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Preliminary summarised audited financial results for the year ended 31 December 2013
SA Corporate Real Estate Fund
("SA Corporate" or "the Fund")
Incorporated in the Republic of South Africa
Share Code: SAC; ISIN Code: ZAE000083614
A Collective Investment Scheme in property registered in terms of the
Collective
Investment Schemes Control Act, No. 45 of 2002 and managed by SA
Corporate Real Estate Fund Managers Limited ("SA Corporate Fund
Managers")
(Registration number 1994/009895/06)
REIT status approved
PRELIMINARY SUMMARISED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31
DECEMBER 2013
Distribution growth
- Full year 8.6% higher than 2012
- 2nd half 2013 9.9% higher than
2nd half 2012
Capital structure
- Low LTV of 18.3%
- 58.9m units repurchased
- Premium to NAV increased to 8.4%
Portfolio activity
- Standing portfolio value up 4.9%
- Acquisition of 3 properties for R492,0m
- Contracted and unconditional acquisition of 4 properties for R254,0m
Property performance
- Vacancy as % of rental income improved to 3.2%
- Standing portfolio retail NPI growth of 7.5%
- Commercial tenant retentions increased to 90.5%
INTRODUCTION
SA Corporate Real Estate Fund is a JSE listed Property Unit Trust
(granted a REIT status which came into effect 1 January 2014) which owns
a portfolio of industrial, retail and commercial buildings located
primarily in the major metropolitan areas of South Africa.
REVIEW OF FINANCIAL RESULTS AND PORTFOLIO PERFORMANCE
The full year's distribution (32.75cpu) increased by 8.6% relative to the
comparable period (30.15cpu). The distribution for the second half of the
year to December 2013 (16.47cpu) increased by 9.9% relative to the
comparable period in December 2012 (14.98cpu). 8.3% of the increase in
the full year's distributions is attributable to the portfolio excluding
acquisitions, with the latter contributing 0.3% to the overall increase.
The Fund achieved standing portfolio net property income growth of 5.6%
and 9.1% on an absolute and per unit basis respectively. The premium to
net asset value (“NAV”) increased to 8.4% at December 2013 (NAV: 368cpu,
Unit price: 399cpu), compared to a premium of 6.7% at December 2012 (NAV:
342cpu, Unit price: 365cpu).
Industrial rental growth (7.0%) was underpinned by weighted average
rental escalations of 8.2% and the leasing of vacant space. The tenant
retentions ratio of 66.4% was impacted by the expiry of 30 000m2
distribution warehousing space which, although not renewed, was
immediately re-let without any downtime. Retail standing portfolio net
property income growth of 7.5% is attributable to improvements in the
quality of the portfolio, leading to strong tenant retentions, reducing
vacancies, positive reversions and improved recoveries. Commercial rental
growth increased by 4.5%, attributable to strong retentions and positive
reversions and supported by the disposal of 3 vacant B and C grade office
buildings together with the acquisition of two A grade office buildings.
Property expenses were marginally down by 0.2%, impacted by disposals and
acquisitions. Expenses relating to the standing portfolio increased by
8.6%. Municipal costs (representing 63.3% of property expenses) increased
by 10.5%, due to an increase in rates, electricity and water costs of
6.8%, 12.3% and 18.6% respectively. Standing portfolio property expenses
excluding municipal costs increased by 5.4%, the main driver being the
increase in Transnet ground rentals in respect of leasehold properties
representing 3.5% of the increased costs, with the balance of the costs
increasing by 1.9%.
Net interest expense decreased by 32.1%. The reduction is attributable to
the early settlement of expensive debt, and the outcome of establishing
an optimal capital structure.
Fund Expenses increased by 2.0%. This relates to increased service fees
due to unit price growth and increased gearing.
The 58,896,063 units repurchased in the open market in January and
February 2013, gave rise to a lapsed distribution of R8,8m, as these were
purchased cum dividend. These lapsed distributions were available for re-
distribution as part of the interim distribution.
The breakdown of distributable earnings is set out below:
Year ended Year ended
31.12.2013 31.12.2012
DISTRIBUTABLE EARNINGS (R000) Audited Audited
Rent (excluding straight line rental adjustment) 878,077 893,877
Net property expenses (109,078) (116,803)
Property expenses (441,832) (442,587)
Recovery of property expenses 332,754 325,784
Net property income 768,999 777,074
Taxation on distributable earnings 102 699
Interest income from associate company (Oryx) - 1,402
Net funding cost (73,751) (108,655)
Interest income 20,811 30,547
Interest expense (94,562) (139,202)
Fund expenses (55,822) (54,707)
Lapsed distribution on units repurchased 8,823 795
Distributable earnings 648,351 616,608
Units in issue (000) 1,980,093 2,038,989
Weighted number of units in issue (000) 1,985,703 2,057,569
Distribution (cents per unit) 32.75 30.15
Interim 16.28 15.17
Final 16.47 14.98
PROPERTY VALUATIONS
The value of the Fund's independently valued property portfolio increased
by R715,45m to R8,87bn as at 31 December 2013 (31 December 2012:
R8,15bn). The standing portfolio, representing properties not under
development and held for the full 12 months to December 2013, increased
by R386.3m (4.9%) from 31 December 2012.
The capitalisation and discount rates in the Fund's standing portfolio at
31 December 2013 were calculated on a weighted basis:
Property type Capitalisation Discount rate (%) Growth in standing
rate (%) portfolio (%)
31.12.2013 31.12.2012 31.12.2013 31.12.2012 31.12.2013
Industrial 9.0 9.5 14.5 15.0 4.7
Retail 8.7 9.0 14.2 14.5 6.0
Commercial 9.3 9.9 14.8 15.4 (0.1)
Portfolio total 8.8 9.3 14.3 14.8 4.9
The NAV per unit (368cpu) increased by 7.6% (December 2013: 342cpu) of
which 5.3% is attributable to property valuation.
PORTFOLIO INVESTMENT ACTIVITY
The portfolio comprised 134 properties (December 2012: 139). The sectoral
and geographic weightings by value as at 31 December 2013 are set out
below:
Sectoral Spread
Retail
R3,9bn
381,115m2
26 properties
44%
Industrial
R3,9bn
727,724m2
89 properties
44%
Commercial
R1,1bn
85,120m2
19 properties
12%
Geographic Spread
Gauteng
R4,4bn
647,983m2
65 properties
50%
KwaZulu-Natal
R3,7bn
438,667m2
52 properties
41%
Western Cape
R0,6bn
82,828m2
11 properties
7%
Other
R0,2bn
24,481m2
6 properties
2%
Developments:
Properties Cost Completion Yield Sector Region
(Rm) date forecast 1st
12 months
(%)
Corner of Rudo Nel &
Tudor Streets, Jet
Park 30.0 12/2013 10.0 Industrial Gauteng
Middelburg Pick 'n
Pay, Middelburg 5.0 08/2013 12.5 Retail Mpumalanga
Total 35.0 10.4
Acquisitions:
Properties Cost Acquisition Yield Sector Region
(Rm) date forecast 1st
12 months
(%)
World Trade Center,
Sandton 360,0 11/2013 9.0 Office Gauteng
Nampak, Denver, 530
Nicholson Road,
Doornfontein 67,0 12/2013 9.0 Industrial Gauteng
PWC, 102 Essenwood
Road, Durban 65,0 05/2013 10.6 Office KwaZulu-
Natal
Total 492,0 9.2
Contracted and unconditional acquisitions:
Properties Cost Expected Yield Sector Region
(Rm) transfer forecast 1st
date 12 months
(%)
Eveready & Continental
Tyres, New Brighton,
Port Elizabeth 124,5 01/2014* 9.0 Industrial Eastern
Cape
Celtis Ridge Shopping
Centre, Centurion 106,0 01/2014* 9.3 Retail Gauteng
Webco Tools, Founders
View 14,1 # 9.0 Industrial Gauteng
UPM Raflatac,
Longmeadow 9,4 # 9.0 Industrial Gauteng
Total 254,0 9.1
* Transferred in January 2014
# To be transferred during 2014
Disposals:
Properties Transfer Gross Carrying Exit yield
date selling value at on sale
price latest price (%)
(Rm) valuation
date (Rm)
425 West Street, Durban 01/2013 54,5 54,5 10.0
Philani Valley Shopping
Centre, Umlazi 11/2013 40,5 35,3 3.5
106 Johan Avenue, Sandton 07/2013 35,0 35,0 4.4#
The Ridge, Roodepoort 03/2013 30,0 30,0 9.0
Clubview Corner, Pretoria 01/2013 27,0 27,0 8.4
131 Jan Hofmeyer Road,
Westville 09/2013 23,9 22,4 7.8
13 Wellington Road,
Parktown 09/2013 17,8 17,4 5.6#
Main Street, Gingindlovu 06/2013 5,0 5,4 6.6#
Total 233,7 227,0 7.1&
# Estimated yield as building 100% vacant
& Weighted on gross selling price
LEASE EXPIRIES AND VACANCIES
Vacancies in terms of rentable area and rental income were as follows:
Property type Vacancy as % of GLA* Vacancy as % of rental income
31.12.2013 31.12.2012 31.12.2013 31.12.2012
Industrial 0.2 1.3 0.2 1.5
Retail 8.9 10.6 4.6 5.8
Commercial 11.8 19.2 7.0 14.1
Portfolio total 4.0 5.9 3.2 4.9
* GLA=Gross Lettable Area
The Fund has made good progress with the vacancy take-up with overall
vacancies reducing by 1.9% based on GLA and 1.7% based on rental income.
The Fund's industrial vacancy as at December 2013 was 0.2% (December
2012: 1.3%). The quality and pro-active management of the portfolio
ensured that the industrial portfolio remains let at levels well above
the sector average. There is pressure on rental levels as tenants strive
to service higher occupancy costs in a challenging economic environment.
Retail vacancies continued their positive downward trend to 8.9% as at 31
December 2013 (December 2012: 10.6%) with significant inroads being made
since June 2013. Vacancies are expected to decrease further on the back
of expansion and redevelopment initiatives.
Low GDP growth impacting employment growth and rental demand is leading
to continued space consolidation in the office market. This places
further pressure on the office vacancies, especially B to C Grade office
buildings. Although offices represent a very small component of the
Fund's portfolio, the focus has been to improve the quality of the office
portfolio by divesting from 3 largely vacant office buildings and
acquiring two A Grade office buildings with solid tenant covenants. This
has resulted in a reduction of commercial vacancies of 7.4% and of 7.1%
as a percentage of GLA and rental income respectively.
The lease expiry profile and vacancies (by GLA) are set out below:
Property Vacant (%) Expiries (%)
type Monthly 2014 2015 2016 2017 Thereafter
Industrial 0.2 2.6 10.9 28.4 12.9 23.3 21.7
Retail 8.9 5.4 15.3 18.2 15.4 7.9 28.9
Commercial 11.8 3.5 25.5 24.5 19.9 7.2 7.6
Total 4.0 3.6 13.6 24.8 14.3 17.0 22.7
TENANT RETENTION AND RENTAL REVERSION
The table below reflects the Fund’s tenant retention ratio and rental
reversion per sector for a rolling 12 month period ending December 2013:
Property type Expiries (m2) Retention (m2) Retention (%) Rental
reversion (%)
Industrial 137,724 91,454 66.4 (0.8)
Retail 45,837 40,052 87.4 2.2
Commercial 15,281 13,836 90.5 2.2
Total 198,842 145,342 73.1 1.0
The tenant retention of 73.1% is lower than 88.1% achieved in the prior
year, as a result of the 30,000m2 industrial expiry referred to in the
“Review of Results and Performance” section.
There was pressure on rental renewal which led to slight negative
reversions on the industrial portfolio during the year. This is however
limited, as only 4.7% of the total industrial GLA is affected. Commercial
retentions have shown significant improvement at 90.5% (December 2012:
50.2%) in a difficult market.
BORROWINGS
The debt profile is detailed below as at 31 December 2013:
Type Maturity date Value (Rm) Interest Rate (%)
Fixed 29.04.2015 200 8.62
Fixed 30.06.2015 425 7.45
Fixed 31.12.2015 300 7.85
Fixed 25.07.2016 1 8.13
Fixed 31.12.2016 400 7.85
Fixed 30.09.2018 270 7.81
Fixed 30.09.2018 30 7.81
Total 1,626 7.83
Loan to value (“LTV”) remained low with debt amounting to 18.3% of the
total portfolio (31 December 2012: 14.0%). The Fund entered into new swap
arrangements during the year hedging R1,375m (84.6%) of the Fund's
effective borrowings.
STRATEGY AND PROSPECTS
At the beginning of 2013 the Fund presented a four pillar strategy to
turn around the performance of the Fund and to provide a base from which
the Fund would be able to deliver sustainable distribution growth well
into the future. The Board is pleased to report that during the year
under review actions were executed to address each of the four pillars of
the strategy and as a consequence the Fund achieved top quartile
performance in the sector in 2013 and is appropriately positioned for
future growth.
In an environment of market volatility and upward pressure on the cost of
capital and yields, the Fund is focusing on unlocking underperformance in
its retail portfolio and robust tenant retention in its industrial
portfolio. In addition the Fund is exploring investment opportunities
that will be yield and growth enhancing.
The Board is pleased with the turnaround of the Fund in 2013 and is
confident that it is now on a firm footing to deliver distribution growth
at least on par with the sector average for listed entities invested in
South African property.
As at As at
CONSOLIDATED STATEMENT 31.12.2013 31.12.2012
OF FINANCIAL POSITION (R000) Note Audited Audited
Assets
Non-current assets 8,927,419 7,990,017
Investment property 8,654,251 7,733,791
- At valuation 8,722,125 7,903,575
- Straight line rental adjustment (210,974) (233,084)
- Properties under development 143,100 63,300
Letting commissions and tenant installations 63,116 53,521
Interest rate swap derivatives 39,644 2,854
Rental receivable - straight line adjustment 170,408 199,851
Current assets 515,248 754,215
Properties held for disposal - 182,900
Letting commissions and tenant installations - 835
Trade receivables 16,637 20,186
Other receivables and accrued interest 146,143 108,956
Rental receivable - straight line adjustment 40,566 33,233
Interest rate swap derivatives 382 -
Capital gains taxation - 824
Cash resources and short term investments 311,520 407,281
Total assets 9,442,667 8,744,232
Unitholders' funds and liabilities
Unitholders' funds 7,280,242 6,973,355
Non-current liabilities 1,625,913 767,719
Interest bearing borrowings 1,625,913 620,975
Deferred taxation 4 - 146,744
Current liabilities 536,512 1,003,158
Trade and other payables 197,160 170,283
Interest bearing borrowings - 520,000
Capital gains taxation - 56
Unclaimed distributions 1,346 1,034
Distributions payable 326,030 305,475
Interest rate swap derivatives 11,976 6,310
Total unitholders' funds and liabilities 9,442,667 8,744,232
NAV cpu 368 342
Year ended Year ended
CONSOLIDATED STATEMENT 31.12.2013 31.12.2012
OF COMPREHENSIVE INCOME (R000) Note Audited Audited
Revenue 1,186,412 1,227,838
Income 1,207,223 1,259,787
Rent 878,077 893,877
Straight line rental adjustment (24,419) 8,177
Recovery of property expenses 332,754 325,784
Interest income from associate company - 1,402
Interest income 20,811 30,547
Expenses (592,216) (636,496)
Accounting and secretarial fees (6,082) (5,893)
Audit fees (1,845) (1,661)
Administrative fees (10,460) (11,594)
Interest expense (94,562) (139,202)
Property expenses (412,714) (407,387)
Property administration (29,118) (35,200)
Service fees (37,435) (35,559)
Operating income 615,007 623,291
Revaluation of interest rate swap derivatives 31,506 (30,141)
Amortisation of debt restructure costs (10,504) (32,739)
Capital loss on disposal of investment
properties (4,086) (20,075)
Revaluation of investment properties 380,625 245,611
- Revaluations 356,206 253,788
- Straight line rental adjustment 24,419 (8,177)
Revaluation of investment property under
development - 625
Income before taxation 1,012,548 786,572
Taxation 146,846 (49,939)
Current capital gains and normal income
taxation 102 1,441
Deferred taxation on property transactions 4 146,744 (51,380)
Deferred taxation on straight line valuation
adjustment (21,815) 846
Deferred taxation on straight line rental
adjustment 21,815 (846)
Net profit attributable to unitholders 1,159,394 736,633
Other comprehensive income
Amortisation of hedge reserve 10,516 27,473
Total comprehensive income attributable to
unitholders 1,169,910 764,106
Year ended Year ended
CONSOLIDATED STATEMENT OF 31.12.2013 31.12.2012
CHANGES IN UNITHOLDERS’ FUNDS (R000) Audited Audited
Unitholders' funds at the beginning of the year 6,973,355 6,967,767
Total comprehensive income for the year 1,169,910 764,106
Net profit for the year 1,159,394 736,633
Amortisation of hedge reserve 10,516 27,473
Repurchase of units (222,986) (142,489)
Unit repurchase cost (509) (216)
Lapsed distribution on units repurchased 8,823 795
Distribution attributable to unitholders (648,351) (616,608)
Unitholders' funds at the end of the year 7,280,242 6,973,355
Year ended Year ended
CONSOLIDATED STATEMENT 31.12.2013 31.12.2012
OF CASH FLOWS (R000) Audited Audited
Operating profit before working capital changes 744,967 744,552
Working capital changes (19,333) 31,663
Cash generated from operations 725,634 776,215
Operating activities changes (695,993) (721,539)
Net cash flows from operating activities 29,641 54,676
Net cash flows from investing activities (395,668) 708,137
Net cash flows from financing activities 270,266 (729,183)
Net (decrease)/increase in cash (95,761) 33,630
Cash resources and short term investments at
beginning of year 407,281 373,651
Cash resources and short term investments at end
of year 311,520 407,281
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The preliminary summarised financial statements have been prepared and
presented in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting
Standards (IFRS), the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, Financial Reporting Pronouncements as
issued by the Financial Reporting Standards Council, the Listings
Requirements of the JSE Limited, the requirements of the Collective
Investment Schemes Control Act, No.45 of 2002 (“CISCA”) and the
information as required by IAS 34: Interim Financial Reporting. The
report has been prepared using accounting policies that comply with IFRS
that are consistent with those applied in the financial statements for
the year ended 31 December 2012 with the exception of the adoption of IAS
1: Presentation of Financial Statements: Presentation of other
Comprehensive Income, Circular 2/2013: Headline Earnings, IFRS 7
Financial Instruments : Disclosures (amendments), IFRS 10 Consolidated
Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of
Interests in Other Entities and IFRS 13 Fair Value Measurement. The
preliminary summarised financial statements were prepared under the
supervision of the group financial director, AM Basson CA(SA) and have
been audited in compliance with the CISCA.
The auditors, Deloitte & Touche, have issued their unmodified audit
opinion on the consolidated financial statements for the year ended 31
December 2013. The audit was conducted in accordance with International
Standards on Auditing.
These preliminary summarised financial statements were derived from the
consolidated financial statements, with which they are consistent in all
material respects. These preliminary summarised financial statements have
been audited by the Fund's auditors who have issued an unmodified
opinion. A copy of the audit report is available for inspection at the
Fund's registered office. The audit report does not necessarily cover all
the information contained in this announcement. Unitholders are therefore
advised that in order to obtain a full understanding of the nature of the
auditor's work they should obtain a copy of that report together with the
accompanying financial information from the Fund's website or from the
registered office of the Fund.
Any reference to future financial performance included in this
announcement, as well as related information which is not based on IFRS,
has not been reviewed or reported on by the Fund's auditors.
1. Reconciliation of headline earnings to distributable earnings
attributable to unitholders
Year ended Year ended
31.12.2013 31.12.2012
Audited Audited
R000 CPU R000 CPU
Net profit for the year 1,159,394 58.39* 736,633 35.80*
Adjustments for:
Capital loss on disposal of
investment properties 4,086 20,075
Taxation on capital profit on disposal
of investment properties (102) (1,441)
Revaluation of investment properties (380,625) (245,611)
Revaluation of investment property
under development - (625)
Taxation on adjustments (124,929) 50,534
Headline earnings 657,824 33.13* 559,565 27.20*
Straight line rental adjustment 24,419 (8,177)
Taxation on straight line rental
adjustment (21,815) 846
Amortisation of debt restructure costs 10,504 32,739
Taxation on distributable earnings 102 699
Lapsed distribution on units repurchased 8,823 795
Revaluation of interest rate swap
derivatives (31,506) 30,141
Distributable earnings attributable
to unitholders 648,351 32.75 616,608 30.15
Interim 322,315 16.28 311,133 15.17
Final 326,036 16.47 305,475 14.98
* Calculated on weighted number of units in issue
2. Primary operational segments (R000)
Business segment Industrial Retail Commercial Group
Extract from statement of
comprehensive income
Revenue 472,533 611,248 102,631 1,186,412
Rental income (excluding
straight line rental adjustment) 416,930 374,746 86,401 878,077
Net property expenditure (45,084) (47,785) (16,209) (109,078)
Property expenses (109,710) (296,186) (35,936) (441,832)
Recovery of property expenses 64,626 248,401 19,727 332,754
Net property income 371,846 326,961 70,192 768,999
Straight line rental adjustment (9,023) (11,899) (3,497) (24,419)
Deferred taxation on straight
line rental adjustment 1,123 20,692 - 21,815
Net interest expense - - - (73,751)
Amortisation of debt restructure
costs - - - (10,504)
Group expenses - - - (55,822)
Revaluation of interest rate swap
derivatives - - - 31,506
Headline earnings 363,946 335,754 66,695 657,824
Other information
Properties 3,781,276 3,832,793 1,040,182 8,654,251
At valuation 3,796,600 3,866,125 1,059,400 8,722,125
Straight line rental
adjustment (120,424) (71,332) (19,218) (210,974)
Property under development 105,100 38,000 - 143,100
Revaluation of investment
properties excluding straight
line adjustment, net of
taxation 178,951 310,883 13,116 502,950
Segment growth rates Industrial Retail Commercial Group
% % % %
Rental income (excluding
straight line rental adjustment) 7.0 (11.1) 4.5 (1.8)
Property expenses 21.3 (6.2) (1.5) (0.2)
Recovery of property expenses 14.7 (0.9) 5.4 2.1
Net property income 4.6 (8.3) 8.1 (1.0)
3. Unit repurchases
The Board approved the implementation of a unit repurchase programme for
which approval was given by the unitholders at the annual general meeting
in 2012. In terms of the programme, a portion of the proceeds from the
sale of the properties can be used to repurchase units in the open market
which would then be cancelled. In January and February 2013 the programme
was concluded by the repurchase of 58,896,063 units at an average price
of 378.61cpu (2012: 42,879,535 units at an average price of 332.30cpu).
4. Deferred taxation
During the reporting period, the JSE Limited approved the Fund's
application for the Real Estate Investment Trust (”REIT”) status. SA
Corporate will qualify as a REIT with effect from the commencement of the
new financial year, being 1 January 2014. In determining the aggregate
capital gain or capital loss of a REIT, or a controlled property company,
for purposes of the Eighth Schedule of the Income Tax Act 1958, as
amended, any capital gain or capital loss determined in respect of the
disposal of immovable property; a share in a REIT; or a share in a
controlled property company, must be disregarded. This results in a
reversal of the Group's deferred tax liability of R146,74m as at December
2012.
5. Significant related party transactions
During the reporting period, the following significant related party
transactions occurred:
Related party Transaction Cost (R000)
SA Corporate Real Estate Fund
Managers Ltd Service fees 37,435 (2012: 35,559)
Old Mutual Property Property
Proprietary Ltd management 15,994 (2012: 35,200)
6. Events subsequent to reporting date
A ballot has been sent to the unitholders in respect of the
internalisation of the management company, to obtain their approval for
certain amendments to the Trust Deed in terms of which:
1. The existing service charge arrangement in respect of the Fund will be
changed from a monthly charge based on a value of 0.4% of the aggregate
market capitalisation of the Fund plus borrowings, to a monthly charge
equal to the actual operating costs incurred by the Manager in
administering the Fund as well as the scrapping of the initial charge of
5% on the value of any new participatory interests ("units") issued
against the payment by the Fund to the Manager for a consideration of
R185 million excluding VAT; and
2. As a separate amendment to increase the borrowing limits of the Fund
from 30% to 60% of the value of its underlying assets.
DISTRIBUTION DECLARATION AND IMPORTANT DATES
Notice is hereby given of the declaration of distribution no.38 in
respect of the income distribution period 1 July 2013 to 31 December
2013. The distribution amounts to 16.47cpu. The source of the
distribution comprises net income from property rentals and interest
earned on cash investments. Please refer to the statement of
comprehensive income for further details. The distribution is not
regarded as a dividend and therefore no dividend withholding tax is
payable on the distribution amount.
Last date to trade cum distribution Thursday, 20 March 2014
Units will trade ex-distribution Monday, 24 March 2014
Record date to participate in the distribution Friday, 28 March 2014
Payment of distribution Monday, 31 March 2014
Unit certificates may not be dematerialised or re-materialised between
Monday, 24 March and Friday, 28 March 2014 both days inclusive.
As SA Corporate has REIT status, unitholders are advised that the
distributions meet the requirements of a "qualifying distribution" for the
purposes of section 25BB of the Income Tax Act, No. 58 of 1962 ("Income
Tax Act"). The distributions on SA Corporate units will be deemed to be
dividends, for South African tax purposes, in terms of section 25BB of the
Income Tax Act.
The distributions received by or accrued to South African tax residents
must be included in the gross income of such unitholders and are not
exempt from income tax (in terms of the exclusion to the general dividend
exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the
Income Tax Act) because they are dividends distributed by a REIT. These
distributions are, however, exempt from dividend withholding tax in the
hands of South African tax resident unitholders, provided that the South
African resident unitholders have provided the following forms to the CSDP
or broker, as the case may be, in respect of uncertificated units, or the
transfer secretaries, in respect of certificated linked units:
a) a declaration that the distribution is exempt from dividends tax; and
b) a written undertaking to inform the CSDP, broker or the transfer
secretaries, as the case may be, should the circumstances affecting the
exemption change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African
Revenue Service.
SA Corporate unitholders are advised to contact the CSDP, broker or
transfer secretaries, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the
distribution, if such documents have not already been submitted.
Distributions received by non-resident unitholders will not be taxable as
income and instead will be treated as ordinary dividends which are exempt
from income tax in terms of the general dividend exemption in section
10(1)(k)(i) of the Income Tax Act. It should be noted that up to 31
December 2013 distributions received by non-residents from a REIT were not
subject to dividend withholding tax. From 1 January 2014, any distribution
received by a non-resident from a REIT will be subject to dividend
withholding tax at 15%, unless the rate is reduced in terms of any
applicable agreement for the avoidance of double taxation ("DTA") between
South Africa and the country of residence of the unitholder. Assuming
dividend withholding tax will be withheld at a rate of 15%, the net
dividend amount due to non-resident unitholders is 13.9995 cents per SA
Corporate unit. A reduced dividend withholding rate, in terms of the
applicable DTA, may only be relied on if the non-resident unitholder has
provided the following forms to the CSDP or broker, as the case may be, in
respect of uncertificated units, or the transfer secretaries, in respect
of certificated units:
a) a declaration that the dividend is subject to a reduced rate as a
result of the application of a DTA; and
b) a written undertaking to inform the CSDP, broker or the transfer
secretaries, as the case may be, should the circumstances affecting the
reduced rate change or the beneficial owner cease to be the beneficial
owner,
both in the form prescribed by the Commissioner for the South African
Revenue Service. Non-resident unitholders are advised to contact the CSDP,
broker or the transfer secretaries, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the
distribution if such documents have not already been submitted, if
applicable.
1,980,093,014 SA Corporate units are in issue at the date of this
distribution declaration and SA Corporate's income tax reference number is
2951279203.
SA Corporate Real Estate Fund Managers Limited
Registered office
South Wing, First Floor
Block A
The Forum
North Bank Lane
Century City
7441
Tel 021 529 8410
Registered auditors
Deloitte & Touche
1st Floor
The Square
Cape Quarter
27 Somerset Road
Cape Town
8005
Transfer secretaries
Computershare Investor Services
(Pty) Ltd
Ground Floor
70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
Sponsor
Nedbank Capital
A division of Nedbank Limited
135 Rivonia Road
Sandton
2196
Managed by Old Mutual Property
A licenced financial services provider
Directors: J Molobela (Chairman appointed 3 May 2013), TR Mackey
(Managing)*, AM Basson (Finance)*, RJ Biesman-Simons, GP Dingaan, KJ
Forbes, P Levett, SH Mia, R Morar (resigned 28 February 2014), ES Seedat
* Executive
OLD MUTUAL PROPERTY PROPRIETARY LTD
SECRETARIES
28 February 2014
Date: 03/03/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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