Commercial developer West Hamilton Holdings said profit rose 13 percent in 2012 to $716,293 as the company put in place a new financing strategy in a year that saw continued high vacancy rates and lower rental rates for office space in the city.The BSX-listed company said rental income for the year totalled $1,985,157 as compared with $2,120,159 in 2011, a decrease of 6.4 percent.The average pricing has been reduced to approximately $40 per square foot for the year as compared with a high of $49 per square foot in previous years, the company said.But the reduction was offset by increasing demand for parking spaces which is expected to continue, especially in 2014 when the parking facility is expected to be full and pricing is expected to rise, West Hamilton said. West Hamilton owns and operates commercial property on Pitts Bay Road.In a letter to shareholders, J Michael Collier, company president and chairman stated: “During 2012, the commercial real estate sector continued to be under pressure with high vacancy rates, increased competition and lower rental rates. It is therefore pleasing to report that the company earned net operating income in 2012 of $716,293 compared with $633,130 in 2011, an increase of $83,163 or 13.14 percent. This is the company’s highest net operating income for the last six years.“The Company enjoyed better operating results in 2012 primarily because of its financing strategy which in 2011 through the rights issue, reduced the company’s borrowing and thus had a positive impact on the operating costs in 2012. Management has also focused on other cost reduction strategies which contributed to an increase in net income.”The commercial property market in Bermuda continues to be burdened with an oversupply of office space, mostly grades B and C which has pressured our renewal rates in 2012, West Hamilton stated.“In addition, the Belvedere Building’s largest tenant will not be renewing its lease in 2014. These two factors will impact our rental revenue in future years until the vacancy rates return to normal and rates begin to harden,” the company said.“Rego Realtors (Bermuda) Ltd is assisting us in securing a tenant for the space that will be vacant in January 2014, which will be a challenge given the current market conditions. However, I am pleased to inform you that a new tenant was secured for approximately 1,778 square feet of office space on the ground floor.“The remaining tenants have renewed their leases in 2013 albeit at reduced rental rates. Indeed a significant tenant issued a request for proposal in 2012 using the services of a realtor to seek interest from the market. After much deliberation, we were able to retain the tenant without concessions, although the offerings made by other landlords were more competitive.“The car park was not fully rented in 2012 because of the downturn in the economy and the reduction in staffing levels experienced by many international companies that are our primary tenants. This trend has since reversed towards the end of 2012 and more so during the first quarter of 2013. The vacancy rate for the car park was approximately 18 percent throughout 2012. However, it is expected to be fully occupied during the second half of 2013 and thereafter.“Our success in remaining competitive in a challenging market was realised from our focus on tenant retention by providing quality service on a timely basis. During the year several modifications and enhancements to the Belvedere Building and its operating systems were completed. We believe that the enhancements made to the Belvedere Building combined with competitive rates and quality service will provide us with every opportunity to retain our tenants in the future.”For the year ended December 31, the Company reported a gain of $112,746 within other comprehensive income compared with $72,823 in 2011. The change in comprehensive income is primarily related to the change in certain marketable securities that are held for resale, the company said.“As a result of the adoption of IFRS, the total comprehensive income for the year was $829,039 compared to $705,953 in 2011, an increase of $123,086 or 17.4 percent,” the company stated. “While the reported net income was higher in comparison with previous years, the gross rental income was lower because of reduced rental rates and higher vacancy rates.”The company said operating expenses are relatively flat when compared with the previous year and it is expected to be lower in 2013 because of certain efficiencies that will be realised from operational enhancements.“Current assets, which include cash and other assets that could readily be converted into cash, totalled $5.30 million compared with $10.25 million in 2011,” West Hamilton said.“The decrease is directly related to the payment of $5.27 million to the Bank of NT Butterfield & Son Limited as part repayment of the construction loan entered into by the company in 2009 and the payment of $315,358 interest expense on the remaining loans.The company generated $910,784 of cash from operations after deducting all operating expenses and used $648,435 for upgrades to operating systems, including structural changes to the Belvedere Building.”Total assets amounted to $24.39 million compared with $24.10 million at the end of 2011 an increase of $0.29 million with the property measured on a cost basis.The company said property was appraised by Rego Realtors in 2011 and they valued the property at between $61 million and $64 million.“Management has taken a prudent view considering the state of the Bermuda economy and is of the opinion that a value of approximately $49.0 million represents a reasonable estimate of the fair value of the property,” the company said.Total liabilities decreased from $15.99 million at the end of 2011 to $10.49 million at the end of 2012. The decrease of $5.50 million is primarily attributed to the repayment of the construction loan of $5.27 million.The company said shareholders equity increased by $829,019. The net income from operations contributed $716,293 and the increase in market value of the investment portfolio contributed $112,746. Book value per share at the end of 2012 was $6.65 (2011: $6.36). This represents an increase of $0.29 cents per share or 4.56 percent.The Board approved the adoption of a Share Buy-Back Programme on 3rd June 2013 as a means to improve shareholder liquidity and facilitate growth in the value of the Company’s Shares.And the Board at its meeting on June 3 approved a Dividend Reinvestment Plan “which is an easy and convenient way for shareholders to increase their holdings in the company by reinvesting all of their cash dividends in additional shares at a price to be determined from time to time”