In line with its earlier trading statement the distribution growth for the interim period, enabled the company to pay unit holders a distribution of 33,5 cents per unit. Executive director Michael Aitken attributes this continued success to the savings achieved through active management of the company’s properties coupled with lower borrowing costs. Freestone’s gearing ratio was reduced to 36,2% from 40,7%, with total borrowings of R643,7 million at the end of the period.

Freestone’s proactive tenant management continued to help maintain a stable vacancy rate of 4,1% across the portfolio. “The continued buoyant retail and industrial markets and increasing demand for office space further contributed towards a low vacancy profile,” says Aitken.

At the end of the period the portfolio was valued at R1,8 billion, reflecting a R184,9 million increase from the value at year-end.

In December 2006 Emira Property Fund announced its offer to acquire all of Freestone’s linked units.  Aitken says that the offer provides a number of benefits for Freestone and has already met with a positive response. “The upwards re-rating we received as a result of the Emira offer indicates a high level of investor support for the transaction.” Commenting on the benefits for Freestone unit holders Aitken adds “In addition to being part of a larger and more diversified fund Freestone unit holders will benefit from Emira’s established relationship with RMB Properties and Momentum Group as well as the fund’s strong BEE structure.”

The combined fund will not only be more diversified but will further provide unitholders with increased efficiencies arising from an enhanced fund management structure. In addition it would be one of the five largest listed property funds with a market capitalisation of over R5 billion. A circular with further details concerning the transaction will be sent to unitholders in due course.

Looking ahead Aitken remains optimistic. “In light of increasing demand and strong rental growth in the property market, prospects for distribution growth continue to be positive.” Freestone’s distribution growth is expected to be driven by net rental growth from the portfolio as well as favourable borrowing costs. “We expect to continue benefiting from the borrowing costs we were able to fix as a result of the Commercial Mortgage Backed Securitisation.” These factors are expected to help contribute towards strong growth in distributions for the full year ending June 2007.
 
Freestone’s units closed yesterday at R9,61.