Wrap Text
Reviewed Condensed Interim Results For The Six Months Ended 30 September 2016
Oasis Crescent Property Fund
A property fund created under the Oasis Crescent Property Trust Scheme
registered in terms of the Collective Investment Schemes Control Act
(Act 45 of 2002) having REIT status with the JSE
Share code: OAS
ISIN: ZAE000074332
(“Oasis” or “the Fund”)
Reviewed condensed interim results for the six months ended 30
September 2016
Condensed statement of comprehensive income
for the 6 months ended 30 September 2016
Reviewed Reviewed Audited
6 months 6 months 12 months
to 30 to 30 to 31
September September March
2016 2015 2016
R’000 R’000 R’000
Revenue 47 378 47 023 94 684
Rental and related income 36 282 35 494 72 703
Income from investments excluding non-
permissible income 10 388 10 908 20 540
Straight-lining of lease income 708 621 1 441
Expenses 20 202 15 656 32 967
Property expenses 16 835 13 041 27 255
Service charges 2 592 2 121 4 493
Other operating expenses 775 494 1 219
Net income from rentals and investments 27 176 31 367 61 717
Fair value adjustment to investment
properties excluding straight-lining of
lease income (708) (621) 24 994
Fair value adjustment to investment
properties - - 26 435
Straight-lining of lease income (708) (621) (1 441)
Operating profit for the period 26 468 30 746 86 711
Net non-permissible investment income (224) (194) (457)
Non-permissible investment income
received 281 207 338
Non-permissible income dispensed (505) (401) (795)
Net profit for the period 26 244 30 552 86 254
Other comprehensive income
Items that may be classified (13 085) 26 976 65 128
subsequently to profit and loss
Fair value (loss)/gain on available-
for-sale financial assets (13 085) 27 532 65 684
Realised gain on disposal of available-
for-sale financial assets - (556) (556)
Total comprehensive income for the
period 13 159 57 528 151 381
Basic earnings per unit (cents) 49.0 64.5 175.1
Additional information:
Headline earnings and distribution
income reconciliation
Basic earnings before non-permissible
income adjustment 26 468 30 746 86 711
Non-permissible investment income 281 207 338
Basic earnings after non-permissible
income adjustment 26 749 30 953 87 049
Non-permissible income dispensed (505) (401) (795)
Basic earnings 26 244 30 552 86 254
Adjusted for:
Realised gains on disposal of
available-for-sale investments - (556) (556)
Fair value adjustment to investment
properties 708 621 (24 994)
Headline earnings 26 952 30 617 60 704
Less: Fair value adjustments on
financial assets at fair value through
profit or loss (337) (1 208) (2 155)
Less: Fair value adjustments on tenant
deposits (55) (88) (161)
Less: Straight-line lease accrual (708) (621) (1 441)
Distributable income excluding non-
permissible income 25 852 28 700 56 949
Basic earnings per unit (cents) 49.0 64.5 175.1
Headline earnings and diluted headline
earnings per unit (cents) 50.3 64.6 123.2
Distribution per unit including non-
permissible income (cents) 49.2 61.4 117.2
Distribution per unit excluding non-
permissible income (cents) 48.3 60.6 115.6
Weighted average units in issue 53 572 345 47 380 608 49 253 281
Units in issue at the end of the period 54 077 452 47 849 435 51 565 907
Additional information:
Reconciliation of Distributable Income
for the 6 months ended 30 September
2016
Rental income 27 005 26 269 54 647
Rental recoveries 9 788 9 672 18 996
Lease incentives (511) (447) (940)
Rental and related income 36 282 35 494 72 703
Less: Property expenses (16 835) (13 041) (27 255)
Property operating income 19 447 22 453 45 448
Investment income excluding non-
permissible investment income 9 996 9 056 17 668
Fair value adjustment on financial
assets at fair value through profit or
loss 392 1 296 2 316
Realised gain on disposal of available-
for-sale financial assets - 556 556
Income from investments excluding non-
permissible income 10 388 10 908 20 540
Non-permissible investment income
received 281 207 338
Total investment income 10 669 11 115 20 878
Net property and investment income 30 116 33 568 66 326
Less: Fair value adjustment on
financial assets at fair value through
profit or loss (392) (1 296) (2 316)
Less: Realised gain on disposal of
available-for-sale financial assets - (556) (556)
Service charges and other operating
expenses (3 367) (2 615) (5 712)
Distributable income including non-
permissible income 26 357 29 101 57 742
Non-permissible rental income and
recoveries (224) (194) (455)
Non-permissible investment income (281) (207) (338)
Distributable income excluding non-
permissible income 25 852 28 700 56 949
Condensed statement of financial position
as at 30 September 2016
Reviewed Reviewed Audited
30 30 31
September September March
2016 2015 2016
R’000 R’000 R’000
Assets
Non-current assets 1 051 167 880 840 1 020 578
Investment properties 552 015 459 072 528 609
Property, plant and equipment 550 411 355
Straight-line lease accrual 11 832 9 442 9 763
Available-for-sale financial assets 486 770 411 915 481 851
Current assets 110 524 108 564 103 296
Trade receivables 4 624 2 777 3 089
Trade receivables from related parties 110 110 110
Other receivables 7 213 5 020 4 923
Straight-line lease accrual 1 109 1 972 2 470
Financial assets at fair value through
profit or loss 86 781 90 195 84 479
Other short-term financial assets 7 857 5 420 6 023
Cash and cash equivalents 2 830 3 070 2 202
Total assets 1 161 691 989 404 1 123 874
Unitholders’ funds and liabilities
Unitholders’ funds 1 120 699 946 579 1 083 450
Capital of the Fund 686 785 565 579 636 845
Retained income 8 639 7 227 8 245
Other reserves 425 275 373 773 438 360
Current liabilities 40 992 42 825 40 424
Trade payables 11 853 9 236 9 040
Accruals 510 206 444
Other payables 1 310 1 296 1 353
Trade payables to related parties 1 015 771 1 078
Unitholders for distribution 26 111 30 047 28 427
Non-permissible income available for
dispensation 193 1 269 82
Total unitholders’ funds and
liabilities 1 161 691 989 404 1 123 874
Supplemental information
NAV (in cents per unit) 2 072 1 978 2 101
Condensed statement of changes in unitholders’ funds
for the 6 months ended 30 September 2016
Capital
of the Other Retained
Fund reserves income Total
R’000 R’000 R’000 R’000
Balance at 1 April
2015 542 565 346 797 5 375 894 737
Net profit for the
period ended 30
September 2015 - - 30 552 30 552
Other
Comprehensive
Income
Fair value gain on
available-for-sale
financial assets - 27 532 - 27 532
Realised gain on
disposal of
available-for-sale
financial assets - (556) - (556)
Total
Comprehensive
income for the
period ended 30
September 2015 - 26 976 30 552 57 528
Issue of units 23 389 - - 23 389
Transaction costs
for issue of new
units (91) - - (91)
Distribution
received in
advance (284) - 284 -
Distribution to
unitholders - - (28 984) (28 984)
Balance at 30
September 2015 565 579 373 773 7 227 946 579
Net profit for the
period ended 31
March 2016 - - 55 702 55 702
Other
Comprehensive
Income
Fair value gain on
available-for-sale
financial assets - 38 152 - 38 152
Total
Comprehensive
Income for the
period ended 31
March 2016 - 38 152 55 702 93 854
Issue of units 29 047 - - 29 047
Units issued for
property
acquisition 42 500 - - 42 500
Transaction costs
for issue of new
units (142) - - (142)
Transfer to other
reserves - 26 435 (26 435) -
Distribution
received in
advance (138) - 138 -
Distribution to
unitholders - - (28 387) (28 387)
Balance at 31
March 2016 636 845 438 360 8 245 1 083 450
Net profit for the
period ended 30
September 2016 - - 26 244 26 244
Other
Comprehensive
Income
Fair value
(loss)/gain on
available-for-sale
financial assets - (13 085) - (13 085)
Realised gain on
disposal of
available-for-sale
financial assets - - - -
Total
Comprehensive - (13 085) 26 244 13 159
Income for the
period ended 30
September 2016
Issue of units 27 353 - - 27 353
Units issued for
property
acquisition 23 000 - - 23 000
Transaction costs
for issue of new
units (170) - - (170)
Distribution
received in
advance (243) - 243 -
Distribution to
unit holders - - (26 093) (26 093)
Balance at 30
September 2016 686 785 425 275 8 639 1 120 699
Condensed statement of cash flows
for the 6 months ended 30 September 2016
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
30 September 30 September 31 March
2016 2015 2016
R’000 R’000 R’000
Cash flows from operating
activities
Net profit for the period 26 244 30 552 86 254
Adjusted for:
Non-permissible investment
income received (281) (207) (338)
Depreciation 78 55 111
Provision for receivables
impairment 691 (754) (1 473)
Straight-line lease accrual (708) (621) (1 441)
Lease incentives 511 447 940
Realised gain on sale of
financial assets - (556) (556)
Fair value adjustment on
financial assets at fair
value through profit or loss (392) (1 296) (2 316)
Fair value adjustment on
investment property 708 621 (24 994)
Net operating cash flow
before changes in working 26 851 28 241 56 187
capital
(Increase)/decrease in
current assets
Trade receivables (2 226) 188 595
Other receivables (2 290) 1 401 1 499
Increase/(decrease) in
current liabilities
Trade payables 2 813 147 1 443
Accruals 66 (28) 210
Other payables (43) (306) (248)
Trade payables to related
parties (63) 70 377
Cash generated from 25 108 29 713 60 063
operations
Non-permissible investment
income received 281 207 338
Unitholders for distribution (1 056) (722) (1 680)
Non-permissible income
available for dispensation 111 363 (824)
Net cash inflow from
operating activities 24 444 29 561 57 897
Cash flows from investing
activities
Acquisition of available-for-
sale financial assets (18 004) (6 362) (38 148)
Acquisition of financial
assets at fair value through
profit or loss (11 965) (35 710) (49 171)
Capital expenditure on
investment properties (1 625) (4 805) (8 054)
Proceeds from disposal of
financial assets at fair
value through profit or loss 10 000 - 20 742
Proceeds from disposal of
available-for-sale financial
assets - 1 979 1 979
Acquisition of other short
term financial assets and
reclassifications (1 779) - (1 149)
Lease incentives paid - - (159)
Acquisition of property,
plant and equipment (273) - -
Net cash outflow from
investing activities
(23 646) (44 898) (73 960)
Cash flows from financing
activities
Transaction costs on issue of
new units (170) (91) (233)
Net cash outflow from
financing activities (170) (91) (233)
Net (decrease)/increase in
cash and cash equivalents 628 (15 428) (16 296)
Cash and cash equivalents
At beginning of period 2 202 18 498 18 498
At end of period 2 830 3 070 2 202
Segment information for the 6 months ended 30 September 2016
Indus- Invest- Corpo-
Retail Offices trial ments rate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental income 13 170 5 241 8 083 - - 26 494
Recoveries 6 474 1 357 1 957 - - 9 788
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 5 548 - 5 548
Permissible
investment
income- domestic - - - 4 448 - 4 448
19 644 6 598 10 040 9 996 - 46 278
Segment expense
Property
expenses 10 509 2 885 3 441 - - 16 835
Service charges - - - - 2 592 2 592
Other operating - - - 209 566 775
expenses
10 509 2 885 3 441 209 3 158 20 202
Segment result
Operating
profit/(loss) 9 135 3 713 6 599 9 787 (3 158) 26 076
Net finance
income
Non-permissible
investment
income received - - - - 281 281
NPI Dispensed (224) - - - (281) (505)
Net
profit/(loss)
before
straight-line
lease income
and fair value
change to
investment
properties 8 911 3 713 6 599 9 787 (3 158) 25 852
Realised gain on
disposal of
available-for-
sale financial
assets - - - - - -
Straight-lining
of lease income 506 (2) (204) - 708
Fair value
adjustment to
financial assets
at fair value
through profit
or loss - - - 392 - 392
Fair value
adjustment to
investment
properties (506) 2 (204) - - (708)
Net
profit/(loss)
after straight-
line lease
income and fair
value adjustment
to investment
properties 8 911 3 713 6 599 10 179 (3 158) 26 244
Segment assets
Investment
properties 229 580 119 850 202 585 - - 552 015
Property, plant
and equipment 531 19 - - - 550
Straight-line
lease accrual 5 791 - 6 041 - - 11 832
non-current
Straight line
lease accrual
current 710 4 395 - - 1 109
Available-for-
sale financial
assets - - - 486 770 - 486 770
Other short term
financial assets 3 101 224 4 532 - - 7 857
Trade
receivables 2 307 1 319 998 - - 4 624
Other
receivables 665 80 2 642 3 634 202 7 213
Trade
receivables from
related parties - - - - 110 110
Financial assets
at fair value
through profit
or loss - - - 86 781 - 86 781
Cash and cash
equivalents - - - 2 830 - 2 830
242 675 121 496 217 193 580 015 312 1 161 691
Segment
liabilities
Trade payables 5 143 1 088 5 622 - - 11 853
Accruals 11 4 32 - 463 510
Other payables 609 31 120 - 550 1 310
Trade payables
to related
parties 268 7 92 41 607 1 015
Unitholders for - - - - 26 111 26 111
distribution
Non-permissible - - - - 193 193
income available
for dispensation
6 031 1 130 5 866 41 27 924 40 992
Net segment
current assets/
(liabilities) 742 497 2 701 93 204 (27 612) 69 532
Capital
expenditure 1 809 67 22 - - 1 898
Segment information for the 6 months ended 30 September 2015
Indus- Invest- Corpo-
Retail Offices trial ments rate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental income 10 088 4 958 10 776 - - 25 822
Recoveries 6 117 1 687 1 868 - - 9 672
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 4 803 - 4 803
Permissible
investment
income- domestic - - - 4 253 - 4 253
16 205 6 645 12 644 9 056 - 44 550
Segment expense
Property
expenses 9 091 1 994 1 956 - - 13 041
Service charges - - - - 2 121 2 121
Other operating
expenses - - - - 494 494
- 9 091 1 994 1 956 - 2 615 15 656
Segment result
Operating
profit/(loss) 7 114 4 651 10 688 9 056 (2 615) 28 894
Net finance
income
Non-permissible
investment
income received - - - - 207 207
NPI Dispensed (194) - - - (207) (401)
Net
profit/(loss)
before straight-
line lease
income and fair
value adjustment
to investment
properties 6 920 4 651 10 688 9 056 (2 615) 28 700
Realised gain on
disposal of
available-for-
sale financial
assets - - - 556 - 556
Straight-lining
of lease income 739 - (118) - - 621
Fair value
adjustment to
financial assets
at fair value
through profit
or loss - - - 1296 - 1296
Fair value
adjustment to
investment
properties (739) - 118 - - (621)
Net
profit/(loss)
after straight-
line lease
income and fair
value adjustment
to investment
properties
6 920 4 651 10 688 10 908 (2 615) 30 552
Segment assets
Investment
properties 186 503 97 128 175 441 - - 459 072
Property, plant
and equipment 373 38 - - - 411
Straight-line
lease accrual
non-current 4 422 - 5 020 - - 9 442
Straight line
lease accrual
current 423 - 1 549 - - 1 972
Available-for-
sale financial
assets - - - 411 915 - 411 915
Other short term
financial assets 2 677 - 2 743 - - 5 420
Trade
receivables 1 382 675 720 - - 2 777
Other
receivables 325 - 1 764 2 243 688 5 020
Trade
receivables from
related parties - - - - 110 110
Financial assets
at fair value
through profit
or loss - - - 90 195 - 90 195
Cash and cash
equivalents - - - 3 070 - 3 070
196 105 97 841 187 237 507 423 798 989 404
Segment
liabilities
Trade payables 4 603 794 3 839 - - 9 236
Accruals 16 3 9 - 178 206
Other payables 711 - 218 - 367 1 296
Trade payables
to related
parties 154 1 59 - 557 771
Unitholders for
distribution - - - - 30 047 30 047
Non-permissible
income available
for dispensation - - - - 1 269 1 269
5 484 798 4 125 - 32 418 42 825
Net segment
current assets/
(liabilities) (677) (123) 2 651 95 508 (31 620) 65 739
Capital
expenditure 5 765 - 532 - - 6 297
Segment information for the 6 months ended 31 March 2016
Indus- Invest- Corpo-
Retail Offices trial ments rate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental income 11 465 5 154 11 266 - - 27 885
Recoveries 5 755 1 420 2 149 - - 9 324
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 6 086 - 6 086
Permissible
investment
income- domestic - - - 2 526 - 2 526
17 220 6 574 13 415 8 612 - 45 821
Segment expense
Property
expenses 9 235 1 965 3 014 - - 14 214
Service charges - - - - 2 372 2 372
Other operating - - - 135 590 725
expenses
9 235 1 965 3 014 135 (2 962) 17 311
Segment result
Operating
profit/(loss) 7 985 4 609 10 401 8 477 (2 962) 28 510
Net finance
income
Non-permissible
investment
income received - - - - 131 131
NPI Dispensed (263) - - - (131) (394)
Net
profit/(loss) 7 722 4 609 10 401 8 477 (2 962) 28 247
before straight-
line lease
income and fair
value adjustment
to investment
properties
Straight-lining
of lease income 1 150 6 (336) - - 820
Fair value
adjustment to
financial assets
at fair value
through profit
or loss - - - 1 020 - 1 020
Fair value
adjustment to
investment
properties 3 192 11 808 10 615 - - 25 615
Net
profit/(loss)
after straight-
line lease
income and fair
value adjustment
to investment
properties 12 064 16 423 20 680 9 497 (2 962) 55 702
Segment assets
Investment
properties 207 680 117 971 202 957 - - 528 609
Property, plant
and equipment 327 29 - - - 355
Straight-line
lease accrual
non-current 5 503 - 4 260 - - 9 763
Straight line
lease accrual
current 492 6 1 972 - - 2 470
Available-for-
sale financial
assets - - - 481 851 - 481 851
Other short term
financial assets 2 901 209 2 913 - - 6 023
Trade
receivables 1 972 345 773 - 3 089
Other
receivables 401 - 1 559 2 324 639 4 923
Trade
receivables from
related parties - - - - 110 110
Financial assets
at fair value
through profit
or loss - - - 84 479 - 84 479
Cash and cash
equivalents - - - 2 202 - 2 202
219 275 118 560 214 434 570 856 749 1 123 874
Segment
liabilities
Trade payables 4 819 439 3 782 - - 9 040
Accruals 21 7 33 - 383 444
Other payables 584 - 251 - 518 1 353
Trade payables
to related
parties 95 1 73 38 870 1 078
Unitholders for - - - - 28 427 28 427
distribution
Non-permissible - - - - 82 82
income available
for dispensation
5 519 447 4 139 38 30 281 40 424
Net segment
current assets/
(liabilities) 246 113 3 078 88 967 (29 532) 62 872
Capital
expenditure 1 680 37 39 - - 1 757
Basis of preparation and accounting policies
The condensed interim financial statements of Oasis Crescent Property
Fund (“the Fund” or “OCPF”) has been prepared in accordance with
International Financial Reporting Standard (IFRS), (IAS) 34 Interim
Financial Reporting, JSE Listings Requirements, the requirements of
the Collective Investment Schemes Control Act of 2002, the SAICA
Financial Reporting Guides, as issued by the Accounting Practices
Committee, and the Financial Reporting Pronouncements, as issued by
the Financial Reporting Standards Council. The financial statements
are prepared on the historical cost basis as modified by the
revaluation of investment properties, financial assets at fair value
through profit or loss and available-for-sale financial assets. The
accounting policies and methods of computation applied in this
interim report are consistent with the policies as set out in the
most recent annual financial statements, which should be read in
conjunction with this report, except as set out below. The Fund’s
external auditor, PricewaterhouseCoopers Inc., has reviewed the
financial information set out in this report. Their unqualified
review report is available for inspection at the Fund’s registered
office. The operational results of the Fund are not affected by
seasonal or cyclical fluctuations.
These condensed reviewed results were compiled by Michael Swingler
CA(SA).
Fair value estimation of investments
Financial instruments and other assets carried at fair value are
valued in terms of IFRS 13.
The fair value of financial instruments traded in active markets
(such as available-for-sale securities) is based on quoted market
prices at the end of the reporting period.
Specific valuation techniques used to determine fair value include:
• Level 1: Quoted prices (unadjusted) in active markets for identical
assets or liabilities
• Level 2: Inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly (as
prices) or indirectly (derived prices)
• Level 3: Inputs for the asset or liability that are not based on
observable market data (unobservable inputs)
The Fund transfers assets between levels in the fair value hierarchy
on the date that there is a change in the circumstances that give
rise to the transfer.
The information below analyses financial assets and financial
liabilities, which are carried at fair value, by level of hierarchy
as required by IFRS 7 and IFRS 13.
The following table presents the Fund’s assets that are measured at
fair value at 30 September 2016:
Assets Level 1 Level 2 Level 3 Total
R ’000 R ’000 R ’000 R ’000
Available-for-sale financial
assets
Investment in Oasis Crescent
Global Property Equity Fund - 411 363 - 411 363
Investment in listed 75 407 - - 75 407
property funds
Financial assets at fair value through profit or loss
Investment in Oasis Crescent
Income Fund - 86 781 - 86 781
Other short-term financial
assets - 7 857 - 7 857
Investment property
Investment property - - 552 015 552 015
The following table presents the Fund’s assets that are measured at fair
value at 30 September 2015:
Assets Level 1 Level 2 Level 3 Total
R ’000 R ’000 R ’000 R ’000
Available-for-sale financial
assets
Investment in Oasis Crescent
Global Property Equity Fund - 377 816 - 377 816
Investment in listed
property funds 34 099 - - 34 099
Financial assets at fair value through profit or loss
Investment in Oasis Crescent
Income Fund - 90 195 - 90 195
Other short-term financial
assets excluding money market
funds - 5 420 - 5 420
Investment property
Investment property - - 459 072 459 072
The following table presents the Fund’s financial assets that are measured
at fair value at 31 March 2016:
Assets Level 1 Level 2 Level 3 Total
R'000 R'000 R'000 R'000
Available-for-sale financial
assets
Investment in Oasis Crescent
Global Property Equity Fund - 420 545 - 420 545
Investment in listed property
funds 61 306 - - 61 306
Financial assets at fair value
through profit or loss
Investment in Oasis Crescent
Income Fund - 84 479 - 84 479
Other short-term financial
assets - 6 023 - 6 023
Investment property
Investment property - - 528 609 528 609
The carrying value of financial liabilities approximates their fair value
due to the short term nature of the instruments.
The fair value of financial instruments traded in active markets is based
on quoted market prices at the statements of financial position date. A
market is regarded as active if quoted prices are readily and regularly
available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and
regularly occurring market transactions on an arm's length basis. These
instruments are included in level 1.
The instruments included in level 2 comprises of Irish stock exchange
property equity investments classified as available-for-sale and
investments in Shari'ah compliant instruments classified as financial
assets at fair value through profit or loss. The fair value of financial
instruments that are not traded in an active market is determined by using
valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required
to fair value an instrument are observable, the instrument is included in
level 2. If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments
include:
Available-for-sale financial assets
Oasis Crescent Global Property Equity Fund:
The fair value of investments in the Oasis Crescent Global Property Equity
Fund is determined using the closing Net Asset Value (NAV) price published
by Oasis Global Management Company (Ireland), the management company of
the fund, and listed on the Irish Stock Exchange. The shares are not
actively traded on the Irish Stock Exchange and are therefore not included
in Level 1.
Investment in listed property funds
The fair value of these investments is determined using the closing price
as at statement of financial position date. These shares are listed and
traded on the JSE Stock Exchange and are therefore classified as Level 1.
Financial assets at fair value through profit or loss
Oasis Crescent Income Fund
The fair value of investments in Oasis Crescent Income Fund is determined
using the closing Net Asset Value (NAV) price published by Oasis Crescent
Management Company Limited, the management company of the fund. These
investments are not actively traded on an exchange and are therefore not
classified as Level 1.
Investment property
Reviewed Reviewed Audited
6 months 6 months 31
to 30 to 30 March
September September 2016
2016 2015
R’000 R’000 R’000
Balance as at beginning of the
period 528 609 453 843 453 843
Acquisitions during the period 23 000 - 42 500
Fair value adjustment on
investment properties excluding
straight-lining of lease income (708) (621) 24 994
Movement in lease incentives (511) (447) (782)
Additions to investment
properties 1 625 6 297 8 054
Balance at the end of the period 552 015 459 072 528 609
The valuation of investment properties include comparable bulk sales,
discounted cash flow and net income capitalisation, using contracted
rental income and other cash flows. Capitalisation rates used in the
valuations are the most recent rates published by the South African
Property Owners Association (SAPOA). The principal assumptions underlying
estimation of fair value are those related to the receipt of contractual
rentals, expected future market rentals, void levels ranging from 0% to
5%, maintenance requirements and appropriate discount rates. These
valuations are regularly compared to actual market yield data, actual
transactions by the Fund and those reported by the market. Valuations were
carried out as at 31 March 2016 by Mills Fitchet Magnus Penny, an
independent, professional valuer registered without restriction in terms
of the Property Valuers Act No. 47 of 2000.
The valuation of investment properties requires judgement in the
determination of future cash flows and an appropriate capitalisation rate
which varies between 7.50% and 10.25% (2015: 6.75% and 13%). Changes in
the capitalisation rate attributable to changes in market conditions can
have a significant impact on property valuations. The valuation of
investment properties may also be influenced by changes in vacancy rates.
There have been no significant transfers between level 1, 2 or 3 during
the period under review, nor were there any significant changes to the
valuation techniques and inputs used to determine fair values.
Related party transactions and balances
Identity of the related parties with whom material transactions have
occurred
Oasis Crescent Property Fund Managers Ltd. (“the Manager”) is the
management company of the Fund in terms of the Collective Investment
Schemes Control Act.
Oasis Group Holdings (Pty) Ltd., the parent of Oasis Crescent Property
Fund Managers Limited, is a tenant at The Ridge@Shallcross and 24 Milner
Road.
As disclosed in the prospectus of Oasis Crescent Global Property
Equity Fund, a management fee is charged for investing in the Oasis
Crescent Global Property Equity Fund by Oasis Global Management
Company (Ireland) Limited, the manager of the fund.
As disclosed in the prospectus of Oasis Crescent Income Fund and
Oasis Crescent International Property Equity Feeder Fund, a
management fee is charged for investing in the Oasis Crescent Income
Fund by Oasis Crescent Management Company Ltd., the manager of the
fund.
Abli Property Developers (Pty) Ltd. renders property development
consulting services to the Fund on capital development projects.
Oasis Asset Management Limited renders investment management services
to the Fund on Available-for-sale financial assets.
There are common directors to the Manager, Oasis Group Holdings (Pty)
Ltd., Oasis Global Management Company (Ireland) Limited, Oasis
Crescent Management Company Ltd. and Abli Property Developers (Pty)
Ltd. Transactions with related parties are executed on terms no less
favorable than those arranged with third parties.
Type of related party transactions
The Fund pays a service charge and a property management fee on a monthly
basis to the Manager.
The Fund pays a consulting fee to Abli Property Developers (Pty) Ltd. for
consulting services rendered in respect of capital development projects.
The Fund pays an investment management fee to Oasis Asset Management Ltd
for investment management services rendered in respect of investment in
listed property funds.
The Fund issued 1.210 million units to Oasis Crescent Property Company
(Pty) Ltd. for the acquisition of 364 Victoria Road at an issue price of
1 901.3773 cents per unit.
Related party transactions
6 months to 6 months to 12 months
30 September 30 September to 31 March
2016 2015 2016
Related party transactions R’000 R’000 R’000
Service charge paid to Oasis
Crescent Property Fund Managers
Ltd. 2 592 2 121 4 493
Property management fees paid to
Oasis Crescent Property Fund
Managers Ltd 632 600 1 251
Rental and related income paid by
Oasis Group Holdings (Pty) Ltd. at
the Ridge@Shallcross 206 201 467
Rental and related income paid by
Oasis Group Holdings (Pty) Ltd. at
24 Milner Road 409 - 275
Consulting fees paid to Abli
Property Developers(Pty)Ltd. for
consulting services on capital
projects 32 96 186
Investment management fees paid to
Oasis Asset Management Ltd 209 - 135
Related party balances
6 months to 6 months to As at
30 September 30 September 31 March
2016 2015 2016
Related party balance R’000 R’000 R’000
Trade receivables from Oasis Group
Holdings (Pty) Ltd. 110 110 110
Trade payables to Oasis Crescent
Property Fund Managers Ltd. (839) (680) (873)
Trade payables to Oasis Group
Holding (Pty) Ltd. (103) (43) (154)
Trade payables to Oasis Asset
Management Ltd. (40) - (38)
Trade payables to Abli Property
Developers(Pty) Ltd. (33) (49) (12)
Manager’s report
INTRODUCTION
The Oasis Crescent Property Fund is a well-diversified REIT invested in
South African direct and listed property investments and high quality global
listed REITS. The Fund has a strong balance sheet with no debt and
substantial reserves which provide flexibility to take advantage of
opportunities.
The objective of the Manager is to protect and grow the real wealth of
investors by providing sustainable growth in Net Asset Value and delivering
a consistent income stream that has potential to grow. Our focused approach
has delivered significant real wealth for investors with an annualised total
unitholder return of 13.5% relative to annualised inflation of 6.1% since
inception, outperforming inflation by an average of 7.4% per annum. Your
Fund’s annualised total intrinsic value return is 13.8% per annum since
inception. The Rand has been volatile and during HY2017 the NAV and
intrinsic value return was impacted by a stronger Rand. Post the interim
period end, this Rand volatility has continued and the weakening of the Rand
has resulted in a recovery of the NAV.
Figures in %
Cumulative returns Since HY2017 HY2016 FY2016 FY2015 FY2014 FY2013
Inception
Unitholder return 295.9 295.9 n/a 286.3 227.3 165.3 125.9
Intrinsic value 306.5 306.5 n/a 302.8 248.7 194.6 161.0
return
Inflation 89.4 89.4 n/a 83.7 71.7 65.2 56.0
Annual Returns Since HY2017 HY2016 FY2016 FY2015 FY2014 FY2013
Inception
Unitholder return 13.5 2.5 8.0 18.0 23.4 17.4 10.7
Intrinsic value 13.8 0.9 6.2 15.5 18.4 12.9 16.4
return
Inflation 6.1 3.1 4.1 7.0 3.9 5.9 5.9
Market Price 1 950 1 830 1 950 1 750 1 500 1 350
NAV 2 072 1 978 2 101 1 919 1 706 1 587
MARKET OVERVIEW
The level of new supply remains low in most of the global developed markets
due to high barriers to entry resulting from the scarcity of land, extensive
planning requirements and a lack of funding for speculative property
development. US and EU REITs have also been more prudent, debt levels are
well below their 2008 peaks and average debt maturity has increased.
In South Africa, Super Regional and Community shopping centres continue
delivering trading density growth above rental growth but medium sized
centres appear to be losing market share and their rent to sales ratios have
started increasing. The demand for office space is linked to confidence and
the employment outlook, which is going to take time to recover and the new
supply of modern and efficient properties is creating an increasing vacancy
and rental risk. Supply chain efficiency and online sales are positive
drivers of demand for modern warehousing and logistics space while the
demand for industrial manufacturing space is limited.
PORTFOLIO OVERVIEW
HY2017 HY2016 FY2016
R'mil % R'mil % R'mil %
Direct Property 566 49 470 48 541 48
Global Investments 411 35 378 38 421 37
Cash and local
investments 185 16 141 14 162 15
Total Assets 1 162 100 989 100 1 124 100
The Fund has focused on building a portfolio with a combination of high
quality direct property investments and global listed REITS with properties
located in the major global cities, which adds geographic and currency
diversification. The direct property portfolio includes exposure to the
retail, industrial and office sectors with a high exposure to the Western
Cape. In order to attract world class tenants, there is continuous
investment in and maintenance of the direct properties. The increase in the
value of direct property during HY2017 was due to the acquisition of a
property in the Western Cape which has location advantages and development
potential. The global investments consist of the Oasis Crescent Global
Property Equity Fund which is well positioned with a focus on REITS with
high quality assets and balance sheets. The global investments increased by
10% in US$ value year-on-year but this was off-set by the stronger Rand.
Post the interim period end the weakening of the Rand has resulted in a
recovery of the value of global investments. The Cash and other listed SA
Investments provide flexibility for the Fund to pursue growth opportunities.
REVIEW OF RESULTS AND OPERATIONS
The Fund remains focused on broadening and continuously improving the SA
direct property portfolio by taking advantage of opportunities when leases
expire to enhance properties and improve the tenant mix. In order to
implement these asset enhancements there will be a period of strategic
vacancy which will have a dilutionary impact over the short term but this
action will enhance the quality and sustainability of the Fund’s income over
the longer term.
We are pleased to announce that the Fund will initiate an investment in a
new modern logistics facility in the Western Cape which is the start of a
strategic partnership with long term potential, where the Fund will benefit
from the development capacity and pipeline of the larger Oasis Group. In
order to provide the flexibility and liquidity for these investments, the
Fund has been building up a balance sheet of compliant income instruments.
In the short term there will be a timing difference between placing these
investments and receiving the profit rates.
Key points as at 30 September 2016
* Unitholder return of 13.5% per annum since inception compared to
inflation of 6.1% per annum
* Net Asset Value per unit of 2 072 cents (HY2016: 1 978 cents)
* The US$ value of global investments increased by 10% year-on-year
* Strong balance sheet with no debt
* Initiating a strategic partnership to invest in new modern logistics
facilities in the Western Cape
HY2017 HY2016 HY2015 FY2016
Distribution per unit including non-
permissible income (cents) 49.2 61.4 50.2 117.2
Distribution per unit excluding non-
permissible income (cents) 48.3 60.6 49.0 115.6
Property portfolio valuation (R’mil) 566 470 441 541
Investment in Offshore Listed
Properties(R’mil) 411 378 300 421
Investment in Local Listed Properties
and other current assets (R’mil) 88 42 43 76
Cash and cash equivalents (R’mil) 97 99 55 86
Net asset value per unit (cents) 2 072 1 978 1 774 2 101
Listed market price at year end
(cents) 1 950 1 830 1 600 1 950
Results Overview
HY
HY2017 HY2016 FY2016 2017/2016
(R'000) (R'000) (R'000) %
Direct property net income 19 447 22 453 44 990 -13
Global Investment Income 5 548 4 803 10 889 16
Cash and Local Investment
Income 4 239 4 460 6 646 -5
Shared expense (3 382) (3 016) (5 576) 12
Distributable Income excl
NPI 25 852 28 700 56 949 -10
As indicated above, the asset enhancement strategy has resulted in higher
vacancy and a reduction in the direct property net income but this action
will enhance the quality and sustainability of the Fund’s income over the
longer term. The Global investment income benefitted from the growth of
distributions from the Oasis Crescent Global Property Equity Fund and the
weaker Rand during HY2017 relative to HY2016. The Fund has been building up
a balance sheet of compliant income instruments to fund future investment
and due to the timing difference between placing these investments and
receiving the profit rates, the cash and local investment income was
slightly lower. The higher service charge expense is due to the increase in
the market capitalisation of the Fund. The weighted average units in issue
increased due to a high proportion of unitholders electing to reinvest their
dividends in additional units as well as the property acquired through the
issue of units.
Direct Property Portfolio Characteristics
Geographical Profile
Rentable Revenue Revenue Revenue
Area HY2017 HY2016 FY2016
Area
(m²) % (R'mil) % (R'mil) % (R'mil) %
Western Cape 81 796 83 20.8 56 21.4 60 44.9 61
KwaZulu-Natal 16 407 17 16.0 44 14.5 40 28.7 39
Total - Direct
Property (excl
straight-lining) 98 203 100 36.8 100 35.9 100 73.6 100
Note: Revenue includes property rental and recoveries and excludes lease
incentives
Segmental Profile
HY2017 HY2016 FY2016
Average Average Average
Rentable Average rental Average rental Average rental
area rental escalation rental escalation rental escalation
Segment (m²) per m² per m² (%) per m² per m² (%) per m² per m² (%)
Retail 22 987 112 8 116 8 114 8
Office 7 629 112 8 125 9 113 8
Industrial 67 587 30 8 28 8 28 8
Total 98 203
The like for like change in average retail rental per m² increased by 7%
year on year. The total year on year decrease is due to the change in mix of
the portfolio due to the property acquisitions. The decrease in average
office rental per m² is as a result of rental reversion to market as well as
the change in mix of the portfolio due to the property acquisitions. Average
industrial rental per m² increased in line with annual rental escalations.
Vacancy Profile
% of total
rentable area HY2017 HY2016 FY2016
Retail 1.8 1.4 0.8
Office 0.0 0.0 0.0
Industrial 14.6 0.0 0.0
16.4 1.4 0.8
The industrial vacancy has increased due to the strategic vacancy to take
advantage of opportunities when leases expire to enhance properties and
improve the tenant mix.
Lease expiry profile
HY2017 HY2016 FY2016
Rental Revenue Rental Revenue Rental Revenue
Area % % Area % % Area % %
- Within 1 year 48 49 40 46 57 52
- Within 2 year 8 12 21 16 4 6
- Within 3 year 6 7 5 8 5 9
- Within 4 year 2 3 1 3 1 2
- Within 5 year
or more years 36 29 33 27 33 31
100 100 100 100 100 100
Tenant Profile
HY2017 HY2016 FY2016
(%) (%) (%)
A - Large nationals, large listed, large
franchisees, multi-nationals and
government 83 71 67
B - Nationals, listed, franchisees and
medium to large professional firms 3 17 17
C - Other 14 12 16
TOTAL 100 100 100
Tenants are classified as large or major (“A” grade) or medium to large (“B”
grade) based on their financial soundness, profile and global or national
footprint.
Investment Portfolio Characteristics
The investment in high quality global listed REITS provide geographic and
sector diversification. REITs with a high exposure to the major global
cities, positive secular demand drivers, enhancing refurbishments and
superior balance sheets are expected to outperform as bond yields normalise
and the Oasis Crescent Global Property Equity Fund is well positioned to
benefit. Oasis Crescent Global Property Equity Fund also displays very
attractive valuation characteristics with an average cash flow yield of 6.2%
and dividend yield of 4.8% which continue to offer value relative to the
average bond yield and inflation of 1.4% and 1.0% respectively.
OUTLOOK
The Fund remains focused on addressing the lease expiry profile through
renewing leases of high quality tenants and improving the tenant mix where
necessary. Expiries also provide opportunities to strategically refurbish
properties and enhance tenant mix. The accumulated cash and liquid reserves
provide the flexibility to take advantage of opportunities. Post the interim
period end, the Fund will initiate an investment in a new modern logistics
facility in the Western Cape which is the start of a strategic partnership
with long term potential. The global investments will continue to provide
diversification benefits to investors and will remain a unique
characteristic of the Fund. Management is confident in the strategy of the
Fund.
ADDITIONAL INFORMATION
Property management
Property management is outsourced to the Manager and external service
providers. The amount paid to the Manager was R0.632 million (HY2016: R0.600
million)
Service charge
The service charge is equal to 0.5% per annum of the Fund’s market
capitalization and borrowing facilities based on the average daily closing
prices of the units. The amount paid to the Manager was R2.592 million
(HY2016: R2.121 million)
Units in issue
As at 30 September 2016 the number of units in issue was 54 077 452 (HY2016:
47 849 435)
Shareholding in The Manager
OCPFM is 100% owned by Oasis Group Holdings (Pty) Ltd.
Changes to the Board
There were no changes to the board of directors during the 6 month period
ended 30 September 2016.
There has been no change in directors’ interests between the end of the
interim period and the date of approval of the Interim Report.
Distribution declaration and important dates
Notice is hereby given that a distribution after non-permissible income
in respect of the six months ended 30 September 2016 of 4 825.64892
cents for every 100 units held, has been declared payable to
unitholders recorded in the register of the Fund at close of business
on Friday, 2 December 2016. Unitholders may elect to receive the
distribution in cash or to reinvest the distribution at a rate of
2.32898 units at 2 072 cents per units (in aggregate) for every 100
units so held.
Unitholders should take note of the corporate action timetable as set out
below in respect of the above distribution and the election in terms
thereof:
Declaration announcement on SENS of Wednesday,
distribution and right of election 26 October
to purchase new units or receive a
cash payment
Finalisation announcement on SENS Monday, 14
in respect of distribution and November
right of election to purchase new
units or receive a cash payment
Circular and form of election Monday, 14
posted to unitholders November
Last day to trade in order to be Tuesday, 29
eligible for the distribution November
Trading commences ex-entitlement to Wednesday,
the distribution 30 November
Listing of maximum possible number Friday, 2
of units that may be purchased, at December
commencement of trade on
Closing date for the election of Friday, 2
cash distribution at 12:00 pm December
Record date Friday, 2
December
Cash distribution cheques posted Monday, 5
and CSDP/broker accounts updated December
with cash
Announcement of the results of the Monday, 5
distribution on SENS December
Unit certificates posted and Wednesday, 7
CSDP/broker accounts updated with December
units
Adjustment of number of new units Friday, 9
listed on or about December
Note:
1. Unitholders reinvesting their distribution in new units are alerted to
the fact that the new units will be listed 3 business days after the
last day to trade and that these new units can only be traded 3 business
days after the last day to trade, due to the fact that settlement of the
units will be 3 business days after the record date, which differs from
the conventional one business day after the record date settlement
process.
2. Units may not be dematerialised or rematerialised between Wednesday, 30
November 2016 and Friday, 2 December 2016, both days inclusive.
3. The above dates and times are subject to change. Any changes will be
announced on SENS.
4. All times quoted in this circular are South African times.
5. Dematerialised unitholders should provide their CSDP or broker with
their election instructions by the cut-off time stipulated in terms of
their custody agreement with such CSDP or broker.
6. If no election is made, the distribution accrued to the unitholder will
be used to purchase additional units.
Tax implications of the distribution
In respect of the distribution, the manager hereby advises unitholders,
who will receive the distribution, that for taxation purposes, OCPF is
a REIT as defined in the Income Tax Act as from 1 April 2013 and,
accordingly, the tax implications of the distribution have changed as
from that date. The distribution will not be exempt from income tax in
terms of section 10(1)(k) of the Income Tax Act.
For South African tax residents, the distribution will be exempt from
dividends tax in terms of section 64F(l) of the Income Tax Act,
provided that you, as unitholder, provide the transfer secretary or
your nominee, custodian or CSDP with confirmation of your tax residence
status in the prescribed form. If you do not provide the required
residence status, they will have no choice but to withhold dividends
tax at a rate of 15%.
For non-resident unitholders, for South African tax purposes, the
distribution received by a non-resident unitholder 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 tax residence
of the unitholder. Non-resident unitholders that believe that a reduced
rate of tax applies in respect of their applicable DTA should contact
the transfer secretaries or their nominee, custodian or CSDP for the
prescribed form to record the reduced rate of tax.
Where dividends tax is withheld at 15%
- the reinvestment ratio for non-resident unitholders will be
1.97963 units at 2 072 cents per unit, for every 100 (one hundred)
units held on the record date;
- should such unitholders elect to receive the distribution in cash,
they will receive 4 101.80158 cents per 100 units held on the record
date.
Kindly contact the transfer secretaries, or your nominee, custodian or
CSDP for a copy of the prescribed declaration form.
The Income Tax Act sections applicable to the distributions made are as
follows:
• Property income distribution from a REIT – section 10(1)(k) and
section 64F(l)
Both resident and non-resident unitholders are encouraged to consult
their professional tax advisors with regard to their individual tax
liability in this regard.
Units in issue at the date of declaration of the distribution: 54 077
452
Income tax reference number: 3354212148
A circular will be posted to unitholders on or about 14 November 2016
in respect of the income and unit distribution.
By order of the Board
Oasis Crescent Property Fund Managers Limited
Cape Town
26 October 2016
Designated Advisor
PSG Capital Proprietary Limited
Date: 26/10/2016 05:15:00 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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