Wrap Text
Audited Results for the year ended 31 August 2013
REBOSIS PROPERTY FUND LIMITED
(“Rebosis” or the “company”)
Registration number 2010/003468/06
(Approved as a REIT by the JSE)
JSE code: REB
ISIN: ZAE 000156147
AUDITED RESULTS FOR THE YEAR ENDED 31 AUGUST 2013
- 11,8% final distribution growth to 47.5 cents per linked unit
- Full year distribution of 92.0 cents per linked unit
- 40,9% growth in market capitalisation to R4,25 billion
- Net operating ratio approved to 12,5%
- Acquisitions of R1,77 billion concluded
- R1,125 billion raised through oversubscribed rights issue and vendor
placement
STATEMENT OF COMPREHENSIVE INCOME
Audited for year Audited for year
ended 31 August 2013 ended 31 August 2012
R’000 R’000
REVENUE
Property portfolio 565 209 500 029
Rental income 522 757 414 163
Straight line rental income
accrual 42 452 85 866
Net income from facilities
management agreement 16 833 15 822
Sundry income 630 6 081
Total revenue 582 672 521 932
Property expenses (132 658) (98 494)
Administration and corporate
costs (20 481) (15 961)
Net operating profit 429 533 407 477
Changes in fair values (3 065) 157 461
Investment properties 5 852 253 489
Straight line rental income
accrual (42 452) (85 866)
Derivative instruments 33 535 (10 162)
Profit from operations 426 468 564 938
Finance charges (90 778) (117 811)
Finance charges – secured loans (147 883) (126 434)
Interest received - other 17 853 8 623
Interest received - antecendent 39 252 -
Profit before debenture interest
and taxation 335 690 447 127
Debenture interest (302 059) (200 378)
Profit before taxation 33 631 246 749
Taxation 242 305 (102 564)
Total comprehensive income for
the year 275 936 144 185
Reconciliation of earnings and
distributable earnings
Profit for the year attributable
to equity holders 275 936 144 185
Debenture interest 302 059 200 378
Earnings 577 995 344 563
Change in fair value of
properties (net of deferred
taxation) (195 695) (136 365)
Change in fair value of
properties 36 600 (167 623)
Deferred taxation (232 295) 31 258
Deferrend taxation – adjustment
to CGT rate and other - 50 108
Headline profit attributable to
linked unitholders 382 300 258 306
Calculation of distributable
earnings
Net operating profit 429 533 407 478
Less - -
Straight line rental income
accrual (42 452) (85 866)
Finance charges (85 022) (115 768)
Net finance charges (90 778) (117 811)
Structuring fee amortisation 2 756 2 043
Debt restructuring fees 3 000 -
Derecognition of current
liability - (5 466)
Distributable earnings
attributable to linked
unitholders 302 059 200 368
Number of linked units in issue 348 131 693 249 147 699
Weighted average number of linked
units in issue 284 622 851 226 332 267
Basic and diluted earnings per
linked unit (cents) 203,07 152,24
Headline profit per linked unit
(cents) 134,32 114,13
Distributable earnings per linked
unit (cents) 92,00 85,50
STATEMENT OF FINANCIAL POSITION
Audited as at 31 Audited as at 31
August 2013 August 2012
R’000 R’000
ASSETS
Non-current assets 5 379 498 4 636 346
Investment property 5 283 500 4 540 200
Goodwill and intangibles 95 703 95 703
Property, plant and equipment 295 443
Current assets 95 339 34 642
Trade and other receivables 55 804 17 320
Cash and cash equivalents 39 535 17 322
5 474 837 4 670 988
EQUITY AND LIABILITIES
Equity 1 382 698 746 424
Stated capital 910 425 550 087
Reserves 472 273 196 337
Non-current liabilities 3 023 242 3 785 068
Debentures 2 527 436 1 808 812
Interest bearing borrowings 488 810 1 679 096
Interest rate swaps 6 996 54 853
Deferred taxation - 242 305
Current liabilities 1 068 897 139 496
Short term portion of interest
bearing borrowings 872 234 -
Trade and other payables 31 300 33 608
Unitholders for distribution 165 363 105 888
Total equity and liabilities 5 474 837 4 670 988
Net asset value per linked unit
(R) 11,23 10,26
Net asset value per linked unit
(excluding deferred taxation) (R) 10,96 9,87
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Audited for year Audited for year
ended 31 August 2013 ended 31 August 2012
R’000 R’000
Stated capital 910 425 550 087
Balance at beginning of year 550 087 477 168
Issue of shares 360 338 72 919
Reserves 472 273 196 337
Balance at beginning of year 196 337 52 152
Profit for the year 275 936 144 185
1 382 698 746 424
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOW
Audited for year Audited for year
ended 31 August 2013 ended 31 August 2013
R’000 R’000
Cash flows from operating
activities 17 749 17 210
Cash generated from operations 348 354 278 409
Net finance costs (88 021) (117 811)
Debenture interest paid (242 584) (143 388)
Cash outflows from investing
activities (739 366) (886 962)
Cash inflows from financing
activities 743 830 816 854
Net movement in cash and cash
equivalents 22 213 (52 898)
Cash and cash equivalents at the
beginning of the year 17 322 70 220
Cash and cash equivalents at the
end of the year 39 535 17 322
SEGMENTAL INFORMATION
Retail Office Industrial Total
R’000 R’000 R’000 R’000
Year ended 31 August
2013
Rental income (excluding
straight-line rental
income accrual) 280 165 236 739 5 853 522 757
Net income from
facilities management
agreement - 16 833 - 16 833
Operating costs (88 804) (43 675) (179) (132 658)
Net property income 191 361 209 897 5 674 406 932
Changes in fair values
of investment property (151 136) 152 604 4 384 5 852
Investment property 2 843 500 2 314 000 126 000 5 283 500
Year ended 31 August
2012
Rental income (excluding
straight-line rental
income accrual) 263 762 150 401 - 414 163
Net income from
facilities management
agreement - 15 822 - 15 822
Operating costs (75 679) (22 815) - (98 494)
Net property income 188 083 143 408 - 331 491
Changes in fair values
of investment property 59 714 107 909 - 167 623
Investment property 2 382 000 2 158 200 - 4 540 200
COMMENTARY
INTRODUCTION
Rebosis owns a high growth defensive portfolio of 14 quality properties
including Hemingways Mall, the largest retail centre situated in East
London. Rebosis’ primary objective is to grow its portfolio and
distributions by investing in high-quality retail and commercial
properties yielding secure capital and income returns for unitholders.
CONVERSION TO A REAL ESTATE INVESTMENT TRUST (“REIT”)
Following the introduction of REIT legislation in South Africa, Rebosis
converted to a REIT on 1 September 2013. The capital restructure, whereby
the linked units will be converted to an all equity capital structure,
will be implemented in due course.
Under the new REIT legislation, investment property comprising land and
buildings held to generate rental income over the longterm, will no longer
be subject to capital gains taxation.
FINANCIAL RESULTS
Rebosis delivered against its growth objectives given its strong
fundamentals and prudent management. It increased assets under management
through yield enhancing strategic acquisitions and delivered on
distribution growth targets whilst maintaining operational costs.
Rebosis has declared a distribution of 47,50 cents per linked unit for the
six months ended 31 August 2013, an increase of 11,8% on the comparable
period. This distribution, together with the distribution of 44,50 cents
per linked unit for the six months ended 28 February 2013, amounts to a
total distribution of 92,0 cents for the year ended 31 August 2013, an
increase of 7,6% for the year.
Rental income increased by 26.2% to R522,8 million, with a dominant
contribution of 54% from the retail portfolio. Operating efficiencies
resulted in an improvement in the net operating cost ratio from 13.5% in
2012 to 12.5% in the year under review.
PROPERTY PORTFOLIO
During the year, a decision was made to separate the valuations of the
retail and office portfolios between two independent valuers. Quadrant
Properties, the valuers of the portfolio since listing, have continued
with their appointment as valuers of the office portfolio and have been
appointed as valuer of the industrial property acquired during the year
under review. Old Mutual Investments Group SA was appointed as valuer of
the retail portfolio at 31 August 2013. The properties have been valued
using the discounted cash flow method. After accounting for the planned
expansion and tenant mix optimisations of the Hemingways and Bloed Street
Malls during 2014, the portfolio has increased in value by
R5,9 million since 31 August 2012.
The portfolio, valued at R5,28 billion, has a total GLA of 346 532m² and
is located in Gauteng, the Eastern Cape, KwaZulu Natal and North West
Province. The portfolio comprises 54% retail, 44% office and 2%
industrial, by value.
Value Value per m2
GLA m2 R’000 R/m2
Retail 164 126 2 843 500 17 537
Office 163 452 2 314 000 14 157
Industrial 18 954 126 000 6 648
Total portfolio 346 532 5 283 500 15 335
The retail component includes four high quality shopping malls delivering
secure, escalating income streams underpinned by strong anchor and
national tenants. The average escalation of the retail portfolio was 7,1%.
The office portfolio consists of nine buildings which are well located in
nodes attractive to government tenants. These are mainly let to the
National Department of Public Works, under long leases providing for
average escalations of 8,1%. The office portfolio represents a sovereign
underpin to a substantial portion of the earnings and shields it from
private sector risks such as tenant insolvency and default. At 31 August
2013, vacancies for the total portfolio were 1,9%. Taking into account
lettings after year end, vacancies have reduced to 1,3%.
ACQUISITIONS
Sunnypark, a well-established dominant retail centre situated on the
eastern side of the Pretoria CBD with a GLA of 27 697m², was acquired
effective 1 June 2013. The purchase consideration of R587.5 million,
including an escalation adjustment of 0.6458% compounded monthly in
arrears from 1 March 2013, was settled in cash. This quality acquisition
further diversifies Rebosis’ retail income streams.
The acquisition of the Antalis property on 14 March 2013 introduced the
first industrial warehouse to Rebosis’ portfolio. The property is a
specialised single tenanted industrial warehouse with a gross lettable
area of 18 954 m² and is occupied under a current triple net lease
expiring on 31 December 2019.
During the reporting period, Rebosis concluded agreements for the
acquisition of the Nthwese portfolio, comprising four recently refurbished
quality properties in Johannesburg and one in Pretoria let to the Gauteng
provincial government and national government respectively.
The 67 952 m² fully let portfolio consists of long-term leases expiring in
2019 and 2020, providing linked unitholders with predictable revenue
streams and low forecast risk. The portfolio, which was expected to
transfer in June 2013, transferred to Rebosis after the reporting date
with the last property transferring on 27 September 2013. Rebosis charged
the vendor interest of R7,95 million, which amount has been included in
interest received for the year under review, to compensate for the delays
in transfer.
CAPITAL RAISING
On 4 February 2013, Rebosis successfully raised R650 million in terms of a
rights offer that was oversubscribed. In terms of the rights offer, 58 035
718 new linked units were issued at a price of R11,20 per unit. A further
40 948 276 new linked units were issued by way of an accelerated book build
on 12 August 2013 at a price of R11.60 per unit, raising R475 million. The
issue prices effectively included an accrued distribution of 38,6 cents for
the period 1 September 2012 to 4 February 2013 and 41,20 cents for the
period 1 March 2013 to 12 August 2013 respectively, totalling R39,3 million
antecedent interest received for the year under review.
BORROWINGS
Rebosis’ net borrowings of R1,336 billion at 31 August 2013 equate to a
gearing ratio of 25,3%. The average cost of borrowings was 8,4% for the
period under review and at year end, 77,6% of borrowings have been hedged.
The average remaining term of the debt is 1,7 years.
A long-term facility of R872,2 million, expiring in May 2014, has been
reclassified as a current liability. The lenders have in principle agreed
to rollover the facilities on terms to be agreed.
PROSPECTS
Demand for space remains strong, vacancies in the portfolio have remained
at low levels and operating costs are well managed. The planned expansion
and tenant mix optimisations at Hemingways and Bloed Street Malls during
2014 will reposition these retail centres as ultimate destinations geared
for future exceptional growth.
Taking into account the expected short-term dilution from the planned
expansion and tenant mix optimisations of the retail centres, the board
anticipates that the distribution for the year ending
31 August 2014 will be between 97,0 cents and 99,0 cents per linked unit.
This forecast is based on the assumption that there will be no change in
current trading conditions of the existing portfolio, a stable macro-
economic environment will prevail, tenants will be able to absorb rising
utility cost and that there will be no major corporate failures. This
forecast is the responsibility of the directors of Rebosis and has not been
reviewed or reported on by the company’s auditors.
DEBENTURE INTEREST DISTRIBUTION
Distribution no. 5 of 47,50 cents per linked unit for the six months ended
31 August 2013 will be paid to linked unitholders in accordance with the
abbreviated timetable set out below:
Last day to trade cum distribution Friday 22 November 2013
Linked units trade ex distribution Monday 25 November 2013
Record date Friday 29 November 2013
Payment date Monday 2 December 2013
Linked unitholders may not dematerialise or rematerialise their linked
units between Monday 25 November 2013 and Friday 29 November 2013, both
days inclusive.
BASIS OF PREPARATION
The results for the year ended 31 August 2013 have been audited by the
company’s independent auditors, Grant Thornton (Jhb) Inc. The auditor’s
unqualified opinion together with the financial information is available
for inspection at the registered office of the company. These results have
been prepared in accordance with International Financial Reporting
Standards (IFRS), IAS 34: Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Standards
Council, JSE Limited Listings Requirements and the requirements of the
South African Companies Act 2008. The accounting policies adopted in the
preparation of these audited results are consistent with those applied in
the preparation of the financial statements for the year ending 31 August
2012. These financial results have been prepared under the supervision of
the financial director, JA Finn (CA(SA).
While the company has complied with IFRS and JSE Listings Requirements by
disclosing earnings and headline earnings per share, the directors are of
the view that earnings per share is not meaningful to investors as the
shares are traded as part of a linked unit and all distributable earnings
and distribution per linked units, as disclosed above, are more significant
meaningful to investors.
By order of the board
Rebosis Property Fund Limited
6 November 2013
Directors
ATM Mokgokong*^ (Chairperson), SM Ngebulana (CEO), JA Finn, AM Mazwai*^,
WJ Odendaal*^, KL Reynolds*, SV Zilwa*^
MF Rodel resigned from the board effective 31 January 2013
*Non-executive ^Independent
Registered office
3rd Floor, Palazzo Towers West, Montecasino Boulevard, Fourways 2191
(PO Box 2972, Northriding 2162)
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
Sponsor
Java Capital
Company secretary
M Ndema
Date: 06/11/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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