Wrap Text
Reviewed preliminary condensed consolidated financial results for the year ended 31 March 2015
Investec Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2008/011366/06)
Share code: IPF ISIN: ZAE000180915
(Income tax reference number 9332/719/16/1)
Investec Property Fund Limited 2015
Reviewed preliminary condensed consolidated financial results
for the year ended 31 March 2015
Highlights
Full year dividend of 119.15cps
growth of 10.1%
2nd half dividend of 64.50cps
growth of 11.7%
Adjusted growth in earnings per share
19.1%
Attributable to underlying
property performance
Long WALE of
4.4 years
37% of leases expiring
after 5 years
Growth in net asset value per share
8.3%
Underpinned by sustainable
increase in net property
income
Growth since listing
5.1x
Portfolio now R8.7 billion
Acquisitions concluded
R2.1bn
Driving 42% growth
year on year
Strong base portfolio
net income growth
9.4%
Continued focus on
property fundamentals
Tenant retention on expiries
79%
Critical focus of asset
management team
Vacancy
2.8%
Remains low
New debt and equity raised
R2.3bn
Diversity of funding sources
Conservative balance sheet management
23.6%
Low gearing – capacity to
pursue quality acquisitions
Efficient interest rate management
8.5% cost of funding
83% hedged
3.8 year swap expiry
Operational KPIs
Number of properties
2015 2014
80 69
Weighted average lease expiry
2015 2014
4.4 years 4.3 years
Vacancy
2015 2014
2.8% 2.6%
In-force escalations
2015 2014
8.0% 8.1%
Cost to income ratios
2015 2014
Total 28.2% 30.1%
Office 22.0% 23.9%
Industrial 26.2% 30.2%
Retail 34.8% 34.7%
Financial KPIs
Dividend per share (full year)
2015 2014
119.15 108.20
Portfolio size
2015 2014
R8.7bn R6.1bn
Gearing
2015 2014
23.6% 16.8%
Funding cost
2015 2014
8.5% 8.5%
Weighted average debt expiry
2015 2014
2.7 years 2.8 years
Weighted average swap expiry
2015 2014
3.8 years 4.3 years
Hedged percentage
2015 2014
83% 84%
Market capitalisation
2015 2014
R7.4bn R5.2bn
Offshore exposure
2015 2014
5.8% 4.4%
Shares in issue
2015 2014
436 690 118* 365 576 663
* Includes 331 034 shares to be issued which were issued post year end.
Consolidated statement of comprehensive income
Reviewed Audited
Year ended Year ended
R'000 Notes 31 March 2015 31 March 2014
Revenue, excluding straight-line rental revenue adjustment 725 664 520 862
Straight-line rental revenue adjustment 120 765 45 132
Revenue 846 429 565 994
Property expenses (120 559) (90 586)
Net property income 725 870 475 408
Other operating expenses (42 703) (32 105)
Operating profit 683 167 443 303
Fair value adjustments 2, 5 293 118 211 610
Profit on disposal of investment property 2 444 10 988
Income from investment 32 981 7 354
Finance costs (136 648) (57 369)
Finance income 9 602 10 745
Profit before debenture interest and taxation 884 664 626 631
Debenture interest – (119 935)
Profit before taxation 884 664 506 696
Taxation – 39
Profit after taxation 884 664 506 735
Items that may be reclassified to profit and loss:
Other comprehensive income: (loss)/gain on cash flow hedge (276) 276
Total comprehensive income attributable to equity holders 884 388 507 011
Distribution reconciliation
Profit after taxation 884 664 506 735
Add: Debenture interest – 119 935
Less: Fair value adjustments 5 (293 118) (211 610)
Profit on disposal of investment property (2 444) (10 988)
Straight-line rental revenue adjustment (120 765) (45 132)
Antecedent dividend 8 32 530 32 925
Distributable earnings 500 867 391 865
Less: Interim dividend paid (219 222) (180 768)
Final dividend 281 645 211 097
Number of shares
Shares in issue and to be issued 436 690 118 365 576 663
Weighted average number of shares in issue 391 664 683 330 736 792
Cents
Final dividend per share 64.50 57.74
Interim dividend per share 54.65 50.46
Full year dividend 119.15 108.20
Basic earnings per share 225.87 153.30
Headline earnings per share 1 142.17 142.03
Consolidated statement of financial position
Reviewed Audited
R'000 Notes 31 March 2015 31 March 2014
ASSETS
Non-current assets 8 706 536 6 117 243
Investment property 7 964 158 5 708 131
Straight-line rental adjustment 237 467 116 702
Derivative financial instruments 2 815 3 714
Investment 3 502 096 288 696
Current assets 127 960 436 082
Trade and other receivables 6 66 965 77 766
Cash and cash equivalents 60 995 358 316
Total assets 8 834 496 6 553 325
EQUITY AND LIABILITIES
Shareholders' interest 6 615 768 5 112 629
Stated capital 5 677 360 4 645 756
Retained earnings 938 408 466 597
Cash flow hedge reserve – 276
Non-current liabilities 1 736 164 944 864
Long-term borrowings 1 718 109 944 864
Derivative financial instruments 4 18 055 –
Current liabilities 482 564 495 832
Trade and other payables 148 564 415 815
Current portion of non-current liabilities 334 000 80 017
Total equity and liabilities 8 834 496 6 553 325
Net asset value per share (cents) 1 515 1 399
Condensed consolidated statement of cash flows
Year ended Year ended
R'000 31 March 2015 31 March 2014
Cash generated from operations 613 090 390 903
Finance income received 9 602 10 745
Finance costs paid (118 258) (48 494)
Income from investment 24 551 –
Taxation paid – (46)
Dividends paid to shareholders (426 026) (344 975)
Net cash inflow from operating activities 102 959 8 133
Net cash outflow from investing activities(1) (1 882 117) (1 217 547)
Net cash inflow from financing activities(2) 1 481 837 1 169 000
Net decrease in cash and cash equivalents (297 321) (40 414)
Cash and cash equivalents at beginning of year 358 316 398 730
Cash and cash equivalents at end of year 60 995 358 316
(1) Investing activities include investment property acquired, additions and improvements to investment properties and proceeds
on sale of investment properties.
(2) Financing activities include term loans raised and repaid, corporate bonds issused and proceeds from the issue of shares.
Condensed consolidated statement of changes in equity
Reviewed Audited
Year ended Year ended
R'000 31 March 2015 31 March 2014
Balance at the beginning of the year 5 112 629 3 172
Capital conversion – 4 088 881
Total comprehensive income attributable to equity holders 884 388 507 011
Shares issued and to be issued(1) 1 044 777 694 333
Dividends declared (426 026) (180 768)
Balance at the end of the year 6 615 768 5 112 629
(1) Includes 831 034 shares to be issued past year-end.
Condensed consolidated segmental information
For the year ended 31 March 2015
R'000 Office Industrial Retail Total
Statement of comprehensive income extracts
Revenue, excluding straight-line rental adjustment 264 784 165 315 295 565 725 664
Straight-line rental adjustment 50 077 13 517 57 171 120 765
Revenue 314 861 178 832 352 736 846 429
Property expenses (34 747) (24 296) (61 516) (120 559)
Net property income 280 114 154 536 291 220 725 870
Statement of financial position extracts
Investment property opening balance 2 394 397 1 343 734 2 086 702 5 824 833
Net additions, acquisitions and disposals 673 973 149 322 1 104 883 1 928 178
Fair value adjustment and straight-lining 138 411 37 044 273 159 448 614
Fair value of investment property 3 206 781 1 530 100 3 464 744 8 201 625
For the year ended 31 March 2014
R'000 Office Industrial Retail Total
Statement of comprehensive income extracts
Revenue, excluding straight-line rental adjustment 174 860 134 470 211 532 520 862
Straight-line rental adjustment 31 631 10 733 2 768 45 132
Revenue 206 491 145 203 214 300 565 994
Property expenses (28 036) (21 382) (41 168) (90 586)
Net property income 178 455 123 821 173 132 475 408
Statement of financial position extracts
Investment property opening balance 1 499 200 995 550 1 692 250 4 187 000
Net additions, acquisitions and disposals 829 796 278 221 297 826 1 405 843
Fair value adjustment and straight-lining 65 401 69 965 96 624 231 990
Fair value of investment property 2 394 397 1 343 736 2 086 700 5 824 833
Notes to the consolidated condensed financial results
Reviewed Audited
Year ended Year ended
R'000 31 March 2015 31 March 2014
1 Reconciliation of basic earnings to headline earnings
Total comprehensive income attributable to equity holders 884 388 507 011
Other comprehensive income 276 (276)
Less: Net fair value adjustment – investment property (327 848) (186 858)
Less: Net fair value adjustment – debenture fair value – 29 657
Add: Debenture interest paid – 119 935
Headline earnings attributable to shareholders 556 816 469 469
2 Fair value adjustments of investment property
The Fund's policy is to value investment properties at year-end, with independent valuations performed on a rotational basis to ensure
each property is valued at least every three years by an independent external valuer. The directors value properties by applying the
income capitalisation method. Total revaluations for the current year amounted to R327.8 million, an increase of 5.7% on carrying
value.
Reviewed Audited
Year ended Year ended
R'000 31 March 2015 31 March 2014
3 Investments
The Fund carries its investment in IAPF at fair value. In October 2014 the Fund increased
its investment by R222 million through the IAPF rights offer.
Listed investment 502 096 288 696
4 Financial instruments
Financial instruments held at fair value consist of derivative financial instruments, which are classified at level 2. These are valued using
valuation models which use market observable inputs such as quoted interest rates. No other financial instruments are carried at fair
value.
Reviewed Audited
Year ended Year ended
R'000 31 March 2015 31 March 2014
5 Fair value adjustments
Fair value adjustment on derivative instruments (18 268) (20 692)
Net investment property fair value adjustment 327 848 186 900
Fair value adjustment on investment (16 462) 45 402
293 118 211 610
6 Fair value hierarchy Carried at
At 31 March 2015 Carried at amortised
fair value Level 1 Level 2 Level 3 cost
Listed investment IAPF 502 097 502 097 – – –
Derivative financial instruments 2 815 – 2 815 – –
Trade and other receivables – – – – 66 965
Cash and cash equivalents – – – – 60 995
Total financial assets 504 912 502 097 2 815 – 127 960
Derivative financial instruments 18 055 – 18 055 – –
Long-term borrowings (including current position)(1) – – – – 2 052 109
Trade and other payables – – – – 148 564
Total financial liabilities 18 055 – 18 055 – 2 200 673
(1) Long-term variable rate borrowings were incorrectly disclosed as carried at fair value through profit and loss in
the prior year and interim results.
The Fund has always applied amortised cost to these long-term borrowings and there is no impact of the change as disclosed
on the primary financial statements of the current or prior financial year. In correcting this, the only item impacted is
the fair value disclosures of these financial instruments. The prior financial year has been correctly re-allocated to
reflect these as amortised cost financial instruments. The impact on the prior year long-term borrowing disclosure
(refer to note 27.1) is a re-allocation of R799.0 million from fair value through profit and loss to amortised costs.
Valuation techniques
Interest rate swaps Valued with reference to the prevailing interest rate and the specifics
of the contract
Forward exchange contracts Valued with reference to the prevailing exchange rate at balance sheet
date and the specific rate entered into in terms of the contract
Investment in IAPF Valued with reference to quoted (unadjusted) market prices for IAPF
Reviewed Audited
Year ended Year ended
R'000 31 March 2015 31 March 2014
7 Related parties
The Fund has entered into the following significant related party transactions during the
year with Investec Limited and its subsidiaries:
Investec Bank Limited Group
Bridge facility (carrying value) – 80 000
Derivative instruments (carrying value) 15 240 3 700
Development loan facility (carrying value) 14 000 –
Corporate advisory and structuring services fees paid 7 765 11 800
Interest received 6 476 10 600
Rentals received 76 323 41 300
Interest paid on derivative instruments 15 622 –
Investec Property Group Limited
Asset management fees paid 35 872 26 400
Letting commissions paid 4 105 –
Rental guarantees received 6 155 9 100
Capex and refurbishment cost 32 859 16 300
Acquisition of properties and subsidiaries(1) 1 126 777 615 900
8 Antecedent dividends
Included within the dividend reconciliation is R32.5 million of antecedent dividends,
made up as follows:
Vendor placements 16 009 3 700
Dividend re-investment program (DRIP) 2 850 –
Accelerated bookbuild 13 671 29 300
Total 32 530 33 000
(1) The purchase of these companies does not meet the definition of IFRS 3, Business Combinations and was not treated as such.
Commentary
Introduction
Investec Property Fund Limited ("The Fund") is a South African Real Estate Investment Trust and currently comprises a portfolio of
80 properties in South Africa with a total gross lettable area ("GLA") of 831 990m(2) valued at R8.2 billion (2014: R5.8 billion) and a R0.5 billion
(2014: R0.3 billion) investment in Investec Australia Property Fund Limited ("IAPF").
The objective of the Fund is to optimise long-term income and capital returns for shareholders by investing in quality real estate in the office,
industrial and retail sectors and through active hands-on asset management. All rental income, less operating costs and interest on debt, is
distributed to shareholders semi-annually.
Financial results
The board of directors is pleased to announce an 11.7% increase in the final dividend to 64.50 cents per share (cps) for the six months
ended 31 March 2015 (31 March 2014: 57.74 cps). This brings the total dividend for the year to 119.15 cps (31 March 2014: 108.20 cps)
representing a 10.1% increase over the prior year. This impressive performance has been achieved by the Fund in a challenging economic
environment which is testament to the quality and defensive nature of the property portfolio.
The growth across the key metrics of dividend per share, normalised earnings per share and net asset value per share can be attributed to,
inter alia, the following:
- Strong underlying property performance with net property income base growth of 9.4% which was generated from:
- Contractual in-force escalations of 8.0%;
- 79% retention ratio on expiries;
- Positive reversions and 8.4% average escalations on renewals and new lets;
- Maintaining a low portfolio vacancy of 2.8%; and
- Strong letting activity in the prior year that generated 11% average reversions;
- 8.1% growth in distribution received from the Fund's R502 million investment in IAPF;
- Increased average gearing during the year;
- Efficient interest rate management by maintaining its cost of funding at 8.5%; and
- The once off impact of the inclusion of the IAPF antecedent dividend of R7.4 million.
The above performance is underpinned by a weighted average lease expiry ("WALE") of 4.4 years, being one of the longest in the sector.
The Fund has also achieved this performance in an acquisitive year, where the total portfolio increased by 42.6% to R8.7 billion.
Together with these acquisitions and the positive revaluation of 7.6% of the Fund's base portfolio, net asset value increased by 8.3% value to
1 515 cents per share.
Earnings reconciliation
The Fund's dividend per share and earnings per share has been impacted by once off items, namely the antecendent portion of the interim
distribution received from IAPF and the change from a debenture to an all equity structure as part of the Fund's conversion to a REIT in the
prior year.
The reconciliation below demonstrates the adjusted dividend per share and adjusted earnings per share if these once off items are excluded.
2015 2014 +/-
Full year dividend per share 119.15 108.20 10.1%
IAPF antecedent distribution (1.65) –
Adjusted dividend per share 117.50 108.20 8.6%
Earnings per share 225.87 153.30 47.3%
Adjustment for change in capital structure 36.26
Adjusted earnings per share 225.87 189.56 19.1%
Acquisitions
The Fund acquired R1.9 billion of new property during the financial year and also increased its investment in IAPF by R222 million in
October 2014. These acquisitions resulted in the total property portfolio of the Fund and the investment in IAPF increasing to R8.2 billion
and R502 million respectively.
Date of
Acquistions Cost (Rm) GLA (m(2)) Sector Yield (%) transfer
1. 30 Jellicoe Avenue 351.5 10 750 Office 8.0 February 15
2. Barinors, Tyger Valley 91.0 5 394 Office 8.5 May 14
3. Nicol Main E, Bryanston 74.7 3 152 Office 8.3 November 14
4. Nicol Main D, Bryanston 50.0 2 095 Office 8.3 July 14
5. Intercare, Fourways 48.0 2 740 Office 9.1 September 14
6. 34 Ingesol Road, Menlyn 46.7 2 376 Office 8.6 February 15
7. Mafuri House, Bryanston 9.0 682 Office 8.9 April 14
8. Diesel Road, Isando 112.0 22 057 Industrial 9.3 February 15
9. 52 Jakaranda, Centurion 44.5 19 998 Industrial 9.1 February 15
10. Dihlabeng Mall 370.1 26 210 Retail 8.0 July 14
11. Fleurdal Mall 310.5 24 370 Retail 8.0 February 15
12. Toyota Menlyn 126.4 6 709 Retail 8.3 March 15
13. McCarthy Menlyn 115.4 7 346 Retail 7.8 May 14
14. Foschini, JHB CBD 77.4 6 305 Retail 9.0 June 14
15. Edcon, Carltonville 23.7 3 811 Retail 9.0 September 14
1 850.9 143 995 8.2
The extent of the acquisition activity in the year evidences the Fund's ability to compete for quality assets in a challenging environment.
Approximately R1.1 billion was acquired directly from Investec Property (Pty) Limited, a subsidiary of Investec Limited, which substantiates
the benefit of the Fund's association with the broader Investec Group.
Sizeable assets brought into the portfolio include 30 Jellicoe Avenue, Rosebank. The property is a recently completed award winning
P-grade office building located in a strong growth area, in the hub of Rosebank's commercial and retail node. The building's major tenant is
the national law firm Fluxmans (50.5% GLA) with over eight years remaining on its lease. The remaining tenant base consists of well known
local South African and international corporations adding to the strength of the tenant mix of the Fund's existing portfolio.
The Nicol Main acquisitions represent the final two buildings in the Nicol Main Office Park, which consists of five individual single tenanted
AAA-grade office blocks located in the centre of Bryanston's retail and commercial node. The office park is well situated directly across from
the Nicolway shopping centre with street frontages to both William Nicol and Main Road. The node has established itself as a premium
niche office and retail market which is home to the corporate and regional head offices such as Microsoft, Nestle, Tiger Brands, Mutual and
Federal, Samsung and Adcorp. These acquisitions add to the Fund's other investments in the node.
Dihlabeng Mall in Bethlehem and Fleurdal Mall in Bloemfontein are dominant regional retail centres in their respective nodes. Both centres
enjoy a national tenancy in excess of 80%.
The Fund is near completion of a 6 000m(2) extension of the Dihlabeng Mall that includes a 4 286m(2) full-line Woolworths store which will
further entrench the dominance of the centre in the region.
The Fund is also in the planning stages of extending the Fleurdal Mall, which scheme has attracted significant interest from nationals not
already present in the centre.
The new acquisitions complement the base property portfolio and contribute to the strength of the existing real estate fundamentals.
Property portfolio
Portfolio Total Office Industrial Retail
Number of properties 80 21 26 33
Asset value R8.2bn R3.2bn R1.5bn R3.5bn
GLA 831 990 164 159 374 114 293 717
Vacancy 2.8% 5.2% 3.0% 1.2%
WALE (years) 4.4 4.9 4.0 4.1
The Fund's current property portfolio consists of a diverse base of 80 quality properties with an average value of R102 million. The portfolio's
income stream is underpinned by contractual escalations of 8.0% and a strong tenant base which is demonstrated by its per property base
net property income growth of 9.4%.
Receivables have been tightly managed during the period and at period end gross arrears were R5.3 million, representing 0.6% of total
collectables over the period (31 March 2014: 0.3%). No debtors greater than 60 days were provided for.
Book value % of portfolio Total area % of portfolio
Top 10 properties Sector (R'm) by value (m(2)) by area
Balfour Mall Retail 422.0 5.1 32 647 3.9
Bethlehem – Dihlabeng Mall Retail 410.0 5.0 26 210 3.2
The Firs Office 354.3 4.3 13 085 1.6
30 Jellicoe Office 351.9 4.3 10 750 1.3
Alrode Multipark Industrial 347.3 4.2 90 762 10.9
Woolworths House Office 343.4 4.2 30 435 3.7
Nicol Main Office 317.0 3.9 11 898 2.2
Fleurdal Mall Retail 311.0 3.8 24 370 2.9
Kriel Mall Retail 280.3 3.4 21 511 2.6
Investec Durban Office 257.3 3.1 6 543 0.8
Total 3 394.5 41.3 268 211 33.1
Sectoral spread — 2015
GLA Revenue Asset value
Office 20% Office 36% Office 39%
Industrial 45% Industrial 23% Industrial 19%
Retail 35% Retail 41% Retail 42%
Geographic spread — 2015
Revenue GLA Asset value
Gauteng 69% Gauteng 71% Gauteng 66%
Western Cape 11% Western Cape 11% Free State 11%
Other* 5% Other* 5% Western Cape 10%
Free State 6% Free State 7% Other* 5%
Limpopo 4% Limpopo 3% Mpumalanga 4%
Mpumalanga 5% Mpumalanga 3% Limpopo 4%
* Includes Eastern Cape, Northern Cape, KwaZulu-Natal and North West.
Letting activity
The Fund has renewed or relet 92% of expired space during the period and despite the challenging economic climate has managed to
achieve tenant retention of 79%, significant positive reversions and above market escalations of 8.4% on renewals.
The letting and renewal activity in the Fund's retail sector has been particularly strong, with average positive reversions of 10.3% achieved.
The Fund's lease expiry profile, which is one of the longest in the sector remains robust and defensive with a WALE of 4.4 years by revenue,
provides visibility of the Fund's net property income in a challenging operating environment.
Expiries Renewals and Expiry New Rental Average
and cancellations new lets rental rental reversion escalation
GLA GLA R/m(2) R/m(2) % %
Office 4 879 3 731 134.03 139.07 3.8 8.8
Industrial 55 682 51 084 37.58 37.18 (1.1)* 8.7
Retail 22 533 21 455 143.74 160.75 10.3 8.2
Total 83 094 76 270 8.4
* Renewal of large manufacturing tenant in the Western Cape clothing industry – if excluded then positive reversion of 11.2%.
Vacancy profile
The Fund's vacancy increased marginally to 2.8% (31 March 2014: 2.6%), which is predominantly attributable to the slight increase in
vacancy in the Fund's mini industrial parks.
Capital expenditure and redevelopment
During the year the Fund spent R82m on capital expenditure, the majority of which related to the extension of the Dihlabeng Mall and
refurbishment of Balfour Mall.
Investment in IAPF
The Fund's investment in IAPF amounts to R502 million, representing 5.8% of the Fund's total portfolio and 18.6% of IAPF.
IAPF delivered annualised full-year growth of 11% post withholding tax which was translated into ZAR growth of 8.1%. IAPF has been
successful in executing its communicated strategy of deploying its capital into quality Australian real estate. The attractive hard currency
growth in distribution is evidence of the broadened quality and diversity of the portfolio and geared growth effect of the increase in leverage
of IAPF.
The Fund manages its exposure to exchange rate risk on its distributions received from IAPF by actively hedging future income from IAPF
through taking out forward exchange rate cover. The Fund has hedged approximately AUD $2.35 million of income to December 2017 at
exchange rates ranging between R9.47 and R10.68/1 AUD $.
The Fund has also entered into a cross currency swap which has enabled the Fund to convert its ZAR debt of R170 million used to partially
fund the rights offer subscription in October 2014 into AUD debt funding of AUD $17.2 million and lock in an attractive AUD funding cost of
3.4% after its restructure in January 2015.
Capital management
The Fund's balance sheet remains well positioned for growth with a conservative gearing of 23.6%.
The active and efficient interest rate risk management strategy is evident in the Fund's current average cost of funding of 8.5% which is
underpinned by a current hedged position of 83% and a swap maturity profile of 3.8 years.
The Fund's corporate rating was reaffirmed in July 2014 at A- with a positive outlook whilst the secured rating was reaffirmed in April 2015
as AA-, reinforcing the Fund's balance sheet strength.
The Fund has always maintained flexibility in its sources of funding without committing to predetermined funding ratios, ensuring banking
lines are well maintained and changes in the debt capital markets fully understood. There is a continued strategy to fund long-term assets
with long-term funding and to conservatively manage refinancing and credit risk.
Despite a volatile environment, the Fund has been successful in raising R2.3bn of new funding during the year. This has been raised in the
form of:
- R500m new bank debt facilities on an unsecured basis – average margin of 170bps above three-month JIBAR and average tenor of
4.4 years;
- R600m of corporate bonds on an unsecured basis – average margin of 157bps above three-month JIBAR and average tenure of 3.8 years;
- R200m three-month commercial paper – rolled several times during the year at an average rate of 33bps above three-month JIBAR, and
- R1.0bn of equity was raised at an average forward yield of 8.1%.
Debt facilities
R'million Facilities Drawn(1) Available
Balance at 31 March 2014 4 000 (1 030) 2 970
Added during the year:(2)
– Commercial paper – (200) (200)
– Corporate bonds issued – (620) (620)
– Term debt 500 (209) 291
Balance at 31 March 2015 4 500 (2 059) 2 441
(1) Balance sheet reflects net of capitalised transaction costs.
(2) All debt issued during the year is on an unsecured basis.
Post year-end the Fund has rolled the commercial paper for a further three months at an attractive margin of 38bps points and refinanced
R134 million of corporate bonds with the issue of a new R100 million secured bond at a margin of 150bps for three years and R34 million
cash. The Fund has also entered into a new five-year term debt facility with Nedbank for R200 million, unsecured at a margin of 175bps
above three-month JIBAR.
Swap facilities Weighted average
Swaps(1) Rate(1) swap expiry
Rm % (years)
Nominal amount at 31 March 2014 1 131.8 7.70 4.3
New and restructured swaps 390.0 7.76 5.1(2)
Forward starting swaps 200.0 6.91 4.9(2)
1 721.8 7.59 4.0
Cross currency swap 162.4 (4.27) 2.0
Nominal amount at 31 March 2015 1 884.2 6.57 3.8
(1) Includes fixed rate loan of R226m at 8.80%.
(2) At date of entering swaps.
Share capital
The Fund has authorised share capital of one billion no par value shares at 31 March 2015. The following shares were issued during the year:
Number of shares Rm(1)
Opening shares in issue 365 576 663 4 645 756
DRIP (82% taken up) 12 488 699 170 651
Bookbuild 18 889 966 289 655
Vendor placement 39 403 756 566 498
Shares to be issued (issued 18 May 2015) 331 034 4 800
Closing shares in issue 436 690 118 5 677 360
(1) Net of transaction cost and antecedent interest.
Changes to the Board
In July 2014, shareholders were informed of the unfortunate and untimely passing of Michael Crawford, the Lead Independent non-executive
director of the Fund. Graham Rosenthal has assumed the role of Lead Independent non-executive director and Moss Ngoasheng has been
appointed as a member of the Audit Committee.
In January 2015, shareholders were advised that Mr Samuel R Leon, who served as CEO on the Board of the Investec Property Fund since
its successful listing on 14 April 2011, was to assume the role of Non-executive Deputy Chairman from 1 April 2015. Mr Nick Riley has been
appointed to assume his responsibilities as CEO.
The Board would like to thank Sam Leon for his invaluable contribution to the growth and success of the Fund, and is pleased to retain his
wealth of expertise and knowledge in his new role.
Prospects
The Fund expects dividend growth to remain in line with core historical performance.
This forecast is based on the assumptions that the macro-economic environment will not deteriorate markedly, no major corporate failures
will occur, budgeted renewals will be concluded, that clients will be able to absorb the recovery of rising rates and utility costs and that the
ZAR/AUD exchange rate remains at similar levels to the current levels. Budgeted rental income was based on contractual escalations and
market-related renewals.
The information and opinions contained above are recorded and expressed in good faith and are based upon sources believed to be
reliable. No representation, warranty, undertaking or guarantee of whatever nature is made or given with regards to the accuracy and/or
completeness of such information and/or the correctness of such opinions.
This forecast has not been reviewed or audited on by the Fund's independent external auditors.
On behalf of the Board of Investec Property Fund Limited
Sam Hackner Sam Leon
Non-executive Chairman Non-executive Deputy Chairman
21 May 2015
Basis of accounting
The reviewed preliminary condensed consolidated financial information for the year ended 31 March 2015 has been prepared in
compliance with International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of IAS 34, Interim
Financial Reporting, the SAICA Financial Reporting Guide as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by The Financial Reporting Standards Council, the Companies Act (71 of 2008, as amended) of South Africa
and the JSE Listings Requirements.
The accounting policies applied in the preparation of the results for the year ended 31 March 2015 are consistent with those adopted
in the financial statements for the year ended 31 March 2014, other than the adoption of those standards that became effective in the
current period, which had no impact on the financial results. These reviewed preliminary condensed consolidated financial statements
have been prepared under the supervision of Dave Donald, CA(SA).
Review conclusion
Ernst & Young Inc., the Fund's independent auditors, have reviewed the preliminary condensed consolidated financial results and have
expressed an unmodified review conclusion. A copy of their review report is available for inspection at the company's registered office.
Final dividend with the election to reinvest cash dividend for shares
Notice is hereby given of the declaration of final dividend number 8 ("Cash dividend") of 64.49652 cents per share for the period
1 October 2014 to 31 March 2015.
Shareholders will be entitled to elect to reinvest the Cash dividend of 64.49652 cents per share after the deduction of the applicable
dividend tax, in return for shares ("Share Re-investment Alternative"), failing which they will receive the net cash dividend in respect of all
or part of their shareholding.
Shareholders who have dematerialised their shares are required to notify their duly appointed Central Securities Depository Participant
("CSDP") or broker of their election in the manner and time stipulated in the custody agreement governing the relationship between the
shareholder and their CSDP or broker.
Other information:
- The dividend portion has been declared from income reserves and no secondary tax on companies' credit has been used.
- A dividend withholding tax of 15% will be applicable on the dividend portion to all shareholders who are not exempt.
- The issued share capital at the declaration date is 436 690 118 ordinary shares of no par value.
In accordance with Investec Property Fund's status as a REIT, shareholders are advised that the dividend meets 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 dividends on the
shares will be deemed to be dividends for South African tax purposes in terms of section 25BB of the Income Tax Act.
Tax implications for South African resident shareholders
Dividends received by or accrued to South African tax residents must be included in the gross income of such shareholders and will
not be exempt from the income tax in terms of the exclusion to the general dividend exemption contained in section 10(1)(k)(i)(aa) of the
Income Tax Act because they are dividends distributed by a REIT. These dividends are, however, exempt from dividend withholding tax
(Dividend Tax) in the hands of South African resident shareholders provided that the South African resident shareholders have provided
to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the Fund, in respect of certificated shares, a DTD(EX)
(Dividend Tax: Declaration and undertaking to be made by the beneficial owner of a share) form to prove their status as South African
residents.
If resident shareholders have not submitted the abovementioned documentation to confirm their status as South African residents, they
are advised to contact their CSDP, or broker, as the case may be, to arrange for the documents to be submitted prior to the payment of
the dividend.
Tax implications for non-resident shareholders
Dividends received by non-resident shareholders from a REIT 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 section 10(1)(k) of the Income Tax Act. It should
be noted that up to 31 December 2013 dividends received by non-residents from a REIT were not subject to Dividend Tax. With effect
from 1 January 2014, any dividend received by a non-resident from a REIT will be subject to Dividend 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 non-resident shareholder. Assuming Dividend Tax will be withheld at a rate of 15%, the net amount due to non-resident
shareholders is 54.82204 cents per share. A reduced dividend withholding rate in terms of the applicable DTA may only be relied on if
the non-resident shareholder has provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated
shares, or the Fund, in respect of certificated shares:
- A declaration that the dividend is subject to a reduced rate as a result of the application of the DTA; and
- A written undertaking to inform the CSDP, or broker or the company, 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 of
the South African Revenue Services.
If applicable, non-resident shareholders are advised to contact the CSDP, broker or the Fund, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the dividend if such documents have not already been submitted.
Summary of the salient dates relating to the Cash Dividend and Share Re-investment Alternative are as follows:
2015
Circular and form of election posted to shareholders Thursday, 21 May
Announcement of Share Re-investment Alternative issue price and finalisation information ("finalisation date") Friday, 29 May
Last day to trade ("LDT") cum dividend Friday, 5 June
Shares to trade ex dividend Monday, 8 June
Listing of maximum possible number of Share Re-investment Alternative shares on the JSE Wednesday, 10 June
Last day to elect to receive the Share Re-investment Alternative (no late forms of election will be accepted)
at 12:00 (South African time) Friday, 12 June
Record date Friday, 12 June
Announcement of results of Cash Dividend and Share Re-investment Alternative on SENS Monday, 15 June
Dividend paid/posted to Certificated Shareholders and accounts credited by CSDP or broker to
Dematerialised Shareholders electing the Cash Dividend on or about Monday, 15 June
Announcement of results of Cash Dividend and Share Re-investment Alternative in the press Wednesday, 17 June
Dematerialised Shareholders electing the Share Re-investment Alternative on or about Thursday, 18 June
Adjustment to shares listed on or about Friday, 19 June
Notes:
1. Shareholder accepting the Share Re-investment Alternative are requested to note that the new shares will be listed on LDT +3 and these
new shares can only be traded on LDT +3 as the settlement of the shares will occur three days after the record date, which differs from
the conventional one day after the record date settlement process.
2. Shares may not be dematerialised or rematerialised between commencement of trade on Monday, 8 June and close of trade on Friday,
12 June.
3. The above dates and times are subject to change. Any changes will be released on SENS and published in the press.
The Cash Dividend or Share Re-investment Alternative may have tax implications for resident and non-resident shareholders. Shareholders
are therefore encouraged to consult their professional advisors should they be in any doubt as to the appropriate action to take.
By order of the Board
Investec Bank Limited
Company Secretary
21 May 2015
Company Information
Directors
S Hackner (Chairman)#
SR Leon (Deputy Chairman)#
N Riley (Chief Executive Officer)
DAJ Donald (Financial Director)
LLM Giuricich#
S Mahomed#*
CN Mashaba#*
MM Ngoasheng#*
GR Rosenthal#*
# Non-executive
* Independent
Registered office
C/o Company Secretarial, Investec Limited
100 Grayston Drive, Sandown, Sandton, 2196
Transfer secretary
Computershare Investor Services (Pty) Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
Sponsor
Investec Bank Limited
100 Grayston Drive, Sandown, Sandton, 2196
Date: 21/05/2015 07:52:00 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.
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