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FINAL RESULTS AND DIVIDEND DECLARATION
CENTRE CITY 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 1998
ARE AS FOLLOWS:
1998 1997
(R000) (R000)
TURNOVER (COMPRISING GROSS
RENTALS AND RECOVERIES) 62 793 56 327
NET INCOME DERIVED FROM FIXED
PROPERTY COMPANIES 51 321 43 611
INTEREST RECEIVED 1 140 1 546
SERVICE FEE (1 234) (1 482)
OTHER EXPENDITURE (36) (130) (30) 34
NET INCOME AVAILABLE FOR DISTRIBUTION 51 191 43 645
RETAINED INCOME AT BEGINNING OF YEAR 10 10
TOTAL INCOME AVAILABLE FOR DISTRIBUTION 51 201 43 655
DIVIDEND DISTRIBUTION 51 191 43 645
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 14,54 12,58
SIX MONTHS ENDED 31 DECEMBER 16,77 14,11
31,31 26,69
ABRIDGED BALANCE SHEET AT 31 DECEMBER
1998 1997
R000 R000
CAPITAL EMPLOYED 254 654 254 875
REPRESENTED BY
INVESTMENT IN PROPERTY 248 538 248 324
CURRENT ASSETS 33 810 29 876
CURRENT LIABILITIES 27 694 23 325
NET CURRENT ASSETS 6 116 6 551
254 654 254 875
DIVIDEND DECLARATION
NOTICE IS HEREBY GIVEN OF THE DECLARATION OF DIVIDEND NO. 39 IN RESPECT OF THE
INCOME DISTRIBUTION PERIOD 1 JULY 1998 TO 31 DECEMBER 1998. THE DIVIDEND
AMOUNTS TO 16,77 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 1999.
DIVIDEND CHEQUES WILL BE POSTED ON OR ABOUT 26 FEBRUARY 1999.
ON BEHALF OF THE BOARD
JHI REAL ESTATE LIMITED
SECRETARIES
4 FEBRUARY 1999
COMMENT
1. INCOME
CENPROP'S NET INCOME AVAILABLE FOR DISTRIBUTION TOTALLED R51,19 MILLION WHICH
REPRESENTS AN INCREASE OF 17% WHEN COMPARED WITH THE RESULTS ACHIEVED DURING
THE YEAR ENDED
31 DECEMBER 1997. THIS EQUATES TO A DIVIDEND OF 31,31 CENTS PER UNIT (1997:
26.69 CENTS PER UNIT).
NET INCOME DERIVED FROM FIXED PROPERTY COMPANIES IMPROVED BY 17% AND MOST
PROPERTIES ACHIEVED OR EXCEEDED BUDGET.
2. PORTFOLIO UPDATE
CENPROP'S PORTFOLIO IS PREDOMINANTLY GAUTENG BASED AND LARGELY LOCATED IN
JOHANNESBURG'S NORTHERN SUBURBS. PRESENTLY, 70% OF THE PORTFOLIO'S TOTAL NET
RENTAL INCOME IS DERIVED FROM INVESTMENT PROPERTIES IN ROSEBANK, HYDE PARK AND
SANDTON, WITH ONLY TWO BUILDINGS REPRESENTING 20% OF THE FUND'S LETTABLE AREA
LOCATED IN THE JOHANNESBURG CBD. BOTH THESE BUILDINGS ARE VIRTUALLY FULLY LET.
ROSEBANK HAS ALWAYS ENJOYED POPULARITY AS AN UPMARKET RETAIL AND OFFICE NODE
AND COMMANDS AMONGST THE HIGHEST RENTALS IN THE COUNTRY.
OLD MUTUAL PROPERTIES IS CURRENTLY REDEVELOPING A RETAIL SITE LOCATED ON THE
CORNER OF OXFORD AND TYRWHITT ROADS IN ROSEBANK, AT A COST OF R160 MILLION.
THIS REDEVELOPMENT WHICH IS SEEN AS A MAJOR POSITIVE FACTOR WILL PROVIDE A
FURTHER 26 000 M2 OF RETAIL SPACE AND 580 BASEMENT PARKING BAYS AND IS DUE FOR
COMPLETION IN EARLY 2000.
FOR SOME TIME, THE MALL OF ROSEBANK HAS BEEN NEGOTIATING WITH THE JOHANNESBURG
CITY COUNCIL TO ACQUIRE AND CLOSE A PORTION OF CRADOCK AVENUE ALONG ITS EASTERN
BOUNDARY. THE MALL'S APPLICATION HAS BEEN HEARD BY VARIOUS COUNCIL
SUB-COMMITTEES AND HAS BEEN APPROVED BY THE EXECUTIVE COMMITTEE OF THE CITY
COUNCIL.
THE CLOSURE OF THE PORTION OF CRADOCK AVENUE HAS BEEN SUPPORTED BY ALL THE
MAJOR ADJOINING LANDOWNERS AND IS SEEN AS A POSITIVE STEP IN ENSURING THE
UPGRADE OF THIS PORTION OF THE PRECINCT.
A VARIETY OF NEW TENANTS HAVE TAKEN UP OCCUPATION OF RETAIL OUTLETS IN THE MALL
OVER RECENT MONTHS, THEY INCLUDE THE GAUTENG TOURISM BOARD, VERIMARK, RED
SQUARE, WHICH IS PART OF THE EDGARS GROUP AND MASTRANTONIO, A POPULAR
RESTAURANT CHAIN. ALL THE NEW TENANTS HAVE SETTLED IN AND HAVE EXPERIENCED
EXCELLENT TRADING CONDITIONS.
CENPROP'S 2 LONG STREET, LOCATED IN CAPE TOWN'S COMMERCIAL HEART, IS OCCUPIED
BY MAJOR NATIONAL TENANTS AND PROMINENT LEGAL AND INVESTMENT COMPANIES. THE
BUILDING'S PROXIMITY TO THE V AND A WATERFRONT AND THE NEWLY COMPLETED CULLINAN
HOTEL AND HOLIDAY INN, MAKE THIS BUILDING A POPULAR CHOICE AMONGST PROSPECTIVE
TENANTS. THE SHORTAGE OF QUALITY VACANT OFFICE SPACE IN THE CAPE TOWN CBD, ALSO
HAS A FAVOURABLE EFFECT ON LETTINGS AT 2 LONG STREET.
THE BALANCE OF CENPROP'S PORTFOLIO HAS EXPERIENCED STABLE GROWTH DURING 1998
AND IT IS EXPECTED THAT THIS TREND WILL CONTINUE DURING 1999 AND BEYOND. THE
CONVERSION OF THE OK BAZAARS AT SOUTHWAY MALL TO A SHOPRITE CHECKERS STORE IS
VIEWED AS A POSITIVE STEP TO IMPROVING THE OVERALL DESIRABILITY OF THE CENTRE.
3. PORTFOLIO VALUATION
CENPROP'S PROPERTY INVESTMENTS WERE VALUED BY JHI REAL ESTATE LIMITED (JHI) -
VALUATION DIVISION IN DECEMBER 1996 AT A TOTAL OPEN MARKET VALUE OF R426
MILLION, WHILST THE ESTIMATED REPLACEMENT COST OF THE PORTFOLIO WAS R543
MILLION. THE VALUATION EQUATES TO 261 CENTS PER UNIT AND WHEN COMPARED TO THE
CLOSING MARKET PRICE OF 148 CENTS PER UNIT AT 31 DECEMBER 1998 SUGGESTS THAT
UNITS WERE TRADING AT A DISCOUNT OF 43%.
IT IS INTERESTING TO NOTE THAT, NOTWITHSTANDING THE MARKET'S PERCEPTION OF
ILLIQUIDITY, CENPROP'S UNITS TRADED VIRTUALLY EVERY DAY THROUGHOUT 1998 AND IN
TOTAL 55% OF THE UNITS WERE TRADED.
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
CENPROP'S OBJECTIVE IS TO BE A PRIME RETAIL AND OFFICE FUND. INVESTOR
CONFIDENCE IN ROSEBANK, ILLUSTRATED BY THE ONGOING NEW DEVELOPMENT OF THE AREA
AND THE GENERAL STABILITY OF CENPROP'S TENANTS, BODE WELL FOR THE POSITIVE
GROWTH DURING 1999. DESPITE THE GENERAL WEAKNESS IN THE ECONOMY AND DIFFICULT
RETAIL TRADING CONDITIONS RESULTING FROM HIGHER REAL INTEREST RATES AND A
DEVALUATION IN THE CURRENCY, THE FUND IS EXPECTED TO PERFORM IN LINE WITH THE
INFLATION RATE DURING THE FORTHCOMING FINANCIAL YEAR.
6. ANNUAL REPORT
CENPROP'S ANNUAL REPORT WILL BE POSTED TO UNITHOLDERS ON OR ABOUT 26 FEBRUARY
1999.
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 1998
ARE AS FOLLOWS:
1998 1997
(R000) (R000)
TURNOVER (COMPRISING GROSS
RENTALS AND RECOVERIES) 49 335 57 214
NET INCOME DERIVED FROM FIXED
PROPERTY COMPANIES 42 454 43 987
EXCEPTIONAL INCOME (SEE COMMENTARY) - 6 260
INTEREST RECEIVED 6 999 6 363
SERVICE FEE (1 315) (1 528)
OTHER EXPENDITURE (36) 5 648 (30) 4 805
NET INCOME AVAILABLE FOR DISTRIBUTION 48 102 55 052
RETAINED INCOME AT BEGINNING OF YEAR - 5
TOTAL INCOME AVAILABLE FOR DISTRIBUTION 48 102 55 057
DIVIDEND DISTRIBUTION 48 102 55 057
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 15,40 16,49
SIX MONTHS ENDED 31 DECEMBER 17,36 16,74
EARNINGS BEFORE EXCEPTIONAL INCOME 32,76 33,23
EXCEPTIONAL INCOME (SEE COMMENTARY) - 4,26
32,76 37,49
ABRIDGED BALANCE SHEET AT 31 DECEMBER
1998 1997
R000 R000
CAPITAL EMPLOYED 301 205 305 055
REPRESENTED BY
INVESTMENT IN PROPERTY 270 612 275 311
CURRENT ASSETS 56 673 61 026
CURRENT LIABILITIES 26 080 31 282
NET CURRENT ASSETS 30 593 29 744
301 205 305 055
DIVIDEND DECLARATION
NOTICE IS HEREBY GIVEN OF THE DECLARATION OF DIVIDEND NO. 31 IN RESPECT OF THE
INCOME DISTRIBUTION PERIOD 1 JULY 1998 TO 31 DECEMBER 1998. THE DIVIDEND
AMOUNTS TO 17,36 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 1999.
DIVIDEND CHEQUES WILL BE POSTED ON OR ABOUT 26 FEBRUARY 1999.
ON BEHALF OF THE BOARD
JHI REAL ESTATE LIMITED
SECRETARIES
4 FEBRUARY 1999
1. INCOME
CAPITAL'S NET INCOME FROM PROPERTY COMPANIES AVAILABLE FOR DISTRIBUTION AT THE
END OF THE YEAR TOTALLED R48,10 MILLION (32,76 CENTS PER UNIT) COMPARED WITH
THE R48,79 MILLION (33,23 CENTS PER UNIT) ACHIEVED FOR THE FINANCIAL YEAR ENDED
31 DECEMBER 1997.
UNITHOLDERS WILL RECALL THAT THE RESULTS TO THE END OF 1997 INCLUDED AN
EXCEPTIONAL GAIN OF R6,3 MILLION (4,26 CENTS PER UNIT) IN ADDITION TO THE 33,23
CENTS PER UNIT, AS A RESULT OF THE LEASE CANCELLATION FEE RECEIVED FROM A MAJOR
TENANT AT THE KING CITY PARKADE IN THE JOHANNESBURG CBD. THE PREMISES HAVE NOT
BEEN RELET AND THE PARKADE HAS BEEN CLOSED. THE LOSS OF FURTHER RENTAL INCOME
FROM THIS TENANT WAS LARGELY OFFSET BY HIGHER THAN EXPECTED INTEREST EARNINGS
ON CASH HELD AND THE FAVOURABLE RENEWAL OF LEASES ON OTHER PROPERTIES WHICH
EXPIRED DURING 1998.
2. PORTFOLIO UPDATE
CAPITAL IS CONTINUING ITS STRATEGY OF DISPOSAL OF SELECTED PROPERTIES WHICH NO
LONGER MEET ITS INVESTMENT CRITERIA. DURING THE 1998 FINANCIAL YEAR, REMAINDER
OF ERF 107104 MAITLAND WAS DISPOSED OF FOR A TOTAL CONSIDERATION OF R4,4
MILLION. THIS SALE REALISED A PROFIT OF
R1,2 MILLION WHICH WAS TRANSFERRED TO CAPITAL RESERVES. AS AT DECEMBER 1998,
FURTHER PROPERTIES HAD BEEN SOLD FOR A TOTAL OF R18,9 MILLION SUBJECT TO THE
BUYERS SUCCESSFULLY SECURING THE NECESSARY FINANCING. THESE WILL BE ACCOUNTED
FOR IN THE 1999 FINANCIAL YEAR.
AS PREVIOUSLY REPORTED, A CONTINGENT LIABILITY EXISTS IN RESPECT OF DAMAGE TO
THE ROOF AT ERF 1115 FERNDALE. THE ESTIMATED REINSTATEMENT COST, INCLUDING LOSS
OF RENTAL, IS LIKELY TO BE IN THE REGION OF R4 MILLION. LEGAL ACTION HAS BEEN
INITIATED AGAINST CERTAIN PROFESSIONALS INVOLVED IN THE DEVELOPMENT OF THE
BUILDING, BUT DUE TO THE LENGTHY NATURE OF LEGAL ACTION AND COURT PROCESS, THE
POSSIBILITY EXISTS THAT ROOF REPAIRS MAY HAVE TO BE UNDERTAKEN PRIOR TO
FINALISATION OF THE LEGAL ACTION. REMEDIAL MAINTENANCE RESERVES WILL BE
UTILISED TO SETTLE THE COST OF REPAIRS, PENDING THE RECOVERY OF THE COSTS FROM
THE DEFENDANTS. NO PROVISION HAS BEEN RAISED AS THE COST IS CONSIDERED TO BE
FULLY RECOVERABLE.
3. PORTFOLIO VALUATION
CAPITAL'S PROPERTY INVESTMENTS WERE VALUED BY JHI REAL ESTATE LIMITED (JHI) -
VALUATION DIVISION IN DECEMBER 1996 AND ALLOWING FOR ESCALATIONS AND DISPOSALS,
THE TOTAL OPEN MARKET VALUE OF THE PORTFOLIO IS R374 MILLION, WHICH INCLUDED
CASH HELD AND MAKES ALLOWANCE FOR PROPERTY DISPOSALS SUBSEQUENT TO THE 1996
VALUATION. THE ESTIMATED REPLACEMENT COST OF THE PORTFOLIO IS R534 MILLION.
DURING 1997, APPROXIMATELY 50% OF THE PORTFOLIO WAS REVALUED, AND DESPITE THE
SOFTENING OF CAPITALISATION RATES, NO MATERIAL CHANGES IN VALUATION WERE
APPARENT. THE BALANCE OF CAPITAL'S PORTFOLIO WILL BE VALUED DURING THE COURSE
OF 1999.
THE VALUATION EQUATES TO 255 CENTS PER UNIT AND WHEN COMPARED TO THE CLOSING
MARKET PRICE OF 145 CENTS PER UNIT AT 31 DECEMBER 1998, SUGGESTS THAT UNITS
WERE TRADING AT A DISCOUNT OF 43%.
4. FUNDS
THE NET EFFECT OF THE ACQUISITION AND DISPOSALS AND CASH HELD AT THE
COMMENCEMENT OF 1998 IS THAT CASH RESOURCES IN THE CAPITAL ACCOUNT WILL AMOUNT
TO R30,4 MILLION. THE MANAGEMENT COMPANY'S POLICY IS TO MAINTAIN A FLOAT OF R10
MILLION TO PROVIDE FOR EXTENSIONS AND REFURBISHMENT TO CAPITAL'S EXISTING
PORTFOLIO.
AFTER MAKING ALLOWANCES, THEREFORE, CAPITAL HAS R20,4 MILLION AVAILABLE FOR
FURTHER INVESTMENT.
5. OUTLOOK
THE EXPECTED FURTHER REDUCTION IN INTEREST RATES IS SEEN AS A POSITIVE SIGN AND
COULD SERVE TO RELIEVE MUCH OF THE STRAIN EXPERIENCED IN RECENT MONTHS IN THE
COMMERCIAL AND INDUSTRIAL SECTORS. IN THIS EVENT, CAPITAL IS PROJECTING TO
ACHIEVE AN INCREASE IN EARNINGS IN LINE WITH THE PROJECTED INFLATION RATE OF 7%
TO 8%.
6. ANNUAL REPORT
CAPITAL'S ANNUAL REPORT WILL BE POSTED TO UNITHOLDERS ON OR ABOUIT 26 FEBRUARY
1999.
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
PFM
PROPERTY FUND MANAGERS LTD
CO. REG. NO. 80/09531/06
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