Wrap Text
Condensed unaudited group interim financial results for the six months ended 30 June 2014
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 ("ManCo")
(Registration number 1994/009895/06)
REIT status approved from 1 January 2014
CONDENSED UNAUDITED GROUP INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS
ENDED 30 JUNE 2014
Interim distribution growth
- 8.6% higher than June 2013
- 7.3% higher than December 2013
Capital structure
- Premium to NAV increased to 11.1%
- Effective debt 95.4% fixed
Portfolio activity
- Acquisition of 4 properties for R277,6m
- Contracted acquisition of 2 properties and 1 portfolio for R1,1bn
- Contracted disposal of 7 properties for R174,5m
Property performance
- Standing portfolio NPI growth of 10.0%
- Vacancy as % of rental income reduced to 2.9%
- Tenant retention increased to 89.5%
INTRODUCTION
SA Corporate Real Estate Fund is a JSE listed Property Unit Trust 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 interim distribution for the six months to June 2014 of 17.68cpu (June
2013: 16.28cpu) increased by 8.6% and 7.3% relative to the final
distribution for the six months to December 2013 (16.47cpu). The
distribution for the six months to June 2013 included a once-off lapsed
distribution of R8.8m arising from the repurchase of 58,896,063 units. Net
property income (“NPI”) in respect of the standing portfolio grew by 10.0%.
The premium to net asset value (“NAV”) increased to 11.1% at June 2014
(NAV: 369cpu, Unit price: 410cpu), compared to a premium of 8.4% at
December 2013.
Industrial rental growth of 11.3% was underpinned by strong tenant
retentions of 92.8%, solid weighted average lease escalations of 8.1% and
acquisitions. Total retail rental income increased by 8.6% on the back of
positive reversions, reduced vacancies, solid retentions, improved turnover
rental collection and weighted average escalations of 8.0%. This result was
supported by the divestment of underperforming properties and an
acquisition. Overall commercial rental income increased by 50.9% largely
attributable to the acquisition of the premium grade World Trade Center
office tower in the last quarter of 2013 and the disposal of largely vacant
B and C grade offices in line with the Fund's strategy of divesting from
poor performing, lower grade offices.
The total standing portfolio rental increased by 7.3%, mainly due to solid
lease escalations, improved tenant retentions and reduced vacancies.
Industrial standing portfolio rental growth was 8.2% evidencing the
robustness of this portfolio. Total retail rental income for the standing
portfolio increased by 7.3% whilst the commercial standing portfolio income
growth was 4.5%.
Property expenses increased by 6.6% compared to June 2013 mainly due to
acquisitions, with the standing portfolio expenses, accounting for 93.3% of
total property expenses, increasing by 3.6%. The below inflation increase
in respect of the standing portfolio is driven by savings in property
management fees during the first half of 2014 of 21.0%, arising from the
change in property manager from 1 July 2013. Property expenses, excluding
property management fees, increased by 5.7%. Overall NPI increased by
16.3%. This can be attributed to an increase in gross income (including
turnover and recoveries) of 7.8% with a 3.6% increase in expenses.
Net interest expense increased by 93.5% for the 6 months to June 2014
compared to the same period in 2013. The increase is supported by net
accretive acquisitions. Group expenses decreased by 17.7% for the 6 months
to June 2014. This can be attributed to a reduction in service fee and
accounting and secretarial fees post the internalisation of the ManCo,
effective 1 May 2014, and the provision for a potential VAT liability in
the first half of 2013.
The breakdown of distributable earnings is set out below:
6 months 6 months Year ended
ended ended
30.06.2014 30.06.2013 31.12.2013
DISTRIBUTABLE EARNINGS (R000) Unaudited Unaudited Audited
Rent (excluding straight line rental
adjustment) 482,814 424,333 878,077
Net property expenses (44,718) (47,664) (109,078)
Property expenses (219,683) (206,144) (441,832)
Recovery of property expenses 174,965 158,480 332,754
Net property income 438,096 376,669 768,999
Taxation on distributable earnings - 103 102
Net funding cost (64,052) (33,095) (73,751)
Interest income 11,404 10,519 20,811
Interest expense (75,456) (43,614) (94,562)
Group expenses (24,000) (30,174) (55,822)
Lapsed distribution on units repurchased
repurchased - 8,812 8,823
Distributable earnings 350,044 322,315 648,351
Units in issue (000) 1,980,093 1,980,093 1,980,093
Weighted number of units in issue
(000) 1,980,093 1,991,406 1,985,703
Distribution (cents per unit) 17.68 16.28 32.75
Interim 17.68 16.28 16.28
Final - - 16.47
PROPERTY VALUATIONS
The value of the Fund's independently valued property portfolio increased
by R539,7m (6.1%) to R9,4bn as at June 2014 (December 2013: R8,9bn). The
standing portfolio, representing properties not under development, held for
the full 12 months to June 2014, increased by R235,8m (2.8%) from December
2013 and R582,6m (7.2%) from June 2013.
The capitalisation and discount rates in the Fund's standing portfolio at
30 June 2014 were calculated on a weighted basis:
Sector Capitalisation Discount rate (%) Growth in standing
rate (%) portfolio (%)
30.06.2014 31.12.2013 30.06.2014 31.12.2013 30.06.2014
Industrial 9.0 9.0 14.5 14.5 2.7
Retail 8.7 8.7 14.2 14.2 3.1
Commercial 8.8 9.3 14.3 14.8 2.3
Portfolio total 8.8 8.8 14.3 14.3 2.8
The NAV per unit (369cpu) increased by 0.3% (December 2013: 368cpu) of
which a 2.8% increase is attributable to property valuation, set-off by a
reduction arising from the fee paid in respect of the ManCo internalisation
of 2.5%.
PORTFOLIO INVESTMENT ACTIVITY
The portfolio comprised 139 properties (136 properties as at June 2013 and
134 properties as at December 2013). The sectoral and geographic weightings
by value as at 30 June 2014 are set out below:
Sectoral Spread
Retail
44%
R4,2bn
375,600 m2
28 properties
Industrial
44%
R4,1bn
786,872 m2
92 properties
Commercial
12%
R1,1bn
85,550 m2
19 properties
Geographic Spread
Gauteng
49%
R4,6bn
640,944 m2
68 properties
KwaZulu-Natal
41%
R3,8bn
443,296 m2
53 properties
Western Cape
7%
R0,6bn
82,823 m2
11 properties
Other
3%
R0,4bn
80,959 m2
7 properties
Committed developments:
Properties Cost Commence- Forecast Yield Sector Region
(Rm) ment date completion forecast
date 1st 12
months
(%)
East Rand Galleria,
Boksburg 421,6 05/2014 09/2016 9.6 Retail Gauteng
Stellenbosch Square,
Stellenbosch 1 12,9 09/2014 03/2015 9.8 Retail Western
Cape
Total 434,5 9.6
1 50% Undivided share of development cost
Acquisitions:
Properties Cost Acquisition Yield Sector Region
(Rm) date forecast 1st
12 months
(%)
Eveready & Continental
Tyres, New Brighton, Eastern
Port Elizabeth 124,5 01/2014 9.0 Industrial Cape
Celtis Ridge Shopping
Centre, Centurion 106,0 01/2014 9.0 Retail Gauteng
50 Mangosuthu Highway, KwaZulu-
Umlazi 1 33,0 04/2014 9.6 Retail Natal
Webco Tools, Founder’s
View 14,1 03/2014 9.0 Industrial Gauteng
Total 277,6 9.1
1 Acquired for the purpose of re-development
Contracted acquisitions:
Properties Cost Actual/ Yield Sector Region
(Rm) Expected forecast 1st
acquisition 12 months
date (%)
AFHCO portfolio and
associated 1 086,0 07/2014 Residential
properties 1 to 08/2014 9.9 / Retail Gauteng
Truck World, Bardene 16,1 09/2014 11.1 Industrial Gauteng
UPM Raflatac,
Longmeadow 9,4 07/2014 9.0 Industrial Gauteng
Total 1 111,5 9.9
1 Includes R169m with payment and economic interest deferred to April 2015
Contracted disposals:
Properties Expected Gross Carrying Exit yield
transfer date selling value at on sale
price 30 June price (%)
(Rm) 2014 (Rm)
Stellenbosch Square,
Stellenbosch 1 09/2014 40,0 41,0 7.8
36 Wierda Road West,
Wierda Valley 10/2014 39,0 32,3 7.5
The Boulevard, Melville 09/2014 31,2 31,4 7.4
293 Hebbard Road,
Robertville 11/2014 23,5 22,9 5.5
90 Electron Avenue, Isando 12/2014 20,0 20,5 5.9
Lebombo Road, Garsfontein 12/2014 12,0 7,5 6.2
110 Zastron Road,
Bloemfontein 09/2014 6,9 6,6 6.8
Total 172,6 162,2 7.0
1 50% Undivided share
LEASE EXPIRIES AND VACANCIES
Vacancies in terms of rentable area and rental income were as follows:
Sector Vacancy as % of GLA* Vacancy as % of rental income
30.06.2014 31.12.2013 30.06.2013 30.06.2014 31.12.2013 30.06.2013
Industrial 1.4 0.2 0.7 1.1 0.2 0.4
Retail 6.5 8.9 11.9 3.5 4.6 6.2
Commercial 10.3 11.8 19.9 6.0 7.0 14.1
Portfolio
total 3.6 4.0 6.0 2.9 3.2 4.5
* GLA=Gross lettable area
The overall vacancy has continued its downward trend with vacancy by GLA
and income reducing by 0.4% and 0.3% respectively, compared to 31 December
2013.
The Fund's industrial vacancy remains well below the sector average as
management continues to focus on tenant retention and partnering with
tenants to accommodate changing operational needs.
Retail vacancies continue their downward trend reducing 2.4% and 1.1% by
GLA and income respectively. This is predominantly due to further progress
with letting, particularly in low value large area premises.
The commercial vacancy (including commercial in retail) reduced by 1.5% and
1.0% by GLA and income respectively, driven by office lettings, improved
tenant retentions and the divestment of vacant properties.
The lease expiry profile and vacancies (by GLA) are set out below:
Sector Vacant (%) Expiring (%)
Monthly 2014 2015 2016 2017 Thereafter
Industrial 1.4 0.2 4.5 25.3 14.0 25.2 29.4
Retail 6.5 4.8 9.9 17.2 16.2 10.5 34.9
Commercial 10.3 1.6 20.0 26.1 21.0 8.3 12.7
Total 3.6 1.6 7.4 23.1 15.2 19.6 29.5
Good progress has been made in further reducing the monthly expiries from
3.6% in December 2013 to 1.6% in June 2014, through longer lease
negotiation or re-tenanting.
TENANT RETENTION AND RENTAL REVERSIONS
The table below reflects the Fund's retention ratio and rental reversion
per sector for a rolling 12 month period ending June 2014:
Sector Expiries Retention Retention Rental
(m2) (m2) (%) reversion (%)
Industrial 119,028 110,463 92.8 (1.0)
Retail 46,289 37,639 81.3 3.1
Commercial 14,774 12,990 87.9 0.1
Total 180,091 161,092 89.5 1.0
The tenant retention has improved to 89.5% (June 2013: 71.3%) particularly
in the industrial and commercial sectors, which were up from 65.1% and
55.5% respectively.
Overall rental reversions remained positive despite pressure on renewal
rentals, with retail showing good reversion, despite tough economic
conditions. The negative industrial reversion is limited to 2.2% of the
total industrial GLA with minimal impact on overall industrial rentals,
depicting standing portfolio rental growth of 8.2%.
BORROWINGS
The debt profile is detailed below as at 30 June 2014:
Type Maturity date Value (Rm) Interest Rate (%)
Revolving 31.12.2015 299 8.09
Bridging 30.06.2015 750 7.84
Revolving 25.07.2016 167 8.16
Fixed 31.12.2016 400 8.24
Fixed 13.08.2018 200 9.12
Fixed 30.09.2018 30 8.29
Fixed 30.09.2018 270 8.29
Total 2,116 8.16
Having entered a net acquisitive phase of investment, the Fund's effective
loan to value (“LTV”) increased to 22.5% (31 December 2013: 18.3%). The
weighted average cost of debt, in respect of the effective debt excluding
fixes, was 7.3%, (December 2013: 6.8%) at a weighted average margin of 1.6%
(December 2013: 1.7%) and a weighted average tenor on fixed term facilities
of 2.9 years and inclusive of bridging facilities of 2.2 years. 35.4% of
the debt includes temporary bridging facilities, which will be refinanced
and extended by 31 December 2015, through a combination of bond and
syndicated loan facilities. Cognisant of the upward trend in interest
rates, 95.4% of the debt drawn was fixed at a weighted average rate and
margin of 6.7% and 0.9% respectively and a weighted average tenor of 3.4
years. The total weighted average cost of debt inclusive of fixes, depicted
above, amounts to 8.2%. This is up 0.3% from December 2013, due to
additional fixes taken out during the period and increases in overall debt.
STRATEGY AND PROSPECTS
With the four pillar turnaround strategy largely executed and operational,
the first six months saw the completion of the ManCo internalisation
transaction, a R1,1bn acquisition of inner city residential and retail
properties with effect from 1 July 2014, the initiation of the Corporate
REIT conversion and the introduction of a management incentive scheme aimed
at aligning management and investor interests.
The Board and management are cognisant of the volatility in market
conditions and the pressures on interest rates. Consequently it has
extended existing loans at favourable rates ahead of expiry and remains
adequately hedged at 82.2% post the AFHCO acquisition.
The foundation has been laid for the Fund to deliver sustainable
distribution growth supported by:
- A robust underpin from a quality Industrial portfolio with a focus on
tenant retention.
- Unlocking value in the retail portfolio by reducing vacancies and
progressing income enhancing redevelopments and repositioning properties
with improved tenant mix and covenants.
- Expanding the inner-city portfolio through developments and acquisitions
of quality properties in dominant nodes, fuelled by the non-discretionary
spend of an increasing urban population.
The Board is pleased with the progress made and is confident that the Fund
will be able to deliver distribution growth for the full year, marginally
better than the first half.
As at As at As at
CONDENSED GROUP STATEMENT 30.06.2014 30.06.2013 31.12.2013
OF FINANCIAL POSITION (R000) Unaudited Unaudited Audited
Assets
Non-current assets 9,298,462 8,328,842 8,927,419
Investment property 9,033,391 8,055,905 8,654,251
- At valuation 8,761,225 8,103,125 8,722,125
- Straight line rental adjustment (209,334) (221,020) (210,974)
- Properties under development 481,500 173,800 143,100
Letting commissions and tenant
installations 61,561 55,897 63,116
Interest rate swap derivatives 34,547 31,668 39,644
Rental receivable - straight line
adjustment 168,557 185,372 170,408
Property, plant and equipment 406 - -
Current assets 728,876 544,268 515,248
Properties held for disposal 162,200 112,040 -
Letting commissions and tenant
installations 1,420 637 -
Trade receivables 12,499 23,330 16,637
Other receivables and accrued interest 174,567 88,642 146,143
Rental receivable - straight line
adjustment 40,777 35,648 40,566
Interest rate swap derivatives 3,362 - 382
Cash resources and short-term
investments 334,051 283,971 311,520
Total assets 10,027,338 8,873,110 9,442,667
Unitholders' funds and liabilities
Unitholders' funds 7,298,821 7,168,527 7,280,242
Non-current liabilities 2,118,968 1,216,014 1,625,913
Interest bearing borrowings 2,116,472 1,216,014 1,625,913
Interest rate swap derivatives 2,496 - -
Current liabilities 609,549 488,569 536,512
Trade and other payables 187,785 161,951 197,160
Capital gains taxation 32,462 31 -
Unclaimed distributions 1,439 1,173 1,346
Distributions payable to unitholders 350,044 322,315 326,030
Dividends payable to shareholders 23,128 - -
Interest rate swap derivatives 14,691 3,099 11,976
Total unitholders' funds and
liabilities 10,027,338 8,873,110 9,442,667
NAV cpu 369 362 368
6 months 6 months Year
ended ended ended
CONDENSED GROUP STATEMENT 30.06.2014 30.06.2013 31.12.2013
OF COMPREHENSIVE INCOME (R000) Unaudited Unaudited Audited
Revenue 658,527 570,158 1,186,412
Income 669,931 580,677 1,207,223
Rent 482,814 424,333 878,077
Straight line rental adjustment 748 (12,655) (24,419)
Recovery of property expenses 174,965 158,480 332,754
Interest income 11,404 10,519 20,811
Expenses (319,970) (279,932) (592,216)
Accounting and secretarial fees (1,779) (3,041) (6,082)
Audit fees (878) (787) (1,845)
Administrative fees (6,713) (7,818) (10,460)
Directors fees (397) - -
Interest expense (75,456) (43,614) (94,562)
Property expenses (206,438) (190,189) (412,714)
Property administration (13,245) (15,955) (29,118)
Salaries and wages (2,047) - -
Unit incentive scheme (70) - -
Service fees (12,930) (18,528) (37,435)
Straight line rental expense (17) - -
Operating income 349,961 300,745 615,007
Revaluation of interest rate swap
derivatives (7,328) 32,025 31,506
Amortisation of debt restructure costs - (10,504) (10,504)
Internalisation fee (185,000) - -
Gain on bargain purchase 8,872 - -
Capital loss on disposal of investment
properties (1,880) (4,995) (4,086)
Revaluation of investment properties 203,928 257,537 380,625
- Revaluations 204,676 244,882 356,206
- Straight line rental adjustment (748) 12,655 24,419
Income before taxation 368,553 574,808 1,012,548
Taxation - 146,847 146,846
Current capital gains and normal income
taxation - 103 102
Deferred taxation on property
transactions - 146,744 146,744
Deferred taxation on straight line
valuation adjustment - (21,815) (21,815)
Deferred taxation on straight line
rental adjustment - 21,815 21,815
Profit attributable to unitholders 368,553 721,655 1,159,394
Other comprehensive income
Amortisation of hedge reserve - 10,515 10,516
Total comprehensive income attributable
to unitholders 368,553 732,170 1,169,910
6 months 6 months Year
ended ended ended
CONDENSED GROUP STATEMENT OF 30.06.2014 30.06.2013 31.12.2013
CHANGES IN UNITHOLDERS’ FUNDS (R000) Unaudited Unaudited Audited
Unitholders' funds at the beginning
of the period 7,280,242 6,973,355 6,973,355
Total comprehensive income for the
period 368,553 732,170 1,169,910
Profit for the period 368,553 721,655 1,159,394
Amortisation of hedge reserve - 10,515 10,516
Repurchase of units - (222,986) (222,986)
Unit repurchase cost - (509) (509)
Lapsed distribution on units repurchased - 8,812 8,823
Unit incentive scheme 70 - -
Distribution attributable to
unitholders (350,044) (322,315) (648,351)
Unitholders' funds at the end of the
period 7,298,821 7,168,527 7,280,242
6 months 6 months Year
ended ended ended
CONDENSED GROUP STATEMENT 30.06.2014 30.06.2013 31.12.2013
OF CASH FLOWS (R000) Unaudited Unaudited Audited
Operating profit before working
capital changes 443,532 354,722 744,967
Working capital changes (41,131) 11,504 (19,333)
Cash generated from operations 402,401 366,226 725,634
Operating activities changes (390,099) (337,668) (695,993)
Net cash flows from operating
activities 12,302 28,558 29,641
Net cash flows from investing
activities (480,330) (12,236) (395,668)
Net cash flows from financing
activities 490,559 (139,632) 270,266
Net increase / (decrease) in cash
resources and short-term investments 22,531 (123,310) (95,761)
Cash resources and short-term
investments at the beginning of period 311,520 407,281 407,281
Cash resources and short-term
investments at the end of period 334,051 283,971 311,520
NOTES
The condensed interim financial information has been prepared in accordance
with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS), SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee,
Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council, the requirements of the Collective Investment Schemes
Control Act and the information as required by IAS 34: Interim Financial
Reporting and the JSE Listings Requirements. The condensed group interim
financial statements have been prepared using accounting policies that
comply with IFRS which are consistent with those applied in the financial
statements for the year ended 31 December 2013. The results and prospects
have not been audited or reviewed by the Group's auditors, Deloitte &
Touche.
1. Reconciliation of profit to headline earnings and distributable earnings
6 months 6 months Year
ended ended ended
30.06.2014 30.06.2013 31.12.2013
Unaudited Unaudited Audited
R 000 CPU R 000 CPU R 000 CPU
Profit for the period 368,553 18.61 721,655 36.24* 1,159,394 58.39*
Adjustments for:
Capital loss on disposal
of investment properties 1,880 4,995 4,086
Taxation on capital
profit on disposal of
investment properties - (103) (102)
Revaluation of
investment properties (203,928) (257,537) (380,625)
Taxation on adjustments - (124,929) (124,929)
Gain on bargain purchase (8,872) - -
Headline earnings 157,633 7.96 344,081 17.28* 657,824 33.13*
Internalisation fee 185,000 - -
Non-distributable
expenses 831 - -
Straight line rental
adjustment (748) 12,655 24,419
Taxation on straight line
rental adjustment - (21,815) (21,815)
Amortisation of debt
restructure costs - 10,504 10,504
Taxation on distributable
earnings - 103 102
Lapsed distribution on
units repurchased - 8,812 8,823
Revaluation of interest
rate swap derivatives 7,328 (32,025) (31,506)
Distributable earnings
attributable to
unitholders 350,044 17.68 322,315 16.28 648,351 32.75
Interim 350,044 17.68 322,315 16.28 322,315 16.28
Final - - - - 326,036 16.47
* 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 263,038 325,289 70,200 658,527
Rental income (excluding
straight line rental
adjustment) 227,328 196,596 58,890 482,814
Net property expenses (22,975) (13,266) (8,477) (44,718)
Property expenses (54,825) (141,683) (23,175) (219,683)
Recovery of property expenses 31,850 128,417 14,698 174,965
Net property income 204,353 183,330 50,413 438,096
Straight line rental adjustment 3,860 276 (3,388) 748
Net interest expense - - - (64,052)
Group expenses - - - (24,000)
Internalisation fee - - - (185,000)
Non-distributable expenses - - - (831)
Revaluation of interest rate
swap derivatives - - - (7,328)
Headline earnings 208,213 183,606 47,025 157,633
Other information
Investment property 3,982,139 4,029,373 1,021,879 9,033,391
At valuation 4,106,400 3,617,525 1,037,300 8,761,225
Straight line rental
adjustment (124,261) (69,652) (15,421) (209,334)
Properties under development - 481,500 - 481,500
Properties held for disposal
At valuation 43,400 72,400 46,400 162,200
Revaluation of investment
properties excluding straight
line adjustment 82,278 100,220 22,178 204,676
Segment growth rates Industrial Retail Commercial Group
% % % %
Rental income (excluding
straight line rental adjustment) 11.3 8.6 50.9 13.8
Property expenses 13.8 0.8 32.8 6.6
Recovery of property expenses 17.5 5.8 63.6 11.2
Net property income 11.3 13.4 60.6 16.3
3. Amendments to the Trust Deed
During the reporting period, the unitholders voted in favour of the
following amendments to the Trust Deed:
- To amend the existing service charge arrangement in respect of the Fund
from a monthly charge based on 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 ManCo in administering the Fund as well as
the scrapping of the initial charge of 5% on the value of any new units
issued against the payment by the Fund to the ManCo of a consideration of
R185 million excluding VAT; and
- To increase the borrowing limits imposed on the Fund from 30% to 60% of
the value of its underlying assets.
As a consequence of the first amendment, the Fund gained control over its
ManCo with effect from 1 May 2014. The results of the ManCo are included in
these results from this date.
The gain on the bargain purchase is the result of acquiring the ManCo's
capital adequacy reserves at no cost. This amount has been provisionally
determined, subject to regulatory approval.
The ManCo's impact on the Group's statement of comprehensive income since
acquisition and pro-forma, for the six months ended 30 June 2014, is as
follows:
For the 2 months ended For the 6 months ended
30.06.2014 30.06.2014
R000 R000
Revenue - -
Profit after taxation 8,041 8,007
4. 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 12,930 (June 2013: 18,528)
SA Corporate Real Estate Fund
Managers Ltd Internalisation
fee 185,000(June 2013: 0)
DISTRIBUTION DECLARATION AND IMPORTANT DATES
Notice is hereby given of the declaration of distribution no.39 in respect
of the income distribution period 1 January 2014 to 30 June 2014. The
distribution amounts to 17.68cpu. 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.
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, with the effect
that the distribution is taxable in the hands of the unitholder. 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 their
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 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 ceases 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 until 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 15.028 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 ceases 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.
Last date to trade cum distribution Thursday, 18 September 2014
Units will trade ex-distribution Friday, 19 September 2014
Record date to participate in the distribution Friday, 26 September 2014
Payment of distribution Monday, 29 September 2014
Unit certificates may not be dematerialised or re-materialised between
Friday, 19 September and Friday, 26 September 2014 both days inclusive.
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
Directors: J Molobela (Chairman), TR Mackey (Managing)*, AM Basson
(Finance)*, RJ Biesman-Simons, GP Dingaan, KJ Forbes, EM Hendricks
(appointed 2 April 2014), P Levett, SH Mia (retired 15 May 2014), MA Moloto
(appointed 7 July 2014)#, R Morar (resigned 28 February 2014), ES Seedat
* Executive #FSB approval awaited
This report has been prepared under the supervision of AM Basson CA(SA).
B Swanepoel
Company Secretary
26 August 2014
Date: 26/08/2014 07:10:00 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,
information disseminated through SENS.
Sharenet Sites 
