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OASIS CRESCENT PROPERTY FUND - Short-Form Announcement: Results for the Year Ended 31 March 2020 and Distribution Declaration

Release Date: 30/04/2020 09:00
Code(s): OAS     PDF:  
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Short-Form Announcement: Results for the Year Ended 31 March 2020 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
(“OCPF” or “the Fund”)


SHORT-FORM ANNOUNCEMENT: RESULTS FOR THE YEAR ENDED 31 MARCH 2020
AND DISTRIBUTION DECLARATION


OASIS CRESCENT PROPERTY FUND PHILOSOPHY & STRATEGY

The Oasis Crescent Property Fund is a well-diversified real estate investment trust (“REIT”)
invested in South African direct property investments and high quality global listed REITs.
The Fund owns a direct property portfolio which is focused on the Western Cape with prime
locations in and around Cape Town and the key industrial and logistic nodes serving the
area. There is only 1 property in the direct property portfolio that is located outside the
Western Cape.

Our focus over the past 15 years in managing this portfolio has been on excellence in the
execution of property basics, which include the continuous improvement of the tenant mix
and lease expiry profile and ensuring that properties are maintained at the highest
standards, with the aim of delivering sustainable income into perpetuity.

In line with our philosophy, a key differentiator between the Fund and the rest of the SA
listed REITs is that it is one of the few SA REITs, if not the only, that has no debt. This
absence of debt and financial leverage delivers a sustainable rate of growth during the
normal course of operations, but, more importantly, the Fund is not exposed to the risk and
negative effects of financial leverage during difficult times, such as those we are currently
experiencing.

1.   THE PERIOD IN BRIEF

Unitholder return of 12.0% per annum since inception compared to inflation of 5.6% per annum
and 7.5% annualised return for the SA listed property index (“SAPY”) over the same period.

Direct property portfolio focused on the Western Cape with prime locations in and around Cape
Town and the key industrial and logistic nodes serving the area. In an opportunity to recycle
capital, Jagger Road was disposed during this period at a premium relative to its last carrying
value at 31 March 2019 of R30 million.

During the past year, the Fund made good progress with the ongoing enhancement of its
portfolio and improvement of tenant quality. In particular, the conclusion of a lease with Clicks
at The Ridge@Shallcross was another important step in the diversification of its tenant mix.

87% of tenants are multi-national, national, or government-related and 76% of the current
rental income is in the Industrial, Office and Retail Essential Goods & Services sectors. The
Fund has no exposure to the Edcon Group.
Distribution per unit including non-permissible income was 102.1 cents per unit relative to
112.8 cents in the prior year.

Distribution per unit was impacted by 5.3 cents per unit or 4.7% due to strategic vacancy for
property enhancement and property disposal and by 1.7 cents per unit or 1.5% due to
additional property security costs incurred.

Net asset value per unit of 2 172 cents per unit (FY2019: 2 198 cents) with a positive direct
property valuation increase of 4%.

Tough environment, but key differentiator is that the Fund has no debt and instead has
substantial cash and liquid reserves to take advantage of opportunities. The Fund remains
focused on excellence in the execution of property basics and Management is confident in the
strategy of the Fund.

2.   KEY FINANCIAL HIGHLIGHTS

Revenue decreased by 1.4% to R114.6 million, from R116.2 million in the prior
corresponding period.

Distributable income decreased by 6.4% to R64.3 million, from R68.7 million in the prior
corresponding period.

Distribution per unit decreased by 9.7% to 101.0 cents per unit, from 111.9 cents per unit in
the prior corresponding period.

Net asset value per unit decreased by 1.2% to 2 172 cents per unit, from 2 198 cents per
unit in the prior corresponding period.

Headline earnings per unit decreased by 85.0% to 30.9 cents per unit, from 205.9 cents per
unit in the prior corresponding period.

Earnings per unit decreased by 70.1% to 75.6 cents per unit, from 252.9 cents per unit in the
prior corresponding period.

3. SUBSEQUENT EVENTS AND OUTLOOK

There were two events at the end of this financial period which will have an impact on the
South African economy and operating environment after the reporting period.

Firstly, ratings agency Moody’s downgraded the South African sovereign credit rating on
27 March 2020 which resulted in the last remaining investment grade rating being lost. This
will raise the cost of debt and equity capital and result in Corporates with high levels of debt
and weak or negative cash flows coming under pressure. Over the short term this will add
pressure on the economy due to lower confidence, but over the longer term it should
encourage the necessary reform required and there will be some offset from the weaker
currency resulting in South Africa becoming more competitive in the global market. In the
property market, this higher cost and reduced availability of capital will increase the barriers
to entry and lead to lower levels of supply which will impact positively on the demand for
existing well-located properties.

Secondly, the President announced the COVID-19 State of Disaster on 15 March and at
midnight on 26 March 2020, South Africa commenced its COVID-19 nation-wide lockdown
which has recently been extended to 30 April 2020. The lockdown measures are impacting
all role-players in the SA property market and the major property bodies in SA have formed a
Property Industry Group to collectively engage on behalf of the commercial real estate
sector. Engagement is ongoing with regards to assistance and relief for tenants that are
hardest hit by complying with the lockdown and it is too early to speculate on the potential
outcome. However, the Fund is well positioned with 87% of tenants being multi-national,
national or government related and 76% of the current rental income is in the Industrial,
Office and Retail Essential Goods & Services sectors. In addition, the Fund has zero
exposure to the Edcon Group.

The Fund is uniquely positioned in this tough environment due to its very strong balance
sheet with no debt and accumulated cash and liquid reserves which provides sustainability
and the flexibility to take advantage of opportunities. Our focus remains on excellence in the
execution of the property basics which include the continuous improvement of the tenant mix
and lease expiry profile and ensuring that properties are maintained at the highest standards
to deliver sustainable income into perpetuity. The Fund and its strategic partner will continue
to assess logistics and mixed-use development opportunities in the Western Cape and the
Management is confident in the strategy of the Fund.

4.   DECLARATION ANNOUNCEMENT IN RESPECT OF THE DISTRIBUTION FOR THE
     6 MONTHS ENDED 31 MARCH 2020

Notice is hereby given that a distribution of 4,878.54402 cents (in aggregate), after non-
permissible income, for every 100 (one hundred) units so held, has been approved and
declared to unitholders recorded in the register of OCPF at close of business on Friday,
5 June 2020, from income. Unitholders may elect to receive the distribution in cash or to
reinvest the distribution by the purchase of new units at a rate of 2.24611 units at 2,172
cents per unit (in aggregate), for every 100 (one hundred) units so held.

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.

The publication of this announcement and/or applicable documents and the right to reinvest
the distribution in jurisdictions other than South Africa may be restricted by law and a failure
to comply with any of these restrictions may constitute a violation of the securities laws of
any such jurisdictions. OCPF units have not been and will not be registered for the purposes
of the election under the securities laws of the United Kingdom, European Economic Area or
EEA, Canada, United States of America, Japan or Australia and accordingly are not being
offered, sold, taken up, re-sold or delivered directly or indirectly to recipients with registered
addresses in such jurisdictions.

In respect of the distribution, unitholders who will receive the distribution are hereby informed
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(1) 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 1.79689 units at 2,172 cents
     per unit, for every 100 (one hundred) units held on the record date; and

 -   should such unitholders elect to receive the distribution in cash, they will receive
     3,902.83522 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(1)

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, 15 May 2020, in respect of the unit and
income distribution.

Units in issue at the date of declaration of the distribution: 64 462 922

Income tax reference number: 3354212148

The salient dates of the dividend declaration are:

                                                                                                     2020
Release of results and declaration announcement on SENS of distribution and            Thursday, 30 April
right of election to purchase new units or receive a cash payment

Circular and form of election posted to unitholders                                        Friday, 15 May

Finalisation announcement on SENS in respect of distribution and right of                  Friday, 15 May
election to purchase new units or receive a cash payment

Last day to trade in order to be eligible for the distribution                            Tuesday, 2 June

Trading commences ex-entitlement to the distribution                                    Wednesday, 3 June

Listing of maximum possible number of units that may be purchased at                       Friday, 5 June
commencement of trade

Closing date for the election of cash distribution or to reinvest at 12:00 pm on           Friday, 5 June

Record date for the distribution                                                           Friday, 5 June

Cash distribution cheques posted and CSDP/broker accounts updated with cash                Monday, 8 June

Announcement of the results of the distribution on SENS                                    Monday, 8 June

Unit certificates posted and CSDP/broker accounts updated with units                   Wednesday, 10 June

Adjustment of number of new units listed on or about                                      Friday, 12 June


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, 3 June 2020
      and Friday, 5 June 2020, 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.

5.   SHORT-FORM ANNOUNCEMENT

This short-form announcement is the responsibility of the directors of the Company. It
contains only a summary of the information in the full announcement (“Full
Announcement”) and does not contain full or complete details. The Full Announcement can
be found at:

https://senspdf.jse.co.za/documents/2020/JSE/ISSE/OAS/FY2020.pdf

Copies of the Full Announcement are also available for viewing on the Company’s website at
https://www.oasis.co.za/default/content.aspx?initial=true&moveto=704. In addition, electronic
copies of the Full Announcement may be requested and obtained, at no charge, from the
Fund at Property@oasiscrescent.com and from the Fund’s designated advisor, PSG Capital.

Any investment decisions by investors and/or shareholders should be based on
consideration of the Full Announcement, as a whole.

These annual results for the year ended 31 March 2020 have been audited by the
Company’s auditors, PricewaterhouseCoopers Inc. who expressed an unmodified audit
opinion thereon. The audit opinion also includes communication of key audit matters. The
audit opinion is available, along with the annual financial statements, and the summary
financial results, on the Company’s website at
https://www.oasis.co.za/default/content.aspx?initial=true&moveto=704.

Cape Town
30 April 2020

Designated Adviser

PSG Capital

Date: 30-04-2020 09:00:00
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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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