Wrap Text
Reviewed interim financial results for the 12 month period ended 31 March 2015
Sycom Property Fund ("Sycom")
A Collective Investment Scheme in Property registered in
terms of the Collective Investment Schemes Control Act, No. 45 of 2002 and managed by Sycom
Property Fund Managers Limited ("SPFM") (Registration number 1986/002756/06)
JSE Share code: SYC ISIN: ZAE000019303
Reviewed interim financial results for the 12 month period ended 31 March 2015
The directors of Sycom Property Fund Managers Limited, the management company of Sycom Property Fund,
submit their report on the results of Sycom for the twelve months ended 31 March 2015.
Condensed Statement of Profit or Loss and Other Comprehensive Income
for the twelve months ended 31 March 2015
Reviewed twelve Audited twelve
months to months to
31 March 2015 31 Mar 2014
(R'000) (R'000)
Revenue 714 627 685 699
Contractual rental revenue and recoveries 732 219 701 389
Straight-lining of rental revenue adjustment (17 592) (15 690)
Direct property operating expenses (133 105) (133 589)
Loss on disposal of investment property (2 600) (19 431)
Selling costs on investment properties held for sale - (553)
Dividend from listed investment 19 466 19 973
Fair value changes on investment property & listed investment 395 958 517 922
Fair value gain on investment properties 433 069 436 400
Fair value (loss)/gain on listed investment (37 111) 81 522
Administrative expenses (49 690) (42 131)
Profit before net finance costs 944 656 1 027 890
Net finance costs (195 180) (128 610)
Interest income 35 188 43 561
Interest expense (212 623) (160 085)
Change in fair value of derivative financial instruments at fair value through
profit and loss (17 745) (12 086)
Profit before taxation 749 476 899 280
Taxation - (556)
Profit for the period 749 476 898 724
Other comprehensive income for the period
Net change in fair value of cash flow hedges * (18 630) 51 897
Other comprehensive income for the period (18 630) 51 897
Total comprehensive income for the period 730 846 950 621
Basic and diluted earnings per unit - cents ** 374.49 378.36
* The fair value movement on the cash flow hedges through other comprehensive income may be reclassified to profit and loss.
** Sycom Property Fund has no dilutionary instruments in place.
Reconciliation of profit for the period to headline earnings and distributable earnings:
Reviewed twelve Audited twelve
months to months to
31 March 2015 31 Mar 2014
(R'000) (R'000)
Profit for the period 749 476 898 724
Fair value adjustment to investment properties (433 069) (436 400)
Loss on disposal of investment property 2 600 19 431
Secondary tax on companies - 556
Headline Earnings 319 007 482 311
Selling costs on investment properties held for sale - 553
Straight-lining rental income accrual 17 592 15 690
Deficit on derivative financial instruments 17 745 12 086
Fair value adjustment to listed investment 37 111 (81 522)
Prepaid distribution - 9 492
Distributable earnings 391 455 438 610
cents cents
Earnings per unit:
Basic and diluted earnings* per unit 374.49 378.36
Headline and diluted headline earnings* per unit 159.40 203.05
Distribution per unit 195.60 183.28
* Sycom does not have any dilutionary instruments in place.
Number of units in issue ('000) 200 132 200 132
Number of weighted average units in issue ('000) 200 132 237 531
Condensed Statement of Financial Position
as at 31 March 2015
Reviewed Audited
31 March 2015 31 Mar 2014
ASSETS (R'000) (R'000)
Property Assets 8 329 251 8 196 492
Investment properties and related receivables 8 329 251 7 528 383
Investment properties 8 124 726 7 307 028
Non-current straight-lining lease receivable 175 009 182 052
Current straight-lining lease receivable 29 516 39 303
Investment properties held for sale and related receivables - 668 109
Investment properties held for sale - 659 244
Straight-lining lease receivable - 8 865
Other non-current assets 396 907 461 121
Listed Investment 377 701 409 224
Derivative financial instruments 19 206 51 897
Current assets 626 153 393 807
Rental and other receivables 104 846 80 185
Dividends receivable 9 321 10 318
Cash and cash equivalents 511 986 303 304
Total assets 9 352 311 9 051 420
UNITHOLDERS' FUNDS AND LIABILITIES
Unitholders' funds 6 116 271 5 776 880
Unitholders' capital 1 947 048 1 947 048
Non-distributable reserves 4 169 223 3 829 832
Non-current liabilities 2 915 630 2 903 795
Borrowings 2 903 795 2 903 795
Derivative financial instruments 11 835 -
Current liabilities 320 410 370 745
Trade and other payables 122 319 125 652
Derivative financial instruments - 54 643
Unitholders for distribution 198 091 190 450
Total unitholders' funds and liabilities 9 352 311 9 051 420
Net asset value per unit - cents * 3 056 2 887
* The calculation of net asset value per unit is calculated by dividing unitholders' funds by the number of units in issue at period end.
Condensed Statement of Changes in Unitholders' Funds
for the twelve months ended 31 March 2015
Non-
distributable
Capital reserve Retained earnings Total
(R'000) (R'000) (R'000) (R'000)
Balance at 31 March 2013 2 579 048 4 128 295 - 6 707 343
Transactions with owners, recognised directly in equity
Issue of 33 027 523 units in May 2013 849 468 - 9 492 858 960
Proceeds 900 000 - - 900 000
Capitalised unit issue costs (11 117) - - (11 117)
Prepaid distribution to 31 March 2013 (29 923) - 29 923 -
Payment of prepaid distribution in July 2013 - - (29 923) (29 923)
Prepaid distribution 2014 period (9 492) - 9 492 -
Buyback of 81.5 million units in
October 2013 (1 481 468) (819 966) - (2 301 434)
Reduction in equity as a result of buyback (1 480 034) (819 966) - (2 300 000)
Incremental costs attributable to buyback of unitholder
capital (1 434) - - (1 434)
Total comprehensive income for the year
Profit for the year - - 898 724 898 724
Other comprehensive income for the period - 51 897 - 51 897
Net change in fair value of cash flow hedge recognised
directly in other comprehensive income - 51 897 - 51 897
Total comprehensive income for the year - 51 897 898 724 950 621
Transfer to non-distributable reserve - 469 606 (469 606) -
Unitholders distribution - - (438 610) (438 610)
Balance at 31 March 2014 1 947 048 3 829 832 - 5 776 880
Total comprehensive income for the period
Profit for the period - - 749 476 749 476
Other comprehensive income for the period - (18 630) - (18 630)
Net change in fair value of cash flow hedge recognised
directly in other comprehensive income - (18 630) - (18 630)
Total comprehensive income for the period - (18 630) 749 476 730 846
Transfer to non-distributable reserve - 358 021 (358 021) -
Unitholders distribution - - (391 455) (391 455)
Balance at 31 March 2015 1 947 048 4 169 223 - 6 116 271
Condensed Statement of Cash Flows
for the twelve month period ended 31 March 2015
Reviewed Audited
31 Mar 2015 31 Mar 2014
(R'000) (R'000)
Cash flows from operating activities
Profit before taxation 749 476 899 280
Adjusted for:
Interest income (35 188) (43 561)
Interest expense 212 623 160 085
Foreign exchange loss/(gain) 439 (416)
Dividend income (19 466) (19 973)
Straight-lining of rental revenue adjustment 17 592 15 690
Fair value gain on investment properties (433 069) (436 400)
Fair value deficit on interest rate and cross currency swaps 17 745 12 086
Fair value loss/(gain) on listed investment 37 111 (81 522)
Loss on disposal of investment properties 2 600 19 431
Change in working capital (24 620) 8 233
(Increase)/decrease in receivables (excluding interest accruals) (23 969) 4 034
(Decrease)/increase in payables (excluding interest accruals) (651) 4 199
Cash generated from operations 525 243 532 933
Dividend received 14 581 833
Distribution paid (383 814) (503 315)
Interest paid (210 629) (151 928)
Interest received 34 496 42 236
Taxation paid - (556)
Net cash outflow from operating activities (20 123) (79 797)
Cash flows from investing activities
Acquisition of investment properties (286 328) (1 679 596)
Subsequent expenditure on investment properties (103 739) (23 801)
Subsequent expenditure on investment properties held for sale (6 648) (7 918)
Proceeds on disposal of investment properties 679 227 -
Selling costs on disposal of investment properties (7 070) (3 403)
Net cash inflow/(outflow) from investing activities 275 442 (1 714 718)
Cash flows from financing activities
Net outflow on settlement of cross currency swap in November 2014 (46 492) -
Gross proceeds from the issue of units in May 2013 - 900 000
Unit issue costs - (11 117)
Share buy-back costs - (1 434)
Borrowings raised - 1 002 987
Net cash (outflow)/ inflow from financing activities (46 492) 1 890 436
Net increase in cash and cash equivalents 208 827 95 921
Cash and cash equivalents at the beginning of the period 303 304 206 745
Effect of exchange rate fluctuations on cash held (145) 638
Cash and cash equivalents at the end of the period 511 986 303 304
NOTES
1. Basis of Preparation and Review Opinion
Sycom has changed its year end to 30 June in order to align with the year end of its parent company, Growthpoint
Properties Limited. As such, the twelve month period ended 31 March 2015 is a second interim reporting period for Sycom. Sycom has prepared
condensed consolidated interim financial statements for this second interim reporting period.
The reviewed condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards,
International Accounting Standard (IAS) 34 Interim Financial Reporting and the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council. The accounting policies applied in
the preparation of these interim financial statements are in terms of International Financial Reporting Standards and are consistent with those
applied in the previous annual financial statements. The key estimates and assumptions used in the interim financial statements are the same as the
ones used in the most recent annual financial statements.
These interim condensed consolidated financial statements for the period ended 31 March 2015 have been reviewed by KPMG Inc., who
conducted the review in accordance with the International Standard on Review Engagements 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity, and have expressed an unmodified review conclusion. A copy of the auditor's review report
is available for inspection at Sycom's registered office together with the financial statements identified in the auditor's review report. The
information contained in the commentary below does not form part of the review opinion.
The condensed consolidated results have been prepared under the supervision of the group's financial director, Craig Kotze.
2. Condensed Segmental Results
for the twelve month period ended 31 March 2015
Segmental earnings:
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Segment rental revenue and recoveries 310 544 421 675 732 219
Straight-lining of rental revenue adjustment (671) (16 921) (17 592)
Dividend income 19 466 - 19 466
Total revenue 329 339 404 754 734 093
Operating expenditure (60 153) (72 952) (133 105)
Profit or (loss) on sale of investment property 5 018 (7 618) (2 600)
Net finance income 796 2 807 3 603
Segmental net operating income 275 000 326 991 601 991
Fair value adjustments 215 663 180 295 395 958
South Africa 252 774 180 295 433 069
International (37 111) - (37 111)
Segmental earnings 490 663 507 286 997 949
Reconciliation of segmental results to profit for the period in the statement of profit or loss and other comprehensive income
Allocated Unallocated Total
(R'000) (R'000) (R'000)
Rental revenue and recoveries 732 219 - 732 219
Straight-lining of rental revenue adjustment (17 592) - (17 592)
Dividend income 19 466 - 19 466
Total revenue 734 093 - 734 093
Operating expenditure (133 105) (49 690) (182 795)
Loss on sale of investment property (2 600) - (2 600)
Net finance cost 3 603 (181 038) (177 435)
Net operating income 601 991 (230 728) 371 263
Fair value gain on investment properties 433 069 - 433 069
Fair value loss on listed investment (37 111) - (37 111)
Fair value adjustment on interest rate and cross currency swaps - (17 745) (17 745)
Profit before taxation 997 949 (248 473) 749 476
Profit for the period 997 949 (248 473) 749 476
Investment Property Assets: RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
3 718 951 4 610 300 8 329 251
For the twelve month period ended 31 March 2014
Segmental earnings:
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Segment rental revenue and recoveries 297 783 403 606 701 389
Straight-lining of rental revenue adjustment 888 (16 578) (15 690)
Dividend income 19 973 - 19 973
Total revenue 318 644 387 028 705 672
Operating expenditure (56 350) (77 239) (133 589)
Loss on disposal of investment property (19 431) - (19 431)
Selling costs on investment properties held for sale (362) (191) (553)
Net finance cost 2 461 1 683 4 144
Segmental net operating income 244 962 311 281 556 243
Fair value adjustments 274 155 243 767 517 922
South Africa 192 633 243 767 436 400
International 81 522 - 81 522
Segmental earnings 519 117 555 048 1 074 165
Reconciliation of segmental results to profit for the period in the statement of profit or loss and other comprehensive income
Allocated Unallocated Total
(R'000) (R'000) (R'000)
Rental revenue and recoveries 701 389 - 701 389
Straight-lining of rental revenue adjustment (15 690) - (15 690)
Dividend income 19 973 - 19 973
Total revenue 705 672 - 705 672
Operating expenditure (133 589) (42 131) (175 720)
Loss on disposal of investment property (19 431) - (19 431)
Selling costs on investment properties held for sale (553) - (553)
Net finance cost 4 144 (120 668) (116 524)
Net operating income 556 243 (162 799) 393 444
Fair value gain on investment properties 436 400 - 436 400
Fair value gain on listed investment 81 522 - 81 522
Fair value adjustment on interest rate and cross currency swaps - (12 086) (12 086)
Profit before taxation 1 074 165 (174 885) 899 280
Taxation - (556) (556)
Profit for the period 1 074 165 (175 441) 898 724
RETAIL OFFICES TOTAL
(R'000) (R'000) (R'000)
Investment Property Assets 3 633 092 4 563 400 8 196 492
3. Fair Value of Financial Instruments recognised in the Statement of Financial Position
The fair values of all financial instruments with the exception of interest rate swaps and the investment in Stenham are substantially the same as
the carrying amounts reflected on the statement of financial position. The group measures fair values using the following hierarchy that reflects the
significance of the inputs used in making the measurements:
- Level 1: Quoted prices (unadjusted) in an active market for an identical instrument.
- Level 2: Valuation techniques based on observable inputs, either directly (ie: as prices) or indirectly (ie: derived from prices). This category
includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly
observable from market data.
- Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique
includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument's valuation. This category also
includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are
required to reflect differences between the instruments.
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair
value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire
measurement.
As the group does not hold financial instruments that are traded in active markets, fair values are not based on quoted market prices or dealer price
quotations. As such, the group determines fair values using valuation techniques. Valuation techniques include net present value and discounted
cash flow models and comparison to similar instruments for which market observable prices exist. Assumptions and inputs used in valuation
techniques include risk-free and benchmark interest rates, credit spreads and other premia used in estimating discount rates, bond and equity
prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations. The objective of valuation
techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date, that would have been
determined by market participants acting at arm's length.
The group uses widely recognised valuation models and techniques for determining the fair value of common and more simple financial
instruments, like the interest rate swaps that use only observable market data and require little management judgement and estimation. Observable
prices and model inputs are usually available in the market for listed debt and equity securities, exchange traded derivatives and simple over the
counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for management
judgement and estimation and also reduces the uncertainty associated with determination of fair values.
The table below analyses financial instruments carried at fair value, by valuation method.
Level 1 Level 2 Level 3 Total
(R'000) (R'000) (R'000) (R'000)
31 March 2015
Financial assets
Listed investment - - 377 701 377 701
Interest rate swaps - 19 206 - 19 206
Financial liabilities
Interest rate swaps - (11 835) - (11 835)
31 March 2014
Financial assets
Listed investment - - 409 224 409 224
Interest rate swaps - 51 897 - 51 897
Financial liabilities
Cross currency and interest rate swaps - (54 643) - (54 643)
A reconciliation of the opening balances to the closing balances for the level 3 valuations is disclosed as follows:
Reviewed Audited
31 March 2015 31 March 2014
(R'000) (R'000)
Balance as at beginning of period 409 224 310 722
Scrip shares acquired 5 588 16 980
Revaluation of investment recognised in profit or loss (37 111) 81 522
Fair value (loss)/gain on listed investment (37 111) 81 522
Carrying value at end of period 377 701 409 224
Level 2 fair values - Interest rate swaps
The following table shows the valuation techniques used in measuring level 2 fair values:
Type Valuation technique Significant unobservable inputs
Interest rate swaps Fair valued monthly by Nedbank Capital Not applicable - observable inputs are used
using mark to market mid market values. in the valuation
This involves, inter alia, discounting the
future cash flows using the curves at the
reporting date and the credit risk inherent in
the contract
Cross currency swap* Fair valued bi-annually by Nedbank Capital Not applicable - observable inputs are used
using mark to market valuation in the valuation
methodology. This involves, inter alia,
calculating the present value of the future
cross currency swap cash flows
* The cross currency swap agreement ended and was settled in November 2014
Level 3 fair value - Investment in Stenham European Shopping Centre Fund ("Stenham")
The investment in Stenham is an investment in a closed fund without an actively traded price. The significant underlying asset per the statement of financial position
of Stenham is the investment property balance, which is valued using a discounted cash flow model (refer valuation technique below). Sycom's valuation in Stenham is
based on the net asset value per share of the investment as per the most recent publically available financial information, translated at the period end ruling exchange
rate.
The investment property is valued by Jones Lang LaSalle, who are independent and qualified in accordance with the Appraisal and Valuation Manual published by the
Royal Institute of Chartered Surveyors (RICS). The valuation is prepared in accordance with the RICS Valuation - Professional Standards published by the Royal
Institute of Chartered Surveyors as well as the International Valuation Standards on the basis of Market Value.
Significant Inter-relationship between key
unobservable unobservable inputs and fair
Valuation technique inputs value measurements
The market value of the investment property is assessed using the discounted a) Financial The fair value would increase/(decrease)
cash flow (DCF) calculation method. The valuation takes into account the information used to based on:
agreed rent for the signed leases, the market rent for currently vacant space and calculate rental (1) increases/(decreases) in the stabilised
estimated rents for re-letting of the space after lease term expiry. In all instances, growth forecasts net operating income,
the valuers calculated the DCF for a 10-year period and assumed a capitalised b) Net initial yield (2) (decreases)/increases in the yield used
value based on a stabilised rental income thereafter. After the DCF period of 10 (6.43%) to calculate the terminal value indication
years, the valuers calculate a stabilised rental income. The capitalised value c) Discount rate (3) (decreases)/increases in the discount
takes this stabilised rental income and subtracts the stabilised expenses, resulting (6.90%) rate used to calculate the gross capital value
in the stabilised net operating income. This result is capitalised into perpetuity d) Terminal
applying an equivalent (growth implicit) yield and produces the terminal value capitalisation rate
indication. The resulting value is then discounted to the valuation date using the (6.55%)
discount rate from term years 1-10. Discounting the remaining cash flows for e) Non recoverable
years 1 to 10 and the terminal value for year 11 to the valuation date (i.e. the net expenses
present value) produces the gross capital value. After deductions for purchaser's f) Market lease
costs, the market value is obtained. assumptions for
contract expiry/
vacant space
Sensitivity analysis for Level 3 fair value - Investment in Stenham
Price risk sensitivity analysis
The price risk sensitivity analysis has been determined based on Sycom's shareholding percentage and the Euro value per share of the investment as per the most recent
publically available financial information and assumes a fixed exchange rate in order to isolate price sensitivity. If the price per share of the investment were to
increase/decrease by 1% and all other variables were held constant, profit for the period ended 31 March 2015would have decreased/increased by R 3 777 007 (2014:
R 4 091 582) and closing equity would have increased/decreased by the same amount. Asthis surplus/deficit movement arises on a fair value measurement, it would
be transferred from retained earnings to the non-distributable reserve and consequently would have no impact on distributable earnings.
4. Related Party Transactions
Identity of the related parties with whom significant transactions have occurred
Entity Relationship
Acucap Properties Limited Sycom is a subsidiary of Acucap Properties Limited
Sycom Property Fund Managers Limited The management company of Sycom and a wholly owned subsidiary of Acucap Properties Limited
Acucap Management Services Proprietary Limited The entity is a wholly owned subsidiary of Acucap Properties Limited
FC Property Management Company Proprietary Limited The entity is jointly controlled by Sycom Property Fund Managers Limited
Reviewed at Audited
31 March 2015 31 March 2014
Significant related party transactions (R'000) (R'000)
Asset Management Fees paid to Sycom Property Fund Managers Limited
in terms of the Trust Deed:
Service charge 43 060 39 067
Initial charge on new units issued - 9 000
Property Management fees
Acucap Management Services Proprietary Limited 21 087 18 102
Sycom Property Fund Managers Limited 530 1 032
FC Property Management Company Proprietary Limited 1 565 1 594
Somerset Mall Property Management Company Proprietary Limited - 967
Letting Commissions fees
Acucap Properties Limited 1 036 1 128
Acucap Management Services Proprietary Limited 20 470 6 437
Asset acquisition & capital development fees
Acucap Properties Limited 592 16 580
COMMENTARY
1. REVIEW OF RESULTS AND OPERATIONS
The Board of SPFM is pleased to report a distribution of 98.98 cents per unit (cpu) for the six
months ended 31 March 2015, which was paid to unitholders on 28 April 2015. This represents
an increase of 4.02% over the corresponding period in the previous financial year.
2. CORPORATE ACTION
Merger with Acucap Properties Limited ("Acucap")
In terms of a general and subsequent follow-on offer to Sycom unitholders during the first half of
the financial year, Acucap increased its holding in Sycom to 83.4%. Starting in April 2014,
Growthpoint built up a 15.6% interest in Sycom, and this, together with the corporate action
referred to in the next paragraph, resulted in the proposed merger between Acucap and Sycom
not proceeding as anticipated.
Merger of combined Acucap and Sycom with Growthpoint Properties Limited ("Growthpoint")
Growthpoint acquired a 34.9% interest in Acucap in April 2014, and subsequently increased its
shareholding in Acucap to 100% by way of a scheme of arrangement which was implemented on
28 April 2015. The scheme of arrangement has resulted in Growthpoint directly and indirectly
holding approximately 99% of the Sycom units in issue, and 100% of SPFM.
3. CHANGE IN YEAR END AND DIRECTORATE
The financial year end of Sycom has changed to 30 June in order to align with that of
Growthpoint.
In terms of the implementation agreement entered into between Acucap and Growthpoint,
certain changes were made to the SPFM board of directors. These changes will only become
effective once approved by the Financial Services Board. Unitholders are referred to the SENS
announcement dated 18 May 2015 wherein these changes are detailed.
4. PORTFOLIO INVESTMENT ACTIVITY
Vaal Mall
The 14,000m2 expansion of Vaal Mall commenced in September 2014 at an estimated cost of R439
million (Sycom's share being R341 million). The project will result in expanded Woolworths,
Truworths, Foschini Group and Edcon stores and a new 2,400m2 Ster-Kinekor. The majority of
stores are expected to be trading by mid-2016, with project completion planned for the end of
2016. The expansion will include an upgrade of the existing mall.
Paarl Mall
The first phase of the 2,850m2 expansion of Paarl Mall, including the 2,000m2 enlargement of
Woolworths, is currently underway. It is anticipated that Woolworths will trade from the enlarged
premises by December 2015. The estimated cost of the expansion is approximately R68 million.
Additional land has been acquired adjacent to the Mall and once re-zoned, it will provide the
necessary bulk to permit an expansion that will allow a large format discounter to be introduced
into the tenant mix.
Greenacres
The first phase of the R296m redevelopment and extension of Greenacres was opened to the public
on 30th April 2015. Sycom's half share of the development cost is R148m. The opening was well
supported by shoppers and the food court and adjacent retailers have to date traded beyond their
expectations. This phase successfully showcases the contemporary standard and modern look and feel
of the next phase. Phase 2 is underway and includes non income producing refurbishment work and
mall revitalisation. In addition national retailers like Jet, Identity, YDE, and Foschini will be adding to
their existing footprint as well as bringing new brands to Greenacres while several independent line
shops are also being introduced.
The full redevelopment is anticipated to be completed by March 2017.
Fourways Crossing
The upgrade and minor expansion of Fourways Crossing has commenced and is progressing well.
The project is scheduled for completion in April 2016. The total capital cost of the project is
estimated to be R85 million with Sycom's share being R42.5 million.
Roggebaai Place
This building, located in the Cape Town Foreshore, was transferred from the developer to Sycom in
December 2014. There has been encouraging interest from potential tenants, although the
developer has provided Sycom with a cash underpin for the full rental for the first two years post
transfer.
Discovery Building, Southgate Mall and Southgate Value Market
The sale of the Discovery Building, Southgate Mall and Southgate Value Market became effective in
October 2014.
5. BORROWINGS
Sycom has an approved total facility of R2.9 billion. At the end of the reporting period, Sycom's
gearing level was 30.8%, with 58.5% of its borrowings being covered by interest rate swap
agreements. This will increase to 78.1% of current borrowings once all contracted forward
starting interest rate swaps become effective over the next 15 months.
Interest rate hedging
Maturity Notional Approximate
Start Date Date Fixed Rate Amount Effective
Rm rate
31-Mar-14 31-Mar-17 5.790% 200 7.290%
17-Mar-14 17-Mar-17 5.785% 200 7.285%
9-Apr-14 9-Apr-18 6.095% 100 7.595%
30-Sep-14 29-Sep-17 6.045% 200 7.545%
30-Sep-14 30-Sep-16 7.180% 500 8.680%
31-Mar-15 29-Mar-18 6.305% 300 7.805%
30-Sep-15 28-Sep-18 7.650% 300 9.150%
31-Mar-16 31-Mar-20 8.150% 100 9.650%
31-Mar-16 31-Mar-21 8.340% 100 9.840%
Total 2 000
6. LEASE EXPIRIES
The lease expiry profile by rental income is reflected in the table below. The lease with Deloitte
at The Woodlands has been extended to 31 March 2020.
Total Retail Offices
June-15 7.0% 4.1% 2.9%
June-16 25.2% 18.5% 6.7%
June-17 19.4% 6.5% 12.9%
June-18 11.9% 4.2% 7.7%
June-19 12.9% 5.3% 7.6%
thereafter 23.6% 2.9% 20.7%
100.0% 41.5% 58.5%
7. VACANCIES
The table below provides details of Sycom's vacancies at March 2015, March 2014 and March
2013, expressed by gross lettable area.
Mar-15 Mar-14 Mar-13
Retail vacancy 1.9% 3.0% 1.6%
Office vacancy 4.9% 4.4% 2.7%
Total vacancy 3.6% 3.8% 2.2%
The low vacancy level reflects the high quality of Sycom's property assets, in particular its office
portfolio, which has performed strongly in market conditions that remain difficult.
8. EVENTS AFTER THE REPORTING DATE
Other than the Corporate Action detailed above there have been no events after the reporting date that
require disclosure.
9. PROSPECTS
Given that minority unitholders hold only 1% of Sycom's units in issue, steps will be taken to acquire
these units and a process will be initiated to de-list Sycom. However, these steps are not expected to
be complete before the end of the current financial year (June 2015).
On behalf of the Board
G K EVERINGHAM PA Theodosiou
Chairman CEO
Sycom Property Fund Managers Limited Sycom Property Fund Managers Limited
3 June 2015
Registered Office
Suite A11 Westlake Square
Westlake Drive
Westlake
Cape Town
Transfer secretaries:
Computershare Investor Services Proprietary Limited
70 Marshall Street
JOHANNESBURG
Sponsor:
Questco Proprietary Limited
http://www.sycom.co.za
GK Everingham (Chairman), MS Moloko (Deputy Chairman), FM Berkeley, JPD Flanagan, BM Stocks,
PA Theodosiou*# (CEO), C Kotze*, CB Marlow, GR Jones*
Company Secretary: H H-O Steyn
* Executive
# British
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