Wrap Text
Final Preliminary Audited Results and Distribution Declaration
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”)
FINAL PRELIMINARY AUDITED RESULTS AND DISTRIBUTION DECLARATION
The directors of Oasis Crescent Property Fund Managers Limited (“OCPFM” or
“the Manager”), the management company of the Fund, present the
preliminary audited results of the Fund for the year ended 31 March 2017
as follows:
Statement of financial position as at 31 March 2017
Audited Audited
2017 2016
R’000 R’000
Assets
Non-current assets 1 044 272 1 020 578
Investment properties 571 874 528 609
Property, plant and equipment 435 355
Straight-line lease accrual 13 066 9 763
Available-for-sale financial assets 458 897 481 851
Current assets 159 148 103 296
Trade receivables 4 029 3 089
Other receivables 5 489 4 923
Trade receivables from related parties - 110
Straight-line lease accrual 810 2 470
Financial assets at fair value
through profit or loss 134 505 84 479
Other short-term financial assets 8 364 6 023
Cash and cash equivalents 5 951 2 202
Total assets 1 203 420 1 123 874
Unitholders’ funds and liabilities
Unitholders’ funds 1 158 412 1 083 450
Capital of the Fund 736 401 636 845
Retained income 9 988 8 245
Other reserves 412 023 438 360
Current liabilities 45 008 40 424
Trade payables 11 240 9 040
Accruals 452 444
Other payables 2 295 1 353
Trade payables to related parties 1 436 1 078
Unitholders for distribution 29 434 28 427
Non-permissible income available for
dispensation 151 82
Total unitholders’ funds and
liabilities 1 203 420 1 123 874
Supplemental information
Net asset value (“NAV”) (per unit) 2 050 cents 2 101 cents
Statement of comprehensive income for the year ended 31 March 2017
Audited Audited
2017 2016
R’000 R’000
Income 98 733 94 684
Rental and related income 75 777 72 703
Income from investments excluding non-
permissible income 21 313 20 540
Straight-lining of lease income 1 643 1 441
Expenses 40 203 32 967
Property expenses 33 301 27 255
Service charges 5 386 4 493
Other operating expenses 1 516 1 219
Net income from rentals and
investments 58 530 61 717
Fair value adjustment to investment
properties excluding straight-
lining of lease income 20 304 24 994
Fair value adjustment to investment
properties 21 947 26 435
Straight-lining of lease income (1 643) (1 441)
Operating profit for the year 78 834 86 711
Net non-permissible investment income 512 338
Operating profit including non-permissible
income 79 346 87 049
Non-permissible income dispensed (922) (795)
Net profit for the year 78 424 86 254
Other comprehensive income
Items that may subsequently be
reclassified to profit or loss (48 284) 65 128
Fair value (loss)/gain on available-for-
sale financial assets (48 284) 65 684
Realised fair value gain reclassified to
profit or loss - (556)
Total comprehensive income for
the year 30 140 151 382
Basic and diluted earnings per
unit (cents) 143.7 175.1
Additional information:
Headline earnings and distribution income
reconciliation
Basic earnings before non-permissible
income adjustment 78 834 86 711
Non-permissible investment income 512 338
Basic Earnings after non-permissible
income adjustment 79 346 87 049
Non-permissible income dispensed (922) (795)
Basic Earnings 78 424 86 254
Adjusted for:
Realised gain on disposal of available-
for-sale financial assets - (556)
Fair value adjustment to investment
properties (20 304) (24 994)
Headline earnings 58 120 60 704
Less: Fair value adjustments on financial
assets at fair value through profit or
loss (1 476) (2 155)
Less: Fair value adjustments on tenant
deposits (268) (161)
Less: Straight-line lease accrual (1 643) (1 441)
Distribution income excluding non-
permissible income 54 733 56 948
Distribution received in advance 782 422
Income distributed 55 515 57 370
Basic earnings and diluted earnings per
unit (cents) 143.7 175.1
Headline earnings and diluted headline
earnings per unit (cents) 106.5 123.2
Distribution per unit including non-
permissible income (cents) 102.0 117.2
Distribution per unit excluding non-
permissible income (cents) 100.3 115.6
Weighted average units in issue 54 559 623 49 253 281
Units in issue at the end of the year 56 509 343 51 565 907
Statement of changes in unitholders’ funds for the year ended 31 March
2017
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 year
ended 31 March 2016 - - 86 254 86 254
Other comprehensive income
Fair value gain on
available-for-sale
financial assets - 65 684 - 65 684
Realised gain on disposal
of available for sale
financial assets - (556) - (556)
Total comprehensive
income for the year
ended 31 March 2016 - 65 128 86 254 151 382
Issue of units 52 435 - - 52 435
Units issued for property
acquisitions 42 500 - - 42 500
Transaction costs for issue
of new units (233) - - (233)
Transfer to non-
distributable reserve - 26 435 (26 435) -
Distribution received
in advance (422) - 422 -
Distribution to
unitholders - - (57 371) (57 371)
Balance at 31 March 2016 636 845 438 360 8 245 1 083 450
Net profit for the year
ended 31 March 2017 - - 78 424 78 424
Other comprehensive
loss
Fair value loss on
available-for-sale
financial assets - (48 284) - (48 284)
Total comprehensive
income for the year
ended 31 March 2017 - (48 284) 78 424 30 140
Issue of units 77 742 - - 77 742
Units issued for property
acquisitions 23 000 - - 23 000
Transaction costs for
issue of new units (404) - - (404)
Transfer to non-
distributable reserve - 21 947 (21 947) -
Distribution received
in advance (782) - 782 -
Distribution to
unitholders - - (55 516) (55 516)
Balance at 31 March 2017 736 401 412 023 9 988 1 158 412
Distributions declared for the year amounted to 100.3 cents (2016: 115.6
cents) per unit.
Statement of cash flows for the year ended 31 March 2017
Audited Audited
2017 2016
R’000 R’000
Cash flows from operating activities
Net profit for the period 78 424 86 254
Adjusted for:
Non-permissible investment income received (512) (338)
Depreciation 180 111
Provision for receivables impairment 277 (1 473)
Straight-line lease accrual (1 643) (1 441)
Lease incentives 1 052 940
Realised gain on sale of financial assets - (556)
Fair value adjustment on financial assets
at fair value through profit or loss (1 744) (2 316)
Fair value adjustment to investment
properties excluding straight-lining of
lease income (20 304) (24 994)
Net operating cash flow before changes in
working capital 55 730 56 187
Increase/(decrease) in current assets
Trade receivables (1 217) 595
Other receivables (566) 1 499
Trade receivables from related parties 110 -
Increase/(decrease) in current liabilities
Trade payables 2 200 1 443
Accruals 8 210
Other payables 942 (248)
Trade payables to related parties 358 377
Cash generated from operations 57 565 60 063
Non-permissible investment income received 512 338
Unitholders for distribution (1 767) (1 680)
Non-permissible income 69 (824)
Net cash inflow from operating activities 56 379 57 897
Cash flows from investing activities
Acquisition of available-for-sale
financial assets (25 330) (38 148)
Acquisition of financial assets at fair
value through profit or loss (58 550) (49 171)
Acquisition of property, plant and equipment (260) -
Capital expenditure to investment properties (1 013) (8 054)
Lease incentives paid - (159)
Acquisition of short-term financial assets (3 081) (1 149)
Proceeds from disposal of available-for-sale
financial assets - 1 979
Proceeds from disposal of financial assets
at fair value through profit or loss 11 008 20 742
Net cash outflow from investing activities (77 226) (73 960)
Cash flows from financing activities
Proceeds from issue of units 25 000 -
Transaction cost (404) (233)
Net cash inflow/(outflow) from financing
activities 24 596 (233)
Net increase/(decrease) in cash and
cash equivalents 3 749 (16 296)
Cash and cash equivalents
At the beginning of the year 2 202 18 498
At the end of the year 5 951 2 202
Segmental information for the year ended 31 March 2017
Indus- Invest- Cor-
Retail Offices trial ments porate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental and
related income 25 846 10 828 20 106 - - 56 780
Recoveries 12 778 2 222 3 997 - - 18 997
Income from
investments
excluding non-
permissible
income
Dividend income
- offshore - - - 10 788 - 10 788
Permissible
investment
income -
domestic - - - 8 781 - 8 781
38 624 13 050 24 103 19 569 - 95 346
Segment expense
Property
Expenses (excluding
Provision for
impairment) 20 067 5 113 7 263 - - 32 443
Provision for
receivables impairment 761 - 97 - - 858
Service charges - - - - 5 386 5 386
Other operating
expenses - - - 461 1 055 1 516
20 828 5 113 7 360 461 6 441 40 203
Realised gain on
sale of
available-for-
sale financial
assets - - - - - -
Segment result
Operating
profit/(loss) 17 796 7 937 16 743 19 108 (6 441) 55 143
Net finance
income
Non-permissible
investment income - - - 248 264 512
NPI Dispensed (411) - - (247) (264) (922)
Net profit/(loss)
before
straight-line
lease income
and fair value
change to
investment
properties 17 385 7 937 16 743 19 109 (6 441) 54 733
Straight-lining
of lease
income 1 254 (6) 395 - - 1 643
Fair value
adjustment to
investment
properties 5 956 2 530 11 818 - - 20 304
Fair value
adjustment to
financial
assets at fair
value through
profit or loss - - - 1 744 - 1 744
Net profit/(loss)
after straight line
lease income and fair
value change to
investment properties 24 595 10 461 28 956 20 853 (6 441) 78 424
Segment assets
Investment
properties 234 916 122 569 214 389 - - 5571 874
Property, plant
and equipment 425 10 - - - 435
Straight-line
lease accrual
non-current 6 555 - 6 511 - - 13 066
Straight-line
lease accrual
current 691 3 116 - - 810
Available-for-
sale financial
assets - - - 458 897 - 458 897
Other short term assets 3 578 230 4 556 - - 8 364
Trade receivables 2 892 477 660 - - 4 029
Other receivables 692 17 2 484 2 255 41 5 489
Trade receivables
from related
parties - - - - - -
Financial assets
at fair value
through profit
or loss - - - 134 505 - 134 505
Cash and cash
equivalents - - - 5 951 - 5 951
249 749 123 306 228 716 601 608 41 1 203 420
Segment
liabilities
Trade payables 5 314 742 5 166 - 18 11 240
Accruals 45 8 39 - 360 452
Other payables 479 - 1 248 - 568 2 295
Trade payables
to related
parties 339 6 127 52 912 1 436
Unitholders for
distribution - - - - 29 434 29 434
Non-permissible - - - - 151 151
income
available for
dispensation
6 177 756 6 580 52 31 443 45 008
Net current segment
assets/(liabilities) 1 676 (29) 1 236 142 659 (31 402) 114 140
Capital
Expenditure (incl.
Property, plant and
equipment) 1 189 62 22 - - 1 273
Segmental information for the year ended 31 March 2016
Indus- Invest- Cor-
Retail Offices trial ments porate Total
R’000 R’000 R’000 R’000 R’000 R’000
Segment revenue
Property income
Rental and
related income 21 553 10 112 22 042 - - 53 707
Recoveries 11 872 3 107 4 017 - - 18 996
Income from
investments
excluding non-
permissible
income
Dividend income
- offshore - - - 10 889 - 10 889
Permissible
investment
income -
domestic - - - 6 779 - 6 779
33 425 13 219 26 059 17 668 - 90 371
Segment expense
Property
Expenses (excluding
Provision for
receivables impairment) 18 237 3 697 5 977 - - 27 911
Provision for
receivables impairment 89 262 (1 007) (656)
Service charges - - - - 4 493 4 493
Other operating
expenses - - - 135 1 084 1 219
18 326 3 959 4 970 135 5 577 32 967
Realised gain on
sale of
available-for-
sale financial
assets - - - 556 - 556
Segment result
Operating
profit/(loss) 15 099 9 260 21 089 18 089 (5 577) 57 960
Net finance
income
Non-permissible
investment income - - - - 338 338
NPI Dispensed (457) - - - (338) (795)
Net profit/(loss)
before
straight-line
lease income
and fair value
change to
investment
properties 14 642 9 260 21 089 18 089 (5 577) 57 503
Straight-lining
of lease
income 1 889 6 (454) - - 1 441
Fair value
adjustment to
investment
properties 2 453 11 808 10 733 - - 24 994
Fair value
adjustment to
financial
assets at fair
value through
profit or loss - - - 2 316 - 2 316
Net profit/(loss)
after straight line
lease income and fair
value change to
investment properties 18 984 21 074 31 368 20 405 (5 577) 86 254
Segment assets
Investment
properties 207 680 117 971 202 957 - - 5528 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 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
distribution - - - - 28 427 28 427
Non-permissible
income
available for
dispensation - - - - 82 82
5 519 447 4 139 38 30 281 40 424
Net current segment
assets/(liabilities) 246 113 3 078 88 967 (29 532) 62 872
Capital
Expenditure (including
Property, plant and
equipment) 7 446 37 571 - - 8 054
Commentary
Basis of preparation and accounting policies
The preliminary financial statements are prepared in accordance with the
requirements of the JSE Limited’s “Listings Requirements” for preliminary
reports. The Listings Requirements require preliminary reports to be
prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards
(“IFRS”) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by
the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting and
the Collective Investment Schemes Control Act of 2002. The accounting
policies applied in the preparation of the financial statements from which
the preliminary financial statements were derived are in terms of
International Financial Reporting Standards and are consistent with those
accounting policies applied in the preparation of the previous annual
financial statements.
The non-permissible income is dispensed to the Oasis Crescent Fund Trust
which is a registered public benefit organisation. The accounting policies
are consistent with those applied in the most recent annual financial
statements of the Fund.
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.
PricewaterhouseCoopers Inc. has audited the financial information set out
in this report. Their unqualified audit report is available for inspection
at the Fund’s registered office.
These preliminary audited results were compiled by the financial director,
Michael Swingler CA(SA).
Any reference to the future financial performance of the Fund contained in
this announcement has not been reviewed or reported on by the Fund’s
auditors.
Financial highlights
Distribution per unit including non-permissible income was 102.0 cents
per unit (FY2016: 117.2 cents)
NAV per unit is 2 050 cents per unit (FY2016: 2 101 cents)
Intrinsic value return of 13.3% per annum since inception compared to
inflation of 6.1% per annum
2017 2016
Distribution per unit including non-permissible income
(cents) 102.0 117.2
Distribution per unit excluding non-permissible income
(cents) 100.3 115.6
Property portfolio valuation(Rm) 586 541
Investment in Offshore Listed Properties (Rm) 377 421
Investments in Local Listed Properties and other
current assets(Rm) 240 162
Net asset value per unit (cents) 2 050 2 101
Listed market price at year end (cents) 2 025 1 950
Movement in investment properties: R’000 R’000
Carrying value at the beginning of the year 528 609 453 843
Acquisitions during the period 23 000 42 500
Subsequent capitalised expenditure 1 013 8 054
Movement in lease incentives (1 052) (782)
Fair value adjustment to investment properties
excluding straight-lining of lease income 20 304 24 994
Revaluation 21 947 26 435
Change in straight-line lease accrual (1 643) (1 441)
Carrying value at the end of the year 571 874 528 609
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 Afric an
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 2017 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% (2016: 7.5% and 10.25%). 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.
Fair value estimation:
IFRS 13 requires that an entity discloses for each class of assets and
liabilities measured at fair value, the level in the fair value hierarchy
into which the fair value measurements are categorised in th eir entirety.
The fair value hierarchy reflects the significance of the inputs used in
making fair value measurements.
The fair value hierarchy has the following levels:
- Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1).
- Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (level 2).
- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
The following table presents the Fund's assets and liabilities that are
measured at fair value at 31 March 2017:
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 - 377 134 - 377 134
Investment in listed property
funds 79 961 - - 79 961
Investment in Oasis Crescent - 1 802 - 1 802
International Property Equity
Feeder Fund
Financial assets at fair value
through profit or loss
Investment in Oasis Crescent
Income Fund - 134 505 - 134 505
Other short-term financial assets - 8 364 - 8 364
Investment property
Investment property - - 571 874 571 874
The following table presents the Fund's assets and liabilities 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 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 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.
Oasis Crescent International Property Equity Feeder Fund :
The fair value of investments in Oasis Crescent International Property
Equity Feeder 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 in listed property funds
The fair value of these investments is determined using the closing bid
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 NAV price published by Oasis Crescent Management Company
Ltd., the management company of the fund. These investments are not
actively traded on an exchange and are therefore not classified as Level 1.
INTRODUCTION
The 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 NAV and delivering a consistent
income stream that has potential to grow. Our focused approach has delivered
significant real wealth creation for investors with an annualised total
unitholder return of 13.5% relative to annualised inflation of 6.1% since
inception, resulting in a real return of 7.4%. Your Fund’s annualised total
intrinsic value return is 13.3% per annum since inception.
Cumulative returns Since 2017 2016 2015 2014 2013
Inception
Unitholder return 321.1 321.1 286.3 227.3 165.3 125.9
Intrinsic value 312.2 312.2 302.8 248.7 194.6 161.0
return
Inflation 95.2 95.2 83.7 71.7 65.2 56.0
Annual Returns Since
Inception 2017 2016 2015 2014 2013
Unitholder return 13.5 9.0 18.0 23.4 17.4 10.7
Intrinsic value 13.3 2.3 15.5 18.4 12.9 16.4
return
Inflation 6.1 6.3 7.0 3.9 5.9 5.9
Market Price 2 025 1 950 1 750 1 500 1 350
NAV 2 050 2 101 1 919 1 706 1 587
MARKET OVERVIEW
The level of supply in global developed property markets has remained
disciplined and net absorption remains positive in most of the markets.
Global REIT debt levels are also well below their 2008 peaks and average
debt maturity has increased. The current REIT DY to 10yr bond yield spreads
are still above their long term averages and REITS with a high exposure to
the major global cities, positive secular demand drivers, enhancing
refurbishments and superior balance sheets are well positioned. At the SA
property level, shopping centres that are appealing destinations or offer
convenience, are better positioned to grow their trading densities in a low
growth environment. The demand for SA 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 office properties is creating an
increasing vacancy and rental risk for B and C grade office properties. On
the industrial side, the tenant requirements for improving supply chain
efficiency are positive drivers of demand for modern warehousing and
logistics space while the demand for industrial manufacturing space is
limited. Our portfolio is well positioned due to our focus on quality, value
and diversification.
PORTFOLIO OVERVIEW
2017 2016 2015
R'mil % R'mil % R'mil %
Direct Property 586 49 541 48 465 50
Global Investments 377 31 421 37 345 37
Cash, SA
Investments and
other 240 20 162 15 121 13
Total Assets 1 203 100 1 124 100 931 100
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 expos ure 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 global
investments consist of the Oasis Crescent Global Property Equity Fund which
is well positioned with a focus on REITS with the best quality assets and
balance sheets. The Cash and other listed SA Investments provide flexibility
for The Fund to pursue growth opportunities.
2017 2016 2015 2017/2016 2017/2015
(R'000) (R'000) (R'000) % %
Direct
property net
income 42 066 44 990 37 153 (6) 6
Global
Investment
Income 10 788 10 889 9 838 (1) 5
Cash and Local
Investment
Income 8 320 6 646 3 720 26 50
Shared expense (6 441) (5 576) (4 686) 16 17
Distributable
Income excl
NPI 54 733 56 949 46 024 (4) 9
During the period, the Fund was impacted by partial vacancy as long term
fully repairing leases came to an end. This impact was partially offset by
active asset management through tactical filling of vacancies and property
acquisitions. Partial vacancy resulted in increased expenses being borne by
the fund during the period. The acquisition of 364 Victoria Road contributed
3% towards direct property net income. Filling of vacancies at favorable
rates contributed 2% towards the increase in direct property income with
escalations contributing a further 4%. This was offset by the impact of
vacancy which resulted in increased net operating expenses.
The investment income earned from the global investments was impacted by the
Rand strengthening which was off-set by additional units of 3% due to
reinvestments of distributions. Distribution per unit in US$ from the Oasis
Crescent Global Property Equity Fund has remained flat year-on-year with the
average distribution growth of 4.5% at the REIT level being off-set by the
weaker Pound to the US Dollar and timing of distributions. Cash and local
investment income benefited from additional investments in SA listed
property during the current financial period while the income received from
the Oasis Crescent Income Fund is lower than the prior year due to the
timing difference between placing investments and receiving the profit
rates. The Oasis Crescent Income Fund cash flow yield has substantial upside
as the gap between the cash flow yield and income yield closes over time.
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. The Fund continues to focus on renewing leases coming up for expiry
and further improvements in the quality of the tenant mix.
Revenue Revenue
Rentable Area 2017 2016
Area (m²) % (R'mil) % (R'mil) %
Western Cape 81 796 83 44.2 57 44.9 61
KwaZulu-Natal 16 407 17 32.6 43 28.7 39
Total - Direct Property (excl
straight lining) 98 203 100 73.6 100 73.6 100
Note: Revenue includes recoveries and excludes leasing incentives
Segmental Profile
2017 2016
Average Average Average Average
rental per rental rental per rental
Segment Rentable area
m² for the escalatio m² for the escalation
period n per period per
(m²) R m² (%) R m² (%)
Retail 22 987 104 8 114 8
Office 7 629 121 8 113 8
Industri
al 67 587 35 7 28 8
TOTAL 98 203
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 acquisition. Average office rental per
m² increased in line with annual rental escalations. The increase in
average industrial rental per m² was impacted by taking advantage of
selective opportunities at favourable rates over the short term.
Vacancy Profile
% of total rentable area 2017 2016
Retail 1.5 0.8
Office 0.3 0.0
Industrial 7.2 0.0
Note: This relates only to the Direct Property Portfolio
Lease expiry profile
2017 2016
Rental Area Revenue Rental Area Revenue
% % % %
- Within 1 year 53 53 57 52
- Within 2 year 5 11 4 6
- Within 3 year 6 5 5 9
- Within 4 year 1 2 1 2
- Within 5 year or more
years 35 29 33 31
100 100 100 100
Tenant Profile
2017 2016
(%) (%)
A - Large nationals, large listed, large franchisees,
multi-nationals and government 77 67
B - Nationals, listed, franchisees and medium to large
professional firms 3 17
C - Other 20 16
TOTAL 100 100
Note: 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. Global REIT cash flow yields (FFO yield) and
dividend yields remain attractive relative to bond yields and the Oasis
Crescent Global Property Equity Fund is well positioned. Valuation
characteristics are very attractive with an average cash flow yield of 6.7%
and dividend yield of 5.2% which offers value relative to the average bond
yield and inflation of 2.3% and 1.5% respectively.
The Fund invests its liquid reserves in the Oasis Crescent Income Fund which
provides competitive, Shariah compliant income and flexibility to take
advantage of opportunities.
OUTLOOK
The Fund remains focused on addressing the lease expiry profile through
strategically 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 advantag e of
opportunities. Post the 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. 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 during the 2017 financial year was
R1.34 million (FY2016: R1.25 million)
Service charge
The service charge is equal to 0.5% per annum of the Fund’s market
capitalisation and borrowing facilities based on the average daily closing
prices of the units. The amount paid to the Manager was R5.39 million during
the 2017 financial year (FY2016: R4.49 million).
Units in issue
As at 31 March 2017, the number of units in issue was 56,509,343 (FY2016:
51,565,907).
Unitholders' holding more than 5% of issued units as at 31 March 201 7:
NUMBER OF HOLDING
NAME UNITS (%)
Oasis Crescent Balanced Progressive
Fund of Funds 7 003 862 12.4
Oasis Crescent Property Company
Proprietary Limited 6 780 577 12.0
Oasis Crescent Pension Annuity
Stable Fund 5 155 438 9.1
Oasis Crescent Balanced Stable Fund
of Funds 3 853 027 6.8
Oasis Crescent Retirement Annuity
High Equity Fund 3 596 220 6.4
BNP Paribas Securities 3 161 912 5.6
Total 29 551 036 52.3
Shareholding in OCPFM
OCPFM is 100% owned by Oasis Group Holdings Proprietary Limited
Related party transactions and balances
Oasis Crescent Property Fund Managers Limited is the management company of
the Fund in terms of the Collective Investment Schemes Control Act.
Oasis Group Holdings Proprietary Limited is a tenant at The
Ridge@Shallcross as well as 24 Milner Road and the parent of Oasis
Crescent Property Fund Managers Limited.
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 that 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 Limited, the manager of that fund.
Abli Property Developers Proprietary Limited renders property development
consulting services to the Fund on capital development projects.
Oasis Asset Managers renders investment management services to the Fund on
Available-for-sale financial assets.
There are common directors to Oasis Crescent Property Fund Managers
Limited, Oasis Group Holdings Proprietary Limited, Oasis Global Management
Company (Ireland) Limited, Oasis Crescent Management Company Limited,
Oasis Asset Management and Abli Property Developers Proprietary Limited.
Transactions with related parties are executed on terms no less favourable
to the Fund 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 Oasis Crescent Property Fund Managers Limited.
Related party transactions
2017 2016
R’000 R’000
Service charge paid to Oasis Crescent Property Fund
Managers Limited 5 386 4 493
Property management fees paid to Oasis Crescent
Property Fund Managers Limited 1 335 1 251
Rental and related income from Oasis Group
Holdings Proprietary Limited at The
Ridge@Shallcross 426 467
Rental and related income from Oasis Group
Holdings Proprietary Limited at 24
Milner Road 799 275
Consulting fees paid to Abli Property Developers
Proprietary Limited for consulting services on
capital projects 37 186
Investment management fees paid to Oasis
Asset Management 461 135
Related party balances
Trade receivables from Oasis Group Holdings
Proprietary Limited - 110
Trade payables to Oasis Crescent Property Fund
Managers Limited (981) (873)
Trade payables to Oasis Group Holdings Proprietary
Limited (386) (154)
Trade payables to Oasis Asset Management (52) (38)
Trade payables to Abli Property Developers
Proprietary Limited (17) (12)
The Fund issued 1 209 649 new units to Oasis Crescent Property Company
Proprietary Limited in consideration for 364 Victoria Road at an issue
price of 1 901 cents per unit.
Changes to the board of directors of the Manager of the Fund
In line with the SENS published on 20 December 2016 unitholders of the
Fund are hereby advised that Mr Abbas Abdul Gani has resigned from the
Board of Directors of Oasis Crescent Property Fund Managers Limited, the
manager of the Fund, with effect from 14 December 2016, due to personal
health reasons.
Declaration announcement in respect of distribution for the 6 months ended
31 March 2017.
Notice is hereby given that a distribution for the six-month period ended
31 March 2017 has been approved and declared of 5 206.17928 cents (in
aggregate), after non-permissible income, for every 100 (one hundred)
units so held, to unitholders recorded in the register of the Fund at
close of business on Friday, 9 June 2017. Unitholders may elect to receive
the distribution in cash or to reinvest the distribution by the purchase
of new units at a rate of 2.53960 units at 2 050 cents per unit (in
aggregate), for every 100 (one hundred) units so held.
Unitholders should take note of the corporate timetable as set out below
in respect of the abovementioned distribution and the election in terms
thereof.
SALIENT DATES AND TIMES 2017
Declaration announcement on SENS of distribution Wednesday, 3 May
and right of election to purchase new units or
receive a cash payment
Circular and form of election posted to Friday, 19 May
unitholders
Finalisation announcement on SENS in respect of Friday, 19 May
distribution and right of election to purchase
new units or receive a cash payment
Circular and form of election posted to Friday, 19 May
unitholders
Last day to trade in order to be eligible for the Tuesday, 6 June
distribution
Trading commences ex- entitlement to the Wednesday, 7 June
distribution
Listing of maximum possible number of units that Friday, 9 June
may be purchased at commencement of trade on
Closing date for the election of cash Friday, 9 June
distribution at 12:00 pm on
Record date for the distribution Friday, 9 June
Cash distribution cheques posted and CSDP/broker Monday, 12 June
accounts updated with cash
Announcement of the results of the distribution Monday, 12 June
on SENS
Unit certificates posted and CSDP/broker accounts Wednesday, 14 June
updated with units
Adjustment of number of new units listed on or Monday, 19 June
about
Notes:
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,
7 June 2017 and Friday, 9 June 2017, both days inclusive .
3. The above dates and times are subject to change. Any changes will be
announced on SENS.
4. 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.
5. If no election is made, the distribution accrued to the unitholder
will be used to purchase additional units.
Fractions
Trading in the electronic Strate environment does not permit fractions and
fractional entitlements in respect of units. Accordingly, should a
unitholder’s entitlement to new units, calculated in accordance with the
ratio mentioned above, give rise to a fraction of a new unit, such
fraction will be rounded down to the nearest whole number, resulting in
allocations of whole units and a payment to the unitholder in respect of
the remaining cash amount due to that unitholder under the distribution.
Tax implications
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 20%.
For non-residents for South African tax purposes, the distribution
received by a non-resident from a REIT will be subject to dividend
withholding tax at 20%, 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 shareholder. Non -resident
unitholders that believe that a reduced rate of tax applies in respect of
their applicable DTA should contact the transfer secretary, or their
nominee, custodian or CSDP for the prescribed form to record the reduced
rate of tax.
Where dividends tax is withheld at 20% for non-resident unitholders:
- the reinvestment ratio for non-resident unitholders will be 2.03168
units at 2 050 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 4 164.94342 cents per 100 units held on the record
date.
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.
A circular will be posted out to unitholders on Friday, 19 May 2017, in
respect of the unit and income distribution.
The number of units in issue at the date of the aforesaid distribution is
56 509 343. The income tax reference number of the Fund is 3354212148.
By order of the board
Oasis Crescent Property Fund Managers Limited
Cape Town
3 May 2017
PSG Capital Proprietary Limited
Designated Adviser
Date: 03/05/2017 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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