Wrap Text
Unaudited results for the six months ended 28 February 2014
REBOSIS PROPERTY FUND LIMITED
(“Rebosis” or the “company”)
Registration number 2010/003468/06
(Approved as a REIT by the JSE)
JSE share code: REB
ISIN: ZAE000156147
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2014
- 9,0% distribution growth to 48,5 cents per linked unit
- 98,0% occupancy level
- 51,0% increase in assets under management to R7,01 billion
- Strategic acquisition of Ascension Manco
- 18,1% growth in market capitalisation to R4,37 billion
- 29,05% Ascension B linked units acquired
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited for Unaudited for
six months six months Audited for
ended 28 ended 28 year ended 31
February 2014 February 2013 August 2013
R’000 R’000 R’000
REVENUE
Property portfolio 393 949 267 248 565 209
Rental income 362 882 248 112 522 757
Straight line rental income
accrual 31 067 19 136 42 452
Net income from facilities
management agreement 8 549 8 215 16 833
Listed property securities income 1 907 - -
Asset management fees received 1 367 - -
Sundry income 570 162 630
Total revenue 406 342 275 625 582 672
Property expenses (98 892) (62 993) (132 658)
Administration and corporate costs (13 825) (9 868) (20 481)
Net operating profit 293 625 202 764 429 533
Amortisation of intangibles (1 499) - -
Changes in fair values 131 423 77 855 (3 065)
Profit from operations 423 549 280 619 426 468
Finance charges (76 717) (48 309) (90 778)
Finance charges – secured loans (82 568) (72 381) (147 883)
Interest received - other 432 1 685 17 853
Interest received - antecendent 5 419 22 387 39 252
Profit before debenture interest
and taxation 346 832 232 310 335 690
Debenture interest (187 468) (136 697) (302 059)
Profit before taxation 159 364 95 613 33 631
Taxation - (20 983) 242 305
Total comprehensive income for the
period 159 364 74 630 275 936
Reconciliation of earnings and
distributable earnings
Profit for the year attributable to
equity holders 159 364 74 629 275 936
Debenture interest 187 468 136 697 302 059
Earnings 346 832 211 326 577 995
Change in fair value of properties
(net of deferred taxation) (144 179) (53 713) (195 695)
Change in fair value of
properties (144 179) (66 025) 36 600
Deferred taxation - 12 312 (232 295)
Headline profit attributable to
linked unitholders 202 653 157 613 382 300
Calculation of distributable
earnings
Net operating profit 293 625 202 764 429 533
Less:
Straight line rental income
accrual (31 067) (19 136) (42 452)
Finance charges (75 091) (46 931) (88 022)
Net finance charges (76 717) (48 309) (90 778)
Structuring fee amortisation 1 626 1 378 2 756
Debt restructuring fee - - 3 000
Distributable earnings attributable
to linked unitholders 187 467 136 697 302 059
Number of linked units in issue 386 531 577 249 147 699 386 531 577
Weighted average number of linked
units in issue 372 589 086 226 332 267 372 589 086
Basic and diluted earnings per
linked unit (cents) 93,49 90,52 93,49
Basic and diluted headline earning
per linked unit (cents) 54,79 66,79 54,79
Distributable earnings per linked
unit (cents) 48,50 44,50 48,50
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited for Unaudited for Audited for
six months six months year ended 31
ended 28 ended 28 August 2013
February 2014 February 2013
R’000 R’000 R’000
ASSETS
Non-current assets 7 126 068 4 733 072 5 379 498
Investment property 6 592 000 4 637 000 5 283 500
Listed property securities 267 941 - -
Goodwill 95 703 95 703 95 703
Intangibles 148 427 - -
Derivative instruments 21 291 - -
Property, plant and equipment 706 369 295
Current assets 87 400 472 488 95 339
Trade and other receivables 66 842 27 122 55 804
Cash and cash equivalents 20 558 445 366 39 535
7 213 468 5 205 560 5 474 837
EQUITY AND LIABILITIES
Equity 1 685 369 1 020 889 1 382 698
Stated capital 1 053 732 749 922 910 425
Reserves 631 637 270 967 472 273
Non-current liabilities 4 840 241 4 016 078 3 023 242
Debentures 2 806 219 2 230 152 2 527 436
Interest bearing borrowings 2 031 879 1 479 614 488 810
Derivative instruments 2 143 43 023 6 996
Deferred taxation - 263 289 -
Current liabilities 687 858 168 593 1 068 897
Short term portion of interest
bearing borrowings 442 824 - 872 234
Trade and other payables 57 566 31 896 31 300
Unitholders for distribution 187 468 136 697 165 363
Total equity and liabilities 7 213 468 5 205 560 5 474 837
Net asset value per linked unit (R)
11,62 10,58 11,23
Net asset value per linked unit
(excluding goodwill and deferred
taxation)(R) 11,38 11,13 10,96
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Unaudited for Unaudited for Audited for
six months six months year ended 31
ended 28 ended 28 August 2013
February 2014 February 2013
R’000 R’000 R’000
Stated capital 1 053 732 749 922 910 425
Balance at beginning of period 910 425 550 087 550 087
Issue of shares 143 307 199 835 360 338
Reserves 631 637 270 967 472 273
Balance at beginning of year 472 273 196 337 196 337
Profit for the period 159 364 74 630 275 936
1 685 369 1 020 889 1 382 698
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOW
Unaudited for Unaudited for Audited for
six months six months year ended 31
ended 28 ended 28 August 2013
February 2014 February 2013
R’000 R’000 R’000
Cash flows from operating
activities 38 106 20 166 17 749
Cash generated from operations 278 559 174 364 348 354
Net finance costs (75 090) (48 310) (88 021)
Debenture interest paid (165 363) (105 888) (242 584)
Cash outflows from investing
activities (1 124 942) (12 437) (739 366)
Cash inflows from financing
activities 1 067 859 420 315 743 830
Net movement in cash and cash
equivalents (18 977) 428 044 22 213
Cash and cash equivalents at the
beginning of the period 39 535 17 322 17 322
Cash and cash equivalents at the
end of the period 20 558 445 366 39 535
SEGMENTAL INFORMATION
Retail Office Industrial Total
R’000 R’000 R’000 R’000
For 6 months ended 28
February 2014
Rental income (excluding
straight-line rental
income accrual)
166 697 189 741 6 444 362 882
Net income from
facilities management
agreement - 8 549 - 8 549
Operating costs (59 610) (39 098) (184) (98 892)
Net property income 107 087 159 192 6 260 272 539
Changes in fair values of
investment property 59 344 109 900 6 000 175 246
Investment property 2 954 000 3 506 000 132 000 6 592 000
For 6 months ended 28
February 2013
Rental income (excluding
straight-line rental
income accrual)
132 957 115 155 - 248 112
Net income from
facilities management
agreement - 8 215 - 8 215
Operating costs (42 886) (20 107) - (62 993)
Net property income 90 071 103 263 - 193 334
Changes in fair values of
investment property 9 676 56 349 - 66 025
Investment property 2 406 000 2 231 000 - 4 637 000
COMMENTARY
INTRODUCTION
Rebosis, a black managed Real Estate Investment Trust (“REIT”), owns a high
growth, defensive portfolio of 19 quality properties including Hemingways Mall,
the largest retail centre in the portfolio, which reported annual turnover growth
of 10,5% in the reporting period. With a market capitalisation of R4,37 billion
and assets under management of R7,01 billion, its objective is to continue to
grow its distributions and long term capital appreciation for its shareholders.
Rebosis has achieved excellent results despite a tougher macro economic
environment with rising interest rates and sector vacancies.
FINANCIAL RESULTS
Rebosis delivered against its growth objectives given its strong fundamentals and
prudent management. During the period under review, it increased total assets to
R7,01 billion through yield enhancing strategic acquisitions and delivered on
distribution growth targets.
Rebosis has declared a distribution of 48,50 cents per linked unit for the six
months ended 28 February 2014, an increase of 9,0% on the distribution of
44,50 cents per linked unit declared for the comparable period in 2013. This
growth is mainly attributable to better portfolio fundamentals, a decrease in the
overall cost of funding from 8,5% to 8,0% and continued operating efficiencies
across the portfolio.
PROPERTY PORTFOLIO
The property portfolio was valued at R6,592 billion, an increase of
R175,2 million since 31 August 2013. Quadrant Properties are the appointed
valuers of the office/industrial portfolio and Old Mutual Investments Group SA of
the retail portfolio. The entire portfolio was valued using the discounted cash
flow method at the reporting date.
The portfolio has a total GLA of 414 398 m2 and is located in Gauteng, the
Eastern Cape, KwaZulu Natal and North West Province. The portfolio comprises 45%
retail, 53% office and 2% industrial, by value.
Value Value per m2
GLA m2 R’000 R/m2
Retail 164 041 2 954 000 18 008
Office 231 403 3 506 000 15 151
Industrial 18 954 132 000 6 964
Total portfolio 414 398 6 592 000 15 907
The retail component includes four high quality shopping malls underpinned by
strong anchor and national tenants delivering secure income streams escalating at
6,3%. The office portfolio consists of 14 buildings which are well located in
nodes attractive to government tenants. These are mainly single tenanted
buildings let to the National Department of Public Works under long leases
providing for average escalations of 8,2%. 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 28 February 2014,
vacancies for the total portfolio were 2,0%.
PROPERTY ACQUISITIONS
During the reporting period, Rebosis took transfer of the Nthwese portfolio,
comprising five recently refurbished quality properties let to the Gauteng
provincial and national government. The 67 952m2 fully let portfolio consists of
long-term leases expiring in 2019 and 2020 and provides linked unitholders with
predictable revenue streams and low forecast risk. R740 million of the purchase
price of R1,06 billion was discharged in cash and R300 million by the allotment
and issue of Rebosis linked units to the vendors at an average issue price of
R11,80 per unit.
STRATEGIC ACQUISITIONS
As announced on SENS on 3 February 2014, Rebosis has unconditionally acquired and
taken delivery of the entire issued share capital of the Ascension Property
Management Company Proprietary Limited, (“Ascenscion Manco”) the asset manager of
the property portfolio of Ascension Properties Limited (“Ascension”), for an
aggregate purchase price of R150 million. The acquisition of this right to manage
property has been classified as an intangible, the value of which is amortised
over the remaining period of the asset management contract.
Further, as announced on SENS on 5 February 2014, Rebosis acquired 109 363 661
Ascension B linked units, at R2,65 per unit for an aggregate purchase price of
R289 813 701, representing 29,05% of Ascension’s B linked unit capital and 15,96%
of Ascension’s total issued linked unit capital. The units were acquired “cum”
distribution at 10,36 cents per unit. The purchase price for the linked units was
settled by R150 million in cash and the balance of R139 813 701 by the allotment
and issue of 2 969 731 Rebosis linked units to the vendors at an issue price of
R10,78 per unit.
FUNDING
At 28 February 2014, Rebosis’ net borrowings increased to R2,475 billion as a
result of the Nthwese and Ascension acquisitions, increasing the gearing ratio to
35,3% from 25,3% at 31 August 2013. The weighted average cost of borrowings was
8,0% for the period under review and at the reporting date, interest rates in
respect of 75,0% of borrowings have been hedged. The average remaining term of
the debt is 2,7 years.
Rebosis has R886,2 million facilities expiring in May 2014. Agreements have been
reached with the lenders to rollover R200 million for 5 years, R246,1 million for
3 years and the balance of the facilities have been extended for 6 months to
30 November 2014 to accommodate the anticipated corporate action.
CAUTIONARY
Linked unitholders are referred to the announcement released on SENS on
25 March 2014, by Rebosis, Ascension and Delta Property Fund Limited (“Delta”)
and are reminded that the company is still trading under cautionary in respect of
the co-operation agreement for the possible tripartite merger with Ascension and
Delta.
PROSPECTS
Given our strong portfolio fundamentals of long term leases with contractual
escalations in the office sector combined with strong turnover growth in the
retail sector, we remain confident about the performance of the fund. Demand for
space is strong, vacancies are low and operating costs are well managed. The
current retail expansion and tenant mix optimisations will further position the
centres for exceptional growth in the future.
Despite a tougher economic environment, the board reaffirms the forecast
distribution of between 97,0 cents and 99,0 cents per linked unit for the year
ending 31 August 2014. This forecast, which has not considered the effects of the
possible corporate action, 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 costs and that there will be no major corporate failures. This forecast
has not been reviewed or reported on by the company’s auditors.
PAYMENT OF DISTRIBUTION
Distribution no. 6 of 48,50 cents per linked unit for the six months ended
28 February 2014 will be paid to linked unitholders in accordance with the
abbreviated timetable set out below:
Last day to trade cum distribution Friday 16 May 2014
Linked units trade ex distribution Monday 19 May 2014
Record date Friday 23 May 2014
Payment date Monday 26 May 2014
Linked unitholders may not dematerialise or rematerialise their linked units
between Monday 19 May 2014 and Friday 24 May 2014, both days inclusive. An
announcement relating to the tax treatment of the distribution will be released
separately on SENS.
BASIS OF PREPARATION
The results for the six months ended 28 February 2014 have not been reviewed or
reported on by the company’s independent auditors, Grant Thornton (Jhb) Inc.
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. Except for new standards adopted as set out below, the
accounting policies adopted in the preparation of these unaudited results are
consistent with those applied in the preparation of the financial statements for
the year ending 31 August 2013:
- IAS 23 Borrowing costs
- IAS 39 Financial assets (listed property securities)
- IAS 18 Revenue recognition (listed securities revenue)
These financial results have been prepared under the supervision of the financial
director, JA Finn (CA(SA).
While the company has complied with requirements by disclosing earnings and
headline earnings per share, the directors are of the view that distributable
earnings and the distribution per linked units, as disclosed above, are more
meaningful to investors.
By order of the board
Dr ATM Mokgokong (Chair) SM Ngebulana (CEO)
24 April 2014
Directors
ATM Mokgokong*^ (Chairperson), SM Ngebulana (CEO), JA Finn, AM Mazwai*^, WJ
Odendaal*^, KL Reynolds*, MF Rodel, SV Zilwa*^
*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: 24/04/2014 07:05:00 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,
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