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 2018 as follows:
Consolidated statement of financial position as at 31 March 2018
Audited Audited
2018 2017
R’000 R’000
Assets
Non-current assets 1 118 910 1 044 272
Investment properties 668 997 571 874
Property, plant and equipment 291 435
Straight-line lease accrual 17 067 13 066
Available-for-sale financial assets 432 555 458 897
Current assets 161 685 159 148
Trade receivables 4 097 4 029
Other receivables 7 103 5 489
Trade receivables from related parties - -
Straight-line lease accrual 611 810
Financial assets at fair value
through profit or loss 138 519 134 505
Other short-term financial assets 8 368 8 364
Cash and cash equivalents 2 987 5 951
Total assets 1 280 595 1 203 420
Unitholders’ funds and liabilities
Unitholders’ funds 1 235 374 1 158 412
Capital of the Fund 806 713 736 401
Retained income 25 880 9 988
Other reserves 402 781 412 023
Current liabilities 45 221 45 008
Trade payables 11 574 11 240
Accruals 448 452
Other payables
2 250 2 295
Trade payables to related parties 921 1 436
Unitholders for distribution 30 014 29 434
Non-permissible income available for
dispensation 14 151
Total unitholders’ funds and
liabilities 1 280 595 1 203 420
Consolidated statement of comprehensive income for the year ended 31 March
2018
Audited Audited
2018 2017
R’000 R’000
Income 122 787 98 733
Rental and related income 79 758 75 777
Income from investments excluding non-
permissible income 39 227 21 313
Straight-lining of lease income 3 802 1 643
Expenses 41 823 40 203
Property expenses 34 314 33 301
Service charges 5 800 5 386
Other operating expenses 1 709 1 516
Net income from rentals and
investments 80 964 58 530
Fair value adjustment to investment
properties excluding straight-
lining of lease income 38 289 20 304
Fair value adjustment to investment
properties 42 091 21 947
Straight-lining of lease income (3 802) (1 643)
Operating profit for the year before non-
permissible income 119 253 78 834
Non-permissible investment income 618 512
Operating profit including non-permissible
income 119 871 79 346
Non-permissible income dispensed (1 149) (922)
Net profit for the year 118 722 78 424
Other comprehensive income
Items that may subsequently be
reclassified to profit or loss (52 093) (48 284)
Fair value (loss)/gain on available-for-
sale financial assets (35 570) (48 284)
Realised fair value gain reclassified to
profit or loss (16 523) -
Total comprehensive income for
the year 66 629 30 140
Basic and diluted earnings per
unit (cents) 203.4 143.7
Additional information:
Headline earnings and distribution income
reconciliation
Basic earnings before non-permissible
income adjustment 119 253 78 834
Non-permissible investment income 618 512
Basic Earnings after non-permissible
income adjustment 119 871 79 346
Non-permissible income dispensed (1 149) (922)
Basic Earnings 118 722 78 424
Adjusted for:
Realised gain on disposal of available-
for-sale financial assets (16 523) -
Fair value adjustment to investment
properties (38 289) (20 304)
Headline earnings 63 910 58 120
Less: Fair value adjustments on financial
assets at fair value through profit or
loss (77) (1 476)
Less: Fair value adjustments on tenant
deposits (52) (268)
Less: Straight-line lease accrual (3 802) (1 643)
Distribution income excluding non-
permissible income 59 979 54 733
Distribution received in advance 460 782
Income distributed 60 439 55 516
Basic earnings and diluted earnings per
unit (cents) 203. 4 143.7
Headline earnings and diluted headline
earnings per unit (cents) 109.5 106.5
Distribution per unit including non-
permissible income (cents) 104.7 102.0
Distribution per unit excluding non-
permissible income (cents) 102.7 100.3
Weighted average units in issue 58 382 990 54 559 623
Units in issue at the end of the year 59 992 811 56 509 343
Consolidated statement of changes in unitholders’ funds for the year ended
31 March 2018
Capital
of the Other Retained
Fund Reserves 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 year
ended 31 March 2017 - - 78 424 78 424
Other comprehensive income
Fair value loss on
available-for-sale
financial assets - (48 284) - (48 284)
Realised gain on disposal
of available for sale
financial assets - - - -
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
Net profit for the year
ended 31 March 2018 - - 118 722 118 722
Other comprehensive
loss
Fair value loss on
available-for-sale
financial assets - (35 570) - (35 570)
Realised gain on disposal
of available for sale
financial assets - (16 523) - (16 523)
Total comprehensive
income for the year
ended 31 March 2018 - (52 093) 118 722 66 629
Issue of units 51 033 - - 51 033
Units issued for property
acquisitions 20 000 - - 20 000
Transaction costs for
issue of new units (261) - - (261)
Transfer to non-
distributable reserve - 42 851 (42 851) -
Distribution received
in advance (460) - 460 -
Distribution to
unitholders - - (60 439) (60 439)
Balance at 31 March 2018 806 713 402 782 25 880 1 235 374
Distributions declared for the year amounted to 102.7 cents (2017: 100.3
cents) per unit.
Consolidated statement of cash flows for the year ended 31 March 2018
Audited Audited
2018 2017
R’000 R’000
Cash flows from operating activities
Net profit for the period 118 722 78 424
Adjusted for:
Non-permissible investment income received (618) (512)
Depreciation 198 180
Provision for receivables impairment (312) 277
Straight-line lease accrual (3 802) (1 643)
Lease incentives 1 165 1 052
Realised gain on sale of financial assets (16 523) -
Fair value adjustment on financial assets
at fair value through profit or loss (129) (1 744)
Fair value adjustment to investment
properties excluding straight-lining of
lease income (38 289) (20 304)
Net operating cash flow before changes in
working capital 60 412 55 730
Decrease/(increase) in current assets
Trade receivables 1 453 (1 217)
Other receivables (1 615) (566)
Trade receivables from related parties - 110
Increase/(decrease) in current liabilities
Trade payables 327 2 200
Accruals (3) 8
Other payables (678) 942
Trade payables to related parties (516) 358
Cash generated from operations 59 380 57 565
Non-permissible investment income received 618 512
Unitholders for distribution (8 827) (1 767)
Non-permissible income (136) 69
Net cash inflow from operating activities 51 035 56 379
Cash flows from investing activities
Acquisition of available-for-sale
financial assets (61 289) (25 330)
Acquisition of investment in subsidiary (36 247) -
Acquisition of financial assets at fair
value through profit or loss (20 937) (58 550)
Acquisition of property, plant and equipment (54) (260)
Capital expenditure to investment properties (4 117) (1 013)
Lease incentives paid (203) -
Acquisition of short-term financial assets (1 873) (3 081)
Proceeds from disposal of available-for-sale
financial assets 52 061 -
Proceeds from disposal of financial assets
at fair value through profit or loss 18 921 11 008
Net cash outflow from investing activities (57 738) (77 226)
Cash flows from financing activities
Proceeds from issue of units - 25 000
Transaction cost (261) (404)
Net cash (outflow)/inflow from financing
Activities (261) 24 596
Net (decrease)/increase in cash and
cash equivalents (2 964) 3 749
Cash and cash equivalents
At the beginning of the year 5 951 2 202
At the end of the year 2 987 5 951
Segmental information for the year ended 31 March 2018
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 26 282 11 518 21 686 - - 59 486
Recoveries 13 079 2 437 4 756 - - 20 272
Income from
investments
excluding non-
permissible
income
Dividend income
- offshore - - - 11 233 - 11 233
Permissible
investment
income -
domestic - - - 11 342 - 11 342
39 361 13 955 26 442 22 575 - 102 333
Segment expense
Property
Expenses (excluding
Provision for
impairment) 20 794 4 987 8 275 - - 34 056
Provision for
receivables impairment 242 16 - - - 258
Service charges - - - - 5 800 5 800
Other operating
expenses - - - 490 1 219 1 709
21 036 5 003 8 275 490 7 019 41 823
Realised gain on
sale of
available-for-
sale financial
assets - - - 16 523 - 16 523
Segment result
Operating
profit/(loss) 18 325 8 952 18 167 38 608 (7 019) 77 033
Net finance
income
Non-permissible
investment income - - - 121 497 618
Non-permissible
investment dispensed (532) - - (120) (497) (1 149)
Net profit/(loss)
before
straight-line
lease income
and fair value
change to
investment
properties 17 793 8 952 18 167 38 609 (7 019) 76 502
Straight-lining
of lease
income 837 2 005 960 - - 3 802
Fair value
adjustment to
investment
properties 13 583 9 492 15 214 - - 38 289
Fair value
adjustment to
financial
assets at fair
value through
profit or loss - - - 129 - 129
Net profit/(loss) 32 213 20 449 34 341 38 738 (7 019) 118 722
after straight line
lease income and fair
value change to
investment properties
Segment assets
Investment
properties 251 766 131 876 285 355 - - 6668 997
Property, plant
and equipment 291 - - - - 291
Straight-line
lease accrual
non-current 7 546 2 005 7 516 - - 17 067
Straight-line
lease accrual
current 524 87 - - 611
Available-for-
sale financial
assets - - - 432 555 - 432 555
Other short term assets 4 375 83 3 910 - - 8 368
Trade receivables 2 376 762 711 - 247 4 097
Other receivables 1 407 968 2 402 2 293 33 7 103
Financial assets
at fair value
through profit
or loss - - - 138 519 - 138 519
Cash and cash
equivalents - - - 2 987 - 2 987
268 283 135 695 299 982 576 354 280 1 280 594
Segment
liabilities
Trade payables 5 778 712 5 047 - 37 11 574
Accruals - - - - 447 447
Other payables 690 14 1 216 - 330 2 250
Trade payables
to related
parties 188 2 117 27 587 921
Unitholders for
distribution - - - - 30 014 30 014
Non-permissible - - - - 14 14
income
available for
dispensation
6 656 728 6 380 27 31 429 45 220
Net current segment
assets/(liabilities) 2 026 1 085 730 143 772 (31 149) 116 464
Capital
Expenditure (incl.
Property, plant and
equipment) 3 627 - 544 - - 4 171
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
receivables 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
income
available for
dispensation - - - - 151 151
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 (including
Property, plant and
equipment) 1 189 62 22 - - 1 273
Commentary
Basis of preparation and accounting policies
The preliminary consolidated 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 consolidated financial statements from which the
preliminary consolidated 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 consolidated annual
financial statements of the Fund.
The consolidated 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 104.7 cents
per unit (FY2017: 102.0 cents)
NAV per unit is 2 059 cents per unit (FY2017: 2 050 cents)
Intrinsic value return of 12.6% per annum since inception compared to
inflation of 5.9% per annum
2018 2017
Distribution per unit including non-permissible
income (cents) 104.7 102.0
Distribution per unit excluding non-permissible
income (cents) 102.7 100.3
Property portfolio valuation(Rm) 687 586
Investment in Offshore Listed Properties (Rm) 398 379
Investments in Local Listed Properties and other
current assets(Rm) 55 97
Net asset value per unit (cents) 2 059 2 050
Listed market price at year end (cents) 2 060 2 025
Movement in investment properties: R’000 R’000
Carrying value at the beginning of the year 571 874 528 609
Acquisitions during the period 55 679 23 000
Subsequent capitalised expenditure 4 117 1 013
Movement in lease incentives (962) (1 052)
Fair value adjustment to investment properties
excluding straight-lining of lease income 38 289 20 304
Revaluation 42 091 21 947
Change in straight-line lease accrual (3 802) (1 643)
Carrying value at the end of the year 668 997 571 874
The valuation of investment properties includes 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 2018 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% (2017: 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 their 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 2018:
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 - 374 946 - 374 946
Investment in listed property
funds 34 724 - - 34 724
Investment in Oasis Crescent
International Property Equity
Feeder Fund - 22 885 - 22 885
Financial assets at fair value
through profit or loss
Investment in Oasis Crescent
Income Fund - 138 519 - 138 519
Other short-term financial assets - 8 368 - 8 368
Investment property
Investment property - - 668 997 668 997
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
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 fair value of financial instruments traded in active markets is based on
quoted market prices at the statement 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 comprise 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 (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 Oasis Crescent Property Fund (Fund) is a well-diversified REIT invested
in South African direct and listed property investments and high quality
global listed REITs. With no debt and substantial reserves, which provides
flexibility to take advantage of opportunities, the Fund is well-positioned
to take advantage of the global rise in interest rates.
With the Rand strengthening during the period it has had an impact on earnings
and the Net Asset Value (NAV) of the Fund. The Fund however utilised this
strength to further geographically diversify by investing in market leading
REITs with exposure to long term secular growth and major global cities. With
the subsequent weakening of the Rand post year-end the Fund has benefitted
with an increase in NAV by R33 million resulting in the NAV increasing to
2,114 cents per unit as at 2 May 2018.
The Fund’s direct property portfolio is well positioned to take advantage of
a recovery in growth in the South African Economy, with the majority of the
portfolio situated in the Western Cape which has the best property fundamentals
in South Africa. The Fund is well placed to take advantage of long term growth
in the logistics sector and continues to negotiate leases with national and
multi-national players in this sector. The increase in the percentage of
national and multi-national tenants in the tenant profile reflects the
improvement in tenant quality.
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 12.9% relative to annualised inflation of 5.9% since
inception, resulting in a real return of 7.0%. Your Fund’s annualised total
intrinsic value return is 12.6% per annum since inception.
Cumulative returns Since 2018 2017 2016 2015 2014 2013
Inception
Unitholder return 349.7 349.7 321.1 286.3 227.3 165.3 125.9
Intrinsic value 334.7 334.7 312.2 302.8 248.7 194.6 161.0
return
Inflation 103.1 103.1 95.2 83.7 71.7 65.2 56.0
Annual returns Since
Inception 2018 2017 2016 2015 2014 2013
Unitholder return 12.9 6.8 9.0 18.0 23.4 17.4 10.7
Intrinsic value 12.6 5.4 2.3 15.5 18.4 12.9 16.4
return
Inflation 5.9 4.0 6.3 7.0 3.9 5.9 5.9
Market Price 2 060 2 025 1 950 1 750 1 500 1 350
NAV 2 059 2 050 2 101 1 919 1 706 1 587
MARKET OVERVIEW
The current Global REIT DY to 10yr bond yield spreads remain attractive
relative to their long-term averages and Global 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 Global
developed property markets has remained disciplined and net absorption remains
positive in most of the markets.
In South Africa, shopping centres that are appealing destinations or offer
convenience are better positioned to grow their trading densities and rentals
in a competitive environment. In the industrial sector, the requirement for
supply chain efficiency remains a positive driver of demand for logistics
space. The demand for South African office space is linked to confidence and
the employment outlook, which is going to take time to recover.
PORTFOLIO OVERVIEW
2018 2017 2016
R'mil % R'mil % R'mil %
Direct Property 687 54 586 49 541 48
Global Investments 398 31 379 32 421 37
Cash, SA
Investments and
other 196 15 238 19 162 15
Total Assets 1 281 100 1 203 100 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. A newly developed, modern logistics facility, located in the Cape Town
Airport City Industrial Park, was acquired during this period. This
acquisition provides the Fund with an excellent opportunity to target and
build relationships with the top quality global logistics companies that
operate in South Africa. 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 Global 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.
2018 2017 2016 2018/2017 2018/2016
(R'000) (R'000) (R'000) % %
Direct
property net
income 44 911 42 066 44 990 7 -
Global
Investment
Income 11 234 10 788 10 889 4 2
Cash and Local
Investment
Income 10 853 8 320 6 646 30 32
Shared expense (7 018) (6 441) (5 576) 9 13
Distributable
Income excl
NPI 59 980 54 733 56 949 10 3
During the period, the Fund took the opportunity to renew leases with key
tenants and entered into leases with major national retailers which has
contributed positively towards direct property income. Partial vacancy
resulted in increased expenses being borne by the Fund during the period.
Filling of vacancies at favorable rates contributed 2% towards the
increase in direct property net income with escalations contributing a
further 5%.
The investment income earned from the global investments increased by 4%
due to an 8% increase in the US$ distribution, a 5% increase in the number
of units offsetting the Rand strengthening by 9%. The 8% increase in the
distribution per unit in US$ from the Oasis Crescent Global Property
Equity Fund was driven by the average distribution growth of 5% at the
REIT level and the benefit from a stronger Pound, Euro and Rand to the US
Dollar. Cash and local investment income benefited from additional
investments and a significant increase in the cash flow yield of the Oasis
Crescent Income Fund during the current financial period. SA listed
property investment income was lower due to the recycling of investments.
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 subsidiary 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 2018 2017
Area (m²) % (R'mil) % (R'mil) %
Western Cape 87 546 84 48.8 60 44.2 57
KwaZulu-Natal 16 407 16 32.1 40 32.6 43
Total - Direct Property (excl
straight lining) 103 953 100 80.9 100 76.8 100
Note: Revenue includes recoveries and excludes leasing incentives
Segmental Profile
2018 2017
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 22 987 109 8 104 8
Office 7 629 129 8 121 8
Industri
al 73 337 31 7 35 7
TOTAL 103 953
Like for like change in average retail rental per m² increased by 7% year
on year. The total year on year increase of 5% is due to the change in
tenant mix as a result of securing high quality tenants on long term
leases. Average office rental per m² increased in line with annual rental
escalations. The decrease in average industrial rental per m² was impacted
by the short term leases at favourable rates coming to an end during the
current period and the securing of longer leases with lower initial base
rentals.
Vacancy Profile
% of total rentable area 2018 2017
Retail 0.3 1.5
Office 0.0 0.3
Industrial 12.4 7.2
Note: This relates only to the Direct Property Portfolio
A newly developed, modern logistics facility, located in the Cape Town
Airport City Industrial Park, was acquired during this period. We are in
the process of targeting top quality global logistics companies to tenant
this property.
Lease Expiry Profile
2018 2017
Rental Area Revenue Rental Area Revenue
% % % %
- Within 1 year 23 24 53 53
- Within 2 years 7 7 5 11
- Within 3 years 27 18 6 5
- Within 4 years 9 21 1 2
- Within 5 years or more
years 34 30 35 29
100 100 100 100
Tenant Profile
2018 2017
(%) (%)
A - Large nationals, large listed, large franchisees,
multi-nationals and government 71 77
B - Nationals, listed, franchisees and medium to large
professional firms 20 3
C - Other 9 20
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. The Oasis Crescent Global Property Equity Fund
displays very attractive valuation characteristics with an average cash flow
yield of 6.8% and dividend yield of 5.2% 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 strategy of The Manager is to ensure a high-quality Portfolio with low
vacancies and a tenant profile increasingly focused on large, institutional,
national or multinational tenants. Going forward, we remain focused on the
lease expiry profile and will look to renew or replace leases in line with
our leasing strategy. The Fund will continue to look to take advantage of
acquisition or development opportunities in line with our strategy of
diversifying and growing our income profile. The acquisition of Oasis
Airport City 1 further enhances the property portfolio and will contribute
towards improving the tenant mix by attracting high quality tenants.
ADDITIONAL INFORMATION
Property management
Property management is outsourced to the Manager and external service
providers. The amount paid to the Manager during the 2018 financial year was
R1.39 million (FY2017: R1.34 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 R5.80 million during
the 2018 financial year (FY2017: R5.39 million).
Units in issue
As at 31 March 2018, the number of units in issue was 59,992,811 (FY2017:
56,509,343).
Unitholders' holding more than 5% of issued units as at 31 March 2018:
NUMBER OF HOLDING
NAME UNITS (%)
Oasis Crescent Property Company
(Pty) Ltd. 7 807 926 13.0
Oasis Crescent Balanced Progressive
Fund of Funds 7 361 620 12.3
Oasis Crescent Pension Annuity
Stable Fund 6 393 295 10.7
Oasis Crescent Equity Fund 4 861 588 8.1
Oasis Crescent Balanced Stable Fund
of Funds 4 049 840 6.8
Oasis Crescent Retirement Annuity
High Equity Fund 3 779 915 6.3
Total 34 254 184 57.1
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.
Oasis Crescent Property Company (Pty) Limited 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 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
2018 2017
R’000 R’000
Service charge paid to Oasis Crescent Property Fund
Managers Limited 5 800 5 386
Property management fees paid to Oasis Crescent
Property Fund Managers Limited 1 392 1 335
Rental and related income from Oasis Group
Holdings Proprietary Limited at The
Ridge@Shallcross 461 426
Rental and related income from Oasis Group
Holdings Proprietary Limited at 24
Milner Road 840 799
Letting commission paid to Oasis Crescent Property
Company (Pty) Limited for securing tenants 1 162 -
Property related expenses paid to Oasis Crescent
Property Company (Pty) Limited 306 -
Consulting fees paid to Abli Property Developers
Proprietary Limited for consulting services on
capital projects 87 37
Investment management fees paid to Oasis
Asset Management 490 461
Related party balances
Trade payables to Oasis Crescent Property Fund
Managers Limited (743) (981)
Trade payables to Oasis Group Holdings Proprietary
Limited (74) (386)
Trade payables to Oasis Crescent Property Company
(Pty) Limited (58) -
Trade payables to Oasis Asset Management (27) (52)
Trade payables to Abli Property Developers
Proprietary Limited (19) (17)
On 1 October 2017, the Fund acquired a wholly owned subsidiary, Eden Court
Oasis Property Joint Venture (Pty) Ltd for R57 million from Oasis Crescent
Property Company (Pty) Ltd. The purchase price was settled R37 million in
cash and R20 million in units.
In the current reporting period, the Fund issued 2.457 million units upon
reinvestment of distributions. 1.218 million units were issued in June 2017
at 2,050 cents per unit and 1.238 million units were issued in December 2017
at 2.105 cents per unit.
The Fund issued a further 1.027 million units to Oasis Crescent Property
Company (Pty) Ltd in consideration for Eden Court Oasis Property Joint
Venture (Pty) Ltd at an issue price of 1,947 cents per unit.
Changes to the board of directors of the Manager of the Fund
On 22 January 2018 unitholders of the Fund were advised that Mr Abduraghman
Mayman had been appointed as an independent non-executive director to the
board of Directors of Oasis Crescent Property Fund Managers Limited, the
Manager of the Fund, with effect from 19 January 2018, being the date on
which his appointment was approved by the Financial Services Board.
Declaration announcement in respect of distribution for the 6 months ended
31 March 2018.
Notice is hereby given that a distribution for the six-month period ended
31 March 2018 has been approved and declared of 5 000.87725 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, 8 June 2018. Unitholders may elect to receive the
distribution in cash or to reinvest the distribution by the purchase of new
units at a rate of 2.42879 units at 2 059 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 2018
Declaration announcement on SENS of distribution Thursday, 3 May
and right of election to purchase new units or
receive a cash payment
Circular and form of election posted to Friday, 18 May
unitholders
Finalisation announcement on SENS in respect of Friday, 18 May
distribution and right of election to purchase
new units or receive a cash payment
Last day to trade in order to be eligible for the Tuesday, 5 June
distribution
Trading commences ex- entitlement to the Wednesday, 6 June
distribution
Listing of maximum possible number of units that Friday, 8 June
may be purchased at commencement of trade on
Closing date for the election of cash Friday, 8 June
distribution at 12:00 pm on
Record date for the distribution Friday, 8 June
Cash distribution cheques posted and CSDP/broker Monday, 11 June
accounts updated with cash
Announcement of the results of the distribution Monday, 11 June
on SENS
Unit certificates posted and CSDP/broker accounts Wednesday, 13 June
updated with units
Adjustment of number of new units listed on or Friday, 15 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, 6
June 2018 and Friday, 8 June 2018, 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 1.943032
units at 2 059 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 4 000.70180 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, 18 May 2018, in
respect of the unit and income distribution.
The number of units in issue at the date of the aforesaid distribution is
59 992 811. 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 2018
PSG Capital Proprietary Limited
Designated Adviser
Date: 03/05/2018 03:00:00 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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