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EMI - Emira Property Fund - Unaudited financial results for the six months

Release Date: 16/02/2011 17:43
Code(s): EMI
Wrap Text

EMI - Emira Property Fund - Unaudited financial results for the six months ended 31 December 2010 and income distribution declaration Emira Property Fund (A property fund created under the Emira Property Scheme, registered in terms of the Collective Investment Schemes Control Act) Share code: EMI ISIN: ZAE000050712 ("Emira" or "the Fund") Innovation Diversification Rejuvenation UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010 AND INCOME DISTRIBUTION DECLARATION R280,5 million distributable income 55,21 cents distribution per PI 1 130 cents net asset value per PI +15,7% 6 month total return Condensed statement of comprehensive income Unaudited Unaudited Audited Six months Six months Year
ended ended ended R`000 31 Dec 2010 31 Dec 2009 30 Jun 2010 Revenue 610 125 585 204 1 162 179 Operating lease rental 611 484 566 918 1 152 167 income and tenant recoveries Allowance for future rental (1 359) 18 286 10 012 escalations Income from listed property 10 050 - - investment Property expenses (229 669) (195 776) (391 807) Management expenses (8 418) (17 478) (36 171) Cancellation payment in (129 150) - - respect of amendment to existing service charge arrangement Administration expenses (27 230) (21 219) (43 214) Depreciation (3 884) (5 620) (9 704) Operating profit 221 824 345 111 681 283 Net fair value adjustments 151 694 (114 313) 42 430 Net fair value 127 272 (114 313) 39 661 gain/(deficit) on investment properties Change in fair value as a 1 359 (18 286) (10 012) result of straight-lining lease rentals Change in fair value as a 2 306 820 5 329 result of amortising upfront lease costs Change in fair value as a 123 607 (96 847) 44 344 result of property appreciation/(depreciation) in value Unrealised gain on fair 24 422 - 2 769 valuation of listed property investment Profit before finance costs 373 518 230 798 723 713 Net finance costs (114 358) (76 616) (211 839) Finance income 7 458 2 574 5 484 Interest received 3 351 2 574 5 484 Claw-back of distribution 4 107 - - in respect of participatory interests issued cum distribution Finance costs (121 816) (79 190) (217 323) Interest paid and amortised (81 260) (70 291) (143 219) borrowing costs Interest capitalised to the 1 808 501 3 065 cost of developments Preference share dividends (6 183) (6 854) (13 351) paid Unrealised deficit on (36 181) (2 546) (63 818) interest-rate swaps Profit before income tax 259 160 154 182 511 874 charge Income tax charge (7 810) 8 036 2 683 Deferred taxation (7 192) 8 721 4 018 - Revaluation of investment (6 977) 8 492 1 753 properties - Other timing differences (215) 229 2 265 including allowance for future rental escalations STC on preference share (618) (685) (1 335) dividends paid
Profit for the period 251 350 162 218 514 557 attributable to equity holders Total comprehensive income 251 350 162 218 514 557 attributable to equity holders Reconciliation between earnings and headline earnings and distribution Unaudited Unaudited Audited Six months Six months Year R`000 ended ended ended 31 Dec 2010 31 Dec 2009 30 Jun 2010
Profit for the period 251 350 162 218 514 557 attributable to equity holders Adjusted for: Net fair value (127 272) 114 313 (39 661) (gain)/deficit on revaluation of investment properties Deferred taxation on 6 977 (8 492) (1 753) revaluation of investment properties Headline earnings 131 055 268 039 473 143 Adjusted for: Allowance for future rental 1 359 (18 286) (10 012) escalations Amortised upfront lease 2 306 820 5 329 costs Unrealised deficit on 36 181 2 546 63 818 interest-rate swaps Unrealised gain on listed (24 422) - (2 769) property investment Pre-acquisition income on 4 628 - - GOZ units acquired in 2010 Cancellation payment in 129 150 - - respect of amendment to existing service charge arrangement Deferred taxation - other 215 (229) (2 265) timing differences Distribution payable to 280 472 252 890 527 244 participatory interest holders Distribution per participatory interest Interim (cents) 55,21 51,84 51,84 Final (cents) - - 56,24 55,21 51,84 108,08 Number of participatory 508 010 487 827 654 487 827 interests in issue at the 229 654 end of the period Weighted average number of 500 661 139 487 827 654 487 827 participatory interests in 654 issue Earnings per participatory 50,20 33,25 105,48 interest (cents) The calculation of earnings per participatory interest is based on net profit for the period of R251,4 million (2009: R162,2 million), divided by the weighted average number of participatory interests in issue during the period of 500 661 139 (2009: 487 827 654). Headline earnings per 26,18 54,95 96,99 participatory interest (cents) The calculation of headline earnings per participatory interest is based on net profit for the period, adjusted for non-trading items, of R131,1 million (2009: R268,0 million), divided by the weighted average number of participatory interests in issue during the period of 500 661 139 (2009: 487 827 654). Condensed statement of financial position Unaudited Unaudited Audited R`000 31 Dec 2010 31 Dec 2009 30 Jun 2010 Assets Non-current assets 7 521 751 7 353 086 7 655 558 Investment properties 7 067 340 7 138 446 7 334 034 Allowance for future 161 479 171 112 162 838 rental escalations Unamortised upfront 36 713 43 528 39 019 lease costs Fair value of 7 265 532 7 353 086 7 535 891 investment properties Listed property 256 219 - 119 667 investment Current assets 165 708 84 101 103 526 Accounts receivable 83 347 54 997 62 845 Derivative financial - 4 271 - instruments Cash and cash 82 361 24 833 40 681 equivalents Non-current assets held 832 369 346 980 347 039 for sale Total assets 8 519 828 7 784 167 8 106 123 Equity and liabilities Participatory interest 5 745 621 5 447 680 5 525 665 holders` capital and reserves Non-current liabilities 1 680 190 1 882 309 1 535 150 Redeemable preference 200 000 200 000 200 000 shares Interest-bearing debt 1 231 014 1 444 929 1 093 067 Deferred taxation 249 176 237 380 242 083 Current liabilities 1 094 017 454 178 1 045 308 Short-term portion of 499 298 - 498 596 interest-bearing debt Accounts payable 221 065 201 288 215 357 Derivative financial 93 182 - 57 001 instruments Distributions payable 280 472 252 890 274 354 to participatory interest holders Total equity and 8 519 828 7 784 167 8 106 123 liabilities Abridged condensed statement of cash flows Unaudited Unaudited Audited Six months Six months Year
ended ended ended R`000 31 Dec 2010 31 Dec 2009 30 Jun 2010 Cash generated from 347 714 331 973 691 269 operations Finance income 7 458 2 574 5 484 Interest paid (81 260) (70 291) (143 219) Preference share (6 183) (6 854) (13 351) dividends paid Taxation paid (652) (838) (1 523) Cancellation payment (129 150) - - in respect of amendment to existing service charge arrangement Pre-acquisition income 4 628 - - on GOZ units acquired in 2010 Distribution to (274 354) (255 914) (508 804) participatory interest holders Net cash (utilised (131 799) 650 29 856 in)/generated from operating activities Acquisition of (148 540) (89 630) (139 337) investment properties and fixtures and fittings Proceeds on disposal 55 100 5 676 12 189 of investment properties and fixtures and fittings Acquisition of (116 758) - (116 898) investment in listed property fund Net cash utilised in (210 198) (83 954) (244 046) investing activities Participatory 244 442 - - interests issued Increase in interest- 138 649 71 613 218 347 bearing debt Cash balance from 586 - - subsidiary acquired Net cash generated 383 677 71 613 218 347 from financing activities Net 41 680 (11 691) 4 157 increase/(decrease) in cash and cash equivalents Cash and cash 40 681 36 524 36 524 equivalents at the beginning of the period Cash and cash 82 361 24 833 40 681 equivalents at the end of the period Basis of preparation and accounting policies The condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") including IAS 34, and are in compliance with the Listings Requirements of the JSE Limited. The accounting policies used in the preparation of these financial statements are consistent with those used in the annual financial statements for the year ended 30 June 2010. As a result of the amendment to the service charge arrangements, in terms of IFRS, the risk and rewards of the manager of Emira, Strategic Real Estate Managers (Proprietary) Limited (STREM) are deemed to be attributable to Emira. The financial statements of STREM have therefore been consolidated with those of Emira, with effect from 15 September 2010, even though Emira has no direct or indirect shareholding in STREM. Had the amendment to the service charge arrangement taken place on 1 July 2010, the net profit after tax of Emira would have increased by R5,3 million. Related parties and related party transactions Momentum Group ("Momentum") is the major participatory interest holder. At 31 December 2010, Momentum owned 14,7% of the Fund`s participatory interests and the Fund`s BEE partners - The Tiso Group, The Shalamuka Foundation, Avuka Investments, The RMBP Broad Based Empowerment Trust and Mr B van der Ross - held 12,0%. The remaining 73,3% were widely held. Unaudited Unaudited Audited Six months Six months Year ended ended ended
R`000 31 Dec 2010 31 Dec 2009 30 Jun 2010 The following transactions were carried out with related parties: Strategic Real Estate Managers (Proprietary) Limited Expenditure comprising 8 418 17 478 36 171 asset management fees Cancellation payment 129 150 - - in respect of amendment to existing service charge arrangement Relationship: Manager of Emira Property Fund Rand Merchant Bank a division of FirstRand Bank Limited Long-term interest- -* 954 475 1 099 475 bearing debt Net finance cost in -* 44 841 93 617 respect of long-term interest-bearing debt Cash on call -* - 5 000 Cash reserve -* 2 000 2 000 Finance income on cash -* 701 1 572 on call Relationship: Associated company of the FirstRand Group* Eris Property Group -* 29 550 58 773 (Proprietary) Limited Expenditure -* 27 402 53 409 comprising: property management fee and letting commissions Development fees -* 2 148 5 364 relating to refurbishments and extensions * As a result of the disposal of Momentum Group Limited by FirstRand Bank Limited and the subsequent unbundling of the shares in MMI Holdings Limited, FirstRand Bank Limited and Eris Property Group (Proprietary) Limited are no longer associates of Emira. The above transactions were carried out on commercial terms and conditions no more favourable than those available in similar arm`s length dealings at market-related rates. Segmental information R`000 Sectoral segments Office Retail Industrial Revenue 269 799 245 410 94 916 Revenue 274 265 240 946 96 273 Allowance for future rental (4 466) 4 464 (1 357) escalations Segmental result Net income from property 157 493 133 714 65 973 rental operations Investment properties 3 789 482 2 948 409 1 360 010 Geographical segments Revenue - Gauteng 199 790 161 818 70 497 - Western and Eastern Cape 35 936 21 326 10 603 - KwaZulu-Natal 22 926 40 367 13 816 - Free State 11 147 21 899 - 269 799 245 410 94 916
Investment properties - Gauteng 2 788 006 1 965 104 1 033 510 - Western and Eastern Cape 576 124 271 163 160 100 - KwaZulu-Natal 304 600 476 000 166 400 - Free State 117 100 239 794 - 3 785 830 2 952 061 1 360 010 Segmental information (continued) Adminis-
R`000 trative and Sectoral segments corporate Total Revenue - 610 125 Revenue - 611 484 Allowance for future rental - (1 359) escalations Segmental result Net income from property rental (135 356) 221 824 operations Investment properties - 8 097 901 Geographical segments Revenue - Gauteng - 432 105 - Western and Eastern Cape - 67 865 - KwaZulu-Natal - 77 109 - Free State - 33 046 - 610 125 Investment properties - Gauteng - 5 786 620 - Western and Eastern Cape - 1 007 387 - KwaZulu-Natal - 947 000 - Free State - 356 894 - 8 097 901 Condensed statement of changes in equity Revaluation Participatory and other Retained R`000 interest reserves earnings Balance at 1 July 2009 3 511 484 2 028 213 (1 345) Total comprehensive - - 162 218 income for the period Distribution to - - (252 890) participatory interest holders Transfer to fair value - (90 672) 90 672 reserve (net of deferred taxation) Balance at 31 December 3 511 484 1 937 541 (1 345) 2009 Balance at 1 July 2010 3 511 484 2 015 526 (1 345) Participatory 244 442 - - interests issued Non-controlling - - - interest in subsidiary acquired Total comprehensive - - 251 350 income for the period Distribution to - - (280 472) participatory interest holders Transfer to fair value - 104 656 (104 656) reserve (net of deferred taxation) Balance at 31 December 3 755 926 2 120 182 (135 123) 2010 Condensed statement of changes in equity (continued) Non-
controlling R`000 interest Total Balance at 1 July 2009 - 5 538 352 Total comprehensive income for the - 162 218 period Distribution to participatory interest - (252 890) holders Transfer to fair value reserve (net of - - deferred taxation) Balance at 31 December 2009 - 5 447 680 Balance at 1 July 2010 - 5 525 665 Participatory interests issued - 244 442 Non-controlling interest in subsidiary 4 636 4 636 acquired Total comprehensive income for the - 251 350 period Distribution to participatory interest - (280 472) holders Transfer to fair value reserve (net of - - deferred taxation) Balance at 31 December 2010 4 636 5 745 621 Commentary The Board of directors of Strategic Real Estate Managers (Proprietary) Ltd ("STREM") is pleased to announce a distribution of 55,21 cents per Emira participatory interest (PI) for the six months to 31 December 2010. This represents good growth in distributions of 6,5% on the previous comparable period, in line with the prospects statement in the Fund`s final results announcement released in August 2010. Emira PI holders enjoyed a healthy total return of 15,7% during the six months to 31 December 2010, comprising capital appreciation of 11,2% and an income return of 4,5%, which represents the distributions actually paid out during the period under review. During the period capital values in the listed property sector benefited from a search for yield from investors, while lower than expected domestic inflation also benefited bond yields, to which property yields are closely related. The percentage of weighted average PIs in issue that traded in the 12-month period equated to 15,9%. The main highlight during the period under review was the announcement by the Fund on 16 September 2010 that the conditions precedent required for the amendments to the Trust Deed had been met. The amendments, which became effective on 15 September 2010, would enable the Scheme to: (i) extend the ambit of the Manager`s investment policy so that the Fund can invest in a broader class of assets; (ii) increase the limit of borrowing by the Scheme from the current limit of 30% to 40% of the value of the underlying assets comprising the relevant portfolio; and (iii) amend the existing service charge arrangement in respect of the Fund from a monthly charge based on enterprise value, to a monthly charge equal to the actual operating costs incurred by the Manager in administering the Fund, and the payment of a cancellation payment of R197,4 million - R68 million of which is deferred until October 2011 - to the Manager. Not only were the amendments approved by virtually all PI holders who cast their ballots, but, in terms of a general resolution granted at the Fund`s AGM, Emira was able to raise an amount of R244 million to fund the cancellation payment, as well as other capital requirements, through the issue of PIs for cash. Further supporting the Board`s view that the amendments were extremely positive for PI holders, the sharp rise in the PI price for the period under review meant that the fund benefited immediately from the amendment to the service charge arrangement. Another highlight during the period was the acquisition of a further 9,175 million stapled securities in Growthpoint Properties Australia (GOZ) for a total consideration of A$17,43 million (R116,8 million). The increased investment in GOZ, secured via a rights issue that took place in September 2010, results in Emira`s stake in GOZ rising to a total of 19.426m stapled securities, at a total cost of R233,7 million, or 9.1% of the total securities in issue. This investment in GOZ, which had a market value of R256,2 million as at 31 December 2010, represents a small (3.2% of Emira`s total assets), passive stake in a high quality, but under-rated, listed Australian REIT, backed by extremely secure, long-term leases with blue-chip tenants at a yield higher than that which is achievable by buying South African commercial property. The transaction was earnings enhancing from the date of purchase and, is expected to be realised on a re-rating of the stapled securities, which is expected to occur in the medium to long-term. In line with the long-term strategy of the Fund, management continues to improve the quality of the Emira portfolio through: (i) the acquisition of new properties; (ii) the refurbishment of existing assets; as well as (iii) the disposal of those properties deemed to be non-core. Activity in the portfolio, which has been increased in the period under review, comprises the following: - Acquisitions: In June 2010, Emira, in partnership with the Eris Property Group, agreed to purchase a 50% undivided share in a 12 500m2, multi-tenanted office building located at 80 Strand Street, Cape Town for R124 million (Emira`s share is R62 million). The property comprises several ground floor retail units, with ten floors of offices above and, when compared to other Cape Town CBD commercial buildings, a high parking ratio of 3,0 bays per 100m2. The anticipated yield on transfer (11 October 2010) is expected to be 10,4%; - In January 2011, the board approved the acquisition of a new 13 782mSquared A grade office development, on the corner of Corobay Avenue and Aramist Avenue, in Menlyn Pretoria, for R306,9 million. The building, which is 70% pre- let to KV3 Engineers for 10 years and has a 1 year gross rental warranty on the balance of the vacant space from completion, from Eris Property Group, is expected to be complete by 30 June 2012 and to yield 9,1% in the first year. - Refurbishments and extensions concluded: Six earnings enhancing projects totalling R134,0 million were concluded during the period, which consisted of (i) extensions to and the refurbishment of Randridge Mall (R110m) for existing blue-chip tenants including Pick n Pay, Woolworths and Dis-Chem; (ii) the refurbishment of Rigel Park (R14m); (iii) extensions for Woolworths at Market Square shopping centre (R3.8m); (iv) refurbishment of WGA Epping for Santam (R3.2m); as well as smaller projects at One Highveld and Tin Roof for national tenants; - Refurbishments and extensions underway: A further five projects worth approximately R255,4 million are underway, which include: (i) the redevelopment of Podium Office Park in Menlyn, comprising the construction of 9 239m2 of prime office space by April 2012 at a total cost of R176,1 million, for which tenants are being sought; (ii) the complete refurbishment of 267 West, located in West Street opposite the Gautrain station in Centurion (R33,7 million); (iii) the construction of a new Audi dealership and refurbishment of the Virgin Active at Cresta Corner (R32,0 million); (iv) the general upgrade of Wesbank House in the Cape Town CBD (R11 million); and (v) the refurbishment of the A-grade Lincolnwood Office Park in Woodmead (R4,0 million); - Refurbishments and extensions approved: Three further projects totalling R100 million - FNB Heerengracht, Gift Acres and Market Square - have been approved by the Board, however have yet to be initiated as the Fund is waiting for the conclusion of certain leases before commencing construction; - Disposals: The disposal of non-core buildings continued during the period, with four properties being transferred out of the Fund - Howick Gardens, Standard Bank Glenwood, QD House and 8 Grader Road - for R55.1 million, while Nampak Building was transferred in January 2011 for R20,5 million. Offers have been accepted for Starsky House, Sandgate Office Park and CRB House (all in Kramerville) at in excess of book value, although these sales are still conditional. - The Board recently approved the disposal of a further 16 non-core properties worth close to R600 million, mainly comprising B-grade office space. The disposal of these properties will significantly improve the quality of the portfolio, reduce vacancies and also allow management to focus on larger buildings, with better income growth prospects. The proceeds from the disposals are expected to be utilised for the Fund`s significant capital expenditure project pipeline mentioned above, acquisitions or, in the event that the returns are sufficiently rewarding, PI buybacks. Results The period under review was characterised by tough underlying trading conditions in the physical portfolio, mitigated by the benefits of the amendments approved by PI holders in September 2010 and the Fund`s investment in GOZ. The period under review was more difficult than expected, with all three sectors of the portfolio being impacted. As a result vacancies rose from 9,2% in June 2010 to 11,4% at December 2010. On an adjusted basis (excluding properties under refurbishment or redevelopment), vacancies rose from 7,9% to 10,0%. Despite the rising vacancies, with a substantial portion of Emira`s portfolio on long-term, escalating leases, property income continued to grow. Excluding the straight-line adjustments from future rental escalations, revenue rose by 7,9% over the comparable period. This was the result of organic growth in income from the existing portfolio, the inclusion of the acquired properties from the effective dates, the conclusion of several capital projects in the previous financial year which contributed for the full period under review, as well as increased recoveries of municipal expenses. Contractual cost escalations were well managed, however growth in net property income was impacted by sharply rising municipal charges, an increase in building maintenance and higher leasing charges on the comparable period. Tenant arrears also continued to rise, resulting in the actual bad debts charge for the period increasing when compared to the comparable period, however remaining constant when compared to the second half of the previous financial year. The net effect is that property expenses rose by 16,6% and net income from properties was 3,3% higher. The income from the Fund`s holding in GOZ of R14,7 million represents the distributions from GOZ for the period to 30 June 2010 and the recently announced distribution to 31 December 2010. Although the distribution from GOZ to 30 June 2010 was only received in August 2010, Emira has received advice that this income is attributable to the period in which GOZ trades ex- dividend, being the financial year to 30 June 2010. As a result, income from the listed investment in the current period is higher than expected by an amount of R5,7 million. Asset management expenses declined as a result of the amendment to the service charge that became effective on 15 September 2010. As per the amendment, after this date, asset management expenses paid only reimburse the manager for the operating costs actually incurred in the management of Emira, resulting in a net saving to Emira. Net interest costs excluding unrealised gains or losses on interest rate swaps rose by 5,5%. This was the result of increased levels of gearing in the Fund, offset by investment income earned from the issue of PIs in September 2010. Net asset value declined marginally (-0,2%) in the six months from 1 133 cents (1 182 cents excluding the deferred tax provision) at 30 June 2010 to 1 130 cents (1 179 cents), largely as a result of the issue of new PIs during the period. Distribution statement Six months Six months Year ended ended % ended 31 Dec 2010 31 Dec 2009 change 30 Jun 2010
Operating lease 611 484 566 918 7,9 1 152 167 rental income and tenant recoveries excluding straight-lining of leases Property expenses (227 363) (194 956) 16,6 (386 478) excluding amortised upfront lease costs Net property 384 121 371 962 3,3 765 689 income Income from 14 678 - - - listed property investment Per statement of 10 050 - - - comprehensive income Income earned 4 628 - - - prior to acquisition of stapled securities Management (12 992) (17 478) (25,7) (36 171) expenses Management (8 418) (17 478) - (36 171) expenses per statement of comprehensive income Reimbursement to (4 574) - - - STREM in respect of management expenses Administration (22 605) (21 219) 6,5 (43 214) expenses Administration (27 230) (21 219) - (43 214) expenses per statement of comprehensive income Management 4 625 - - - expenses incurred by STREM included in the above Depreciation (3 884) (5 620) (30,9) (9 704) Net interest cost (78 846) (74 755) 5,5 (149 356) Interest paid and (81 260) (70 291) 15,6 (143 219) amortised borrowing costs Interest 1 808 501 260,9 3 065 capitalised to the cost of developments Preference share (6 183) (6 854) (9,8) (13 351) dividends paid STC on preference (618) (685) (9,8) (1 335) share dividends paid Investment income 7 407 2 574 187,8 5 484 Investment income 3 351 2 574 - 5 484 per statement of comprehensive income Investment income (51) - - - earned by STREM Claw-back of 4 107 - - - distribution in respect of participatory interests issued cum distribution Distribution 280 472 252 890 10,9 527 244 payable to participatory interest holders Number of units 508 010 229 487 827 654 4,1 487 827 654 in issue Distribution per 55,21 51,84 6,5 108,08 participatory interest (cents) Prospects The underlying conditions in the commercial property sector were tougher than expected in the period under review. Indications are that tenant interest has picked up in 2011, however this has yet to be translated into a reduction in vacancies. Emira PI holders are, nevertheless, expected to continue to benefit from the amendment to the service charge implemented in September 2010. As a result, the level of growth in distributions from the Fund for the financial year is expected to be similar to that achieved in the six months to 31 December 2010. The forecast financial information on which this statement has been based has not been reviewed or reported on by the Fund`s auditors. Income distribution declaration Notice is hereby given that a final cash distribution of 55,21 cents (2010: 51,84 cents) per participatory interest has been declared payable to participatory interest holders on 14 March 2011. The source of the distribution comprises: Net income from property rentals; income earned from the Fund`s listed property investment and interest earned on cash on deposit. Please refer to the statement of comprehensive income for further details. Last day to trade cum distribution Friday, 4 March 2011 Participatory interests trade ex distribution Monday, 7 March 2011 Record date Friday, 11 March 2011 Payment date Monday, 14 March 2011 Participatory Interest certificates may not be dematerialised or rematerialised between Monday, 7 March 2011 and Friday, 11 March 2011, both days inclusive. By order of the STREM Board Martin Harris Company secretary Ben van der Ross Chairman James Templeton Chief executive officer Sandton 15 February 2011 Acquisitions Properties purchased and transferred to Emira during the six months to December 2010 Purchase Property Sector Location GLA price (Rm) (mSquared)
80 Strand Office Cape Town 12 500 6,20 Street (50% CBD undivided share) Forward Property yield (%) Effective date Tenants 80 Strand Street 10,4 11 Oct 2010 De Vries Inc, (50% undivided CK Friedlander, share) Medway Holdings Disposals In accordance with the strategy of the Fund, certain properties that are underperforming or pose excessive risk to the Fund are earmarked and disposed of. Properties transferred out of Emira during the six months to December 2010 Valuation
Jun `10 Property Sector Location GLA (m2) (Rm) Howick Gardens Office Midrand 3 075 20,7 Standard Bank Retail Durban 368 4,5 Glenwood QD House Industrial Kyalami 3 470 14,9 8 Grader Road Industrial Spartan 3 437 10,3 Properties transferred out of Emira during the six months to December 2010 Sale price Exit Effective Property (Rm) yield (%) date Howick Gardens 21,0 9,4 30 August 2010 Standard Bank 5,0 11,6 22 September 2010 Glenwood QD House 16,6 11,7 30 September 2010 8 Grader Road 12,5 9,0 13 December 2010 Property sold, not yet transferred out of Emira at December 2010 Valuation Jun 10
Property Sector Location GLA (m2) (Rm) Nampak Industrial Denver 24 880 18,0 Building
Property sold, not yet transferred out of Emira at December 2010 Sale price Exit Effective
Property (Rm) yield (%) date Nampak Building 20,5 8,5 4 January 2011 Vacancies Vacancies increased from 9,2% in June 2010 to 11,4% by December 2010, with all three sectors of the portfolio experiencing tougher letting conditions. If the vacancies in four buildings that are currently either under refurbishment or pending refurbishment (FNB Heerengracht (office), Podium Office Park (office), 267 West (office) and Cresta Corner (retail)) are removed, adjusted portfolio vacancies drop to 10,0%. Office vacancies rose from 16,2% to 18,0% (15,1% adjusted), with the major vacancies, besides those mentioned above, being located in Knightsbridge Manor (4 331m2), Midrand Business Park (4 080m2) and Fleetway House (4 027m2). Industrial vacancies rose from 5,1% to 8,0% - Isando Unitrans (4 970m2), Fosa Park (4 200m2) and Aeroport Fulcrum (3 805m2) - although there is tenant interest in certain portions of this space. Retail vacancies increased fractionally from 5,3% to 6,9% (6,2% adjusted). Sector GLA Jun Vacancy % GLA Dec Vacancy % (m2) 10 Jun 10 10 Dec 10 Office 447 289 72 293 16,2 448 851 80 855 18,0 Retail 384 640 20 454 5,3 386 563 26 690 6,9 Industrial 386 061 19 746 5,1 379 308 30 354 8,0 Total 1 217 990 112 493 9,2 1 214 722 137 899 11,4 Valuations One-third of Emira`s portfolio is valued by independent valuers at the end of every financial year, with the balance being valued by the directors. At the interim stage, director`s valuations are used. Total portfolio movement Jun 2010 Dec 2010 Sector (R`000) R/m2 (R`000) Office 3 696 931 8 265 3 785 830 Retail 2 846 316 7 400 2 952 061 Industrial 1 339 683 3 470 1 360 010 Total 7 882 930 8 097 901 Total portfolio movement Difference Difference
Sector R/m2 (%) (R`000) Office 8 434 2,4 88 899 Retail 7 637 3,7 105 745 Industrial 3 586 1,5 20 327 Total 214 971 After capital expenditure and capitalised interest of R150,4 million, disposals of R55,1 million and depreciation of R3,9 million, investment properties increased in value by R215,0 million, implying a slight upward revision in property values of R123,6 million. Debt Emira has a relatively low level of gearing, with available debt facilities at attractive margins which will enable the Fund to acquire good quality properties with sustainable income streams. Emira has entered into various swap agreements as set out below. As a result, 95,9% of the Fund`s debt has been fixed for periods of between three and 13 years. As at 31 December 2010, the weighted average cost of debt equated to 9,43%. Weighted Weighted Amount (Rm) % of debt average average term rate %
Debt - Swaps 9,53 8,3 years 1 856,6 95,9 Debt - Floating 7,08 79,9 4,1 Total 9,43 1 936,5 100,0 Less: Costs (6,2) capitalised not yet amortised Per balance sheet 1 930,3 Fund Manager: Strategic Real Estate Managers (Proprietary) Limited Directors of the Fund manager: BJ van der Ross (Chairman)*, JWA Templeton (Chief executive officer), MS Aitken*, BH Kent*, V Mahlangu*, NE Makiwane*, W McCurrie*, MSB Neser*, WK Schultze, NL Sowazi*, PJ Thurling *Non- executive director Registered address: 3 Gwen Lane, Sandton, 2146 Sponsor: Rand Merchant Bank (a division of FirstRand Bank Limited) Transfer secretaries: Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001 www.emira.co.za Date: 16/02/2011 17:43:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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