provisions increased from 0.7% to 1.4% of revenue during the period.

However‚ Wapnick said that no further deterioration was expected.

Residential property comprises 29.3% of the portfolio and performed positively driven by low vacancies and strong demand for affordable‚ secure accommodation.

"We will continue to grow our residential property portfolio‚ which shows strong potential. Premium has established a proud reputation of providing well-managed‚ desirable residential units‚" said Wapnick. "Our residential development model is matched to demand allowing us to launch new residential units while minimising vacancies."

Five development projects‚ all in Pretoria‚ were underway and earmarked for completion in the 2013 and 2014. Together they represent an investment of R196.9m.

These projects include the R63.5m development of residential apartments at The Fields in Hatfield‚ the R15.9m upgrade of Protea Towers office block and the R50.4m upgrade of Die Meent.

Wapnick said The Fields mixed-use development‚ was ideally sited next to the Hatfield Gautrain Station and clost to the Tshwane University.

"The City Lodge Hotel at the Fields is settling down well and its residential apartments are providing desirable student accommodation‚" claimed Wapnick.

Premium also upgraded The Pavilion for R9.3m and is redeveloping the mixed-use Eastway Centre at a cost of R57.8m.