Investec Property Fund Limited HY 2014 results

606 views

Published on

Investec Property Fund Limited HY 2014 results

Published in: Investor Relations
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
606
On SlideShare
0
From Embeds
0
Number of Embeds
13
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Investec Property Fund Limited HY 2014 results

  1. 1. Investec Property Fund Limited Reviewed interim condensed financial results for the six months to 30 September 2013
  2. 2. Highlights Interim distribution 7.7% Acquisitions during the period R1.6 billion Industrial space let 32 800 m2 to 50.46 cps concluded and announced A further 28 000 m2 committed Capital structure converted to all-equity REIT status obtained, effective 1 April 2013 Gearing Will increase to 31.0% after all announced acquisitions are completed Term debt market accessed with 10.1% R500 million Vacancy 2.8% Net asset value per share 4.8% facility in place Strong underlying property fundamentals
  3. 3. Statement of comprehensive income Reviewed Six months to 30 September 2013 Unaudited Six months to 30 September 2012 Audited Year to 31 March 2013 Revenue, excluding straight-line rental revenue adjustment Straight-line rental revenue adjustment 241 556 21 046 127 704 15 192 331 398 43 790 Revenue Property expenses 262 602 (52 589) 142 896 (25 813) 375 188 (59 669) Net property income Other operating expenses Asset management fee 210 013 (2 918) (12 620) 117 083 (1 669) (6 616) 315 519 (3 041) (17 834) Operating profit Fair value adjustments Profit on disposal of investment property Finance costs Finance income 194 475 (35 473) 10 953 (18 500) 5 106 108 798 (15 192) – (20 047) 6 081 294 644 (82 856) 39 066 (39 184) 25 143 Profit before debenture interest Debenture interest 156 561 (119 935) 79 640 (79 561) 236 813 (236 576) 36 626 39 79 (22) 237 (66) 39 – – (22) (4 254) 4 254 (66) (30 251) 30 251 36 665 57 171 Total comprehensive income attributable to equity holders Less: Net fair value adjustment on investment property Straight-line rental revenue adjustment Profit on disposal of investment property Add: Fair value adjustment on interest rate swap derivatives Debenture net fair value adjustment Debenture interest 36 665 – (21 046) (10 953) 5 816 29 657 119 935 57 – (15 192) – 5 691 9 501 79 561 171 (96 168) (43 790) (39 066) (4 124) 141 820 236 576 Distributable earnings 160 074 79 618 195 419 317 220 000 317 220 000 – – – – 170 000 000 170 000 000 – – 317 220 000 236 430 502 – – – 50.46 11.56 11.56 46.83 46.83 51.38 0.03 0.03 0.03 99.99 100.13 119.44 0.07 0.07 (40.60) R’000 Profit before taxation Taxation – normal taxation – deferred taxation charge – deferred taxation credit Total comprehensive income attributable to equity holders Reconciliation of attributable earnings to distributable earnings Number of linked units and shares Shares in issue at the end of the period Weighted average number of shares in issue Linked units in issue at the end of the period Weighted average number of linked units in issue Cents Distribution per linked unit Earnings per linked unit Headline earnings per linked unit Dividend per share Earnings per share Headline earnings/(loss) per share
  4. 4. Statement of financial position Reviewed Six months to 30 September 2013 Audited Year to 31 March 2013 Unaudited Six months to 30 September 2012 ASSETS Non-current assets 4 440 946 4 187 000 2 309 981 Investment property Straight-line rental revenue adjustment 4 348 177 92 769 4 115 125 71 875 2 264 282 45 699 Current assets 240 143 452 343 111 976 Trade and other receivables Taxation receivable Cash and cash equivalents 44 162 – 195 981 53 613 – 398 730 16 492 3 95 481 Total assets 4 681 089 4 639 343 2 421 957 EQUITY AND LIABILITIES Stated share capital Retained earnings Debentures 4 092 282 36 665 – 3 172 – 3 940 004 1 700 – 1 845 779 Total shareholders’ interest R’000 4 128 947 3 943 176 1 847 479 Non-current liabilities 461 110 455 294 456 860 Long-term borrowings Other non-current financial liabilities 450 000 11 110 450 000 5 294 450 000 6 860 Current liabilities 91 032 240 873 117 618 Trade and other payables Taxation payable Linked unitholders for interest and dividends 90 988 44 – 76 625 41 164 207 38 000 – 79 618 4 681 089 4 639 343 2 421 957 1 301.60 1 243.04 1 085.75 Reviewed Six months to 30 September 2013 Unaudited Six months to 30 September 2012 Audited Year to 31 March 2013 Cash generated from operations Finance income received Finance costs paid Taxation paid Distribution paid to unitholders 197 460 4 480 (18 461) (41) (164 207) 89 442 6 081 (10 409) (22) (83 789) 236 976 20 712 (29 887) (28) (163 404) Net cash inflow from operating activities Net cash outflow from investing activities Net cash inflow/(outflow) from financing activities 19 231 (221 486) (494) 1 303 (229 389) 319 000 64 369 (1 485 664) 1 815 458 Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period (202 749) 398 730 90 914 4 567 394 163 4 567 Cash and cash equivalents at the end of the period 195 981 95 481 398 730 Total equity and liabilities Net asset value per share/linked unit (cents) Condensed statement of cash flows R’000
  5. 5. Condensed statement of changes in equity Reviewed Six months to 30 September 2013 Unaudited Six months to 30 September 2012 Audited Year to 31 March 2013 3 172 1 700 1 700 Capital conversion 4 089 110 – – – Fair value of debentures to stated capital – Fair value of debenture interest to stated capital 3 969 175 119 935 – – – – 36 665 – – 57 – (57) 171 1 472 (171) 4 128 947 1 700 3 172 R’000 At the beginning of the period Total comprehensive income attributable to equity holders Issue of ordinary shares Dividends paid to ordinary shareholders Balance at the end of the period Condensed segmental information For the six months ended 30 September 2013 R’000 Office Industrial Retail Total Statement of comprehensive income extracts Revenue, excluding straight-line rental revenue adjustment Property expenses 80 194 (12 974) 62 465 (13 979) 98 897 (25 636) 241 556 (52 589) Segment results 67 220 48 486 73 261 188 967 Statement of financial position extracts Investment property opening balance Net additions, acquisitions and disposals Fair value adjustment (including straight-lining) 1 499 200 139 448 15 259 913 050 82 135 5 000 1 774 750 11 315 788 4 187 000 232 899 21 046 Fair value of investment property 1 653 907 1 000 185 1 786 853 4 440 945 Office Industrial Retail Total Statement of comprehensive income extracts Revenue, excluding straight-line rental revenue adjustment Property expenses 64 355 (12 280) 49 569 (11 592) 13 780 (1 941) 127 704 (25 813) Segment results 52 075 37 977 11 839 101 891 Statement of financial position extracts Investment property opening balance Net additions, acquisitions and disposals Fair value adjustment (including straight-lining) 1 182 600 1 658 10 282 697 300 80 039 3 593 185 500 147 692 1 317 2 065 400 229 389 15 192 Fair value of investment property 1 194 540 780 932 334 509 2 309 981 For the six months ended 30 September 2012 R’000
  6. 6. Commentary Introduction Investec Property Fund Limited (“the Fund”) is a Real Estate Investment Trust (“REIT”), having listed on the JSE Limited (“JSE”) on 14 April 2011. It currently comprises a portfolio of 52 properties in South Africa with a total Gross Lettable Area (“GLA”) of 590 658m² valued at R4.4 billion. The objective of the Fund is to grow its asset base by investing in well-priced income-producing properties in the office, industrial and retail sectors to optimise capital and income returns over time for unitholders. Effectively, all rental income, less operating costs and interest on debt, is distributed to unitholders semi-annually. Financial results The board of directors is pleased to announce a 7.7% increase in the interim distribution to 50.46 cents per share (“cps”) for the six months ended 30 September 2013 (30 September 2012: 46.83 cpu). The growth in distribution has been underpinned by 7.1% growth in the net income of the base portfolio (being properties held for 12 months prior to the beginning of FY13), with further growth derived from the acquisitions made towards the end of FY12. These results reflect the defensiveness of the portfolio and management’s continual focus on the underlying property fundamentals against a backdrop of statutory pressures. The performance is further underpinned by a significant proportion of high-quality, long-term single tenancies, low vacancies and an elongated portfolio lease expiry profile. Receivables have been tightly managed during the year under review and at the year-end gross arrears were limited to R1.8 million; representing 0.4% (31 March 2013: 0.55%) of total collectables over the period. Asset growth (R’billion) 70 properties 5.5 5.0 1.3 Investment property 18 properties 4.4 52 properties 50 properties 4.5 4.0 276 3.5 3.0 2.5 2.0 32 properties 29 properties 4.2 1.5 1.0 1.7 2.1 0.5 0.0 Assets April 2011 March 2012 March 2013 Announced acquisitions September 2013 Top 10 properties Property Sector Book value (R) Woolworths House, Cape Town The Firs, Rosebank Balfour Mall Alrode Multipark Investec Offices, Durban Kriel Mall Innovation Group, Randburg Investec Offices Pretoria Great North Plaza, Musina Builders Warehouse, The Glen Office Office Retail Industrial Office Retail Office Office Retail Retail 322 886 794 306 126 864 301 675 473 278 792 287 234 123 074 215 891 537 192 585 201 176 479 897 157 228 366 138 952 202 Total 2 324 741 695 % of portfolio by value Total area (m2) % of portfolio by area 7.3 6.9 6.8 6.3 5.3 4.9 4.3 4.0 3.5 3.1 30 435 13 787 36 451 90 762 6 543 20 848 15 500 6 301 13 561 11 113 5.2 2.3 6.2 15.4 1.1 3.5 2.6 1.1 2.3 1.9 52.4 245 301 41.6
  7. 7. Geographic spread by GLA Geographic spread by revenue 30 September 2013 30 September 2013 Gauteng 72% Gauteng 67% Western Cape 14% Western Cape 12% Limpopo 4% Limpopo 6% Mpumalanga 4% Mpumalanga 6% KwaZulu-Natal 1% KwaZulu-Natal 5% Eastern Cape 2% Eastern Cape 1% Free State 2% Free State 2% North West 1% North West 1% Sectoral spread by GLA Sectoral spread by revenue 30 September 2013 30 September 2013 Retail Industrial 31% 52% Office 17% Retail Industrial Office 46% 28% 26%
  8. 8. Vacancy levels At 30 September 2013, the property portfolio reflects a 2.8% vacancy, representing a marginal improvement from the 2.9% vacancy at 31 March 2013. The Industrial sector saw significant letting activity, with over 60 000m² of space being renewed or let (32 800m² in the period and a further 28 000m² commencing in the second half of the financial year). Of the 32 800m² of new leases in the period 11 236m² achieved positive rental reversions of 33.3%, whilst the remaining 21 565m² saw a negative reversion of 14.4% as a result of an historical short-term lease at above market rent. There were no other material changes in the retail or office sectors. Vacancy levels 2 GLA (m ) 20000 15000 10000 5000 7.3% 6.8% 1.8% 1.8% 2.5% 2.3% 2.9% 2.8% Office Industrial Retail Total 0 Office Industrial 31 March 2013 30 September 2013 Retail Total Area (m²) % of GLA Area (m²) % of GLA Area (m²) % of GLA Area (m²) % of GLA Tenanted at 31 March 2013 Sold Acquired 1 Expiries/cancellations New leases/renewals 2 85 243 – 8 036 – – 92.7 285 878 (13 822) 27 955 (32 826) 32 801 98.2 180 415 – – (2 818) 3 544 97.5 551 536 (13 822) 35 991 (35 644) 36 344 97.1 Tenanted at 30 September 2013 93 279 93.2 299 986 98.2 181 140 97.8 574 405 97.2 Letting activity 1 2 Net GLA (total acquired less vacant space taken on). New leases account for 31 505m2 of industrial and 2 188m2 of retail space. Vacancy movement Sector Office Industrial Retail Total Expiry rent R/(m²) New rent R/(m²) Average escalation (%) GLA expiries and cancellations GLA new leases/ renewals – 37.65 133.88 – 36.48 129.52 – 9.1 8.1 – 32 826 2 849 – 32 801 3 544 45.48 44.94 8.6 35 675 36 368
  9. 9. Lease expiry profile by sector % of Revenue 17.0 17.9 18 16 14 12 10 3.4 2.1 7.4 6.8 6.0 6.3 4.5 0.8 1.9 0 0.8 1.8 2.6 2 3.0 4 5.8 4.8 6 7.1 8 Office Industrial 2014 2015 2016 2017 2018 April 2018 onwards Retail 30 September 2013 Acquisitions and disposals During the period the Fund completed R254.1 million of acquisitions and announced R1.3 billion of acquisitions that are expected to transfer before the end of the financial year. This will take the portfolio to R5.7 billion, up 36% from 31 March 2013. Additionally, on 18 October 2013, the Fund invested R235.5 million (AUD25 million) in the newly JSE-listed Investec Australia Property Fund (“IAPF”), equating to an 18.7% stake in IAPF and representing circa 4% of the Fund’s asset base. Transfer date Sector April 2013 May 2013 May 2013 May 2013 Industrial Office Office Industrial SA Ladder, Alrode ³ 5 Bond Street, K101 Midrand ³ Minolta, Belville Minolta, Centurion Total completed acquisitions Announced acquisitions Bigbox retail portfolio, national ³ Bigen Africa, Innovation Hub, Pretoria ³ Martin & Martin, Isando ³ Nonkqubela Link extension; Khayelitsha RPP Portfolio, Bryanston, Roodepoort and Tyger Valley Nicol Main Office Park, Bryanston Total announced acquisitions Investment in Investec Australia Property Fund Total Cost (R million) GLA (m2) 75 118 25 36 25 000 5 870 2 166 2 955 254 Acquisitions 35 991 October 2013 ¹ October 2013 ¹ December 2013 ² February 2014 ² Retail Offfice Industrial Retail 207 125 89 32 38 475 5 545 19 972 2 911 March 2014 ¹ Various 5 Office/Industrial 4 Office 572 298 35 206 11 863 1 323 113 972 236 – 1 813 149 963 ¹ Effective dated acquisitions. ² Expected transfer date. ³ Related party acquisitions – Investec Property (Pty) Ltd. 4 Office GLA is 26 284m², Industrial GLA is 8 923m². 5 Transfer of portions of the properties will occur in three tranches: March 2014, July 2014 and November 2014. During the period the Fund disposed of the Monsanto and SABB Mayville properties for a total consideration of R52.0 million, resulting in a capital profit of R10.9 million.
  10. 10. Fair value adjustments of investment property The Fund’s policy is to value investment properties at year-end, with independent valuations performed on a rotational basis to ensure each property is valued at least every three years by an independent external valuer. The directors’ valuation methods include using the discounted cash flow model and the capitalisation model. Revaluations were not undertaken at period-end as the directors are not aware of any factors which would materially affect the valuation of the properties. Other fair value adjustments Fair value adjustments in the statement of comprehensive income consist of the folllowing: 30 September 2013 R’m 30 September 2012 R’m 31 March 2013 R’m (5.8) (29.7) – (5.7) (9.5) – (4.1) (197.0) 118.2 (35.5) (15.2) (82.9) Fair value adjustment on interest rate swap Debenture fair value adjustment Net investment property revaluation Capital funding During the period the Fund registered a Special Purpose Vehicle (SPV) structure to facilitate the raising of term debt, establishing a clear debt strategy and debt planning process as well as a firm platform for growth. A R500 million facility has been committed by Nedbank and Standard Bank to fund some of the announced acquisitions, with support to increase this facility in the future. The Fund may consider accessing the DMTN market to fund the remaining portion of the acquisitions. The Fund’s gearing ratio remained low at 10.1% (27.2% after the completion of all announced acquisitions), providing significant headroom to pursue future acquisitions, supported by the extensive bank and corporate bond facilities. The Fund remains cautious with respect to interest rate risk and, as such, continues to ensure that at least 75% of its longterm debt is hedged. At the date of this report, the Fund had entered into R792.5 million forward starting swaps to match the funding requirement of announced acquisitions at an average swap rate of 7.5%, with 91% of these hedging out fiveyear interest rate risk. The Fund’s all-in cost of borrowing, including the debt required to fund the announced acquisitions, has increased marginally to 8.3%, resulting from the uptick in long-bond rates since May 2013. Long-term borrowings: At 30 September 2013 DMTN Programme Tranche 1 Tranche 2 Tranche 3 Tranche 6 Expiry Rate April 2015 April 2016 April 2017 April 2017 JIBAR + 140 bp JIBAR + 155 bp JIBAR + 165 bp Fixed @ 8.8% Total DMTN Facilities available ¹ Investec bridge facility Standard Bank term debt facility ² Nedbank term debt facility ² DMTN Programme Total facilities Drawn down at 30 September 2013 Drawn down post-30 September 2013 to fund acquisitions Available facilities 1 2 Amount (R’m) 134 40 50 226 450 12 months’ notice October 2016 October 2018 N/A JIBAR + 225 bp JIBAR + 155 bp JIBAR + 170 bp Various 500 250 250 3 000 4 000 450 480 3 070 At 30 September 2013, all bank facilities were undrawn. Nedbank and Standard Bank facilities were concluded on 3 October 2013 and include a R50 million revolving facility in each facility.
  11. 11. Debt maturity profile Amount due (R million) 450 400 350 250 300 276 250 250 200 134 150 100 50 DMTN 40 0 2016 2017 2018 2019 Bank debt – post-period-end * Excludes funding for RPP Portfolio and Nicol Main 30 September 2013 REIT legislation On 1 April 2013, National Treasury introduced South African REIT regulations. The Fund applied to and received from the JSE, REIT status with effect from 1 April 2013, being the first day of its financial year ending 31 March 2014. Share and debenture capital The authorised share capital is one billion ordinary shares of 1 cent each at 30 September 2013. On 16 August 2013, shareholders and debenture holders approved the conversion of the Fund’s linked-unit structure to that of an all-equity capital structure. To achieve this, each linked unit was replaced with a delinked ordinary share with the fair value of debentures capitalised to stated capital and the Fund’s ordinary par value shares converted to ordinary no par value shares. The financial statements at 30 September 2013 reflect this conversion. As set out in the Finalisation Announcement released on SENS on 7 November 2013, the conversion will be effected on 25 November 2013. Shareholders Investec Limited, Stanlib and S Giuricich Holdings Proprietary Limited are the only shareholders holding in excess of 5% of the Fund’s total issued shares at 30 September 2013, holding 50.01%, 7.68% and 5.36% thereof, respectively. Numbers of shares in issue Number of shareholders 317 220 000 2 934 Prospects The Board expects underlying property performance in the second half of the year to be in line with that of the first half and maintains its previous guidance of 7% to 8% growth in distributions for the full year. This forecast is based on the assumptions that the macro-economic environment will not deteriorate markedly, no major corporate failures will occur, budgeted renewals will be concluded and that clients will be able to absorb rising rates and utility costs. Budgeted rental income was based on contractual escalations and market-related renewals. The information and opinions contained above are recorded and expressed in good faith and are based upon sources believed to be reliable. No representation, warranty, undertaking or guarantee of whatever nature is made or given concerning the accuracy and/or completeness of such information and/or the correctness of such opinions. This forecast has not been reviewed or reported on by the Fund’s independent external auditors. On behalf of the Board of Investec Property Fund Limited Sam Hackner Chairman 21 November 2013 Sam Leon Chief Executive Officer
  12. 12. Basis of accounting The reviewed interim condensed financial information for the six months ended 30 September 2013 has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of IAS 34: Interim Financial Reporting, the AC 500 Standards as issued by the International Accounting Standards Board (IASB), and the Companies Act, 2008. The accounting policies applied in the preparation of the results for the period ended 30 September 2013 are consistent with those adopted in the financial statements for the year ended 31 March 2013. These reviewed interim condensed financial statements have been prepared under the supervision of Dave Donald, CA(SA). Investment property comprises land and buildings held to generate rental income and capital growth over the long term. Should any properties no longer meet the company’s investment criteria and be sold, any profits or losses will be of a capital nature but will be exempt from Capital Gains Tax under the new REIT legislation. Deferred taxation on the revaluation of investment property no longer applies for the aforementioned reason. These interim condensed financial statements for the period ended 30 September 2013 have been reviewed by the external auditor, Ernst & Young Inc. on which an unmodified review conclusion was expressed. A copy of their review report is available for inspection at the company’s registered office. Distribution Notice is hereby given of an interim gross dividend declaration number 5 of 50.4613 cents per share (after applying the Dividend Withholding Tax of 15% would provide a net dividend of 42.89211 cents per share) for the six months ended 30 September 2013, payable to holders of shares as recorded in the books of the company at the close of business on Friday, 13 December 2013. No Secondary Tax on Companies credits were utilised in the net dividend determination to those shareholders who are not exempt from Dividend Withholding Tax. The salient dates relating to the distribution are as follows: Last day to trade in order to participate in the distribution Shares to trade ex distribution Record date Distribution posted/paid to certificated shareholders Accounts credited by CSDP or broker to dematerialised shareholders Friday, 06 December 2013 Monday, 09 December 2013 Friday, 13 December 2013 Tuesday, 17 December 2013 Tuesday, 17 December 2013 Shares may not be dematerialised between Monday, 09 December 2013 and Friday, 13 December 2013, both days inclusive. The above dates and times are subject to amendment. Any such amendment will be released on SENS and published in the press. Number of shares in issue: 317 220 000 Tax number: 9332719161 By order of the Board Investec Bank Limited Company Secretary 21 November 2013
  13. 13. Notes
  14. 14. Notes
  15. 15. Notes
  16. 16. Directors S Hackner* (Chairman) SR Leon* (Chief Executive Officer) MP Crawford (Lead Independent Director)# DAJ Donald* LLM Giuricich S Mahomed# CN Mashaba# MM Ngoasheng# GR Rosenthal# * Executive # Independent non-executive Investec Property Fund Limited (Incorporated in the Republic of South Africa) (Registration number 2008/011366/06) Share code: IPF ISIN: ZAE000180915 (Income tax reference number 9332/719/16/1) Registered office C/o Company Secretarial, Investec Limited 100 Grayston Drive, Sandown, Sandton, 2196 Transfer secretary Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07) Ground Floor, 70 Marshall Street, Johannesburg, 2001 Sponsor Investec Bank Limited 100 Grayston Drive, Sandown, Sandton, 2196 For a copy of the Fund’s results, refer to the website: www.investecpropertyfund.com

×