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ACP - Acucap Properties Limited - Audited group results and declaration of the
final distribution for the year ended 31 March 2011
Acucap Properties Limited
(Reg No. 2001/021725/06)
(Incorporated on 12 September 2001)
"Acucap" or "the company"
Share Code: ACP
ISIN: ZAE000037651
Audited group results and declaration of the final distribution for the year
ended 31 March 2011
Statements of Financial Position
at 31 March 2011
2011 2010 2009
Restated Restated
R`000 R`000 R`000
Assets
Property assets 6 926 761 5 841 064 5 360 301
Investment properties 6 351 984 5 379 866 4 857 961
Non-current receivable 91 242 112 284 112 591
Current receivable 30 259 24 005 17 204
Investment properties and 6 473 485 5 516 155 4 987 756
related receivables
Investment properties held 147 250 50 000 140 578
for sale and related
receivables
Investment properties under 234 023 203 400 191 111
development
Owner-occupied property 9 870 10 344 10 828
Property development 62 133 61 165 30 028
inventory
Other non-current assets 1 534 948 1 312 873 1 128 639
Loans in respect of unit 331 383 294 230 248 689
purchase scheme
Equipment 1 385 1 459 1 687
Intangible assets and 308 052 82 786 106 736
goodwill
Interest in subsidiaries 52 98 368 98 368
and jointly controlled
entities
Listed investments 834 276 786 424 612 210
Deferred tax assets 59 800 49 606 60 949
Other current assets 221 043 224 220 169 288
Trade and other receivables 214 629 186 308 134 748
Interest in jointly - - 12 335
controlled entities
Tax receivable 437 - -
Cash and cash equivalents 5 977 37 912 22 205
Total assets 8 682 752 7 378 157 6 658 228
Equity and liabilities
Shareholders` interest 3 313 077 2 641 408 2 175 910
Share capital and share 1 832 561 1 535 933 1 334 619
premium
Non-distributable reserve 1 699 847 1 307 786 925 194
Accumulated loss (219 331) (202 311) (83 903)
Non-current liabilities 4 500 737 3 888 576 3 725 862
Debentures 1 630 633 1 496 030 1 381 108
Financial liabilities 2 423 093 2 008 111 2 045 969
Financial instruments 90 199 110 565 95 901
BEE instrument 84 042 76 547 40 421
Deferred tax liabilities 272 770 197 323 162 463
Current liabilities 868 938 848 173 756 456
Trade and other payables 127 658 103 503 116 183
Financial liabilities 514 591 518 518 424 217
Tax payable - 30 635 46 341
Debenture interest payable 226 689 195 517 169 715
Total equity and 8 682 752 7 378 157 6 658 228
liabilities
Statements of Comprehensive Income
for the year ended 31 March 2011
2011 2010
Restated
R`000 R`000
Revenue 624 298 552 151
- Contractual 636 827 545 215
- Straight (12 529) 6 936
lining
Net operating expenses (64 616) (56) 161)
Loss on disposal of (205) (1 281)
investment properties
Loss on sale of jointly (948) -
controlled entity
Amortisation of (25 151) (23 950)
intangible assets
Profit before fair value 533 378 470 759
adjustments, interest and
taxation
Fair value adjustment to 524 940 216 648
investment properties
Fair value adjustment to (7 495) (36 126)
BEE instrument
Fair value adjustment to 3 927 5 701
government bonds
Profit before interest 1 054 750 656 982
and taxation
Interest income 134 001 107 912
Interest expense
- debentures (443 397) (388 249)
- other (252 008) (223 342)
Profit before taxation 493 346 153 303
Taxation (65 765) (28 385)
Profit for the year 427 581 124 918
Other comprehensive
(expense)/ income
Net change in fair value of listed (51826) 149 824
investments, net of taxation
Net change in fair value of cash (714) (10 558)
flow hedge, net of taxation
Other comprehensive (expense)/ (52 540) 139 266
income for the year, net of taxation
Total comprehensive income for the 375 041 264 184
year
Cents Cents
Basic and diluted earnings 272.64 87.18
per share
Interest distribution per
linked unit
- interim 136.75 128.70
- final 138.88 130.56
Distribution per linked 275.63 259.26
unit
2011
Gross Net of tax
Headline (loss)/earnings R`000 R`000
The calculation of the headline
earnings per share is based on a
weighted average of 156 829 793
(2010: 143 287 206 ) shares in issue
during the year and the headline
earnings is calculated as follows:
Profit for the year 427 581
Fair value adjustment of investment (524 940) (453 481)
properties
Loss on disposal of investment 205 176
properties
Headline loss - shares (25 724)
Interest paid to debenture holders 443 397
Headline earnings - linked units 417 673
Cents
Headline loss per share (16.40)
Headline earnings per linked unit 266.32
2010
Gross Net of tax
Restated Restated
Headline (loss)/earnings R`000 R`000
The calculation of the headline
earnings per share is based on a
weighted average of 156 829 793
(2010: 143 287 206 ) shares in issue
during the year and the headline
earnings is calculated as follows:
Profit for the year 124 918
Fair value adjustment of investment (216 648) (186 317)
properties
Loss on disposal of investment 1 281 1 102
properties
Headline loss - shares (60 298)
Interest paid to debenture holders 388 249
Headline earnings - linked units 327 951
Cents
Headline loss per share (42.08)
Headline earnings per linked unit 228.88
Statement of Cash Flows
for the year ended 31 March 2011
2011 2010
R`000 R`000
Cash flows from operating
activities
Cash generated from operations 567 686 426 097
Changes in property purchases 12 835 6 863
Income tax paid (28 849) (18 172)
Interest received 134 001 107 912
Interest paid (664 233) (585 789)
Net cash inflow/ (outflow) from 21 440 (63 089)
operating activities
Net cash outflow from investing (884 209) (299 584)
activities
Cash flows from financing
activities
Proceeds from the issue of shares 296 628 201 314
Proceeds from the issue of 134 603 114 922
debentures
Settlement of financial (15 379) -
instruments
Financial liabilities raised 730 984 530 000
Financial liabilities repaid (316 002) (467 856)
Net cash inflow from financing 830 834 378 380
activities
Net cash (outflow)/ inflow for (31 935) 15 707
the year
Cash and cash equivalents at 37 912 22 205
beginning of year
Cash and cash equivalents at end 5 977 37 912
of year
Statement of Changes in Equity
for the year ended 31 March 2011
Share Share Non- Accumulated Total
capital premium distribut loss
able
reserve
R`000 R`000 R`000 R`000 R`000
BALANCE AT 31 MARCH 138 1 334 481 793 096 (83 903) 204 3812
2009
Restatement of - - 132 098 - 132 098
prior period
balances
RESTATED BALANCE AT 138 1 334 481 925 194 (83 903) 217 5910
31 MARCH 2009
Total comprehensive
income for the year
Profit for the year - - - 124 918 124 918
Other comprehensive
income/ (expense)
for the year
Net change in fair - - 149 824 - 149 824
value of listed
investments
Net change in fair - - ( 10 558) - (10558)
value of cash flow
hedge recognised
directly in other
comprehensive
income
Total comprehensive - - 139 266 124 918 264 184
income for the year
Transactions with
owners, recorded
directly in equity
Issue of 525 000 1 8 695 - - 8 696
shares in September
2009
Proceeds 1 8 724 - - 8 725
Share issue costs - (29) - - (29)
Issue of 9 698 649 10 169 065 - - 169 075
shares in October
2009
Proceeds 10 170 105 - - 170 115
Share issue costs - (1 040) - - (1 040)
Issue of 1 280 000 1 23 542 - - 23 543
shares in November
2009
Proceeds 1 23 582 - - 23 583
Share issue costs - ( 40) - - (40)
Transfer to non- - - 243 326 (243 326) -
distributable
reserve
Total transactions 12 201 302 243 326 (243 326) 201 314
with owners
BALANCE AT 31 MARCH 150 1 535 783 1 307 786 (202 311) 2 641 408
2010
Total comprehensive
income/ (expense)
for the year
Profit for the year - - - 427 581 427 581
Other comprehensive
expense for the
year
Net change in fair - - (51 826) - (51 826)
value of listed
investments
Net change in fair - - (714) - (714)
value of cash flow
hedge recognised
directly in other
comprehensive
income
Total comprehensive - - (52 540) 427 581 375 041
income/ (expense)
for the year
Transactions with
owners, recorded
directly in equity
Issue of 8 717 627 9 181 913 - - 181 922
shares in July 2010
Proceeds 9 182 028 - - 182 037
Share issue costs - (115) - - (115)
Issue of 2 471 153 2 59 613 - - 59 615
shares in Dec 2010
Proceeds 2 59 676 - - 59 678
Share issue costs - (63) - - (63)
Issue of 1 685 000 1 40 601 - - 40 602
shares in Jan 2010
Proceeds 1 40 664 - - 40 665
Share issue costs - (63) - - (63)
Issue of 600 000 1 14 488 - - 14 489
shares in Jan 2010
Proceeds 1 14 492 - - 14 493
Share issue costs - (4) - - (4)
Transfer to non- - - 444 601 (444 601) -
distributable
reserve
Total transactions 13 296 615 444 601 (444 601) 296 628
with owners
BALANCE AT 31 MARCH 163 1 832 398 1 699 847 (219 331) 3 313 077
2011
BASIS OF PREPARATION AND AUDIT OPINION
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS), and presented in accordance with the
minimum content, including disclosures, prescribed by IAS 34 Interim
Financial Reporting applied to year end reporting, and South African
Statements and Interpretations of Statements of Generally Accepted Accounting
Practice and AC500 Series and the requirements of the South African Companies
Act.
The financial statements are prepared on the historical cost basis, except
for investment properties, investment properties held for sale, derivative
financial instruments, financial assets and available-for-sale financial
assets which are measured at fair value.
The financial statements are prepared on the going concern basis and Acucap`s
accounting policies have been applied consistently to all periods presented,
except for the early adoption by the group of the Amendments to IAS12 (the
2010 amendment) as published by the IASB on 20 December 2010. Companies are
only required to adopt this policy effective with years commencing on or
after 1 January 2012. The effect of this early adoption is that deferred tax
on investment properties is no longer calculated at a blended rate but are
now treated with the rebuttable presumption that the carrying value of the
investment property will be recovered entirely through sale. Prior periods
have been restated to account for the early adoption.
KPMG Inc. has audited the financial information set out above. Their
unmodified audit report is available for inspection at the company`s
registered office. The information contained in the commentary below does not
form part of the audit opinion.
COMMENTARY
1. REVIEW OF RESULTS AND OPERATIONS
Acucap`s board is pleased to report a distribution of 138.88 cents per unit
(cpu) for the six months ended 31 March 2011. This represents growth of 6.4%
over the same six month period last year. Together with the interim distribution
of 136.75 cpu, this gives unitholders an annual distribution of 275.63 cpu, a
growth rate of 6.3% over the previous financial year.
There are mixed signals around the performance of the South African economy.
Weak credit extension and money supply growth numbers suggest demand side
weakness, pointing to lower output growth and slower job creation, while
external factors and administered cost increases are causing inflationary
pressures to build on the supply side. In spite of historically low interest
rates, businesses and consumers remain cautious, and this is likely to persist
until the economic outlook becomes clearer.
Reported tenant revenue in Acucap`s retail portfolio grew by 7.6% in nominal
terms for the year to 31 March 2011 compared to the previous year, but by a
lower 4.9% for the quarter ended on that date compared to the same quarter last
year. While this suggests that consumer spending may be losing momentum, the
month of April produced a return to double digit turnover growth, 11.5% higher
than the same month last year.
Leases for 56,920m2 expired during the year and were let at rentals that were,
on average, 6.4% higher than the expiry rentals. Leases for 68,461 mSquared are
due to expire in the 2012 financial year, at average rentals of R119.93/m2, and
are expected to be renewed at an average of R107.58/m2.
Vacancy rates remained low across Acucap`s retail portfolio, ending the year at
2.9%, and net income growth from the fund`s retail assets was a pleasing 13%.
Although rental growth exceeded the underlying growth in tenant turnovers, the
rent to turnover ratios remained within comfortable ranges across all retail
segments, indicating the sustainability of rental levels in the retail
portfolio.
Acucap`s high quality office portfolio performed well in the period under
review, and further details are set out under section 3 below.
Development profits from Helderberg Village declined substantially, in line with
Acucap`s strategy of ultimately eliminating all sources of non-recurring
revenue. Development profits accounted for only 1.9% of distributions compared
to 8.6% last year, the remainder comprising sustainable annuity income
underpinned by high quality growth assets.
Bad debts written off amounted to R1.25m down from R2.15m in the prior year.
Tenant receivables impaired decreased by R896 000 to R3.691m, down from R4.587m
in the prior year. The greatest pressure was evident in the restaurant segment,
with some of the weaker casual dining formats failing. Nonetheless, the segment
as a whole showed positive growth, principally as a result of the more dominant
brands gaining market share.
There were no acquisitions in the year under review, and two disposals of non-
core assets, being the 10,400m2 Kargo Denver industrial warehouse south of
Germiston, and the 5,900m2 Watermeyer Park retail centre in eastern Pretoria.
Both were disposed of for net sale prices in excess of their most recent
independent valuations. Capital expenditure of R226m has been incurred on the
expansion and refurbishment of Bayside Mall and Howard Centre, both of which are
now complete and showing strong growth in turnovers.
On the basis of individual assets and asset segments, Acucap`s net income is
attributable as follows:
% of Net % of
Contractual total property total
rental income
income
R` 000`s R`000`s
Festival 101 227 16.6% 90 191 16.2%
Mall
Key West 61 035 10.0% 56 226 10.1%
Bayside 57 329 9.4% 53 281 9.6%
Centre
Gardens 36 594 6.0% 31 531 5.7%
Centre
Other 157 104 25.8% 146 855 26.4%
retail
Offices 160 758 26.3% 157 290 28.3%
Industrial 36 220 5.9% 20 458 3.7%
610 267 100.0% 555 832 100.0%
2. SIMPLIFIED FINANCIAL INFORMATION
Simplified financial information is presented to eliminate the effects of
IFRS and accounting adjustments that do not form part of Acucap`s distribution.
Simplified distribution income statement for the year ended 31 March
2011
year to year to 31
31 March March
2011 2010
R`000 R`000
Revenue 608 738 506 070
Net operating expenses -73 951 -58 992
Profit before interest and 534 787 447 078
taxation
Income from investment in Sycom 28 587 24 321
Property Fund Managers
Development profits 8 937 31 748
Interest received 41 984 14 604
Income from Listed Investments 61 046 59 811
Interest received on Unit Purchase 21 884 19 664
Trust
Notional Interest received on 11 308 16 048
units issued
Debenture holders interest paid - -228 224 -203 570
interim
Other interest paid -241 919 -203 735
Profit for the period 238 390 206 515
Final distribution per unit 138.88 130.56
(cents)
Simplified Balance Sheet at 31
March 2011
31-Mar-11 31-Mar-10
R`000 R`000
Assets
Property assets 6 717 378 5 729 899
Listed property investments 868 186 817 276
Other non-current assets 700 672 526 449
Other current assets 285 288 298 003
Total assets 8 571 524 7 371 627
Equity and liabilities
Shareholder`s interest 5 242 769 4 437 635
Non-current liabilities 2 691 258 2 397 476
Deferred tax 272 770 197 323
Current liabilities 364 727 339 193
Total equity and liabilities 8 571 524 7 371 627
30.54 28.06
Net Asset value per unit (Rand)
3. PORTFOLIO PERFORMANCE
Retail portfolio
As noted above, the tenants in Acucap`s retail portfolio showed a pleasing
aggregate growth rate of 7.6% in their turnover for the year to 31 March 2011
compared to the same period in the prior year. The chart below shows the
segmental contribution to turnover within Acucap`s retail portfolio.
Segment Segment: % of
Turnover
Food Majors 39.2%
Apparel 24.4%
Home & Furniture 3.2%
Electronics & Music 4.1%
Discounters 7.9%
Health & Beauty 9.9%
Food Service & Entertainment 6.4%
Other 4.9%
100.0%
The change in contribution from Acucap`s major retail segments is reflected
below. For the year to 31 March 2011, the discount, electronics and homeware
segments showed strong growth over the prior year, although for the last quarter
of the year, there was a noticeable slow-down in growth from the discount
sector. Apparel`s contribution remained relatively flat, and the contribution
from the supermarket segment declined slightly. This analysis shows that
consumers have directed proportionately more of their spending to discretionary
segments and relatively less to supermarket spend.
ACUCAP: Turnover & Rent to Turnover Ratio by
Segment
Segment Quarter-on-Quarter Year-on-Year
Total 4.9% 7.6%
Turnover
Food Majors -2.2% -0.2%
Apparel 0.8% 5.1%
Home 19.5% 14.2%
Electronics 20.9% 12.6%
Discounters 1.8% 14.3%
Health & 6.5% 10.5%
Beauty
Food 3.8% 6.9%
Service
Rent-to-turnover ratios are also monitored monthly for each tenant, and the
segmental movements in these ratios are reflected below. As expected, the strong
performance of the discount, electronics, homeware and health & beauty segments
has resulted in their rent-to-turnover ratios improving as can be seen in the
figure below. The ratio of rent to turnover for food majors continued to
deteriorate as supermarket rentals have escalated faster than the growth in
their turnovers. Nonetheless, with rental at 2.6% of turnover, this segment
remains comfortably within the industry norm of 2.5% to 2.75%. The same applies
to the apparel segment where rental has risen slightly from 4.2% to 4.5% of
turnover.
Segment Rent Ratio Rent Ratio Year-on-Year
2010 2011 Growth
Food Majors 2.3% 2.6% 10.6%
Apparel 4.2% 4.5% 5.4%
Home 8.9% 7.9% -11.2%
Electronics 3.5% 3.3% -4.0%
Discounters 4.9% 4.6% -6.2%
Health & 2.3% 2.2% -2.6%
Beauty
Food 8.0% 8.1% 2.0%
Service
Office portfolio
Vacancies remained low in Acucap`s high quality office portfolio, ending the
year at 3.5%. Leases totalling 10,112mSquared expired during the year at an
average rental of R115.56/ mSquared, and were renewed at an average of R107.01/
mSquared, a function of the weakness in the office cycle over the last financial
year. Leases for 20,775 mSquared are due to expire in the 2012 financial year at
an average rental of R127.20/ mSquared, and the board expects to maintain the
high retention ratio that has characterised Acucap`s office portfolio.
Sycom
Distributions received from Acucap`s investment in Sycom Property Fund were
slightly lower at 156.67 cpu compared to 159.34 cpu in the year to 31 March
2010. This result was largely due to cyclical weakness in the office market,
where Sycom`s vacancies increased from an average of 8.2% for the 2010 financial
year to an average of 10.9% for the current year. On Sycom`s portfolio of
approximately 140,000m2 of offices, this reflects a 4,000m2 increase in
vacancies. There are, however, positive signs of an improvement in the market
for `A` grade office space, and Sycom has concluded deals for 4,960m2 of vacant
space where the leases will come into effect during the 2012 financial year.
There is also a meaningful improvement in the number and size of enquiries for
new space, suggesting that a recovery in the `A` grade office market is well
under way, and this will drive Sycom`s distribution growth in the year ahead.
Dividends from Sycom`s investment in the Stehnam European Shopping Centre Fund
(`SESCF`) were substantially higher in the second half of the financial year,
with the result that total dividends received for the year to 31 March 2011 were
9% higher in Rand terms than for the prior year, although still 7.7% lower than
the dividends received in financial 2009, indicating relatively flat income
growth from the underlying Nova Eventis shopping centre in Leipzig, Germany.
Sycom`s retail portfolio produced a solid 6.5% growth in turnover, with the
segmental contribution to turnover largely unchanged from the prior year.
4. HELDERBERG VILLAGE
Acucap sold 4 units in the year under review. Net development profits were
R8.9m, compared to R23m in the prior year. There are 2 units left to sell, all
of which are budgeted to be sold in the 2012 financial year. There will be no
development profits from Helderberg in the 2013 financial year, and the effects
of Helderberg will be out of the distribution base by 2014.
5. BORROWINGS
The company has total borrowings of R2.75 billion (excluding BEE funding).
Interest rates are hedged on 59.1% of total borrowings, at a weighted average
rate of 10% and a weighted average maturity of 6.6 years. Acucap`s gearing ratio
at 31 March 2011 was 34%, down from 36% at the end of March 2010.
The chart below shows Acucap`s borrowings relative to its investment portfolio
from date of listing to the current year end. The chart reflects the board`s
strategic intent of maintaining the company`s gearing ratio within the 30% to
40% range.
Total Borrowings (Rm)
investment
portfolio (Rm)
March 2003 913 451
March 2004 1 068 416
March 2005 1 718 633
March 2006 2 364 662
March 2007 3 307 601
March 2008 6 300 2453
March 2009 6 002 2286
March 2010 6 658 2343
March 2011 8 077 2754
6.PROPERTY PORTFOLIO VALUATION
The Acucap portfolio was revalued at 31 March 2011 by independent valuers. The
value of the property portfolio increased from R5.5bn at the end of March 2010
to R6.5bn at the end of the current financial year, an 18.2% increase. Excluding
the effects of capital expenditure and also removing the two disposals mentioned
under section 1 above from the base, the portfolio value increased by 9.1% over
the prior year. A complete property valuation schedule is set out below. In
addition to independent values and capitalisation rates, the schedule also
indicates average net rentals per m2 for each property, as well as its occupancy
level. In the case of the office segment, average net rental rates per m2
include parking revenue.
Following the year end revaluation, Acucap`s Net Asset Value (NAV) increased to
R30.54 per linked unit. Excluding the effects of deferred tax, the NAV per unit
would be R32.13.
Schedule of investment
properties at 31 March 2011
Independent Cap rate Average Occupancy
valuation at rental
R`000 31/03/20 (R per
11 mSquared
Retail 4 555 565 102.67 97.1%
Festival Mall, 1 127 000 7.50% 102.85 99.6%
Kempton Park
Bayside Centre, 845 000 8.50% 112.38 94.3%
Table View
Keywest, 725 600 8.25% 97.14 94.7%
Krugersdorp
Gardens Centre, 400 000 8.25% 182.33 95.9%
Cape Town
Howard Centre, 220 000 9.25% 109.21 91.0%
Pinelands
The Village 218 000 8.75% 91.87 98.8%
Square,
Randfontein
Westville Mall, 200 000 8.75% 102.90 97.6%
Durban
East Rand Value 176 500 8.75% 101.27 100.0%
Mall, Boksburg
14thAvenue Hyper, 175 000 8.75% 58.54 100.0%
Roodepoort
50% Hillcrest 146 500 9.00% 129.21 99.7%
Corner, Durban
Sunward Centre, 118 400 9.00% 81.72 98.1%
Boksburg
27.5% of The 115 765 9.00% 82.71 96.5%
Bridge, Port
Elizabeth
Rondebosch-on- 80 000 10.00% 99.63 95.0%
Main, Cape Town
Boulevard 7 800 10.00% 150.23 100.0%
Piazzas, Illovo
Offices 1 755 656 126.90 96.5%
Tygerberg Office 302 856 8.60% 135.79 96.8%
Park
Golf Park, 198 750 10.15% 118.02 92.2%
Mowbray
Microsoft, 157 200 8.50% 121.31 100.0%
Bryanston
82 Grayston 136 700 9.25% 141.68 100.0%
Drive, Sandown
28 Fricker Road, 108 400 9.25% 149.08 100.0%
Illovo
Tiger Brands, 107 000 8.75% 111.15 100.0%
Bryanston
Bogare, Menlyn, 94 500 9.25% 112.56 100.0%
Pretoria
The Village, 83 300 10.50% 120.66 80.5%
Faerie Glen,
Pretoria
Nautica, Granger 82 000 9.50% 149.80 91.2%
Bay, Cape Town
Kagiso House, 77 500 9.00% 151.16 100.0%
Illovo
4 Fricker Road, 76 100 9.00% 122.23 100.0%
Illovo
SA Weather 72 000 9.50% 130.07 100.0%
Services,
Pretoria
Colliers, Illovo 65 100 9.50% 145.12 99.3%
Pharos House, 59 000 8.75% 99.44 98.6%
Westville Mall,
Durban
Albion Springs, 49 000 9.75% 138.02 100.0%
Rondebosch
Bremerton Office 46 750 9.50% 98.63 100.0%
Park, Port
Elizabeth
Selborne Fourways 39 500 9.50% 120.72 91.2%
Golf Park,
Gauteng
Industrial 141 700 64.66 82.7%
20% of N1 57 000 8.75% 60.66 100.0%
Business Park,
Midrand
30% of Tellumat, 45 000 10.50% 61.66 87.2%
Retreat, Cape
Town
33'% of 121 30 867 11.00% 103.06 25.1%
Roeland Street,
Cape Town
33'% of 67 Regent 8 833 11.00% 90.00 84.3%
Road, Sea Point
Investment 6 452 921 107.60 96.4%
properties
7. HISTORICAL LEASE EXPIRIES OVER THE LAST 12 MONTHS
The table below shows a summary of all leasing activity in the Acucap portfolio
over the last financial year.
Expiries and Average through Average
terminations rent at expiry escalation
rate at expiry
Regional 39 823 112.09 8.4%
retail
Other 17 097 95.82 8.1%
retail
Offices 10 112 115.56 8.4%
Industri 1 608 54.27 9.2%
al
New leases Average through Average
and renewals rent for new escalation
leases rate for new
leases
Regional 39 884 114.50 8.1%
retail
Other 21 297 121.40 8.2%
retail
Offices 10 843 107.01 8.6%
Industri 1 774 59.04 9.2%
al
Acucap successfully renegotiated over 82% of expiring leases during the year,
with 3.5% of expiries moving into temporary retail vacancies resulting from
redevelopment activities. Retail leases were renewed at a weighted average net
rental that was 6.6% higher than the expiring rental. Office leases were renewed
with an 11.2% negative reversion.
The pattern of expiries and renewals can be seen in the context of Acucap`s
overall portfolio in the table below, which reconciles the opening and closing
gross lettable area, taking into consideration expiries, renewals, new leases,
extensions to GLA, and acquisitions and disposals.
Opening GLA Expiries and New leases and Net area
terminations renewals added
Total 433 620 -60 665 60 665 9 684
let 414 900 -68 640 73 798 9 343
vacant 18 720 7 975 -13 133 341
Properties Properties held Closing GLA
purchased for sale
/developed
Total 18 967 -16 311 445 960
let 16 102 -15 572 429 931
vacant 2 865 -739 16 029
8. FORWARD LEASE EXPIRIES
Over the next financial year, leases for 91,593m2 will expire, representing
20.5% of the portfolio GLA. Details of the expiry rentals are shown below,
together with estimated renewal rentals. For offices, there is an expected
negative reversion of 13.3%, and for retail, a negative reversion of 9.7%.
Area Net rental / Net
terminating m2 at expiry expected
to 31-3-2012 date rental / m2
m2 on renewal
Offices 20 775 127.20 110.28
Retail 68 461 118.94 107.40
Industrial 2 357 84.48 88.90
Over the longer-term, the fund continues to show a good, long-dated lease expiry
profile. Expiries in the office portfolio are approximately 20% by office income
per annum over the next 2 years. The principal renewals in the retail portfolio
over the next 2 years will centre around Festival Mall and Key West.
Sectoral lease expiry profile by revenue
vacancy Mar- Mar- Mar- Mar- Mar-
12 13 14 15 16
Retail 2.8% 16.9% 11.8% 9.8% 12.4% 7.6%
Offices 0.8% 5.5% 5.5% 8.2% 3.5% 2.5%
0.5% 0.4% 0.0% 0.2% 0.2% 0.6%
Industrial
Total 4.1% 22.8% 17.3% 18.2% 16.1% 10.7%
thereafter
Retail 6.9%
Offices 3.5%
Industrial 0.4%
Total 10.8%
9. MAJOR TENANTS BY AREA AND INCOME
Acucap`s twenty largest tenants account for 50.6% of its rental income, with
retail tenants contributing 41.1% and office tenants 9.5%, in line with the
fund`s high retail weighting in its property portfolio. The tenants listed below
indicate the high quality of Acucp`s rental cash flows.
Rental area
Shoprite 7.4% 10.0%
SA Government 4.4% 3.7%
Pick n Pay 4.2% 6.6%
Edcon 3.9% 4.5%
Foschini Group 3.0% 2.1%
Pep 2.9% 2.3%
Mr Price 2.7% 2.7%
Nedbank 2.4% 1.9%
Absa 2.3% 1.5%
Microsoft 2.2% 1.9%
Massmart 1.9% 3.2%
Woolworths 1.9% 3.9%
Tiger Brands 1.6% 1.5%
Clicks 1.6% 1.7%
Standard Bank 1.6% 1.2%
Truworths 1.5% 1.4%
Famous Brands 1.4% 0.9%
FNB 1.3% 0.9%
Kagiso 1.2% 0.9%
Virgin 1.2% 1.8%
10. VACANCIES
Total vacancies by income have reduced slightly from 4.3% at the end of March
2010 to 4.1% a year later. Excluding the effects of temporary vacancies arising
out of redevelopment activities, the vacancy is 2.65% by income.
The table below shows the vacancy attributable to each segment of the Acucap
portfolio by GLA :
Vacancy profile by sector by GLA
% of Total GLA
Industrial vacancy 0.6%
Office vacancy 0.9%
Retail vacancy 2.1%
GLA let 96.4%
11. COST TO INCOME
Acucap has exhibited sound long-term control over non-recoverable operating
costs, and this has been attributable to two principal factors. The first is the
composition of the portfolio, which comprises smaller number of large, good
quality properties, and the second is the operation of an in-house property
administration business, where cost and quality benefits have been enhanced by
the growing scale of the business, and the increasing quality and experience of
the administration team.
2011 2010 2009 2008 2007 2006
Net cost 11.5% 11.1% 14.2% 12.6% 12.2%
to
income 11.6%
Administered price increases are still a serious concern, although the board
expects that the major base adjustments in rates and taxes is now behind us and
increases in the foreseeable future should be more reasonable. Whilst the unit
cost of electricity is increasing at a rate well in excess of the CPI,
considerable effort is being devoted by both Acucap and many of its tenants to
initiatives aimed at reducing energy unit consumption and therefore mitigating
overall cost increases.
12. UNIT HOLDER SUMMARY
A summary of Acucap`s unit holder profile is set out below. Annual trade in
Acucap`s linked units was 25.4% of the total number of units in issue,
indicating a sound level of liquidity, particularly considering the long-term
nature of many of Acucap`s major unit holders.
2011 2010
Public Investment 13.3% 14.0%
Corporation
Investec 9.3% 11.5%
Directors and employees 9.2% 9.5%
Stanlib 9.1% 10.3%
Coronation 7.9% 15.1%
Old Mutual 6.6% 1.1%
Nedbank 6.1% 6.6%
Thesele Group (Pty) 4.9% 5.3%
Limited
66.4% 73.4%
Other shareholders 33.6% 26.6%
100.0% 100.0%
Number of unitholders 3 282 2 390
Weighted average units 165 250 787 151 708 200
Units traded 41 989 078 38 315 645
Liquidity 25.41% 25.26%
13. PROSPECTS
The Acucap property portfolio is well-positioned to continue delivering real
growth in distributions, even though economic growth rates in South Africa
remain below potential. Household demand is expected to continue its gradual
improvement, particularly if interest rates remain low in the coming financial
year, and this should support retailers. Signs of an improvement in the market
for A Grade offices will also assist Acucap in its renewals for the 2012
financial year. The contribution from development profits continues to diminish,
and once these effects are out of Acucap`s income base, growth in distributions
can be expected to pick up even further, in line with the potential of Acucap`s
high quality property portfolio.
The above information has not been reviewed or reported on by Acucap`s auditors.
14. PAYMENT OF DEBENTURE INTEREST
Notice is hereby given that a final distribution of 138.88 cents per linked unit
has been approved in respect of the six month period ended 31 March 2011. The
last date to trade the linked units cum distribution is Friday, 24 June 2011 and
the record date will be Friday, 1 July 2011. The linked units will start trading
ex-distribution from Monday, 27 June 2011. Distributions will be made to unit
holders on Monday, 4 July 2011.
Linked unit certificates may not be dematerialised or rematerialised between
Monday 27 June and Friday 1 July 2011 both days inclusive.
On behalf of the Board
BS KANTOR
(Chairman)
PA THEODOSIOU
(Managing Director)
9 June 2011
Registered Office
Suite A11 Westlake Square
Westlake Drive
Westlake
CAPE TOWN
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street
JOHANNESBURG
http://www.acucap.co.za
info@acucap.co.za
Share Code: ACP
ISIN: ZAE000037651
Directors: Prof BS Kantor (Chairman), PA Theodosiou*#
(Managing Director), FM Berkeley, RC Frolich, N Mandindi,
C B Marlow *, M S Moloko, JH Rens*, B Stevens, NDC Whale
* Executive # British
Sponsor:
Nedbank Capital
Date: 09/06/2011 08:00:04 Supplied by www.sharenet.co.za
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