JSE-listed Synergy Income Fund on Friday said it expected its B-linked unit distribution growth to be flat at around 57.57c for the full 2015 financial year; however, its A-linked unit distribution would likely increase to about 91.13c, from 86.79c in 2014.

The specialised retail property fund, which announced a distribution of 44.45c per A-linked unit and 28.19c per B-linked unit, an increase of 5% and 2.4% respectively, for the six months to December 31, believed growth in the last half of the year would be hit by rental adjustments, advisory costs and a challenging trading environment.

The company’s operational performance during the first half of the financial year had been impacted by African Bank Investment Limited’s (Abil’s) wholly-owned subsidiary Ellerine Furnishers going into business rescue.

Synergy's total exposure to Abil was 2.4% of monthly income and 1.65% of gross lettable area, with the vacating of a number of the Ellerines premises during November and December widening the property group’s retail vacancy rate by 1.8%.

Synergy’s retail vacancy ratio of 6.3% was expected to improve, however, over the next six months, owing to the conclusion of several lease negotiations.

Meanwhile, the total advisory costs of the Vukile Property Fund’s acquisition of Synergy amounted to R2.6-million, of which R1-million had already been incurred.

Vukile last year acquired Synergy’s B-linked units at a swap ratio of one Vukile linked unit for every 2.67 Synergy B-linked units, and the company had extended a comparable offer to Synergy A-linked unitholders at a swap ratio of one Vukile linked unit for every 1.65 Synergy A-linked units.

Vukile's total beneficial interest in Synergy A-linked units increased from 0% to 8.41% and its total interest in the B-linked units increased from 57.76% to 75.16%, meaning that Synergy had become a listed subsidiary of Vukile.

Synergy also warned of operating in a challenging macroeconomic and social environment, which had been characterised by subdued economic growth, rising inflation, high unemployment, highly indebted consumers and reduced consumer spending.

Meanwhile, the company reported a rise in revenue to R160-million in the six months under review.

Net operating profit contracted marginally to R89-million, while profit from operations declined from R77-million in the six months to December 2013 to R89-million in the half-year to December 2014.

The property fund reported a total comprehensive loss for the period of R724 169 in the interim period under review, compared with a profit of R14-million in the comparative period the year before.