Wrap Text
Reviewed Condensed Interim Results For The Six Months Ended 30 September 2017
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 2017
Condensed statement of comprehensive income
for the 6 months ended 30 September 2017
Reviewed Reviewed Audited
6 months 6 months 12 months
to 30 to 30 to 31
September September March
2017 2016 2017
R’000 R’000 R’000
Income 62 617 47 378 98 733
Rental and related income 38 770 36 282 75 777
Income from investments excluding non-
permissible income 22 786 10 388 21 313
Straight-lining of lease income 1 061 708 1 643
Expenses 20 404 20 202 40 203
Property expenses 16 757 16 835 33 301
Service charges 2 783 2 592 5 386
Other operating expenses 864 775 1 516
Net income from rentals and investments 42 213 27 176 58 530
Fair value adjustment to investment
properties excluding straight-lining of
lease income (1061) (708) 20 304
Fair value adjustment to investment
properties - - 21 947
Straight-lining of lease income (1 061) (708) (1 643)
Operating profit for the period 41 152 26 468 78 834
Net non-permissible investment income (285) (224) (410)
Non-permissible investment income 332 281 512
Non-permissible income dispensed (617) (505) (922)
Net profit for the period 40 867 26 244 78 424
Other comprehensive income
Items that may be subsequently 21 628 (13 085) (48 284)
reclassified to profit and loss
Fair value gain/(loss) on available-
for-sale financial assets 30 768 (13 085) (48 284)
Realised gain on disposal of available-
for-sale financial assets (9 140) - -
Total Comprehensive Income for the
period 62 495 13 159 30 140
Basic earnings per unit (cents) 71.4 49.0 143.7
Additional information:
Headline earnings and distribution
income reconciliation
Basic earnings before non-permissible
income adjustment 41 152 26 468 78 834
Non-permissible investment income 332 281 512
Basic earnings after non-permissible
income adjustment 41 484 26 749 79 346
Non-permissible income dispensed (617) (505) (922)
Basic earnings 40 867 26 244 78 424
Adjusted for:
Realised gains on disposal of
available-for-sale financial assets (9 140) - -
Fair value adjustment to investment
properties 1 061 708 (20 304)
Headline earnings 32 788 26 952 58 120
Less: Fair value adjustments on
financial assets at fair value through
profit or loss (1 407) (337) (1 476)
Less: Fair value adjustments on tenant
deposits (142) (55) (268)
Less: Straight-line lease accrual (1 061) (708) (1 643)
Distributable income excluding non-
permissible income 30 178 25 852 54 733
Basic earnings per unit (cents) 71.4 49.0 143.7
Headline earnings and diluted headline
earnings per unit (cents) 57.3 50.3 106.5
Distribution per unit including non-
permissible income (cents) 53.8 49.2 102.0
Distribution per unit excluding non-
permissible income (cents) 52.7 48.3 100.3
Weighted average units in issue 57 235 096 53 572 345 54 559 623
Units in issue at the end of the period 57 727 809 54 077 452 56 509 343
Additional information:
Reconciliation of Distributable Income
for the 6 months ended 30 September
2017
Rental income 29 460 27 005 57 832
Rental recoveries 9 864 9 788 18 997
Lease incentives (554) (511) (1 052)
Rental and related income 38 770 36 282 75 777
Less: Property expenses (16 757) (16 835) (33 301)
Property operating income 22 013 19 447 42 476
Investment income excluding non-
permissible investment income 12 098 9 996 19 569
Fair value adjustment on financial
assets at fair value through profit or
loss 1 549 392 1 744
Realised gain on disposal of available-
for-sale financial assets 9 140 - -
Income from investments excluding non-
permissible income 22 787 10 388 21 313
Non-permissible investment income
received 332 281 512
Total investment income 23 119 10 669 21 825
Net property and investment income 45 131 30 116 64 301
Less: Fair value adjustment on
financial assets at fair value through
profit or loss (1 549) (392) (1 744)
Less: Realised gain on disposal of
available-for-sale financial assets (9 140) - -
Service charges and other operating
expenses (3 647) (3 367) (6 902)
Distributable income including non-
permissible income 30 795 26 357 55 655
Non-permissible rental income and
recoveries (285) (224) (410)
Non-permissible investment income (332) (281) (512)
Distributable income excluding non-
permissible income 30 178 25 852 54 733
Condensed statement of financial position
as at 30 September 2017
Reviewed Reviewed Audited
30 30 31
September September March
2017 2016 2017
R’000 R’000 R’000
Assets
Non-current assets 1 063 104 1 051 167 1 044 272
Investment properties 570 983 552 015 571 874
Property, plant and equipment 334 550 435
Straight-line lease accrual 14 166 11 832 13 066
Available-for-sale financial assets 477 621 486 770 458 897
Current assets 196 575 110 524 159 148
Trade receivables 3 793 4 624 4 029
Trade receivables from related parties - 110 -
Other receivables 12 284 7 213 5 489
Straight-line lease accrual 770 1 109 810
Financial assets at fair value through
profit or loss 153 054 86 781 134 505
Other short-term financial assets 7 553 7 857 8 364
Cash and cash equivalents 19 121 2 830 5 951
Total assets 1 259 679 1 161 691 1 203 420
Unitholders’ funds and liabilities
Unitholders’ funds 1 215 336 1 120 699 1 158 412
Capital of the Fund 761 008 686 785 736 401
Retained income 20 677 8 639 9 988
Other reserves 433 651 425 275 412 023
Current liabilities 44 343 40 992 45 008
Trade payables 11 021 11 853 11 240
Accruals 438 510 452
Other payables 1 346 1 310 2 295
Trade payables to related parties 948 1 015 1 436
Unitholders for distribution 30 451 26 111 29 434
Non-permissible income available for
dispensation 139 193 151
Total unitholders’ funds and
liabilities 1 259 679 1 161 691 1 203 420
Supplemental information
Net Asset Value (NAV) (in cents per 2 105 2 072 2 050
unit)
Condensed statement of changes in unitholders’ funds
for the 6 months ended 30 September 2017
Capital
of the Other Retained
Fund reserve income Total
R’000 R’000 R’000 R’000
Balance at 1 April
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 on
available-for-sale
financial assets - (13 085) - (13 085)
Total
Comprehensive
Income for the
period ended 30
September 2016 - (13 085) 26 244 13 159
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
unitholders - - (26 093) (26 093)
Balance at 30
September 2016 686 785 425 275 8 639 1 120 699
Net profit for the
period ended 31
March 2017 - - 52 180 52 180
Other
Comprehensive
Income
Fair value loss on
available-for-sale
financial assets - (35 199) - (35 199)
Total
Comprehensive
Income for the
period ended 31
March 2017 - (35 199) 52 180 16 981
Issue of units 50 389 - - 50 389
Transaction costs
for issue of new
units (234) - - (234)
Transfer to other
reserve - 21 947 (21 947) -
Distribution
received in
advance (539) - 539 -
Distribution to
unitholders - - (29 423) (29 423)
Balance at 31
March 2017 736 401 412 023 9 988 1 158 412
Net profit for the
period ended 30
September 2017 - - 40 867 40 867
Other
Comprehensive
Income
Fair value gain on
available-for-sale
financial assets - 30 768 - 30 768
Realised gain on
disposal of
available-for-sale
financial assets - (9 140) - (9 140)
Total
Comprehensive
Income for the
period ended 30
September 2017 - 21 628 40 867 62 495
Issue of units 24 980 - - 24 980
Transaction costs
for issue of new
units (113) - - (113)
Distribution (260) 260
received in - -
advance
Distribution to
unit holders - - (30 438) (30 438)
Balance at 30
September 2017 761 008 433 651 20 677 1 215 336
Condensed statement of cash flows
for the 6 months ended 30 September 2017
Reviewed Reviewed Audited
6 months to 6 months to 12 months to
30 September 30 September 31 March
2017 2016 2017
R’000 R’000 R’000
Cash flows from operating
activities
Net profit for the period 40 867 26 244 78 424
Adjusted for:
Non-permissible investment
income received (332) (281) (512)
Depreciation 101 78 180
Provision for receivables
impairment (462) 691 277
Straight-line lease accrual (1 061) (708) (1 643)
Lease incentives 554 511 1 052
Realised gain on sale of
available-for-sale financial
assets (9 140) - -
Fair value adjustment on
financial assets at fair
value through profit or loss (1 549) (392) (1 744)
Fair value adjustment on
investment property excluding
straight-lining of lease
income 1 061 708 20 304
Net operating cash flow
before changes in working 30 039 26 851 55 730
capital
Decrease/(increase) in
current assets
Trade receivables 698 (2 226) (1 217)
Other receivables (6 795) (2 290) (566)
Trade receivables from -
related parties - 110
(Decrease)/increase in
current liabilities
Trade payables (219) 2 813 2 200
Accruals (14) 66 8
Other payables (949) (43) 942
Trade payables to related
parties (488) (63) 358
Cash generated from 22 272 25 108 57 565
operations
Non-permissible investment
income received 332 281 512
Unitholders for distribution (4 579) (1 056) (1 767)
Non-permissible income (12) 111 69
Net cash inflow from
operating activities 18 013 24 444 56 379
Cash flows from investing
activities
Acquisition of available-for-
sale financial assets (7 953) (18 004) (25 330)
Acquisition of financial
assets at fair value through
profit or loss (17 142) (11 965) (58 550)
Capital expenditure on
investment properties (724) (1 625) (1 013)
Proceeds from disposal of
financial assets at fair
value through profit or loss 1 921 10 000 11 008
Proceeds from disposal of
available-for-sale financial
assets 19 997 - -
Acquisition of other short
term financial assets (829) (1 779) (3 081)
Acquisition of property,
plant and equipment - (273) (260)
Lease incentives paid - - -
Net cash outflow from
investing activities (4 730) (23 646) (77 226)
Cash flows from financing
activities
Proceeds from issue of units - - 25 000
Transaction costs on issue of
new units (113) (170) (404)
Net cash outflow from
financing activities (113) (170) (24 596)
Net increase/(decrease) in
cash and cash equivalents 13 170 628 3 749
Cash and cash equivalents
At beginning of period 5 951 2 202 2 202
At end of period 19 121 2 830 5 951
Segment information for the 6 months ended 30 September 2017
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 12 786 5 456 10 664 - - 28 906
Recoveries 6 364 1 024 2 476 - - 9 864
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 5 726 - 5 726
Permissible
investment
income- domestic - - - 6 372 - 6 372
19 150 6 480 13 140 12 098 - 50 868
Segment expense
Property
expenses 10 203 2 310 4 244 - - 16 757
Service charges - - - - 2 783 2 783
Other operating - - - 277 587 864
expenses
10 203 2 310 4 244 277 3 370 20 404
Segment result
Operating
profit/(loss) 8 947 4 170 8 896 11 821 (3 370) 30 464
Net finance
income
Non-permissible
investment
income received - - - - 332 332
NPI Dispensed (285) - - - (332) (617)
Net
profit/(loss)
before
straight-line
lease income
and fair value
change to
investment
properties 8 662 4 170 8 896 11 821 (3 370) 30 179
Realised gain on
disposal of
available-for-
sale financial
assets - - - 9 140 - 9 140
Straight-lining
of lease income 491 34 536 - - 1 061
Fair value
adjustment to
financial assets
at fair value
through profit
or loss - - - 1 549 - 1 549
Fair value
adjustment to
investment
properties (491) (34) (536) - - (1 061)
Net
profit/(loss)
after straight-
line lease
income and fair
value adjustment
to investment
properties 8 662 4 170 8 896 22 509 (3 370) 40 867
Segment assets
Investment
properties 234 712 122 356 213 915 - - 570 983
Property, plant
and equipment 334 - - - - 334
Straight-line
lease accrual
non-current 6 981 34 7 151 - - 14 166
Straight line
lease accrual
current 752 - 18 - - 770
Available-for-
sale financial
assets - - - 477 621 - 477 621
Other short term 4 159 82 3 312 - - 7 553
financial assets
Trade
receivables 2 415 608 770 - - 3 793
Other
receivables 902 154 2 337 8 810 81 12 284
Financial assets
at fair value
through profit
or loss - - - 153 054 - 153 054
Cash and cash
equivalents - - - 19 121 - 19 121
250 255 123 234 277 503 658 606 81 1 259 679
Segment
liabilities
Trade payables 5 031 575 5 397 - 18 11 021
Accruals 18 6 22 - 392 438
Other payables 654 15 90 - 587 1 346
Trade payables
to related
parties 290 4 49 54 551 948
Unitholders for - - - - 30 451 30 451
distribution
Non-permissible - - - - 139 139
income available
for dispensation
5 993 600 5 558 54 32 137 44 342
Net segment
current assets/
(liabilities) 2 235 244 879 180 931 (32 057) 152 232
Capital
expenditure 398 13 313 - - 724
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
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
non-current 5 791 - 6 041 - - 11 832
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 31 March 2017
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 12 676 5 587 12 023 - - 30 286
Recoveries 6 304 865 2 040 - - 9 209
Income from
investments
excluding non-
permissible
income
Dividend income
offshore - - - 5 240 - 5 240
Permissible
investment
income- domestic - - - 4 333 - 4 333
18 980 6 452 14 063 9 573 - 49 069
Segment expense
Property
expenses
(excluding
Provision for
receivables
impairment) 9 558 2 228 3 822 - - 15 608
Provision for
receivables
impairment 761 - 97 - - 858
Service charges - - - - 2 794 2 794
Other operating - - - 252 489 741
expenses
10 319 2 228 3 919 252 3 283 20 001
Segment result
Operating
profit/(loss) 8 661 4 224 10 144 9 321 (3 283) 29 068
Net finance
income
Non-permissible
investment
income received - - - 248 (17) 231
Non-permissible
investment
dispensed (187) - - (247) 17 (417)
Net
profit/(loss)
before
straight-line
lease income
and fair value
adjustment to
investment
properties 8 474 4 224 10 141 9 322 (3 283) 28 882
Straight-lining
of lease income 748 (4) 191 - - 935
Fair value - - - 1 352 - 1 352
adjustment to
financial assets
at fair value
through profit
or loss
Fair value
adjustment to
investment
properties 5 956 2 530 11 818 - - 20 304
Net
profit/(loss)
after straight-
line lease
income and fair
value adjustment
to investment
properties 15 178 6 750 22 153 10 674 (3 283) 51 473
Segment assets
Investment
properties 234 916 122 569 214 389 - - 571 874
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
financial 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
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 - - - - 29 434 29 434
distribution
Non-permissible - - - - 151 151
income available
for dispensation
6 177 756 6 580 52 31 443 45 008
Net segment
current assets/
(liabilities) 1 676 (29) 1 236 142 659 (31 402) 114 140
Capital
expenditure 1 189 62 22 - - 1 273
Basis of preparation and accounting policies
The condensed interim financial statements of Oasis Crescent Property Fund
(“the Fund” or “OCPF”) have been prepared in accordance with International
Financial Reporting Standard (IFRS), (IAS) 34 Interim Financial Reporting,
JSE Listings Requirements, 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 in terms of IFRS and 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 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 - 407 316 - 407 316
Investment in listed 65 663 - - 65 663
property funds
Investment in Oasis Crescent
Property Equity Feeder Fund - 4 642 - 4 642
Financial assets at fair value
through profit or loss
Investment in Oasis Crescent
Income Fund - 153 054 - 153 054
Other short-term financial
assets - 7 533 - 7 553
Investment property
Investment property - - 570 983 570 983
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 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
International Property Equity
Feeder Fund - 1 802 - 1 802
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 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.
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 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 2017
2017 2016
R’000 R’000 R’000
Balance as at beginning of the
period 571 874 528 609 528 609
Acquisitions during the period - 23 000 23 000
Fair value adjustment on
investment properties excluding
straight-lining of lease income (1 061) (708) 20 304
Movement in lease incentives (554) (511) (1 052)
Capital expenditure on investment
properties 724 1 625 1 013
Balance at the end of the period 570 983 552 015 571 874
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 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.
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 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 Ltd., renders investment management services
to the Fund on Available-for-sale financial assets.
Oasis Crescent Property Company (Pty) Ltd., renders services relating
to identifying and securing tenants for the Fund.
There are common Directors to Oasis Crescent Property Fund Managers
Limited, Oasis Group Holdings (Pty) Ltd., Oasis Crescent Property
Company (Pty) Ltd., Oasis Crescent Management Company Limited, Oasis
Asset Management Ltd. and Abli Property Developers (Pty) Ltd.
Transactions with related parties are executed on terms no less
favourable 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 investments in
listed property funds.
The Fund pays an administration fee to Oasis Crescent Property Company
(Pty) Ltd. for identifying and securing tenants for properties held by the
Fund.
Related party transactions
6 months to 6 months to 12 months
30 September 30 September to 31 March
2017 2016 2017
Related party transactions R’000 R’000 R’000
Service charge paid to Oasis
Crescent Property Fund Managers
Ltd. 2 783 2 592 5 386
Property management fees paid to
Oasis Crescent Property Fund
Managers Ltd 680 632 1 335
Rental and related income paid by
Oasis Group Holdings (Pty) Ltd. at
The Ridge@Shallcross 224 206 426
Rental and related income paid by
Oasis Group Holdings (Pty) Ltd. at
24 Milner Road 386 409 799
Letting commission paid to Oasis
Crescent Property Company (Pty)
Ltd. 22 - -
Consulting fees paid to Abli
Property Developers(Pty)Ltd. for
consulting services on capital
projects 16 32 37
Investment management fees paid to
Oasis Asset Management Ltd 277 209 461
Related party balances
Reviewed Reviewed to Audited
30 September 30 September 31 March
2017 2016 2017
Related party balance R’000 R’000 R’000
Trade receivables from Oasis Group
Holdings (Pty) Ltd. - 110 -
Trade payables to Oasis Crescent
Property Fund Managers Ltd. (674) (839) (981)
Trade payables to Oasis Group
Holding (Pty) Ltd. (181) (103) (386)
Trade payables to Oasis Asset
Management Ltd. (54) (40) (52)
Trade payables to Oasis Crescent
Property Company (Pty) Limited. (22) - -
Trade payables to Abli Property
Developers(Pty) Ltd. (18) (33) (17)
Subsequent Events
The Fund entered into a sale of shares agreement with Oasis Crescent
Property Company Proprietary Limited, in terms of which the Fund is to
acquire 100% of Eden Court Oasis Property Joint Venture Proprietary
Limited (ECOP), for a purchase consideration of R57 000 000, to be settled
in cash and through the issue of units in the Fund. The shares in question
were acquired by the Fund on 1 October 2017. ECOP holds a 99 year usufruct
over land at 32 Montreal Drive, Cape Town, being Erf 170986, Cape Town on
which the construction of a modern warehousing facility has recently been
completed. Oasis Crescent Property Company Proprietary Limited is related
to the Fund, for purposes of the JSE Listings Requirements, by virtue of
it holding more than 10% of the Funds units in issue.
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 creation for investors with an
annualised total unitholder return of 13.0% relative to annualised inflation
of 5.9% since inception, resulting in a real return of 7.1%. Your Fund’s
annualised total intrinsic value return is 13.2% per annum since inception.
Figures in %
Cumulative returns Since HY2018 HY2017 FY2017 FY2016 FY2015 FY2014
Inception
Unitholder return 326.8 326.8 n/a 321.1 286.3 227.3 165.3
Intrinsic value 333.9 333.9 n/a 312.2 302.8 248.7 194.6
return
Inflation 98.3 98.3 n/a 95.2 83.7 71.7 65.2
Annual Returns Since HY2018 HY2017 FY2017 FY2016 FY2015 FY2014
Inception
Unitholder return 13.0 1.4 2.5 9.0 18.0 23.4 17.4
Intrinsic value 13.2 5.3 0.9 2.3 15.5 18.4 12.9
return
Inflation 5.9 1.6 3.1 6.3 7.0 3.9 5.9
Market Price 2 000 1 950 2 025 1 950 1 750 1 500
NAV 2 105 2 072 2 050 2 101 1 919 1 706
MARKET OVERVIEW
The current global REIT dividend yield to 10yr bond yield spread remains
attractive relative to their long term averages. REITS with a high exposure
to the major global cities, positive secular demand drivers, enhancing
refurbishments and superior balance sheets are well positioned to outperform
in a normalising interest rate environment. The level of supply in
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. In
South Africa, the demand for office space is linked to confidence and the
employment outlook, which is going to take time to recover. In the
industrial sector, the requirement for supply chain efficiency remains a
positive longer term driver of demand for logistics space but the low level
of business confidence is impacting negatively on demand. Shopping centres
that are appealing destinations or offer convenience are better positioned
to grow their trading densities in a low growth environment.
PORTFOLIO OVERVIEW
HY2018 HY2017 FY2017
R'mil % R'mil % R'mil %
Direct Property 586 47 566 49 586 49
Global Investments 407 32 411 35 377 31
Cash , SA
investments and
other 267 21 185 16 240 20
Total Assets 1 260 100 1 162 100 1 203 100
Period end ZAR/US$
exchange rate 13.54 13.73 13.40
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 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.
REVIEW OF RESULTS AND OPERATIONS
Key points as at 30 September 2017
- Distribution per unit including non-permissible income was 53.8 cents
per unit (HY2017: 49.2 cents)
- Net Asset Value per unit is 2 105 cents per unit (HY2017: 2 072 cents)
- Intrinsic value return of 13.2% per annum since inception compared to
inflation of 5.9% per annum
- Initiating a strategic partnership to invest in new modern logistics
facilities in the Western Cape
HY2018 HY2017 FY2017
Distribution per unit including non-
permissible income (cents) 53.8 49.2 102
Distribution per unit excluding non-
permissible income (cents) 52.7 48.3 100.3
Property portfolio valuation (R’mil) 586 566 586
Investment in Offshore Listed
Properties(R’mil) 407 411 377
Investment in Local Listed Properties
and other current assets (R’mil) 87 88 99
Cash and cash equivalents (R’mil) 180 97 141
Net asset value per unit (cents) 2 105 2 072 2 050
Listed market price at year end
(cents) 2 000 1 950 2 025
Results Overview
HY
HY2018 HY2017 FY2017 2018/2017
(R'000) (R'000) (R'000) %
Direct property net income 21 727 19 223 42 066 13
Global Investment Income 5 678 5 548 10 788 2
Cash and Local Investment
Income 6 143 4 239 8 320 45
Shared expense (3 370) (3 158) (6 441) 7
Distributable Income excl
NPI 30 178 25 852 54 733 17
Average ZAR/US$ exchange
rate 13.23 14.31 13.89 (8)
During the period, the Fund made good progress in reducing vacancies and
improving tenant quality and also had good cost management which contributed
positively towards distributable income for the period. Filling of vacancies
contributed 2% towards the increase in direct property net income with
escalations contributing a further 7%. Action taken against debtors provided
for in the prior period has resulted in recovery of outstanding balances
which contributed a further 3% towards the increase in direct property net
income.
The investment income earned from the global investments increased by 2% and
was impacted by the Rand strengthening by 8%. Distribution per unit in US$
from the Oasis Crescent Global Property Equity Fund including dividend
reinvestment increased by 10% year-on-year. Income received from the Oasis
Crescent Income Fund increased significantly due to the higher distributions
as well as a higher balance held during the period.
Direct Property Portfolio Characteristics
Geographical Profile
Rentable Revenue Revenue Revenue
Area HY2018 HY2017 FY2017
Area
(m²) % (R'mil) % (R'mil) % (R'mil) %
Western Cape 81 796 83 23.4 60 20.8 56 44.2 57
KwaZulu-Natal 16 407 17 15.9 40 16.0 44 32.6 43
Total - Direct
Property (excl
straight-lining) 98 203 100 39.3 100 36.8 100 76.8 100
Note: Revenue includes recoveries and excludes leasing incentives
Segmental Profile
HY2018 HY2017 FY2017
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 22 987 114 8 106 8 104 8
Office 7 629 119 8 112 8 121 8
Industrial 67 587 30 7 30 8 35 7
Total 98 203
Average retail and office rental per m² increased in line with annual rental
escalations. The decrease in average industrial rental per m² was a result
of short term leases at favorable rates coming to an end during the period.
Vacancy Profile
% of total
rentable area HY2018 HY2017 FY2017
Retail 2.2 1.8 1.5
Office 0.0 0.0 0.3
Industrial 12.0 14.6 7.2
14.2 16.4 9.0
Post period end the Fund has successfully concluded additional retail leases
with national tenants which had reduced retail vacancy below 1%. The
industrial vacancy is due to the strategic vacancy to take advantage of
opportunities when leases expire to enhance properties and improve the
tenant mix.
Lease expiry profile
HY2018 HY2017 FY2017
Rental Revenue Rental Revenue Rental Revenue
Area % % Area % % Area % %
- Within 1 year 28 39 48 49 53 53
- Within 2 year 4 8 8 12 5 11
- Within 3 year 30 17 6 7 6 5
- Within 4 year 2 4 2 3 1 2
- Within 5 year
or more years 36 32 36 29 35 29
100 100 100 100 100 100
The lease expiry profile has improved relative to the prior period due to
focus on longer term leases with high quality tenants. This remains a high
priority and further progress is expected for remainder of the year.
Tenant Profile
HY2018 HY2017 FY2017
(%) (%) (%)
A - Large nationals, large listed, large
franchisees, multi-nationals and
government 76 83 71
B - Nationals, listed, franchisees and
medium to large professional firms 5 3 3
C - Other 19 14 20
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. 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 6.5%
and dividend yield of 5.1% which offers value relative to the average bond
yield and inflation of 2.4% and 2.3% 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 advantage of
opportunities. Post the period end, the Fund has initiated 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 was R0.680 million (HY2017: R0.632
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 R2.783 million
(HY2017: R2.592 million)
Units in issue
As at 30 September 2017 the number of units in issue was 57,727,809 (HY2017:
54,077,452)
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 2017.
There has been no change in directors’ interests between the end of the
interim period and the date of approval of the Interim Report.
New Acquisition
Unitholders are advised that the Fund entered into a sale of shares
agreement (“Sale Agreement”) with Oasis Crescent Property Company
Proprietary Limited (“OCPC”) and Eden Court Oasis Property Joint
Venture Proprietary Limited (“ECOP”) on 29 September 2017, in terms
of which the Fund will purchase the entire issued share capital of
ECOP (“Sale Shares”) from OCPC (“Transaction”). Unitholders are referred
to the SENS announcement released on 29 September 2017 for further details
of the transaction.
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 2017 of 5 272.63051
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, 1 December 2017. Unitholders may elect to receive the
distribution in cash or to reinvest the distribution at a rate of
2.50481 units at 2 105 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 Tuesday,
distribution and right of election 24 October
to purchase new units or receive a
cash payment
Finalisation announcement on SENS Friday, 10
in respect of distribution and November
right of election to purchase new
units or receive a cash payment
Circular and form of election Friday, 10
posted to unitholders November
Last day to trade in order to be Tuesday, 28
eligible for the distribution November
Trading commences ex-entitlement to Wednesday,
the distribution 29 November
Listing of maximum possible number Friday, 1
of units that may be purchased, at December
commencement of trade on
Closing date for the election of Friday, 1
cash distribution at 12:00 pm December
Record date Friday, 1
December
Cash distribution cheques posted Monday, 4
and CSDP/broker accounts updated December
with cash
Announcement of the results of the Monday, 4
distribution on SENS December
Unit certificates posted and Wednesday, 6
CSDP/broker accounts updated with December
units
Adjustment of number of new units Friday, 8
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, 29
November 2017 and Friday, 1 December 2017, both days inclusive.
3. The above dates and times are subject to change. Any changes will be
announced on SENS.
4. All times quoted above 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.
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 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 20%.
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 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 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 20%
- the reinvestment ratio for non-resident unitholders will be
2.00385 units at 2 105 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 4 218.10441 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: 57 727
809
Income tax reference number: 3354212148
A circular will be posted to unitholders on or about 10 November 2017
in respect of the income and unit distribution.
By order of the Board
Oasis Crescent Property Fund Managers Limited
Cape Town
24 October 2017
Designated Advisor
PSG Capital Proprietary Limited
Date: 24/10/2017 05:05:00 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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