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ACP
ACP
ACP - Acucap Properties - Reviewed Interim Results For The 6 Months
Ended 30 September 2007 and Payment Of Debenture Interest
Acucap Properties Limited
Incorporated in the Republic of South Africa
(Reg No. 2001/021725/06)
Share Code: ACP & ISIN: ZAE000037651
("Acucap" or "the company")
REVIEWED INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2007
30 September 31 March 30 September
2007 2007 2006
R`000 R`000 R`000
Abridged Balance
Sheet
Assets
Property Assets 4 291 887 2 883 409 2 576 743
Investment 3 991 456 2 726 424 2 493 767
properties
Long term 89 254 64 909 59 832
receivable
Short term 7 831 6 323 4 507
receivable
Investment 4 088 541 2 797 656 2 558 106
properties and
related
receivables
Investment 152 456 85 425 -
properties under
development
Other property 50 890 328 18 637
assets
Other non current 196 615 579 514 108 441
assets
Loans in respect 154 967 159 290 103 307
of unit purchase
scheme
Equipment 3 004 540 457
Listed investments 25 621 412 619 -
Other investments 1 674 - -
Financial 11 235 7 065 3 999
instruments
Deferred tax asset 114 - 678
Other current 438 405 41 440 42 673
assets
Properties 406 657 - 13 998
classified as held
for sale
Short term 8 - 3 002
receivable
Properties 406 665 - 17 000
classified as held
for sale and
related
receivables
Trade and other 24 560 35 665 17 750
receivables
Cash and cash 7 180 5 775 7 923
equivalents
Total assets 4 926 907 3 504 363 2 727 857
Equity and
liabilities
Shareholders` 1 726 019 1 300 725 842 474
interest
Share capital and 789 332 442 257 141 593
share premium
Non-distributable 1 032 429 959 239 736 394
reserve
Accumulated loss (95 742) (100 771) (35 513)
Non current 3 048 778 2 088 324 1 790 891
liabilities
Debentures 1 092 561 934 740 734 878
Financial 1 606 024 784 710 773 378
liabilities
BEE instrument 69 136 70 577 -
Deferred tax 281 057 298 297 282 635
liabilities
Current 152 110 115 314 94 492
liabilities
Trade and other 59 610 23 000 20 405
payables
Financial 44 543 - -
liabilities
Tax payable 8 101 - -
Debenture interest 39 856 92 314 74 087
payable
Total equity and 4 926 907 3 504 363 2 727 857
liabilities
Abridged Income
Statement
for the 6 months
ended 30 September
2007
6 months year ended 6 months ended
ended 31 March 30 September
30 September 2007 2006
2007
R`000 R`000 R`000
Revenue 155 910 245 107 121 302
- Contractual 150 945 237 988 118 075
- Straight lining 4 965 7 119 3 227
Net operating (17 512) (30 082) (18 888)
expenses
Profit/ loss on sale 2 719 3 195 3 195
of properties
Amortisation 0
debenture premium
section 311 expenses (2 287)
Profit before fair
value adjustments,
interest and taxation 138 830 218 220 105 609
Fair value adjustment 24 018 177 204 13 288
to investment
properties
Fair value adjustment 1 441 (70 577)
to BEE instrument
Profit before 164 289 324 847 118 897
interest and taxation
Interest received 20 790 28 506 8 426
Interest paid
- Debenture holders (67 407)
- special
- Debenture holders (39 856) (74 087) (74 087)
- interim
- Debenture holders 0 (85 360) -
- final
- Other (42 985) (80 908) (44 847)
Profit before 34 831 112 998 8 389
taxation
Taxation 544 (35 550) (3 932)
Profit for the period 35 375 77 448 4 457
Reconciliation of profit for the
period to headline (loss)/
earnings
Profit for the period 35 375 77 448 4 457
Fair value adjustment (24 018) (177 204) (13 288)
to investment
properties
Profit on disposal of (2 719) (3 195) -
investment properties
Tax effects 2 813 35 015 3 854
Headline (loss)/ 11 451 (67 936) (4 977)
earnings - shares
Interest paid to 107 263 159 447 74 087
debenture holders
Headline earnings - 118 714 91 511 69 110
linked units
Cents Cents Cents
Basic and diluted 36.62 97.74 6.40
earnings per share
Headline earnings per 122.91 115.49 99.30
linked unit
Interest Distribution 108.51 189.92 91.26
per linked unit
- Interim 36.47 91.26 91.26
- Special 72.04 - -
- Final - 98.66 -
Abridged Cash flow statement
for the 6 months ended 30
September 2007
6 months year 6 months
ended ended ended
30 31 March 30
September 2007 September
2007 2006
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated by operations 132 297 210 132 108 354
Income tax paid 175 (1 678) (2 506)
Interest received 35 365 21 598 8 426
Interest paid (202 706) (208 602) (105 408)
Net cash (outflows)/ inflows (34 869) 21 450 8 866
from operating activities
Cash outflows from investing (886 648) (744 213) (217 623)
activities
Cash inflows from financing 922 922 727 856 215 998
activities
Net cash inflows for the 1 405 5 093 7 241
period
Cash and cash equivalents at 5 775 682 682
beginning of period
Cash and cash equivalents at 7 180 5 775 7 923
end of period
Abridged Statement of changes in equity for the 6 months ended 30
September 2007
Shares issued Share Share Premium
capital
Number R`000 R`000
Balance at 31 March 68 588 953 69 86 643
2006
Issue of 500 000 shares 500 000 1 5 335
in July 2006
Issue of 4 046 000 4 046 000 4 44 927
shares in August 2006
Issue of 426 440 shares 426 440 - 5 441
in August 2006
Income/ (Expenses) - - (827)
recognised directly in
equity
Share issue costs - - (827)
Net change in fair - - -
value of cash flow
hedge recognised
directly in equity
Profit for the period - - -
Transfer to non- - - -
distributable reserve
Balance at 30 September 73 561 393 74 141 519
2006
Issue of 12 455 606 12 455 606 12 182 960
shares in November 2006
Issue of 5 561 600 5 561 600 6 81 694
shares in November 2006
Issue of 1 989 000 1 989 000 2 36 377
shares in February 2007
Income/ (Expenses) - - (387)
recognised directly in
equity
Share issue costs - - (387)
Net change in fair - - -
value of listed
investments
Net change in fair - - -
value of cash flow
hedge recognised
directly in equity
Profit for the period - - -
Transfer to non- - - -
distributable reserve
Balance at 31 March 93 567 599 94 442 163
2007
Issue of 15 797 910 15,797,910 15 337 270
shares in August 2007
Income/ (Expenses) - - 9 790
recognised directly in
equity
Share issue costs - - (163)
Net change in fair - - -
value of listed
investments
Net change in fair - - -
value of cash flow
hedge recognised
directly in equity
Increase in fair value - - 9 953
of investment in Atlas
Profit for the period - - -
Transfer to non- - - -
distributable reserve
Balance at 30 September 109 365 509 109 789 223
2007
Table continued:
Non Accumulated Total
Distributable loss
Reserve
R`000 R`000 R`000
Balance at 31 March 2006 742 125 (27 606) 801 231
Issue of 500 000 shares in - - 5 336
July 2006
Issue of 4 046 000 shares - - 44 931
in August 2006
Issue of 426 440 shares in - - 5 441
August 2006
Income/ (Expenses) 7 496 - 6 669
recognised directly in
equity
Share issue costs - - (827)
Net change in fair value of 7 496 - 7 496
cash flow hedge recognised
directly in equity
Profit for the period 0 4 457 4 457
Transfer to non- 12 364 (12 364) 0
distributable reserve
Balance at 30 September 761 985 (35 513) 868 065
2006
Issue of 12 455 606 shares - - 182 972
in November 2006
Issue of 5 561 600 shares - - 81 700
in November 2006
Issue of 1 989 000 shares - - 36 379
in February 2007
Income/ (Expenses) 59 005 - 58 618
recognised directly in
equity
Share issue costs - - (387)
Net change in fair value of 55 940 - 55 940
listed investments
Net change in fair value of 3 065 - 3 065
cash flow hedge recognised
directly in equity
Profit for the period - 72 991 72 991
Transfer to non- 138 249 (138 249) -
distributable reserve
Balance at 31 March 2007 959 239 (100 771) 1 300 725
Issue of 15 797 910 shares - - 337 285
in August 2007
Income/ (Expenses) 42 844 - 52 634
recognised directly in
equity
Share issue costs - - (163)
Net change in fair value of 10 325 - 10 325
listed investments
Net change in fair value of 4 170 - 4 170
cash flow hedge recognised
directly in equity
Increase in fair value of 28 349 - 38 302
investment in Atlas
Profit for the period - 35 375 35 375
Transfer to non- 30 346 (30 346) -
distributable reserve
Balance at 30 September 1 032 429 (95 742) 1 726 019
2007
Segmental
results
for the 6 months ended 30 September
2007
6 months 6 months
ended ended
30 September 30 September
2007 2006
R`000 R`000
Retail Segment revenue 112 574 88 277
(external customers)
Net operating (11 209) (8 796)
expenses
Fair value (6 296) 12 882
adjustment to
investment
properties
Segmental results 95 069 92 363
Offices Segment revenue 37 633 25 472
(external customers)
Net operating (1 286) (1 766)
expenses
Fair value (2 229) 551
adjustment to
investment
properties
Segmental results 34 118 24 257
Industrial Segment revenue 5 703 7 553
(external customers)
Net operating (1 003) (210)
expenses
Profit on sale of 2 719 -
investment
properties
Fair value 32 543 (145)
adjustment to
investment
properties
Segmental results 39 962 7 198
Property Segment revenue - -
development (external customers)
Net operating 2 676 -
expenses
Segmental results 2,676 -
Reconciliation to profit before interest and
taxation for the period in the income statement
Revenue 155 910 121 302
Allocated operating (10 822) (10 772)
expenses
Unallocated (6 690) (4 921)
operating expenses
Profit on sale of 2 719 -
investment
properties
Section 311 expenses (2 287) -
Fair value 24 018 13 288
adjustment to
investment
properties
Fair value 1 441 -
adjustment to BEE
instrument
Profit before 164 289 118 897
interest and
taxation
BASIS OF PREPARATION AND REVIEW OPINION
The financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) and IAS34, as well
as the requirements of the Companies Act in South Africa, and on a
basis consistent with the company`s most recent annual financial
statements.
KPMG Inc. has reviewed the financial information set out in this
report. Their unqualified review report is available for inspection
at the company`s registered office.
COMMENTARY ON THE RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
1. REVIEW OF RESULTS AND OPERATIONS
The directors of Acucap are pleased to report a 19.3% growth in
distributions per unit for the six months ended 30 September
2007, compared to the same period last year. The historical
Acucap portfolio delivered growth of 10.1%, in line with
guidance given to the market, and the acquisition of Atlas
Properties, a listed fund with a R1.5 billion property portfolio
made up principally of Cape Town retail assets, contributed an
additional 8.9% to distribution growth. The Intaprop deal,
effective 1 August 2007 and consisting principally of six
corporate office buildings in Illovo, Bryanston and Sandton,
added a further 0.3%, resulting in a combined year-on-year
growth rate of 19.3%.
Acucap`s distributions comprise only net rental income, and
therefore the growth rate achieved by the portfolio prior to the
Atlas and Intaprop acquisitions was pleasing, particularly given
the company`s low gearing level. It was also gratifying to see
the strong growth contribution coming through from Atlas,
endorsing of management`s strategy to acquire this business. The
board expects further growth enhancement from this acquisition
over time.
Of particular significance is that the strong distribution
growth was accompanied by an improvement in the quality of the
underlying property portfolio, maintaining its strong retail
bias, but adding greater geographic diversification, and not
compromising on Acucap`s strategy of owning a smaller number of
large properties.
As a result of the two transactions referred to above, the
Acucap portfolio has grown significantly in the six months under
review to just over R5 billion, and the market capitalisation is
now comfortably over R4 billion. Net asset value per linked unit
at the end of September 2007 was R26.92 (2006 : R21.57), an
increase of 24.8% over the last 12 months.
On the basis of individual assets and asset segments, Acucap`s
net income is attributable as follows:
% of Net % of
Contractual total property total
rental income *
income
R`000s R`000
Festival Mall 35,710 23% 33,569 24%
Key West 21,587 14% 20,926 15%
Other retail 35,861 23% 29,773 21%
Offices 24,456 16% 23,626 17%
Core portfolio 117,614 75% 107,894 77%
Income from properties 40,155 25% 37,657 27%
acquired and disposed
of
Indirect and asset (5 232) (4%)
management costs
157,769 100% 140,319 100%
* reconciles with the simplified income statement shown in section 2
below.
2. SIMPLIFIED FINANCIAL INFORMATION
With South Africa`s adoption of International Financial
Reporting Standards (IFRS) there has been a growing complexity
in statutory financial disclosure, and a divergence between IFRS
reporting on the one hand, and what may be understood as the
underlying commercial substance of the company`s operations on
the other. In Acucap`s case, the main areas of divergence are:
1. the treatment of Acucap`s empowerment deal with the Thesele
Group (`Thesele`);
2. the straight lining of rental income;
3. the timing of the recognition of acquisitions and
disposals; and
4. the accounting recognition of non-distributable capital
profits and revaluation surpluses.
5. The board of Acucap fully supports South Africa`s adoption of an
internationally recognised accounting standard, but at the same time
believes that the company`s financial statements should present a
clear and easily understandable picture of its financial position and
the results of its operations. For this reason, the board has decided
to present a simplified income statement and balance sheet, not in
any way diminishing the importance of the statutory disclosure set
out above, but reconciling the formal disclosure to a more usable
representation of Acucap`s results for the six months to 30 September
2007.
Simplified income statement for the six months ended 30
September 2007
Note R`000
Revenue 1 157,769
Net operating expenses 2 (17,450)
Profit before interest and taxation 140,319
Interest received 5 17,252
Debenture holders interest paid - 6 (73,473)
special
Other interest paid 7 (33,857)
Atlas distribution dividend element (377)
retained
Profit for the period 49,864
Number of linked units in issue 8 135,390,099
Interim distribution August and 36.83
September - cents per unit
Special distribution April to July - 72.04
cents per unit
Full distribution for the six months to 108.87
30 September 2007
Distribution for the six months ended 91.26
30 September 2006
Distribution growth 19.30%
Notes to the simplified distribution
income statement
1 Revenue as stated 155,910
Less : straight lining revenue reversed (4,965)
Add : Intaprop portfolio net income 6,824
from effective date of 1 August 2007
157,769
2 Net operating expenses as stated (17,512)
Add : Thesele secretarial fees 3
Intaprop portfolio net 69
operating cost recovery
Less : Atlas capital costs now expensed (10)
(17,450)
3 Profit on sale of properties as stated 2,719
Less : Non-distributable capital profit (2,719)
reversed
0
4 Section 311 Atlas acquisition costs as (2,287)
stated
Add : Transaction costs capitalised 2,287
0
5 Interest received as stated 20,790
Less : Proceeds on unwind of interest (4,603)
rate swap by Thesele
Add : Interest received from Thesele, 1,065
previously eliminated on consolidation
17,252
6 Debenture interest paid (special) as stated (67,407)
Less : Debenture interest paid to Thesele, (6,066)
previously eliminated on consolidation
(73,473)
7 Other interest paid as stated (42,985)
Add : Other interest paid by Thesele, 10,244
previously inculded on consolidation
Less : Net reversal of interest provided from (1,116)
period end to distribution payment date
(33,857)
8 Number of linked units in issue at 30 109,365,509
September 2007
Thesele linked units previously treated as 8,420,994
treasury units on consolidation
Linked units issued to Intaprop on 24
October 2007, qualifying for
distributions from the transaction 17,603,596
effective date of 1 August 2007
135,390,099
Simplified balance sheet
Note R`000
Assets
Property assets 9 5,006,766
Other non-current assets 196,615
Other current assets 10 51,338
Total assets 5,254,719
Equity and liabilities
Shareholder`s interest 11 2,292,595
Non-current liabilities 12 2,896,063
Current liabilities 13 66,061
Total equity and liabilities 5,254,719
Notes to the simplified balance sheet
9 Property assets as stated 4,291,887
Add : Intaprop portfolio at fair value 562,450
Hillcrest Corner shopping centre 152,429
transferred on 18 October 2007
5,006,766
10 Other current assets as stated 438,405
Less : Properties held for sale, removed (406,657)
from assets
Short-term receivable associated with (8)
properties held for sale
Add : Net rental receivable from Intaprop 7,772
Interest receivable from Thesele 11,826
51,338
11 Shareholder`s interest as stated 1,726,019
Add : Share capital and premium on shares 109,529
issued to Thesele
Thesele retained income eliminated on 69,592
consolidation
Share capital and premium on shares 387,455
issued for Intaprop
2,292,595
12 Non-current liabilities as stated 3,048,778
Add : Debenture portion of linked units 84,126
issued to Thesele
Debenture portion of linked units issued 175,860
for Intaprop
Purchase consideration for Hillcrest 152,429
Corner
Re-classification of current financial
liabilities and debenture interest
to reflect settlement from available 94,407
facilities
Less : Proceeds from disposal of assets (406,665)
classified as held for sale
Financial liabilities attributable to (183,736)
Thesele
Reversal of BEE financial instrument (69,136)
2,896,063
13 Current liabilities as stated 152,110
Add : Debenture interest attributable to 6,907
Intaprop from effective date
Debenture interest payable to Thesele 3,101
Less : Re-classification of current financial
liabilities and debenture interest
to reflect settlement from available (94,407)
facilities
Accrued interest receivable from Thesele (1,650)
66,061
3. ATLAS INTEGRATION
The integration of Atlas Properties into Acucap has proceeded
according to plan. Acucap has entered into unconditional
agreements to dispose of 38 non-core properties from the Atlas
portfolio, and negotiations are in progress to exit from a
further property held in a joint venture vehicle. This will
leave 11 properties out of the original portfolio of 50,
bringing the Atlas acquisition in line with Acucap`s strategy of
focusing on a small number of large assets. The properties
retained represent approximately 80% of the value of the Atlas
acquisition portfolio.
The integration of Atlas personnel has proceeded smoothly. The
disposal of the non-core assets regrettably led to the closure
of Atlas` Johannesburg office and the retrenchment of 13 staff.
There was a small degree of natural attrition in the Cape Town
operation, and the result is that the full Acucap staff
complement now stands at 57. This comprises an augmented asset
management team of 13 people, including support staff, and a
property management business of 44 people, including a team of 6
running the Helderberg Village development and sales functions.
The property management business is a dedicated vehicle
administering only Acucap assets, and it has been optimised and
re-focussed to provide a high quality, cost-effective property
administration service to the company.
4. HELDERBERG VILLAGE
Atlas has been involved with Helderberg for 17 years, and has
developed this property into one of South Africa`s premium
retirement villages. Development profits from the sale of
retirement homes in Helderberg have historically been paid out
to Atlas unit holders as part of normal half yearly
distributions. Acucap, on the other hand, has since listing in
2002 only distributed net rental income, providing unit holders
with high quality, sustainable earnings. The acquisition of
Atlas has brought the Helderberg income stream into the Acucap
business model, and whilst this income certainly has annuity
characteristics, it consists primarily of development profits
and other fees. After extensive interaction with shareholders,
the board of Acucap has resolved to continue distributing
Helderberg Village income to unit holders, but with full
disclosure and reliable guidance as to future distribution
effects.
The following table shows the income from Helderberg Village
that has been distributed in the period commencing 1 April 2005
and ending 30 September 2007:
Period Amounts previously included
in Atlas Properties
distributions
1 April 2005 to 31 March 2006 R7,665,000
1 April 2006 to 31 March 2007 R8,589,000
1 April 2007 to 31 July 2007 R4,658,000
1 August 2007 to 30 September 2007 R2,676,000
Looking ahead, there are 3 completed homes available for sale at
Helderberg Village, with a further 11 under construction, due
for completion by March 2008, and a final 22 undeveloped sites.
The potential remaining development profit from Heldeberg
Village principally represents a realisation of land value.
Based on the number of unsold units and development sites still
available, this profit is estimated to be approximately R72
million under current market conditions The rate of sales of
homes at Heldeberg is demand driven, although this is
undoubtedly influenced on the one hand by the availability of
new stock for release to potential buyers, and on the other by
the re-sale of existing homes that periodically come onto the
market. Notwithstanding that contractual commitments require
Atlas to complete the development of all existing sites by
October 2010, it is anticipated that market demand will dictate
that the remaining units will be sold evenly over the period to
March 2014, implying that Acucap will hold a stock of completed
units for part of this period.
5. DEVELOPMENTS WITHIN THE PROPERTY PORTFOLIO
Festival Mall
Construction of the new Ster Kinekor cinema complex and
associated restaurant area at Entrance 3, Festival Mall is
nearing completion. The opening is planned for March 2008, and
on completion, the gross lettable area of Festival Mall will
have grown to approximately 80,000m2, with a comprehensive
tenant offering across all retail segments, including a strong
entertainment mix.
Key West
An extension of the Key West Shopping Centre was initiated
earlier this year, principally to round off the tenant mix by
introducing Game and Mr Price Sports to the centre. The work
also included extensions to both Standard Bank and Absa, as well
as an upgrade to the restaurant area. Mr Price Sports is
scheduled to open at the end of November this year, and Game is
expected to start trading at the end of April 2008, taking the
GLA of the centre to 52,800m2
14th Avenue District
During the six month period under review, refurbishment work was
substantially completed on the retail component of what will
become known as the 14th Avenue District (previously Checkers
Hyperama Roodepoort). As a result of the refurbishment
activities, the GLA reduced from 26,000m2 to 23,000m2, although
gross occupancy has increased by over 5,400m2 since acquisition
and it is anticipated that the retail component will be fully
let on completion in March 2008. Thereafter, a further 6,000m2
of retail rights will still be available, and negotiations are
under way to utilise this for a gym, for completion towards the
latter part of 2009. The site will then have 29,000m2 of retail
bulk.
The 14th Avenue District is well positioned in the growing
Roodepoort corporate office market, and the site has recognised
commercial potential. Acucap is therefore working with an
experienced office developer to supplement the retail component
with upto 35,000m2 of offices, expressed in two elements. The
first will be a 20,000m2 high rise icon building overlooking
Hendrik Potgieter Road and the N3, and the second element will
consist of a low rise office park of 15,000m2 on the western
side of the property. On completion, the precinct will thus
comprise a mixed use commercial node of some 64,000m2 of
lettable area, and a re-zoning application has already been
submitted to secure these rights.
N1 Business Park
Situated in Midrand with prime N1 frontage, the N1 Business Park
is positioned as a top end industrial park comprising individual
warehouse sites contained within a secure precinct. Essential
township services to the value of R33m including roads, gate
house, street lighting and services reticulation have been
substantially completed. The business park has been designed to
accommodate 115,000m2 of light industrial buildings with an
estimated serviced cost of R1,100 per bulk m2. A 12 year lease
agreement for BPB Gypsum has been signed, with construction of
the 8,000m2 unit scheduled for completion in early November
2007. A second unit of 3,800m2 is under construction, and
scheduled for completion towards the end of the year. The
development has attracted strong market interest with a total
estimated demand of over 120,000m2 currently under negotiation
with blue chip tenants. It is anticipated that secured leases
will be in place for the remainder of the bulk rights within the
second quarter of 2008. The total construction cost of the build-
out is in the order of R550m with an anticipated first year
yield based on market related rentals of approximately 10.5%.
Montague Business Park
Montague Business Park, Cape Town, is currently in the township
planning phase. The park is designed around a main arterial
boulevard, servicing mixed use planning that provides for
150,000m2 of light industrial, warehousing and distribution
bulk, plus an additional 92,000m2 of retail rights aimed at so-
called `big box` users.
The last six months has seen the submission of the necessary
environmental applications, as well as the preparation of the
detailed township services design for tender purposes. The
construction of services is expected to commence in February
2008, to be followed in April by work on the first 20 hectare
industrial phase, driven by tenant demand. A planned 18,000m2
retail component will also get underway in the first half of
2008.
Market demand for space has been strong, and leasing is expected
to progress quickly in 2008 once the necessary environmental
approvals are in place to permit township services to be
constructed.
6. BORROWINGS
The company has fixed the interest rate on 63.8 % (2006 : 70%)
of its facilities with unexpired terms varying between 6 months
and 6.25 years as follows :
Facility Interest rate Fixed Simplified
period Outstanding Balance
balance 30 Sheet
September
2007
R `000 R` 000 R `000
FIXED 905,000 805,000
50,000 11.74% Mar-08 50,000 50,000
50,000 9.89% Apr-08 50,000 50,000
100,000 12.40% May-08 100,000 100,000
50,000 11.58% Oct-08 50,000 50,000
60,000 9.61% Aug-09 60,000 60,000
50,000 11.37% Oct-09 50,000 50,000
75,000 9.86% Apr-10 75,000 75,000
50,000 10.26% Sep-11 50,000 50,000
50,000 9.73% Dec-11 50,000 50,000
50,000 13.20% Mar-12 50,000 50,000
50,000 10.05% Oct-12 50,000 50,000
50,000 9.80% Oct-13 50,000 50,000
120,000 9.95% Oct-13 120,000 120,000
100,000 Thesele 11.25% Dec-13 100,000
745,568 457,459
FLOATING
716,923 prime less 434,910 257,459
2.3%
- Rod * plus 200,000
0.55%
141,000 prime less 2% 92,543
83,736 Thesele prime 83,736
less 1.8%
75,250 prime less 58,071
1.5%
66,000 90 day jibar 66,000
plus 1.1%
50,000 30 day jibar 10,307
plus 1.4%
TOTAL 1,650,568 1,262,459
2,037,909
*Rod - Rand Overnight Deposit rate
The weighted average interest rate at 30 September 2007 was
11.2% (2006 : 11.6%)
7. LEASE EXPIRY, THROUGH RENTAL AND ESCALATION DATA
The forward lease expiry profile of the combined Acucap, Atlas
and Intaprop portfolios is detailed below, categorized as to (1)
major retail assets (Festival Mall, Key West, Gardens Centre,
Bayside Mall (50%), The Bridge (17.7%)), (2) other retail assets
and (3) offices. It provides a comprehensive profile of all
contractual lease expiries and therefore excludes the effects of
turnover rentals:
FORWARD LEASE EXPIRY PROFILE BY INCOME
Mar-08 Mar- Mar-10 Mar-11 Mar- Mar-
09 12 13+
Major retail
assets
Expiry 40.75% 5.44% 3.95 8.96% 6.98% 8.54% 6.88%
(% of total fund %
income)
National tenants 25.97% 2.28% 1.68 6.10% 4.13% 6.54% 5.24%
%
Other 14.78% 3.16% 2.27 2.86% 2.85% 2.00% 1.64%
%
Average current 82.25 93.65 95.6 90.97 83.15 99.42 57.38
net rate m2 7
National tenants 69.82 63.96 55.9 77.15 74.36 90.13 52.87
3
Other 127.78 140.65 202. 147.33 100.31 149.8 78.89
04 5
Average 8.6% 9.0% 8.8% 8.5% 10.2% 8.4% 6.7%
escalation rate
National tenants 8.2% 8.0% 7.6% 8.2% 10.9% 8.3% 6.4%
Other 9.2% 9.8% 9.8% 9.2% 9.3% 8.8% 7.6%
Other retail
assets
Expiry 26.69% 3.02% 5.42 3.00% 2.58% 2.27% 10.39%
(% of total fund %
income)
National tenants 16.52% 0.81% 3.25 1.23% 1.41% 1.30% 8.53%
%
Other 10.16% 2.21% 2.17 1.77% 1.17% 0.97% 1.86%
%
Average current 69.87 104.31 74.1 85.24 62.43 84.59 63.59
net rate m2 7
National tenants 60.48 101.71 64.4 59.35 47.09 69.91 58.53
7
Other 106.23 105.31 95.7 121.95 102.22 117.6 105.13
2 3
Average 7.9% 9.7% 8.5% 8.9% 8.0% 7.9% 6.8%
escalation rate
National tenants 7.0% 8.6% 7.7% 7.9% 6.9% 7.2% 6.5%
Other 9.4% 10.1% 9.6% 9.5% 9.4% 8.8% 8.3%
Offices
Expiry
(% of total fund
income)
Large corporates
& government 20.20% 0.10% 1.98% 2.84% 0.69% 4.78% 9.82%
Other 12.36% 1.12% 6.85% 1.76% 0.85% 1.03% 0.75%
Average 88.34 86.87 89.7 80.13 79.11 107.5 88.46
current net 9 0
rate m2
(including
parking)
Large 92.13 118.55 88.2 77.77 76.59 114.3 90.32
corporates & 9 2
government
Other 86.16 84.86 90.2 84.26 81.26 84.21 69.75
3
Average 8.7% 8.8% 8.4% 8.3% 8.7% 10.0% 8.5%
escalation
rate
Large 8.6% 9.0% 7.5% 7.7% 8.2% 10.1% 8.4%
corporates &
government
Other 8.8% 8.8% 8.7% 9.1% 9.1% 9.2% 8.8%
TOTAL
Expiry (% of 100.00 9.68% 18.2 16.56% 11.11% 16.61 27.84%
total fund % 0% %
income)
National 62.70% 3.20% 6.90 10.17% 6.23% 12.61 23.59%
tenants % %
Other 37.30% 6.49% 11.2 6.39% 4.88% 4.00% 4.25%
9%
Average 82.02 95.77 85.5 86.66 76.68 99.65 69.12
current net 7
rate m2
National 73.29 73.41 70.2 75.65 66.48 95.02 66.89
tenants 7
Other 105.74 114.63 103. 116.74 96.16 120.1 86.99
91 5
Average 8.4% 9.2% 8.5% 8.5% 9.5% 8.9% 7.4%
escalation
rate
National 8.1% 8.1% 7.8% 8.1% 9.7% 8.9% 7.3%
tenants
Other 9.1% 9.8% 9.1% 9.3% 9.3% 8.8% 8.2%
SUMMARY OF PORTFOLIO GROSS LETTABLE AREA
Total Leased Vacant Vacancy
GLA %
Major retail 165,360 160,999 4,361 2.6%
Other retail 127,463 124,856 2,607 2.0%
Offices 123,038 120,747 2,291 1.9%
TOTAL 415,861 406,602 9,259 2.2%
8. PORTFOLIO DETAILS
Reference has been
made in this
commentary to the
combined Acucap
portfolio, which
includes the core
Atlas properties
and the Intaprop
assets. A full
schedule of this
combined
portfolio,
including
geographic and
sectoral
allocations, is
set out in the
table below :
Carrying
value
Geographic Retail
allocation
Atlas Properties
Gardens Centre Cape 337,417,123 337,417,123
Bayside Tableview (50%) Cape 272,529,214 272,529,214
Golf Park Mowbray Cape 211,021,871
Howard Centre Pinelands Cape 181,686,143 181,686,143
Westville Mall KZN 173,899,594 173,899,594
Development land Cape / 141,712,000
Gauteng
Mutual Terrace Pinelands Cape 46,200,191
Neotel Woodmead Gauteng 43,812,316
135 West Street Sandton Gauteng 41,009,158
Albion Spring Rondebosch Cape 41,009,158
1,490,296,768 965,532,074
Table continued:
Sectoral
allocation
Office Land
Atlas Properties
Gardens Centre
Bayside Tableview (50%) 182,990,295 28,031,576
Golf Park Mowbray
Howard Centre Pinelands
Westville Mall 141,712,000
Development land 46,200,191
Mutual Terrace Pinelands 43,812,316
Neotel Woodmead 41,009,158
135 West Street Sandton 41,009,158
Albion Spring Rondebosch 355,021,118 169,743,576
Acucap Properties
Festival Mall Gauteng 886,025,434 886,025,434
Keywest Mall Gauteng 574,490,064 574,490,064
Hillcrest corner (59%) KZN 153,303,995 153,303,995
East Rand Value Mall Gauteng 143,179,309 143,179,309
Village Randfontein Gauteng 136,150,000 136,150,000
Aon House Illovo Gauteng 116,018,000
Roodepoort 14th Avenue Gauteng 97,987,894 97,987,894
District
Sunward Centre Gauteng 79,806,947 79,806,947
Atterbury Office Park Gauteng 79,000,000
Montague Business Park Cape 71,167,292
SA Weather Gauteng 59,500,000
Nautica Granger Bay Cape 57,750,000
17.7% Bridge E Cape 56,133,207 56,133,207
Colliers Illovo Gauteng 53,000,000
The Village, Faerie Gauteng 52,804,789
Glen
N1 Motor City Cape 51,020,815 51,020,815
Rondebosch Shopping Cape 50,426,707 50,426,707
Centre
Watermeyer Park Gauteng 50,000,000 50,000,000
Goldfields,Parktown Gauteng 38,224,426
Selborne Fourways Gauteng 34,222,205
Warwick Claremont Cape 32,502,800 16,251,400
Bremerton E Cape 31,210,087
Multichoice Cape 28,806,600
NI Business Park Gauteng 21,288,647
Midrand
2,954,019,2 2,294,775,772
18
Table continues:
Acucap Properties
Festival Mall
Keywest Mall
Hillcrest corner (59%)
East Rand Value Mall
Village Randfontein
Aon House Illovo 116,018,000
Roodepoort 14th Avenue
District
Sunward Centre
Atterbury Office Park 79,000,000
Montague Business Park 71,167,292
SA Weather 59,500,000
Nautica Granger Bay 57,750,000
17.7% Bridge
Colliers Illovo 53,000,000
The Village, Faerie 52,804,789
Glen
N1 Motor City
Rondebosch Shopping
Centre
Watermeyer Park
Goldfields,Parktown 38,224,426
Selborne Fourways 34,222,205
Warwick Claremont 16,251,400
Bremerton 31,210,087
Multichoice 28,806,600
NI Business Park 21,288,647
Midrand
566,787,507 92,455,939
Intaprop Properties
Microsoft Bryanston Gauteng 142,541,000
82 Grayston Sandton Gauteng 122,523,300
Tiger Brands Bryanston Gauteng 102,270,700
4 Fricker Rd Illovo Gauteng 77,330,000
Kagiso House Illovo Gauteng 68,509,000
Chaplain Corner Illovo Gauteng 23,655,000
Wellness Centre Gauteng 18,571,600
Bryanston
Piazza Properties Gauteng 7,049,400 7,049,400
Illovo
562,450,000 7,049,400
5,006,765,986 3,267,357,246
116,436,418
Table continues:
Intaprop Properties
Microsoft Bryanston 142,541,000
82 Grayston Sandton 122,523,300
Tiger Brands Bryanston 102,270,700
4 Fricker Rd Illovo 77,330,000
Kagiso House Illovo 68,509,000
Chaplain Corner Illovo 23,655,000
Wellness Centre 18,571,600
Bryanston
Piazza Properties
Illovo
555,400,600 0
1,477,209,225 262,199,515
Table continues:
Sectoral allocation based on fair values
Retail Office Land
65% 30% 5%
Geographic allocation based on fair values
Cape Gauteng KZN Eastern Cape
29% 62% 7% 2%
9. RECONCILIATION OF
LEASE EXPIRIES WITH NEW
LEASES AND RENEWALS
The table below
provides a
reconciliation of
lease expiries
with new leases
and renewals over
the six month
period from 1
April 2007 to 30
September 2007 :
Expiries and Average Average
terminations through rent escalation
at expiry rate at
expiry
Regional Retail 5 535 88.42 9.2%
Community retail 6 222 47.34 8.7%
Neighbourhood 2 251 71.87 9.6%
and other retail
Offices 1 225 88.38 10.5%
Total 15 233
Table continues:
New leases Average Average
and renewals through rent escalation
for new for new
leases leases
Regional Retail 6 005 109.97 8.1%
Community retail 5 443 95.31 8.0%
Neighbourhood 2 493 121.62 8.5%
and other retail
Offices 1 827 93.37 9.5%
Total 15 768
The following
table places the
six month pattern
of expiries and
renewals within
the context of an
overall
reconciliation of
change in the
gross lettable
area of the
combined Acucap
portfolio, which
now includes the
core Atlas
properties that
have been
retained, as well
as the Intaprop
portfolio:
GLA at 31 Expiries and Renewals New
March 2007 terminations leases
and
renewals
Total 333 664 (12 251) 7 028 5 227
- leased 325 053 (15 233) 7 028 8 186
- vacant 8 611 2 982 (2 959)
Table continues:
Area added Properties Properties GLA at 30
purchased sold September
2007
Total 554 145 618 (63 979) 415 861
- leased 554 144 304 (63 290) 406 602
- vacant 1 314 ( 689) 9 259
10. UNITHOLDERS
A table of
Acucap`s major unit
holders is set out
below :
issue
Entities controlling > 5% of issued
units
Stanlib Asset Managers 13.9%
Public Investment Corporation 12.7%
Coronation Fund Managers 11.9%
Investec Asset Managers and 7.8%
Private Clients
Directors and employees 7.3%
Old Mutual Investment Group 6.5%
Thesele Group 6.2%
Other 33.7%
100.0%
Number of units in issue 135,390,099
Number of unitholders 1,657
In terms of
liquidity, an
annualised 38% of
Acucap`s issued
units traded on
the JSE in the 6
month period ended
30 September 2007.
11. COST TO INCOME
RATIO
Acucap continues to
focus on cost
efficiently asset
management, and the
cost to income ratio
has remained at the
low level
benchmarked by
management. Details
are set out below:
six months to six months
30-9-07 to
30-9-06
Cost category
Net direct 9,116 8,489
operating costs
Property 3,102 2,411
administration fees
Asset management 3,337 2,918
costs
Indirect 1,895 1,875
administration
costs
Total costs 17,450 15,693
Contractual rental 157,769 118,075
income
Cost to income 11.06% 13.30%
ratio
Net direct 5.8% 7.2%
operating costs
Property 2.0% 2.0%
administration fees
Asset management 2.1% 2.5%
costs
Indirect 1.2% 1.6%
administration
costs
Total costs 11.1% 13.3%
12. BLACK ECONOMIC
EMPOWERMENT
A comprehensive
process has been
initiated at board
level to guide the
implementation of
Acucap`s BEE
strategy. The
process deals with
all facets of the
generic BEE
framework,
including equity
ownership, board
and management
representation,
enterprise
development,
preferential
procurement and
skills
development.
In this context,
the board of
Acucap is pleased
to announce the
appointment of Ms
Felleng Sekha as
an independent non-
executive director
of Acucap. Felleng
is a specialist in
media
telecommunications
law, and she has
an outstanding
track record in
that field, having
chaired the
Independent
Broadcasting
Authority (later
to become ICASA)
and the National
Telecommunications
Forum. As General
Manager of
International
Business
Development for
MTN, Felleng led
the team that
successfully set
up MTN in Nigeria.
She was resident
in Nigeria from
2001 to 2005, and
on her return
spent a further 8
months in Zambia
leading a similar
project for MTN.
Felleng holds law
degrees from the
Universities of
Lesotho and Cape
Town, and a post
graduate diploma
in media
communications and
information
technology law
from the
University of
Melbourne. The
board welcomes
Felleng.
13. PROSPECTS
For the full year
to March 2008,
Acucap expects to
maintain its
record of strong
distribution
growth, delivering
results
commensurate with
those achieved
over the last
three financial
years.
14. PAYMENT OF
DEBENTURE INTEREST
Notice is hereby
given that interim
distribution
number 14 of 36.83
(thirty six comma
eight three) cents
per linked unit
has been approved
in respect of the
two month period
ended 30 September
2007. The last
date to trade the
linked units cum
distribution is
Friday, 16
November 2007 and
the record date
will be Friday, 23
November 2007. The
linked units will
start trading ex-
distribution from
Monday, 19
November 2007.
Distributions will
be made to unit
holders on Monday
26 November 2007.
Linked unit
certificates may
not be
dematerialised or
rematerialised
between Monday 19
November 2007 and
Friday 23 November
2007 both days
inclusive.
On behalf of the Board
BS KANTOR
PA THEODOSIOU
(Chairman)
(Managing Director)
31 October 2007
Registered Office
Suite A11 Westlake
Square
Westlake Drive
Westlake
CAPE TOWN
Transfer secretaries:
Computershare Investor
Services 2004 (Pty)
Limited
70 Marshall Street
JOHANNESBURG
http://www.acucap.co.za
info@acucap.co.za
Share Code: ACP
ISIN : ZAE000037651
Directors: Prof BS
Kantor (Chairman), PA
Theodosiou* (Managing
Director), FM Berkeley,
RC Frolich, MJ
Lindeque, S M Moloko,
JH Rens*, F Sekha , B
Stevens, NDC Whale
* Executive, # British
Sponsor
Java Capital
(Proprietary) Limited
Date: 01/11/2007 07:10:01 Produced by the JSE SENS Department.
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