Wrap Text
Condensed unaudited consolidated interim financial results for the six months ended 30 June 2015
SA Corporate Real Estate Limited
(“the Group” or “the Company”)
Incorporated in the Republic of South Africa
Share Code: SAC; ISIN Code: ZAE000203238
(Registration number 2015/015578/06)
CONDENSED UNAUDITED CONSOLIDATED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Interim distribution growth
- 11.2% higher than June 2014
- 9.1% higher than December 2014
Capital structure
- Premium to NAV of 18.3%
- Effective debt 81.8% fixed
Portfolio activity
- Acquisition of 7 properties for R379,9m
- Contracted acquisition of a portfolio of 13 properties for R279,6m
- Disposal of 8 properties for R188,6m
Property performance
- Standing portfolio NPI growth of 6.4%
- Traditional and AFHCO portfolio vacancy as % of GLA reduced to 3.0%
and 3.4% respectively
- Traditional portfolio positive rental reversions of 3.7%
INTRODUCTION
SA Corporate Real Estate Fund, was reconstituted as a corporate Real Estate
Investment Trust (“REIT”) with effect from 1 July 2015. The rationale for
this conversion was to further align the interest of the Company to that of
its shareholders, following the internalisation of the management of the
Group on 1 May 2014. This better aligns the mechanics of the Group to
global best practice and investor preference as it fosters better
understanding of the regulatory and tax environments.
The Group owns a portfolio of industrial, retail, commercial and
residential buildings located primarily in the major metropolitan areas of
South Africa. The portfolio, excluding the Afhco portfolio, is referred to
as the traditional portfolio.
The consolidated results reflect the position of SA Corporate Real Estate
Fund.
REVIEW OF FINANCIAL RESULTS AND PORTFOLIO PERFORMANCE
Distribution Growth
SA Corporate delivered growth in distributions per unit for the six months
to June 2015 of 11.2%. This amounts to a distribution of 19.66cpu (June
2014: 17.68cpu). The acquisition of the Afhco business and other assets in
2014 amounting to R1.4bn impacted positively on the results for the period.
This was further supported by standing portfolio net property income
(“NPI”) growth of 6.4%.
Portfolio Performance
Total NPI increased by 20.1%, with the standing portfolio contributing
6.1%, Afhco 13.5% and other acquisitions 1.6% and off set by a 1.1%
reduction in respect of disposals.
Industrial NPI growth of 7.3% was underpinned by strong tenant retentions
of 88.3%, solid weighted average lease escalations of 8.1%, positive
renewal reversions of 3.6% and acquisitions contributing 0.7%. The retail
portfolio NPI growth of 9.5% was supported by solid retentions at 85.3%,
positive renewal reversions of 2.9%, weighted average escalations of 7.8%.
The Afhco portfolio has delivered very pleasing results. The portfolio
acquired on 1 July 2014, delivered growth in NPI of 13.3% relative to the 6
months July to December 2014. This is supported by escalations of 8% and
10% in respect of the residential and retail sectors respectively and
reduced residential vacancies of 3.5% (Dec 2014:7.9%). Acquisitions
contributed 4.5% to the increase in total NPI for the Group.
The standing portfolio expense ratio reduced from 32.8% to 30.8% due to bad
debt recoveries, reduced maintenance costs especially with re-developments
in the retail portfolio and reductions in letting costs. As a consequence
of the acquisition of the Afhco portfolio, the property expenses increased
by 16.3%.
Finance Cost
Net interest expense increased by 69.6%. This increase is supported by net
accretive acquisitions amounting to R1.4bn.
Group and Other Expenses
Group expenses decreased by 22.3% for the 6 months to June 2015. This can
be attributed to a reduction in service fee and accounting and secretarial
fees post the internalisation of the management company, SA Corporate Real
Estate Fund Managers Limited (“ManCo”), effective 1 May 2014, and a
reduction in general administration costs emanating from the high level of
transactional activity in the period January to June 2014.
The breakdown of distributable earnings is set out below:
6 months 6 months Year
ended ended ended
30.06.2015 30.06.2014 31.12.2014
DISTRIBUTABLE EARNINGS (R000) Unaudited Unaudited Audited
Rent (excluding straight line rental
adjustment) 584,926 482,814 1,034,231
Net property expenses (59,200) (44,718) (115,689)
Property expenses (255,524) (219,683) (494,474)
Recovery of property expenses 196,324 174,965 378,785
Net property income 525,726 438,096 918,542
Net funding cost (109,221) (64,052) (162,795)
Interest income 11,970 11,404 30,478
Interest expense (121,191) (75,456) (193,273)
Group expenses (18,456) (24,000) (45,793)
Distributable earnings 398,049 350,044 709,954
Units in issue (000) 2,024,162 1,980,093 1,997,395
Weighted number of units in issue
(000) 2,021,500 1,980,093 1,988,341
Distribution (cents per unit) 19.66 17.68 35.70
Interim 19.66 17.68 17.68
Final - - 18.02
PROPERTY VALUATIONS
The value of the Group's independently valued property portfolio increased
by R604.5m to R11.27bn as at 30 June 2015 (31 December 2014: R10.67bn). The
traditional like for like portfolio held for the full 12 months to 30 June
2015, increased by R246,5m (2.6%) from 31 December 2014.
The capitalisation and discount rates in the Group's like for like
portfolio at 30 June 2015 were calculated on a weighted basis:
Sector Capitalisation Discount rate (%) Growth in like for
rate (%) like portfolio (%)
30.06.2015 31.12.2014 30.06.2015 31.12.2014 30.06.2015
Industrial 8.9 8.9 14.4 14.4 1.3
Retail 8.7 8.6 14.2 14.1 4.4
Commercial 8.7 8.7 14.2 14.2 0.8
Portfolio total 8.8 8.8 14.3 14.3 2.6
The value of the Afhco portfolio increased by R63,7m (8.9%) relative to the
acquisition price.
The NAV per unit (387cpu) increased by 1.6% (December 2014: 381cpu) of
which 1.4% increase is attributable to property valuation and increased
number of units. Excluding the impact of the distribution, the NAV would
have increased by 6.7%.
PORTFOLIO INVESTMENT ACTIVITY
The portfolio comprised 169 properties (139 properties as at June 2014 and
166 properties as at December 2014). The sectoral and geographic weightings
by value as at 30 June 2015 are set out below:
Sectoral Spread
Retail
39%
R4,5bn
358,684 m2
27 properties
Industrial
39%
R4,3bn
791,608 m2
92 properties
Commercial
10%
R1,1bn
80,670 m2
17 properties
AFHCO
12%
R1,4bn
175,062 m2
33 properties
Geographic Spread
Gauteng
55%
R6,2bn
809,202 m2
99 properties
KwaZulu-Natal
36%
R4,1bn
441,318 m2
53 properties
Western Cape
6%
R0,6bn
76,819 m2
11 properties
Other
3%
R0,4bn
78,867 m2
6 properties
Committed Developments:
Properties Cost Commence- Forecast Yield Sector 3 Region
(Rm) ment date completion forecast
date 1st 12
months
(%)
East Point, Boksburg 433,1 05/2014 10/2016 9.0 Retail Gauteng
Umlazi Mega City, KwaZulu-
Umlazi 1 259,2 11/2014 06/2017 9.3 Retail Natal
120 End Street
Precinct, New
Doornfontein 140,2 04/2015 03/2017 11.0 AFHCO Gauteng
Stuttafords House,
Johannesburg CBD 64,3 09/2014 03/2016 10.5 AFHCO Gauteng
Bluff Shopping KwaZulu-
Centre, Bluff 63,1 01/2015 11/2015 9.7 Retail Natal
Comaro Crossing,
Oakdene 56,9 03/2015 06/2016 8.0 Retail Gauteng
Connaught Mansions
and Gemdawn, New
Doornfontein 41,6 09/2014 08/2015 11.0 AFHCO Gauteng
Letsema House,
Marshalltown 41,4 02/2015 05/2016 11.0 AFHCO Gauteng
Jeppe Street Mall,
New Doornfontein 35,8 09/2014 09/2015 11.0 AFHCO Gauteng
Moray House, New
Doornfontein 27,6 02/2015 04/2016 11.0 AFHCO Gauteng
Stellenbosch Square, Western
Stellenbosch 2 21,9 11/2014 11/2015 9.9 Retail Cape
Anchor Towers,
Johannesburg CBD 7,7 03/2015 12/2015 11.0 AFHCO Gauteng
Total 1 192,8 9.6
1 75% Undivided share of development cost
2 50% Undivided share of development cost
3 The AFHCO Portfolio is a mixed use portfolio, including residential
and/or retail and/or commercial.
Acquisitions:
Properties Cost Acquisition Yield Sector Region
(Rm) date forecast 1st
12 months
(%)
Atkinson House,
Johannesburg CBD 1 92,3 03/2015 10.3 AFHCO Gauteng
Nukerk, New
Doornfontein 2 72,5 01/2015 10.6 AFHCO Gauteng
Ilanga House, New
Doornfontein 2 70,6 01/2015 10.6 AFHCO Gauteng
Textile Centre, New
Doornfontein 2 49,5 01/2015 10.6 AFHCO Gauteng
Sambro House,
Marshalltown 44,0 03/2015 10.2 AFHCO Gauteng
Lustre House, New
Doornfontein 2 37,7 01/2015 10.6 AFHCO Gauteng
African Diamond, New
Doornfontein 2 13,3 01/2015 10.6 AFHCO Gauteng
Total 379,9 10.4
1 Deferred portion of original AFHCO acquisition
2 Part of Morulat Property Investments 4 Proprietary Limited portfolio
Contracted and Unconditional Acquisitions:
Property Cost Acquisition Yield Sector Region
(Rm) date forecast 1st
12 months
(%)
Inner City Retail
Portfolio, Johannesburg
CBD 279,6 09/2015 10.8 AFHCO Gauteng
Disposals:
Properties Transfer Gross Carrying Exit yield
date selling value at on sale
price latest price (%)
(Rm) valuation
date (Rm)
Stellenbosch Square,
Stellenbosch 1 02/2015 40,0 46,3 7.8
36 Wierda Road West,
Wierda Valley 02/2015 39,0 39,0 7.5
The Boulevard, Melville 04/2015 31,2 31,2 7.4
3 Remblok Street, Strydom
Park 03/2015 10,7 10,4 8.3
110 Zastron Road,
Bloemfontein 01/2015 6,9 6,9 6.8
Total 127,8 133,8 7.6
1 50% Undivided share
Contracted and Unconditional Disposals:
Properties Expected Gross Carrying Exit yield
transfer date selling value at 30 on sale
price June 2015 price (%)
(Rm) (Rm)
Middelburg Pick n Pay,
Middelburg 10/2015 25,3 25,3 8.3
293 Hebbard Road,
Robertville 09/2015 23,5 23,5 5.5
Lebombo Road, Garsfontein
(portion) 09/2015 12,0 12,0 6.2
Total 60,8 60,8 6.8
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
30.06.2015 31.12.2014 30.06.2014 30.06.2015 31.12.2014 30.06.2014
Traditional
Portfolio:
Industrial 0.7 1.4 1.4 0.6 1.2 1.1
Retail 5.5 5.9 6.5 3.5 3.4 3.5
Commercial 12.7 12.7 10.3 8.4 7.8 6.0
Traditional
Portfolio total 3.0 3.7 3.6 2.9 3.1 2.9
AFHCO Portfolio:
Retail /
Commercial 3.0 1.8 - 3.3 2.3 -
Residential 3.5 7.9 - 4.2 8.9 -
AFHCO Portfolio
total 3.4 6.1 - 4.0 6.3 -
* GLA=Gross lettable area
The trajectory of the total vacancies by GLA continued its downward trend,
with vacancies by rental marginally up due to an increase in stand-alone
office vacancies.
The industrial portfolio remains well let with improvements both in
vacancies by GLA and rental. The quality of the underlying properties and
strong relationships with tenants bode well for the industrial portfolio.
Retail vacancies by GLA reduced by a further 0.4%.
The commercial vacancy by GLA (which includes offices in retail centres at
6.2% of the total vacancy) remained flat with a 0.6% increase in vacancies
by rental. The Group has successfully tendered for and let 1,768m2 of
office space at Musgrave Office Towers on a 5 year lease with occupation
scheduled for early 2016 and has earmarked certain office buildings for
residential conversions. This would reduce the commercial vacancies by GLA
from 12.7% to 10.9%.
The Afhco portfolio vacancies have reduced by 2.7% and 2.3% by GLA and
rental respectively. This is due to a combination of focused leasing and
marketing strategies and the seasonality of the residential vacancies. This
has further resulted in reduced vacancies by GLA since acquisition from
6.4% for residential and 3.3% for retail/commercial to 3.5% and 3.0%
respectively.
The lease expiry profile and vacancies (by GLA) are set out below:
Sector Vacancy (%) Expiring (%)
Monthly 2015 2016 2017 2018 Thereafter
Traditional Portfolio:
Industrial 0.7 2.9 6.2 16.7 28.8 17.9 26.8
Retail 5.5 9.5 9.0 17.4 13.0 21.0 24.6
Commercial 12.7 5.1 9.3 25.9 12.6 8.4 26.0
Traditional
Portfolio total 3.0 4.9 7.2 17.6 23.1 18.0 26.2
AFHCO Portfolio:
Retail / Commercial 3.0 5.2 14.6 22.6 13.8 10.1 30.7
Residential 1 3.5 48.2 22.5 25.8 - - -
AFHCO Portfolio total 3.4
1 Calculated on number of units
TENANT RETENTION AND RENTAL REVERSIONS
The table below reflects the Group's retention ratio and rental reversion
per sector for a rolling 6 month period ending June 2015:
Sector Expiries Retention Retention Rental
(m2) (m2) (%) reversion (%)
Traditional Portfolio:
Industrial 71,071 62,726 88.3 3.6
Retail 30,257 25,803 85.3 5.1
Commercial 5,179 3,018 58.3 (4.6)
Traditional Portfolio
total 106,507 91,547 86.0 3.7
AFHCO Portfolio:
Retail / Commercial 1 5,555 3,713 66.8 16.1
1 Residential sector not included given the short term nature of the
contracts.
In respect of the SA Corporate Portfolio, tenant retention has improved to
86.0% from December 2014 (75.9%), however tough conditions continue to
weigh on tenancies such that this is still below the 89.5% level achieved
in June 2014.
Given the pressure of the current economic conditions, reversions on
commercial renewal rentals remain under pressure while industrial and
retail are showing good reversions despite challenging economic conditions
and exponential increases in administered costs.
BORROWINGS
The debt profile is detailed below as at 30 June 2015:
Type Maturity date Value (Rm) Interest Rate (%)
Fixed 31.12.2015 300 7.95
Term revolver 25.07.2016 27 8.94
Fixed 31.12.2016 500 8.04
Fixed 15.12.2017 1,152 8.13
Fixed 13.08.2018 200 8.31
Fixed 30.09.2018 270 8.27
Fixed 30.09.2018 30 8.27
Fixed 15.12.2019 848 8.43
Fixed 15.04.2024 77 6.88
Total/weighted average 3,404 8.18
The level of gearing (LTV) has increased from 22.5% in June 2014 to 30.2%
in June 2015. This is due to R1.4bn of accretive acquisitions made in 2014
and further R380m in the first half of 2015. The weighted average cost of
debt drawn excluding fixes, remains at 7.7%, and inclusive of fixes at
8.2%. The weighted average margin and tenor at 30 June 2015 is 1.6%
(excluding fixes) and 2.9 years respectively. 81.8% of the debt is fixed
through a combination of fixes (81.4%) and fixed debt in respect of half
the AFD loan. The swaps weighted average swap rate and tenor is 0.61% and
3.5 years respectively.
STRATEGY AND PROSPECTS
The conversion to a corporate REIT on 1 July 2015 marked the completion of
the successful execution of the four pillar turnaround strategy,
positioning the Company for sustainable distribution growth.
With its resilient industrial portfolio, unlocking of value in the retail
portfolio and expansion into affordable residential properties, the Group
is well placed and sized to broaden its scope to become well-diversified in
sub-Saharan Africa, active in all sectors.
As we move to an increasing interest rate cycle amidst volatility and
uncertainty the Board and management are acutely aware of the risks and
consequently seek to extend debt facilities ahead of expiry and lock in the
rates through remaining 81.8% hedged.
Management are exploring a number of acquisitions particularly in retail
and residential which if successful will enhance the performance of the
Company into the future.
In view of the achievements to date and the acquisition pipeline, the Board
is confident that the Company will, for the full year, disregarding any
accretive acquisitions in addition to those disclosed in these results, be
able to deliver distribution growth of approximately 10%.
As at As at As at
CONDENSED CONSOLIDATED STATEMENT 30.06.2015 30.06.2014 31.12.2014
OF FINANCIAL POSITION (R000) Unaudited Unaudited Audited
Assets
Non-current assets 11,369,728 9,298,056 10,621,038
Investment property 10,995,322 9,033,391 10,291,993
Letting commissions and tenant
installations 57,938 61,561 63,430
Property, plant and equipment 2,741 - 1,427
Intangible asset 82,972 - 71,800
Interest rate swap derivatives 59,955 34,547 21,204
Rental receivable - straight line
adjustment 169,281 168,557 169,468
Other financial assets 1,519 - 1,019
Deferred taxation - - 697
Current assets 537,721 661,899 719,311
477,012 498 279 554,939
Trade receivables 23,082 11,689 15,312
Other receivables and accrued interest 186,222 174,567 167,713
Other financial assets 39,581 - 24,429
Rental receivable - straight line
adjustment 45,974 40,777 41,871
Interest rate swap derivatives 3,044 3,362 4,042
Taxation receivable 538 - 321
Inventory 34 - 27
Cash resources and short-term
investments 22,248 267,884 301,224
Loan to SA Corporate Real Estate
Limited 156,289 - -
Properties held for disposal 60,275 162,200 163,000
Letting commissions and tenant
installations 434 1,420 1,372
Total assets 11,907,449 9,959,955 11,340,349
Unitholders' funds and liabilities
Unitholders' funds 7,842,293 7,290,710 7,603,215
Non-current liabilities 3,094,576 2,118,968 3,106,491
Interest bearing borrowings 3,094,576 2,116,472 3,100,650
Interest rate swap derivatives - 2,496 5,841
Current liabilities 970,580 550,277 630,643
Trade and other payables 250 177 185,542 253,560
Taxation payable 480 - 480
Interest bearing borrowings 309,915 - -
Distributions payable 398,049 350,044 359,910
Interest rate swap derivatives 11,959 14,691 16,684
Bank overdraft - - 9
Total unitholders' funds and
liabilities 11,907,449 9,959,955 11,340,349
NAV cpu 387 368 381
6 months 6 months Year
ended ended ended
CONDENSED CONSOLIDATED STATEMENT 30.06.2015 30.06.2014 31.12.2014
OF COMPREHENSIVE INCOME (R000) Unaudited Unaudited Audited
Revenue 781,894 658,527 1,408,879
Income 793,864 669,931 1,439,357
Rent 584,926 482,814 1,034,231
Straight line rental adjustment 644 748 (4,137)
Recovery of property expenses 196,324 174,965 378,785
Interest income 11,970 11,404 30,478
Expenses (411,791) (319,139) (761,610)
Accounting and secretarial fees (31) (1,779) (1,843)
Audit fees (1,441) (878) (2,183)
Administrative fees (6,216) (6,713) (35,770)
Depreciation (490) - (688)
Interest expense (121,191) (75,456) (193,273)
Operating expense (15,060) (1,700) (20,538)
Property expenses (242,006) (206,438) (467,657)
Property administration fees (13,518) (13,245) (26,817)
Service fees - (12,930) (12,841)
Debt restructure cost (11,838) - -
Operating income 382,073 350,792 677,747
Capital loss on disposal of
investment properties (8,151) (1,880) (3,634)
Gain on acquisition of subsidiary - - 102,000
Internalisation fee - (185,000) (185,000)
Loss on disposal of property, plant
and equipment - - (29)
Revaluation of investment properties 107,916 203,928 401,547
- Revaluations 108,560 204,676 397,410
- Straight line rental adjustment (644) (748) 4,137
Revaluation of interest rate swap
derivatives 33,859 (7,328) (25,329)
Income before taxation 515,697 360,512 967,302
Taxation 6,254 - (122)
Net profit attributable to unitholders 521,951 360,512 967,180
Other comprehensive income - - -
Total comprehensive income attributable
to unitholders 521,951 360,512 967,180
6 months 6 months Year
ended ended ended
CONDENSED CONSOLIDATED STATEMENT OF 30.06.2015 30.06.2014 31.12.2014
CHANGES IN UNITHOLDERS’ FUNDS (R000) Unaudited Unaudited Audited
Unitholders' funds at the beginning
of the period 7,603,215 7,280,242 7,280,242
Total comprehensive income for the
period 521,951 360,512 967,180
Profit for the period 521,951 360,512 967,180
Units issued 115,176 - 65,747
Distribution attributable to
unitholders (398,049) (350,044) (709,954)
Unitholders' funds at the end of the
period 7,842,293 7,290,710 7,603,215
6 months 6 months Year
ended ended ended
CONDENSED CONSOLIDATED STATEMENT 30.06.2015 30.06.2014 31.12.2014
OF CASH FLOWS (R000) Unaudited Unaudited Audited
Operating profit before working
capital changes 497,271 435,892 683,145
Working capital changes 34,097 (41,892) 8,524
Cash generated from operations 531,368 394,000 691,669
Operating activities changes (480,433) (390,570) (850,747)
Net cash flows from operating
activities 50,935 3,430 (159,078)
Net cash flows from investing
activities (734,468) (537,625) (783,072)
Net cash flows from financing
activities 404,557 490,559 931,845
Net decrease in cash resources and
short-term investments (278,976) (43,636) (10,305)
Cash resources and short-term
investments at the beginning of period 301,224 311,520 311,520
Cash resources and short-term
investments at the end of period 22,248 267,884 301,215
NOTES
The condensed consolidated interim financial statements are prepared in
accordance with International Financial Reporting Standard, (IAS) 34
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements as
issued by Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa. 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 results and
prospects have not been audited or reviewed by the Group's auditors,
Deloitte & Touche.
1. Reconciliation of net profit to headline earnings to distributable
earnings attributable to unitholders
6 months 6 months Year
ended ended ended
30.06.2015 30.06.2014 31.12.2014
Unaudited Unaudited Audited
R 000 CPU R 000 CPU R 000 CPU
Net profit 521,951 25.65* 360,512 18.21 967,180 48.42*
Adjustments for:
Capital loss on disposal
of investment properties 8,151 1,880 3,634
Revaluation of investment
properties (107,916) (203,928) (401,547)
Gain on acquisition of
subsidiary - - (102,000)
Headline earnings 422,186 20.88* 158,464 8.00 467,267 23.50*
Cost of acquisition of
subsidiary 1,564 - 15,795
Debt facility fees 14,367 - 11,616
Depreciation 490 - 688
Taxation - - 122
Internalisation fee - 185,000 185,000
Revaluation of interest
rate swap derivatives (33,859) 7,328 25,329
Straight line rental
adjustment (644) (748) 4,137
Taxation on distributable
earnings (6,254) - -
Non-distributable expenses 199 - -
Distributable earnings
attributable to
unitholders 398,049 19.66 350,044 17.68 709,954 35.70
Interim 398,049 19.66 350,044 17.68 350,044 17.68
Final - - - - 359,910 18.02
* calculated on weighted number of units in issue
2. Primary operational segments (R000)
Business segment Industrial Retail Commercial AFHCO Group
Extract from statement of
comprehensive income
Revenue 275,147 335,161 71,164 100,422 781,894
Rental income (excluding
straight line rental
adjustment) 242,293 205,048 57,850 79,735 584,926
Net property expenditure (23,015) (5,234) (10,181) (20,770) (59,200)
Property expenses (56,034) (135,635) (23,461) (40,394) (255,524)
Recovery of property
expenses 33,019 130,401 13,280 19,624 196,324
Net property income 219,278 199,814 47,669 58,965 525,726
Straight line rental
adjustment (165) (288) 34 1,063 644
Net interest expense - - - - (109,221)
Group expenses - - - - (35,076)
Revaluation of interest
rate swap derivatives - - - - 33,859
Taxation - - - - 6,254
Headline earnings 219,113 199,526 47,703 60,028 422,186
Other information
Properties 4,224,604 4,397,254 1,056,640 1,377,099 11,055,597
Non-current assets: 4,201,104 4,372 479 1,044 640 1,377,099 10,995,322
At valuation 4,321,600 4,441,025 1,061,400 1,386,028 11,210,053
Straight line rental
adjustment (120,496) (68,546) (16,760) (8,929) (214,731)
Current assets: 23,500 24,775 12,000 - 60,275
Properties held for
disposal 23,500 25,300 12,000 - 60,800
Straight line rental
adjustment - (525) - - (525)
Revaluation of
investment properties
excluding straight line
rental adjustment 48,924 5,146 (148) 54,638 108,560
Segmental growth rates (%) Industrial Retail Commercial Group
Rental income (excluding
straight line rental adjustment) 6.6 4.3 (1.8) 4.6
Property expenses (2.2) (4.3) 1.2 (2.1)
Recovery of property expenses 5.9 1.3 (11.2) 1.0
Net property income 7.3 (9.0) (5.4) 6.5
3. Amendments to the Trust Deed
During the 2014 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 Group
from a monthly charge based on 0.4% of the aggregate market capitalisation
of the Group plus borrowings, to a monthly charge equal to the actual
operating costs incurred by the ManCo in administering the Group as well as
the cancellation of the initial charge of 5% on the value of any new units
issued.
This was settled with the payment by the Group to the ManCo of a
consideration of R185 million excluding VAT. As a consequence of the above
amendment, the Group was deemed to gain control over its ManCo with effect
from 1 May 2014. The results of the ManCo were consolidated in the
Securities Exchange News Service (“SENS”) announcement dated 26 August
2014. However, as the Group is not entitled to the ManCo's variable returns
and therefore does not control the ManCo, the ManCo is no longer
consolidated in the Group's results. This has no impact on the
distributable earnings as the ManCo is on the cost recovery model post
internalisation and the impact on distributable earnings remains unchanged.
The impact on the profit after tax has subsequently been reversed with a
total impact of R8.1m mainly due to the gain on bargain purchase of R8.9m.
Impact on the Condensed Currently As previously Movement
Consolidated Statement of reported reported
Financial Position
Property, plant and equipment - 406 (406)
Trade receivables 11,689 12,499 (810)
Cash resources and short-term
investments 267,884 334,051 (66,167)
Unitholders' funds (7,290,710) (7,298,821) 8,111
Trade and other payables (185,542) (189,224) 3,682
Taxation payable - (32,462) 32,462
Dividends payable to shareholder - (23,128) 23,128
(7,196,679) (7,196,679) -
Impact on the Condensed
Comprehensive Consolidated
Statement of Comprehensive Income:
Operating expense (1,700) - (1,700)
Gain on acquisition of subsidiary - 8,872 (8,872)
Salaries and wages - (2,047) 2,047
Directors fees - (397) 397
Straight line rental adjustment - (17) 17
(1,700) 6,411 (8,111)
4. Interest rate swap derivatives
The interest rate swap derivatives are valued based on the discounted cash
flow method. Future cash flows are estimated based on forward interest
rates from observable yield curves at the end of the reporting period and
contract interest rates, discounted at a rate that reflects the credit
risk. This is classified as a level 2 financial asset in terms of the
degree to which the fair value is observable.
5. Events subsequent to reporting date
SA Corporate unitholders (“Unitholders”) are referred to the previous
announcements released on the SENS on 30 April 2015, 29 May 2015, 19 June
2015 and 26 June 2015, regarding the proposed transaction whereby SA
Corporate will be reconstituted to an internally managed corporate Real
Estate Investment Trust and listed on the Johannesburg Stock Exchange as SA
Corporate Real Estate Limited. The conversion from a trust REIT to a
corporate REIT occurred as planned on 1 July 2015.
DISTRIBUTION DECLARATION AND IMPORTANT DATES
Notice is hereby given of the declaration of distribution no.41 in respect
of the income distribution period 1 January 2015 to 30 June 2015. The
distribution amounts to 19.66 cpu. 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 16.711 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.
2,024,162,410 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, 17 September 2015
Units will trade ex-distribution Friday, 18 September 2015
Record date to participate in the distribution Friday, 25 September 2015
Payment of distribution Monday, 28 September 2015
Unit certificates may not be dematerialised or re-materialised between
Friday, 18 September and Friday, 25 September 2015, both days inclusive.
SA Corporate Real Estate 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, MA
Moloto, ES Seedat
* Executive
This report has been prepared under the supervision of AM Basson CA(SA).
B Swanepoel
Company Secretary
28 August 2015
Date: 31/08/2015 11:01:00 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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