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CENTRECITY PROPERTY FUND
("CENPROP")
CENPROP'S LONG-TERM OBJECTIVE IS TO MAINTAIN INVESTMENTS IN WELL TENANTED,
QUALITY OFFICE AND RETAIL PROPERTIES
THE DIRECTORS OF PROPERTY FUND MANAGERS LIMITED, MANAGEMENT COMPANY OF CENPROP,
ANNOUNCE THAT THE FINAL RESULTS OF THE FUND FOR THE YEAR ENDED 31 DECEMBER 1999
ARE AS FOLLOWS:
1999 1998
R000 R000
TURNOVER (COMPRISING GROSS RENTALS AND
RECOVERIES) 69 775 62 793
NET INCOME DERIVED FROM FIXED
PROPERTY COMPANIES 58 130 51 321
INTEREST RECEIVED 869 1 140
SERVICE FEE (1 749) (1 234)
OTHER EXPENDITURE (36) (916) (36) (130)
NET INCOME AVAILABLE FOR DISTRIBUTION 57 214 51 191
RETAINED INCOME AT BEGINNING OF YEAR 10 10
TOTAL INCOME AVAILABLE FOR DISTRIBUTION 57 224 51 201
DIVIDEND DISTRIBUTION 57 214 51 191
RETAINED INCOME AS AT 31 DECEMBER 10 10
UNITS IN ISSUE
AT 31 DECEMBER 163 490 707 163 490 707
EARNINGS AND DIVIDENDS PER UNIT (CENTS)
SIX MONTHS ENDED 30 JUNE - 16,95 14,54
SIX MONTHS ENDED 31 DECEMBER 18,05 16,77
35,00 31,31
ABRIDGED BALANCE SHEET AT 31 DECEMBER
1999 1998
R000 R000
CAPITAL EMPLOYED 253 954 254 654
REPRESENTED BY
INVESTMENT IN PROPERTY 250 167 248 538
CURRENT ASSETS 33 728 33 810
CURRENT LIABILITIES 29 941 27 694
NET CURRENT ASSETS 3 787 6 116
253 954 254 654
COMMENT
1. INCOME
NET INCOME AVAILABLE FOR DISTRIBUTION FOR THE YEAR ENDED 31 DECEMBER 1999 WAS
R57,22 MILLION OR 35,0 CENTS PER UNIT (1998: 31,31 CENTS). THIS REPRESENTS AN
OVERALL INCREASE IN EARNINGS OF 11,8%. THE DISTRIBUTION COMPRISES OF AN
INTERIM DISTRIBUTION OF 16,95 CENTS PER UNIT (1998: 14,54 CENTS) PAID IN AUGUST
1999 AND A FINAL DISTRIBUTION OF 18,05 CENTS (1998: 16,77 CENTS) PAYABLE ON 28
FEBRUARY 2000.
2. PORTFOLIO UPDATE
IN LINE WITH CENPROP'S POLICY OF MAINTAINING AND REFURBISHING ITS PROPERTY
HOLDINGS, VARIOUS PROJECTS OF A CAPITAL NATURE WERE UNDERTAKEN TO THE VALUE OF
R2,3 MILLION, THE LARGEST BEING THE ACQUISITION OF CRADOCK AVENUE IN ROSEBANK
FROM THE EASTERN METROPOLITAN SUB-STRUCTURE FOR R1,65 MILLION.
AS A RESULT OF THE ACQUISITION OF CRADOCK AVENUE, THE MALL HAS ACQUIRED FURTHER
RETAIL BULK OF 1 250 M2 AND HAS EMBARKED ON A PROCESS OF REZONING WHICH, IF
SUCCESSFUL, WOULD INCREASE THE AVAILABLE BULK BY AN ADDITIONAL 15 000 M2 SPLIT
BETWEEN OFFICE AND RETAIL USAGE.
THE ACQUISITION OF CRADOCK AVENUE REQUIRED THAT A SELECTED GROUP OF THE
EXISTING AFRICAN CURIO TRADERS BE HOUSED IN A FORMAL CURIO MARKET ENVIRONMENT.
DESIGNS FOR THIS MARKET ARE IN THE FINAL STAGES AND CONSTRUCTION OF THE
BUILDING IS TO COMMENCE EARLY IN 2000. THE PROPOSED LANDMARK BUILDING IS BEING
DESIGNED TO INCORPORATE ARCHITECTURAL INFLUENCES OF THE AFRICAN CONTINENT AND
WILL BE MARKETED AS A TOURIST ATTRACTION. IT IS APPARENT THAT THE ROSEBANK
CURIO MARKET IS CONSIDERED A MAJOR SOURCE OF QUALITY AFRICAN ART BY
INTERNATIONAL TOURISTS, MANY OF WHOM RESIDE IN THE HIGH QUALITY HOTELS IN THE
AREA. IT IS EXPECTED THAT THE CURIO MARKET WILL OPEN BY SEPTEMBER 2000.
THE CONSTRUCTION OF THE CURIO MARKET INCORPORATES THE CLOSURE OF CRADOCK
AVENUE, THE CONSTRUCTION OF A VEHICULAR RAMP ALONG THE EXTERNAL FACADE OF THE
MALL AND THE PEDESTRIANISATION AND LANDSCAPING OF WHAT WAS PREVIOUSLY THE ROAD
RESERVE. IT IS EXPECTED THAT THE ENTIRE PROJECT WILL BE FINALISED TO COINCIDE
WITH THE OPENING OF THE NEW R365 MILLION OLD MUTUAL RETAIL DEVELOPMENT, THE
ZONE @ ROSEBANK, LOCATED WITHIN 400 M OF THE CRADOCK AVENUE ENTRANCE OF THE
MALL. THESE DEVELOPMENTS ARE EXPECTED TO HAVE A POSITIVE IMPACT ON RETAILING IN
ROSEBANK. THE ZONE IS FOCUSED AS AN UPMARKET, STATE-OF-THE-ART ENTERTAINMENT
CENTRE AND PROMISES TO ATTRACT ADDITIONAL SHOPPERS TO THE NODE.
THE MALL IS ALSO POISED TO EMBARK ON A REFURBISHMENT PROGRAM INCORPORATING A
SUBSTANTIAL CAPITAL UPGRADE AND THE CONSTRUCTION OF ADDITIONAL RETAIL
ACCOMMODATION. THE AGGREGATE COST OF THE ENTIRE PROJECT WILL BE APPROXIMATELY
R50 MILLION.
2 LONG STREET IS LOCATED IN THE POPULAR FORESHORE AREA OF CAPE TOWN. IN THE
IMMEDIATE VICINITY, BOTH THE CULLINAN AND HOLIDAY INNS HOTELS HAVE BEEN
COMPLETED AND DIRECTLY OPPOSITE 2 LONG STREET, THE CONSTRUCTION OF INVESTEC
BANK'S CAPE TOWN OFFICES HAS COMMENCED, THUS ENTRENCHING THIS NODE AS A PRIME
ADDRESS FOR PROSPECTIVE OFFICE AND RETAIL TENANTS ALIKE.
DESPITE DIFFICULT TRADING CONDITIONS WHICH AFFECTED THE PROPERTY MARKET,
PARTICULARLY IN EARLY TO MID 1999, THE BALANCE OF CENPROP'S PORTFOLIO, WHICH
INCLUDES SOUTHWAY MALL, SEADOONE MALL AND KEW GARDENS, HAVE DISPLAYED STABLE
PERFORMANCES. DURING SEPTEMBER 1999, THE BALANCE OF THE VACANT SPACE MEASURING
3 400 M2 AT KEW GARDENS WAS TAKEN UP AND SUBSEQUENT TO THE YEAR END, THE
BUILDING WAS SOLD FOR R2,7 MILLION. THIS DISPOSAL IS VIEWED POSITIVELY IN LIGHT
OF THE POOR LOCATION AND LIMITED FUTURE PROSPECTS OF THE PROPERTY.
CENPROP'S CLAIM AGAINST SHOPRITE CHECKERS IN RESPECT OF OUTSTANDING OPERATING
COSTS DUE AT SEADOONE MALL IS PROGRESSING AND CURRENTLY A TRIAL DATE IS
EXPECTED. THE LIKELIHOOD STILL EXISTS THAT THE MATTER MAY BE SETTLED PRIOR TO
BEING TAKEN TO TRIAL AND VARIOUS DISCUSSIONS HAVE TAKEN PLACE IN THIS REGARD.
IN 1999, A PROVISION OF R240 000 HAS BEEN RAISED IN ANTICIPATION OF LEGAL FEES
ARISING FROM THIS MATTER. CENPROP IS CLAIMING R2 MILLION IN RESPECT OF ARREAR
OPERATING COSTS, PLUS INTEREST THEREON FROM DATE OF INCEPTION OF THE VARIOUS
CLAIMS. UNITHOLDERS WILL BE APPRAISED OF DEVELOPMENTS IN THIS REGARD.
DURING THE YEAR UNDER REVIEW, CENPROP ALSO ACCEPTED OFFERS TO DISPOSE OF 2 LONG
STREET, ERF 85 HYDE PARK (HUTTON COURT), SOUTHWAY MALL, SEADOONE MALL, NBS
BUILDING, INNES CHAMBERS AND KEW GARDENS. SUSPENSIVE CONDITIONS PERTAINING TO
THESE DISPOSALS WERE UNFORTUNATELY NOT MET AND THE NEGOTIATIONS WERE SUSPENDED.
IT IS EXPECTED THAT NEGOTIATIONS WITH FURTHER PROSPECTIVE INVESTORS WILL
COMMENCE IN EARLY 2000.
3. PORTFOLIO VALUATION
IN DECEMBER 1999, THE MAJORITY OF CENPROP'S PORTFOLIO WAS VALUED BY INDEPENDENT
VALUERS, JHI REAL ESTATE LIMITED.
PROPERTIES WHICH WERE NOT VALUED DURING THE 1999 FINANCIAL YEAR ARE SOUTHWAY
MALL, SEADOONE MALL AND HUTTON COURT, ALL OF WHICH WERE SUBJECT TO SALE
AGREEMENTS AT THE TIME OF VALUATION. DIRECTORS' VALUATIONS OF THESE PROPERTIES
HAVE BEEN UNDERTAKEN.
IN TOTAL, THE VALUATION EQUATES TO 316 CENTS PER UNIT AND WHEN COMPARED TO THE
CLOSING MARKET PRICE OF 250 CENTS PER UNIT (1998: 148 CENTS PER UNIT) AT 31
DECEMBER 1999, SUGGESTS THAT UNITS WERE TRADING AT A DISCOUNT OF 20,89% (1998:
43%). BASED ON THE UNIT PRICE AS AT 31 DECEMBER 1999, CENPROP'S MARKET
CAPITALISATION WAS R408 MILLION.
IT IS INTERESTING TO NOTE THAT NOTWITHSTANDING THE MARKET'S PERCEPTION OF
ILLIQUIDITY, A TOTAL OF 27% (1998: 55%) OF CENPROP'S UNITS WERE TRADED DURING
THE YEAR.
4. FUNDS
CENPROP'S FINANCIAL RESOURCES ARE FULLY INVESTED. THIS IS IN ACCORDANCE WITH
CENPROP'S POLICY OF ALLOWING FOR COMPLETION OF CURRENT COMMITMENTS AND PLANNED
REFURBISHMENT, BUT NOT HOLDING SURPLUS CASH.
5. OUTLOOK
NET RENTAL EARNINGS FOR THE YEAR ENDING DECEMBER 2000 ARE EXPECTED TO BE
APPROXIMATELY 7% ABOVE THOSE ACHIEVED IN 1999. DUE TO CURRENT REAL INTEREST
RATES BEING LOWER THAN THOSE ACHIEVED DURING 1999 AND HIGHER SERVICE FEES WHICH
WILL RESULT FROM SUBSTANTIALLY INCREASED UNIT PRICES WHICH HAVE RESULTED FROM
THE RE-RATING OF THE PROPERTY UNIT TRUST SECTOR AT THE END OF LAST YEAR, IT IS
EXPECTED THAT TOTAL DISTRIBUTIONS FOR THE YEAR 2000 WILL BE SIMILAR TO THOSE OF
1999.
6. ANNUAL REPORT
CENPROP'S ANNUAL REPORT WILL BE POSTED TO UNITHOLDERS ON OR ABOUT 29 FEBRUARY
2000.
DIVIDEND DECLARATION
NOTICE IS HEREBY GIVEN OF THE DECLARATION OF DIVIDEND NO. 41 IN RESPECT OF THE
INCOME DISTRIBUTION PERIOD 1 JULY 1999 TO 31 DECEMBER 1999. THE DIVIDEND
AMOUNTS TO 18,05 CENTS PER UNIT AND IS PAYABLE TO UNITHOLDERS REGISTERED AS
SUCH IN THE BOOKS OF THE FUND AT THE CLOSE OF BUSINESS ON
19 FEBRUARY 2000. DIVIDEND CHEQUES WILL BE POSTED ON OR ABOUT 29 FEBRUARY 2000.
ON BEHALF OF THE BOARD
JHI REAL ESTATE LIMITED
SECRETARIES
4 FEBRUARY 2000
CAPITAL PROPERTY FUND
("CAPITAL")
CAPITAL'S LONG-TERM OBJECTIVE IS TO HOLD A WELL BALANCED, BROAD PORTFOLIO OF
STRATEGICALLY LOCATED INDUSTRIAL, WAREHOUSE, OFFICE, PARKING AND RETAIL
PROPERTIES
THE DIRECTORS OF PROPERTY FUND MANAGERS LIMITED, MANAGEMENT COMPANY OF CAPITAL,
ANNOUNCE THAT THE FINAL RESULTS OF THE FUND FOR THE YEAR ENDED 31 DECEMBER 1999
ARE AS FOLLOWS:
1999 1998
(R000) (R000)
TURNOVER (COMPRISING GROSS
RENTALS AND RECOVERIES) 49 870 49 335
NET INCOME DERIVED FROM FIXED
PROPERTY COMPANIES 43 393 42 454
INTEREST RECEIVED 7 606 6 999
SERVICE FEE (1 559) (1 315)
OTHER EXPENDITURE (36) 6 011 (36) 5 648
NET INCOME AVAILABLE FOR DISTRIBUTION 49 404 48 102
RETAINED INCOME AT BEGINNING OF YEAR - -
TOTAL INCOME AVAILABLE FOR DISTRIBUTION 49 404 48 102
DIVIDEND DISTRIBUTION 49 404 48 102
RETAINED INCOME AT END OF YEAR - -
UNITS IN ISSUE
AT 31 DECEMBER 146 838 565 146 838 565
EARNINGS AND DIVIDENDS PER UNIT (CENTS)
SIX MONTHS ENDED 30 JUNE 17,07 15,40
SIX MONTHS ENDED 31 DECEMBER 16,58 17,36
33,65 32,76
ABRIDGED BALANCE SHEET AT 31 DECEMBER
1999 1998
R000 R000
CAPITAL EMPLOYED 314 499 306 275
REPRESENTED BY
INVESTMENT IN PROPERTY 254 969 275 682
CURRENT ASSETS 84 520 56 673
CURRENT LIABILITIES 24 990 26 080
NET CURRENT ASSETS 59 530 30 593
314 499 306 275
COMMENT
1. INCOME
NET INCOME AVAILABLE FOR DISTRIBUTION FOR THE YEAR ENDED 31 DECEMBER 1999
TOTALLED R49,4 MILLION (33,65 CENTS PER UNIT) WHICH REPRESENTS A 2,7% INCREASE
WHEN COMPARED WITH THE R48,1 MILLION (32,76 CENTS PER UNIT) ACHIEVED IN 1998.
THE DISTRIBUTION FOR 1999 COMPRISES OF AN INTERIM DISTRIBUTION OF 17,07 CENTS
PER UNIT (1998: 15,40 CENTS) PAID IN AUGUST 1999 AND A FINAL DISTRIBUTION OF
16,58 CENTS (1998: 17,36 CENTS) PAYABLE ON 28 FEBRUARY 2000.
2. PORTFOLIO UPDATE
DURING THE YEAR UNDER REVIEW, CAPITAL CONTINUED ITS STRATEGY OF DISPOSING OF
SELECTED PROPERTIES WHICH NO LONGER MET ITS INVESTMENT CRITERIA. THIS IS AN
ONGOING PROCESS WHICH, DESPITE BEING HINDERED BY HIGH INTEREST RATES DURING THE
FIRST HALF OF THE YEAR, GAINED MOMENTUM TOWARDS THE CLOSE OF 1999.
THE FOLLOWING PROPERTIES WERE DISPOSED OF AND THE PROFITS TRANSFERRED TO
CAPITAL RESERVES:
* ERF 2290 ROODEKOP WAS DISPOSED OF FOR R13 MILLION, REALISING A NET SURPLUS OF
APPROXIMATELY R3,17 MILLION.
* REMAINDER STAND 2283 RUSTENBURG WAS DISPOSED OF FOR R6,5 MILLION, REALISING A
NET SURPLUS OF APPROXIMATELY R1,87 MILLION.
* STANDS 7472 - 7476 PINETOWN WERE DISPOSED OF FOR R10,49 MILLION, REALISING A
NET SURPLUS OF APPROXIMATELY R2,63 MILLION.
* ERF 82 MIDRAND, A VACANT SITE AT CAPITAL HILL, WAS DISPOSED OF FOR R1,09
MILLION. CAPITAL'S 35% SHARE OF THE PROCEEDS EQUATED TO R381 500.
* ERF 637 ALRODE EXT. 4 WAS DISPOSED OF FOR R1,95 MILLION, REALISING A NET
SURPLUS OF R547 675.
IN TOTAL, SALES FOR THE YEAR RAISED R33,03 MILLION AND THE SURPLUS OF
APPROXIMATELY R8,21 MILLION WAS TRANSFERRED TO CAPITAL RESERVES.
ERF 191 BROMHOF WAS SOLD AFTER THE FINANCIAL YEAR END FOR A CONSIDERATION OF
R550 000. THE PROFIT OF R190 442 WILL BE TRANSFERRED TO CAPITAL RESERVES IN THE
NEW FINANCIAL YEAR.
ACQUISITIONS
IN JANUARY 2000, CAPITAL COMMITTED TO ACQUIRE A R39 MILLION COMMERCIAL
DEVELOPMENT IN MENLYN, PRETORIA, OPPOSITE THE RECENTLY UPGRADED AND EXPANDED
MENLYN SHOPPING CENTRE. THIS PRIME INVESTMENT WHICH OFFERS AN ATTRACTIVE RETURN
WILL HOUSE THE PRETORIA BRANCH OF PRICEWATERHOUSECOOPERS. THE BUILDING IS
SCHEDULED FOR COMPLETION IN SEPTEMBER 2000.
3. PORTFOLIO VALUATION
DURING 1998, APPROXIMATELY 50% OF CAPITAL'S PORTFOLIO WAS REVALUED WITH THE
BALANCE BEING REVALUED DURING THE COURSE OF 1999, AND DESPITE THE SOFTENING OF
CAPITALISATION RATES, NO MATERIAL CHANGES IN VALUATION WERE APPARENT. HAVING
REGARD TO THE RECENT IMPROVEMENT IN THE PROPERTY MARKET, MANAGEMENT IS OF THE
VIEW THAT THE VALUATION IS CONSERVATIVE.
THE COMBINED VALUATION EQUATES TO 268 CENTS PER UNIT AND WHEN COMPARED TO THE
CLOSING MARKET PRICE OF 240 CENTS PER UNIT AT 31 DECEMBER 1999, SUGGESTS THAT
UNITS WERE TRADING AT A DISCOUNT OF 10,5% (1998: 43%).
4. FUNDS
ALLOWING FOR THE PROPOSED ACQUISITIONS AND DISPOSALS, THE FUND'S REMAINING
CAPITAL ACCOUNT AMOUNTS TO R20 MILLION. THE MANAGEMENT COMPANY'S POLICY IS TO
MAINTAIN A FLOAT OF R10 MILLION TO PROVIDE FOR EXTENSIONS AND REFURBISHMENT TO
THE EXISTING PORTFOLIO. CAPITAL THEREFORE HAS A FURTHER R10 MILLION AVAILABLE
FOR INVESTMENT.
5. OUTLOOK
NET RENTAL EARNINGS FOR THE YEAR ENDING DECEMBER 2000 ARE EXPECTED TO BE
APPROXIMATELY 7% ABOVE THOSE ACHIEVED IN 1999. DUE TO CURRENT REAL INTEREST
RATES BEING LOWER THAN THOSE ACHIEVED DURING 1999 AND HIGHER SERVICE FEES WHICH
WILL RESULT FROM SUBSTANTIALLY INCREASED UNIT PRICES WHICH HAVE RESULTED FROM
THE RE-RATING OF THE PROPERTY UNIT TRUST SECTOR AT THE END OF LAST YEAR, IT IS
EXPECTED THAT TOTAL DISTRIBUTIONS FOR THE YEAR 2000 WILL BE SIMILAR TO THOSE OF
1999.
6. ANNUAL REPORT
CAPITAL'S ANNUAL REPORT WILL BE POSTED TO UNITHOLDERS ON OR ABOUT 29 FEBRUARY
2000.
DIVIDEND DECLARATION
NOTICE IS HEREBY GIVEN OF THE DECLARATION OF DIVIDEND NO. 33 IN RESPECT OF THE
INCOME DISTRIBUTION PERIOD 1 JULY 1999 TO 31 DECEMBER 1999. THE DIVIDEND
AMOUNTS TO 16,58 CENTS PER UNIT AND IS PAYABLE TO UNITHOLDERS REGISTERED AS
SUCH IN THE BOOKS OF THE FUND AT THE CLOSE OF BUSINESS ON 19 FEBRUARY 2000.
DIVIDEND CHEQUES WILL BE POSTED ON OR ABOUT 29 FEBRUARY 2000.
ON BEHALF OF THE BOARD
JHI REAL ESTATE LIMITED
SECRETARIES
4 FEBRUARY 2000
REGISTERED OFFICE:
1ST FLOOR, JHI HOUSE, 11 CRADOCK AVENUE, CNR. BAKER STREET, ROSEBANK, 2196
PO BOX 2100, PARKLANDS, 2121
TRANSFER SECRETARIES:
MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET, JOHANNESBURG, 2001
PO BOX 1053, JOHANNESBURG, 2000
PROPERTY FUND MANAGERS LTD
CO. REG. NO. 80/09531/06
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