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ACP
ACP
ACP - Acucap Properties - Audited Consolidated Results for the year ended 31
March 2009
Acucap Properties Limited
(Reg No. 2001/021725/06)
(Incorporated on 12 September
2001)
"Acucap" or "the company"
Share Code: ACP
ISIN : ZAE 000037651
Audited Consolidated Results for the year ended 31 March 2009
Balance sheet
at 31 March 2009
2009 2008
Restated
R`000 R`000
Assets
Property assets 5 360 301 5 630 175
Investment properties 4 857 961 4 923 576
Long term receivable 112 591 107 434
Short term receivable 17 204 15 680
Investment properties and 4 987 756 5 046 690
related receivables
Investment properties held for 140 578 386 643
sale and related receivables
Investment properties under 191 111 161 990
development
Owner-occupied property 10 828 10 404
Property development inventory 30 028 24 448
Other non-current assets 1 101 787 923 780
Loans in respect of unit 248 689 222 694
purchase scheme
Equipment 1 687 1 208
Intangible assets 106 736 -
Interest in jointly controlled 98 368 -
entities
Listed investments 612 210 643 642
Financial instruments - 25 785
Deferred tax assets 34 097 30 451
Other current assets 169 288 84 960
Trade and other receivables 134 748 60 728
Interest in jointly controlled 12 335 11 979
entity held for sale
Cash and cash equivalents 22 205 12 253
Total assets 6 631 376 6 638 915
Equity and liabilities
Shareholders` interest 2 016 960 2 110 213
Share capital and share 1 334 619 1 211 285
premium
Non-distributable reserve 766 244 984 309
Accumulated loss ( 83 903) ( 85 381)
Non-current liabilities 3 857 960 3 247 964
Debentures 1 381 108 1 289 200
Financial liabilities 2 045 969 1 591 731
Financial instruments 95 901 -
BEE instrument 40 421 48 256
Deferred tax liabilities 294 561 318 777
Current liabilities 756 456 1 280 738
Trade and other payables 116 183 93 346
Financial liabilities 424 217 1 032 136
Tax payable 46 341 10 411
Debenture interest payable 169 715 144 845
Total equity and liabilities 6 631 376 6 638 915
Income statement
for the year ended 31 March
2009
2009 2008
Restated
R`000 R`000
Revenue 558 332 426 927
- Contractual 545 496 404 117
- Straight lining 12 836 22 810
Net operating (expenses)/ ( 67 398) ( 57 460)
income
(Loss)/ profit on disposal of ( 14 500) 10 965
investment properties
Amortisation of intangible ( 12 923) -
assets
Section 311 expenses - ( 2 287)
Profit before fair value 463 511 378 145
adjustments, interest and
taxation
Fair value adjustment to ( 7 687) 95 186
investment properties
Fair value adjustment to BEE 7 835 22 322
instrument
Fair value adjustment to ( 20 067) -
government bonds
Profit before interest and 443 592 495 653
taxation
Interest income 97 533 33 253
Interest expense
- debentures ( 346 390) ( 259 780)
- other ( 250 036) ( 133 393)
Share of (loss)/ profit of equity accounted ( 356) 3 750
investees (net of income tax)
(Loss)/ profit before taxation ( 55 657) 139 483
Taxation ( 4 250) ( 29 965)
(Loss)/ profit for the year ( 59 907) 109 518
Cents Cents
Basic and diluted (loss)/ ( 43.89) 98.15
earnings per share
Interest distribution per
linked unit
- special - 72.04
- interim 121.30 36.83
- final 122.76 112.24
Distribution per linked unit 244.06 221.11
Restated
2009 2008
Gross Net of Gross Net of
tax tax
Headline R`000 R`000 R`000 R`000
(loss)/earnings
The calculation of
the headline earnings
per share is based on
a weighted average of
136 500 471 (2008:
111 584 767) shares
in issue during the
year and the headline
earnings is
calculated as
follows:
(Loss)/ profit for ( 59 907) 109 518
the year
Fair value adjustment 7 687 6 321 ( 95 186) ( 86 037)
of investment
properties
Profit on disposal of 14 500 12 470 ( 10 965) ( 9 430)
investment properties
Headline ( 41 116) 14 051
(loss)/earnings -
shares
Interest paid to 346 390 259 780
debenture holders
Headline earnings - 305 274 273 831
linked units
Cents Cents
Headline ( 30.12) 12.59
(loss)/earnings per
share
Headline earnings per 223.64 245.40
linked unit
Abridged cash flow statement
for the year ended
31 March 2009
2009 2008
Restated
R`000 R`000
Cash flows from operating
activities
Cash generated from 427 975 341 838
operations
Income tax refunded/ 9 516 ( 47)
(paid)
Interest received 97 533 42 930
Interest paid ( 571 556) ( 377 956)
Net cash (outflow)/ inflow from ( 36 532) 6 765
operating activities
Net cash outflow from investing 4 989 (1 467 055)
activities
Cash flows from financing
activities
Proceeds from the 123 334 768 708
issue of shares
Proceeds from the issue of 91 908 354 460
debentures
Financial 232 865 663 580
liabilities raised
Financial ( 406 612) ( 319 980)
liabilities repaid
Net cash inflow from financing 41 495 1 466 768
activities
Net cash inflow for 9 952 6 478
the year
Cash and cash equivalents at 12 253 5 775
beginning of year
Cash and cash equivalents at 22 205 12 253
end of year
Statement of
changes in
equity
for the year
ended 31
March 2009
Share Share Non- Accumulated Total
capital premium distributable loss
reserve
R`000 R`000 R`000 R`000 R`000
Balance at 31 94 442 163 959 239 ( 100 771) 1 300 725
March 2007
Issue of 15 16 347 060 - - 347 076
797 910
shares in
August 2007
Proceeds 16 337 270 - - 337 286
Adjustment of - 9 953 - - 9 953
issue price
on effective
date of
acquisition
of investment
in Atlas
Share issue - ( 163) - - ( 163)
costs
Issue of 17 17 378 054 - - 378 071
603 596
shares in
October 2007
Proceeds 17 387 438 - - 387 455
Adjustment of - ( 9 330) - - ( 9 330)
issue price
on effective
date of
acquisition
of investment
in Intaprop
Share issue - ( 54) - - ( 54)
costs
Issue of 2 2 43 879 - - 43 881
080 000
shares in
November 2007
(Expenses)/ - - ( 69 058) - ( 69 058)
income
recognised
directly in
equity *
Net change in - - ( 87 779) - ( 87 779)
fair value of
listed
investments
Net change in - - 18 721 - 18 721
fair value of
cash flow
hedge
recognised
directly in
equity
Profit for - - - 109 518 109 518
the year *
Transfer to - - 97 965 ( 97 965) -
non-
distributable
reserve
Balance at 31 129 1 211 156 988 146 ( 89 218) 2 110 213
March 2008
Restatement - - ( 3 837) 3 837 -
of prior
period due to
change in
accounting
policy **
Restated 129 1 211 156 984 309 ( 85 381) 2 110 213
balance at 31
March 2008
Issue of 8 8 108 632 - - 108 640
000 000
shares in May
2008
Proceeds 8 108 712 - - 108 720
Share issue - ( 80) - - ( 80)
costs
Issue of 1 1 14 693 - - 14 694
200 000
shares in
November 2008
Proceeds 1 14 729 - - 14 730
Share issue - ( 36) - - ( 36)
costs
Expenses - - ( 156 680) - ( 156
recognised 680)
directly in
equity *
Net change in - - ( 34 994) - ( 34 994)
fair value of
listed
investments
Net change in - - ( 121 686) - ( 121
fair value of 686)
cash flow
hedge
recognised
directly in
equity
Loss for the - - - ( 59 907) ( 59 907)
year *
Transfer from - - ( 61 385) 61 385 -
non-
distributable
reserve
Balance at 31 138 1 334 481 766 244 ( 83 903) 2 016 960
March 2009
* total expense for period
(including profit or loss
for period as well as
income or expenses
recognised directly in
equity) is R 216 587 000
(2008: profit of R 40 460
000)
** Refer note regarding
basis of preparation
BASIS OF PREPARATION AND AUDIT OPINION
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IAS 34 and
interpretations adopted by the International Accounting Standards
Board (IASB) and the requirements of the South African Companies
Act.
The financial statements are prepared on the historical cost basis,
except for investment properties, investment properties held for
sale, derivative financial instruments, financial assets and
available-for-sale financial assets which are measured at fair
value.
The financial statements are prepared on the going concern basis
and Acucap`s accounting policies have been applied consistently to
all periods presented except for the change in policy of jointly
controlled entities.
In the prior year, the group`s 50% investment in Swanvest 334
(Proprietary) Limited, a jointly controlled entity, was
proportionally consolidated. During the current year, the
accounting policy for jointly controlled entities was changed from
proportional consolidation to equity accounted earnings.
KPMG Inc. has audited the financial information set out in this
report. Their unqualified audit report is available for inspection
at the company`s registered office.
COMMENTARY
1. REVIEW OF RESULTS AND OPERATIONS
Acucap`s board is pleased to report growth in distributions for the year
ended 31 March 2009 of 10.4% over the previous financial year. With the
now weaker South African economy, the performance of local listed
property companies will increasingly be differentiated by the quality of
their underlying portfolios. Acucap has worked consistently to build a
portfolio comprising a smaller number of large, good quality assets,
capable of delivering real growth through the economic cycle. Further
details of the company`s performance over the last financial year are
set out in this commentary.
2. SIMPLIFIED FINANCIAL INFORMATION
Simplified financial information is presented to eliminate the effects
of IFRS and accounting adjustments that do not form part of Acucap`s
distribution. The comparative figures have not been re-stated for the
change in accounting policy, which has no effect on cash distributions.
Simplified distribution income statement for the year ended
31 March 2009
2009 2008
Note R`000 R`000
Revenue 1 499,180 400,193
Net operating expenses 2 -56,114 -52,550
Profit before interest and 443,066 347,643
taxation
Income from investment in 5 8,010 -
Sycom Property Fund Managers
Helderberg net income 6 41,823 8,903
Interest received 11 14,821 5,816
Income from Listed 11 56,631 15,435
Investments
Interest received on Unit 11 16,508 13,192
Purchase Trust
Notional Interest received on 11 13,250 1,150
units issued
Debenture holders interest 12 -186,890 -123,608
paid - special and interim
Other interest paid 13 -227,166 -114,233
Profit for the period 180,053 154,298
Final distribution per unit 122.76 112.24
Simplified Balance Sheet at
31 March 2008
R`000 R`000
Assets
Property assets 15 5,189,695 5,219,084
Listed property investments 16 641,958 669,600
Other non-current assets 17 489,577 277,380
Other current assets 18 211,105 92,946
Total assets 6,532,335 6,259,010
Equity and liabilities
Shareholder`s interest 19 3,812,238 3,796,801
Non-current liabilities 20 2,379,326 2,205,732
Current liabilities 21 340,771 256,477
Total equity and liabilities 6,532,335 6,259,010
Notes to the simplified
financial information
1 Revenue as stated 558,332 427,594
Less : straight lining -12,836 -22,810
revenue reversed
Less : Helderberg sales -46,316 -13,947
Add : Intaprop portfolio 9,356
income from effective date of
1 August 2007 to 17 October
2007
499,180 400,193
2 Net operating expenses as -67,398 -
stated 57,493
Less : Net income from Sycom -8,010
Property Fund Managers
Add : CShell expenses 97
54
Less : Helderberg cost of
sales 19,197 5,044
Add : Intaprop net expenses -
from effective date of 1 -145
August 2007 to 17 October
2007
Less: Profit on sale of
properties (Metcash)
Less : Atlas capital costs
now expensed -10
-56,114 -52,550
3 (Loss) / Profit on sale of -14,500 10,965
properties as stated
Non-distributable capital 14,500 -10,965
profit / loss reversed
0 0
4 Amortisation of Intangible -12,923
Assets as stated
Reversal of amortisation of 12,923 0
intangible asset
0 0
5 Income from Sycom Property
Fund
transferred from net 8,010
operating expenses
8,010 0
6 Helderberg sales transferred 46,316 13,947
from Revenue
Helderberg cost of sales -19,197 -5,044
transferred from expenses
Helderberg units sold not yet 14,704 -
transferred
41,823 8,903
7 Section 311 Atlas acquisition -2,287
costs as stated
Add : Transaction costs 0 2,287
capitalised
0 0
8 Fair value adjustment to -7,687 100,515
investment properties
Less: Fair value adjustment 7,687 -100,515
to investment properties
reversed
0 0
9 Fair value adjustment to BEE 7,835 22,322
instrument
Less: Fair value adjustment -7,835 -22,322
to BEE instrument reversed
0 0
10 Fair value adjustment to -20,067 -
Government bonds
Less: Fair value adjustment 20,067 -
to government bonds reversed
0 0
11 Interest received as stated 97,533 33,253
Add : Interest received from 3,677 2,340
CShell, previously eliminated
on consolidation
Less : Income received on -56,631 -15,435
listed units separately
disclosed
Less : Interest received on -16,508 -13,192
Unit Purchase Trust
separately disclosed
Less : Notional Interest -13,250 -1,150
received on units issued
separately disclosed
Less : Notional Interest - -
received from CShell on
initial issue
14,821 5,816
12 Debenture interest paid as -346,390 -259,780
stated
Reverse debenture interest as 346,390 259,780
stated
Notional interest iro Mar-08 -8,979
final distribution on units
issued in May
Interim debenture interest to -177,911
30 September 2008
Interim debenture interest to -
30 September 2006
Special debenture interest to -73,473
31 July 2007
Interim debenture interest to -50,135
30 September 2007
-186,890 -123,608
13 Other interest paid as stated -250,036 -134,114
Less : Other interest paid by 22,062 16,415
CShell, previously included
on consolidation
Less : Net reversal of 808 3,466
interest provided from period
end to distribution payment
date
-227,166 -114,233
14 Number of linked units in 138,249,105 129,049,105
issue per IFRS at 31 March
2009
CShell linked units 8,420,994 8,420,994
previously treated as
treasury units on
consolidation
Actual units in issue 146,670,099 137,470,099
15 Property assets as stated 5,360,301 5,655,482
Less : Properties held for -140,578 -411,950
sale, removed from assets
Less : Helderberg property -30,028 -24,448
inventory
5,189,695 5,219,084
16 Listed property investment in 612,210 643,642
Sycom
Add : Sycom interest 29,748 25,958
receivable at 31 March 2009
641,958 669,600
17 Other non-current assets as 1,101,787 924,314
stated
Less: Listed property -612,210 -643,642
investments disclosed
separately
Less: Reversal of CShell -3,292
financial instrument
489,577 277,380
18 Other current assets as 169,288 73,839
stated
Add: CShell intercompany loan 26,834 20,617
eliminated on consolidation
Add : Helderberg property 30,028 24,448
inventory
Less : Sycom interest -29,748 -25,958
receivable at 31-3-09
Less : Helderberg property 23,981 -
sales not yet transferred
Less : Helderberg property -9,278 -
sold not yet transferred cost
of sales
211,105 92,946
19 Shareholder`s interest as 2,016,960 2,110,212
stated
Add Debentures 1,381,108 1,289,200
Debenture portion of 84,126 84,126
linked units issued to CShell
Share capital and 109,530 109,530
premium on shares issued to
CShell
CShell retained income 53,538 48,063
/ NDR
Helderberg property 14,703 -
sales not yet transferred net
income
Adjust deferred tax to 152,273 155,670
the Capital Gains Tax rate
3,812,238 3,796,801
20 Non-current liabilities as 3,857,960 3,262,408
stated
Re-classification of 424,217 1,032,136
current financial liabilities
Less : Proceeds from disposal -140,578 -411,950
of assets classified as held
for sale
Adjust deferred tax -152,273 -155,670
to the Capital Gains Tax rate
Debentures -1,381,108 -1,289,200
Financial -183,736 -183,736
liabilities attributable to
CShell
Financial -4,735
instrument CShell SWAP
Reversal of BEE -40,421 -48,256
financial instrument
2,379,326 2,205,732
21 Current liabilities as stated 756,456 1,281,015
Add: Debenture interest 10,338 9,452
payable to CShell
Less: Re-classification of -424,217 -1,032,136
current financial liabilities
Accrued interest -1,806 -1,854
receivable from CShell
340,771 256,477
3. PORTFOLIO ACTIVITIES
Sycom
For the year to March 2009, Sycom Property Fund delivered a very sound
11.1% growth in distributions. This strong performance in challenging
market conditions underlines the quality of Sycom`s portfolio, and this
was the primary rationale for Acucap`s acquisition of a substantial
investment in the fund, as well as joint control of its management
company. The defensive strength of Sycom`s portfolio was emphasised by a
3.4% appreciation in the value of its investment properties since the
last revaluation a year ago, resulting in an NAV of R20.74 at the end of
March 2009. The Acucap and Parkdev asset management teams have combined
well to increasingly realise the potential of Sycom`s properties, and
the intensive style adopted at both asset management and administration
levels is expected to continue delivering positive results. The growth
in income from Acucap`s investment in Sycom will increasingly replace
the Helderberg income stream, referred to in note 4 below.
Acucap retail portfolio
The fund`s retail portfolio continued to perform well in the year under
review, despite South Africa`s economy recording lower levels of
consumer spending. In Acucap`s retail portfolio, total retail turnover
for the year to March 2009 grew by a nominal 10.43% and foot traffic
also showed positive growth, increasing in real terms by 2%. The
development activities within the retail sector are summarised below:
Bayside Mall
On 22 May 2009, Acucap announced the acquisition of Old Mutual`s
50% undivided share in this regional mall. Unit holders are
referred to the announcement, which contains the terms of the deal
and its financial effects. The only condition precedent is approval
by the competition authorities. The development of the new store
for Mr Price was completed and as anticipated, the reconfiguration
has resulted a more balanced foot flow to this section of the mall,
with Mr Price now playing an anchor role in a mall area previously
occupied by smaller line shops. Additional bulk rights have been
approved to increase the mall`s GLA to 52,000m2, and negotiations
are well advanced with two majors to anchor the additional areas
and give Bayside a highly competitive tenant mix.
Festival Mall
Paid parking was introduced to Festival Mall in November 2008. The
change has been smoothly integrated, and is making a significant
contribution to centre revenues. The introduction of the paid
parking system necessitated upgrades to the parking area and
realignment of internal access roads, as well as resurfacing of the
majority of external parking areas. External lights, landscaping,
road markings and signage were all upgraded in order to deliver a
parking environment that compliments a quality shopping experience
offered by the internal malls. The four entrances have been
redeveloped, integrated into the structured parking, and the lead-
in malls have been upgraded to a more contemporary retail design.
The total capital cost of the project was R38m, with the paid
parking income and letting of the recently completed external shops
resulting in an anticipated first year yield in excess of 9%. This
project was the final phase of the redevelopment and extension at
Festival Mall which resulted in the introduction of Game, Ster
Kinekor and Boardmans as well as an additional 800 structured
parking bays.
Key West
The introduction of the paid parking system in Key West was put on
hold due to internal traffic congestion that was revealed during
the testing phase of the system. Currently planning is underway
with the aim of introducing an additional 500 parking bays in a
structured format in order to meet parking demand and ease
congestion. A partial upgrade of the existing parking areas has
been completed, including landscaping, fencing of the perimeter of
the site, road markings and lighting. The new Virgin Gym entrance
was completed at the same time as the internal upgrade to the gym
premises. A number of national tenants, including Woolworths, have
commenced internal upgrades to their specification.
Rondebosch Village
The final phase of the centre`s redevelopment was completed in the
last quarter of the financial year. This phase included the
introduction of an additional 105 parking bays, a pedestrian
walkway along the Liesbeek Canal, the extension and complete
upgrade of the Pick n Pay store, the introduction of a number of
new line shops, and finally the conversion of the obsolete cinema
space into 1,000m2 of high quality offices.
Howard Centre
Plans to redevelop the centre are well advanced, and will result in
the creation of an additional 2,500m2 of GLA, as well as an
expansion of Woolworths, the realignment of the old food court, and
a general upgrade to entrances, public facilities and mall
finishes. The estimated capital cost of the project is R62m with an
projected first year yield of 11%.
Westville Mall
Planning is also underway to upgrade the Westville Mall. The
existing facade, parking area, and internal mall finishes are to be
upgraded, and the existing GLA will be extended by 800m2. The
estimated capital cost for the project is in the order of R23m with
an indicative first year yield of 9%. The work is scheduled for
completion towards the end of 2009.
Acucap office portfolio
There were no new developments or acquisitions in the office portfolio,
but significant leasing activity occurred in the year under review.
Leases for 37,876m2 expired during the year, and new leases or renewals
were concluded for 39,192m2 of space.
Illovo Boulevard node
Acucap has 18,866m2 of office space in the prime Illovo Boulevard
office precinct. Leases over 9,706m2 expired during the year, and
new leases or renewals were concluded for 9,015 m2 of this space at
gross rentals of between R120/m2 and R125/m2. Negotiations are well
advanced for 538m2 of the unlet area at a gross rental of R120/ m2,
and 153m2 remains vacant, representing 0.8% of Acucap`s office
exposure in this node.
Golf Park, Mowbray
This office park comprises 16,293m2 of GLA, of which 4,885m2
expired during the current year and was successfully renewed.
Mutual Terrace, Pinelands
Old Mutual renewed its lease over this 4,493m2 building at a market-
related rental, resulting in an 18.5% upward reversion.
Albion Springs, Rondebosch
A five year renewal was concluded with the park`s anchor tenant for
2,809m2 of office space.
135 West Street, Sandton
The property was sold for a consideration of R50m, against its
March 2008 valuation of R40,6m. Transfer was effected in May 2009.
Acucap industrial portfolio
Acucap`s industrial interests are represented in the N1 and Montague
business parks, and although they currently represent a small proportion
of the fund`s portfolio, they will comprise a more meaningful proportion
of Acucap`s investment properties once the build-out of the respective
parks is complete. The current status of the developments is summarized
below :
N1 Business Park
Tenant demand has remained firm for space in this premium
industrial park, The latest signing is Digistics for a 7,821m2
facility on terms that will provide an initial yield of 10.33%.
This deal takes the total lease area at N1 Business Park to
26,488m2, out of a total anticipated build out of approximately
115,000m2.
Montague Business Park
Land use, traffic and environmental approvals have all been
obtained, and a site development plan has been submitted for a
mixed use build-out of the site, incorporating both industrial and
retail elements totaling 236,225m2 of bulk. Negotiations are
progressing well for a proposed retail development on the Koeberg /
Plattekloof corner of the site, and there is sufficient power
available to complete this project. Eskom has confirmed that the
site`s additional power requirements will be provided in two
phases, with the first tranche of additional capacity coming on
stream in January 2010. The remainder of the site`s requirements
will be delivered by March 2011.
4. HELDERBERG VILLAGE
Acucap had budgeted to sell 20 units in the current financial year, and
by year end, a total of 19 units had been sold. This pleasing result, in
a distressed residential market, underlines both the uniqueness of
Helderberg`s offering and the profile of many of its buyers, who are
less reliant on bank funding. Net revenue from Helderberg sales was
R42m, compared to R9m in the prior year. There are 17 units left to
sell, with 12 units budgeted to be sold in the 2010 financial year, and
the remaining 5 units in financial 2011.
5. BORROWINGS
The company has total borrowings of R2.286 billion as tabulated below.
Interest rates are hedged on 84% of total borrowings, at a weighted
average rate of 10.53% and a weighted average maturity of 8 years. The
Nedbank facilities are subject to renewal in two tranches, the first
renewal for the R977m facility effective 31 March 2012, and the second
renewal for the R792m facility effective 31 March 2013. The smaller
Omsfin and Standard Bank facilities run to 31 March 2011 and 30 June
2010 respectively. Acucap`s gearing ratio at 31 March 2009 was 39.13%.
Fixed Amount Effective
period R`000 interest rate
Nedbank 04-Aug-09 9.6%
60,000
Standard 01-Oct-09 11.4%
50,000
Nedbank 27-Sep-11 10.3%
50,000
Standard 01-Oct-11 10.2%
50,000
Omsfin 15-Dec-11 9.7%
50,000
Nedbank 31-Mar-12 13.2%
50,000
Standard 01-Oct-12 10.1%
50,000
Nedbank 08-Feb-13 11.2%
200,000
Standard 01-Oct-13 9.8%
50,000
Omsfin 11-Oct-13 10.0%
120,000
Nedbank 24-Nov-14 9.5%
100,000
Nedbank 24-Nov-15 9.5%
100,000
Nedbank 01-Aug-16 11.2%
70,000
Nedbank 30-Sep-16 10.7%
50,000
Nedbank 31-Jul-17 10.9%
50,000
Nedbank 17-Jul-19 11.6%
50,000
Nedbank 31-Jul-20 11.1%
50,000
Nedbank 05-Aug-20 10.9%
50,000
Nedbank 30-Sep-20 10.4%
50,000
Nedbank 31-May-21 11.7%
250,000
Nedbank 31-Jul-23 10.9%
50,000
Nedbank 09-Oct-23 10.0%
100,000
Bond shorts 2025/2036 9.2%
R186/R209 224,217
Fixed interest
loans 1,924,217
Floating
interest loans 362,233
Nedbank prime less
14,035 2.3%
Omsfin ROD + 0.98%
200,000
Standard jibar + 1.1%
116,000
Standard prime less 2%
7,421
Nedbank Prime
24,777
Total borrowings
2,286,450
6. PROPERTY PORTFOLIO VALUATION
The Acucap portfolio was independently revalued at 31 March 2009 by the
fund`s appointed valuers, Quadrant Properties in Gauteng and Natal,
Magnus Penny in the Western Cape and Majola & Boyd in the Eastern Cape.
In addition, when prevailing market conditions are considered to be
unusual, independent peer review valuations are commissioned. The board
considered this appropriate in the current year, and independent peer
review valuations were performed on a sample of the fund`s properties.
Their results concurred with those of the fund`s independent valuers,
and a complete property valuation schedule is set out below. In addition
to independent values and capitalisation rates, the schedule also
indicates average net through rentals per m2 for each property, as well
as its occupancy level. In the case of the office segment, average net
rental rates per m2 include parking revenue.
Cap Average Occupancy
Rentable Independent rate Valuation rent per
Area valuation per mSquared
mSquared
R`000 R
mSquared
Retail 295,736 3,480,620 11,769 85.23 97.0%
1 Festival 8.00% 87.33 99.6%
Mall, Kempton 80,345 972,500 12,104
Park
2 Keywest, 8.25% 81.32 98.6%
Krugersdorp 53,490 660,000 12,339
3 Gardens 8.50% 152.92 96.9%
Centre, Cape 14,388 355,000 24,673
Town
4 50% of 8.50% 107.55 97.9%
Bayside 18,579 282,500 15,205
Centre, Table
View
5 The Village 9.25% 76.32 98.5%
Square, 18,437 167,000 9,058
Randfontein
6 Howard 9.00% 90.52 92.1%
Centre, 15,054 160,500 10,662
Pinelands
7 59% Hillcrest 9.25% 117.55 99.7%
Corner, 11,892 160,500 13,496
Durban
8 East Rand 9.00% 79.51 85.9%
Value Mall, 13,497 150,000 11,114
Boksburg
9 Westville 9.00% 70.15 89.9%
Mall, Durban 12,755 141,000 11,054
10 Roodepoort 9.00% 47.85 97.3%
Hyperama 20,762 122,800 5,915
11 27.5% of The 8.50% 71.09 99.1%
Bridge, Port 12,095 106,120 8,774
Elizabeth
12 Sunward 9.50% 66.36 97.6%
Centre, 12,031 91,300 7,589
Boksburg
13 Rondebosch 9.50% 66.11 91.6%
Village, Cape 6,020 58,000 9,635
Town
14 Watermeyer 10.25% 67.11 83.4%
Park, 5,894 46,200 7,838
Pretoria
15 Boulevard 10.00% 120.09 100.0%
Piazzas, 497 7,200 14,487
Illovo
Offices 106,257 1,388,210 13,065 104.24 97.2%
16 Golf Park, 9.75% 101.94 100.0%
Mowbray 16,257 189,860 11,679
17 Microsoft, 8.50% 102.65 99.7%
Bryanston 9,450 138,000 14,603
18 82 Grayston 9.25% 119.13 100.0%
Drive, 7,226 119,750 16,572
Sandown
19 Tiger Brands, 8.75% 97.08 100.0%
Bryanston 6,773 93,400 13,790
20 Aon House, 9.50% 119.02 91.2%
Illovo 6,138 93,100 15,168
21 Bogare, 9.25% 96.50 100.0%
Menlyn, 6,301 81,700 12,966
Pretoria
22 The Village, 10.00% 71.45 68.5%
Faerie Glen, 6,799 77,300 11,369
Pretoria
23 Nautica, 9.25% 139.19 100.0%
Granger Bay, 5,234 75,000 14,329
Cape Town
24 4 Fricker 8.75% 105.20 100.0%
Road, Illovo 4,726 70,000 14,812
25 Kagiso House, 8.50% 124.93 100.0%
Illovo 3,808 67,300 17,673
26 SA Weather 9.50% 107.49 100.0%
Services, 4,270 64,000 14,988
Pretoria
27 Colliers, 9.25% 122.66 95.5%
Illovo 4,244 58,100 13,690
28 Pharos House, 9.00% 81.13 98.4%
Westville 5,521 52,000 9,419
Mall, Durban
29 Mutual 10.00% 98.12 100.0%
Terraces, 4,493 47,500 10,572
Pinelands
30 Neotel, 9.75% 74.91 100.0%
Woodmead 4,619 45,800 9,916
31 Albion 9.50% 116.01 100.0%
Springs, 3,361 44,000 13,091
Rondebosch
32 Bremerton 10.50% 125.89 100.0%
Office Park, 3,643 39,000 10,705
Port
Elizabeth
33 Selborne 10.00% 100.81 100.0%
Fourways Golf 3,394 32,400 9,546
Park, Gauteng
Industrial 43.04 98.6%
19,113 102,963 5,387
34 Kargo, Denver 10.50% 38.52 100.0%
10,417 47,000 4,512
35 Tellumat 44.37 95.3%
(30%) 5,881 32,883 5,591
36 N1 Business 8.50% 56.95 100.0%
Park, Midrand 2,815 23,080 8,199
Investment 421,106 4,971,793 11,807 88.11 97.1%
properties
7. RETAIL PORTFOLIO PERFORMANCE
Segmental contribution to turnover within the Acucap retail portfolio is
shown below.
ACUCAP Retail Segments -
Contribution to Turnover
Food Majors 40.28%
Apparel 26.91%
Home & Furniture 2.48%
Electronics & Music 4.01%
Mass Discounters 7.23%
Health & Beauty 8.40%
Food Service & 6.55%
Entertainment
Other 4.13%
100.00%
Just over 67% of turnover is attributable to food and apparel, and these
two segments contribute 54% of Acucap`s rental income.
The performance of Acucap`s major retail segments for the full year and
for the last quarter of the year to March 2009 are shown in the chart
below. For the year, the graph shows positive growth across all segments
except for mass discounters, where discretionary spend on durable goods
has been under pressure for most of the year. In the quarter to March
2009, the growth rate has generally slowed, largely due to Easter
falling in April this year. This is shown by a muted 2.05% turnover
growth in March, compared to a more robust 5.16% turnover growth in
April 2009.
The strong performance of the Home segment in the last quarter of 2009
was influenced by the opening of the new format Mr Price store in
Bayside referred to above. The Health & Beauty segment also proved
resilient, outperforming its strong annual showing in the last quarter.
Segmental turnover growth
Segment Quarter-on- Year-on-
Quarter Year
Total Turnover 5.84% 10.43%
Food Majors 7.13% 11.14%
Apparel 0.11% 3.56%
Home 22.99% 2.60%
Electronics 0.13% 4.98%
Mass -5.17% -0.73%
Discounters
Health & Beauty 9.24% 7.26%
Food Service -1.01% 4.46%
Acucap monitors each tenant`s rent to turnover ratio on a monthly basis
to determine if there are any early signs of stress, typically indicated
by rent to turnover ratios exceeding segmental industry norms. The graph
below shows these ratios for each of the seven major segments in
Acucap`s retail portfolio. The Home and Mass Discount segments have
deteriorated the most, although both remain with industry norms at 9.4%
and 5.5% rent to turnover respectively.
Segmental rent to turnover
ratios
Segment Rent Ratio Rent
2008 Ratio
2009
Food Majors 2.27% 2.20%
Apparel 3.86% 3.98%
Home 8.44% 9.39%
Electronics 3.20% 3.29%
Mass 5.05% 5.51%
Discounters
Health & Beauty 2.42% 2.43%
Food Service 7.15% 7.62%
8. HISTORICAL LEASE EXPIRIES OVER THE LAST 12 MONTHS
The table below shows a summary of all leasing activity in the Acucap
portfolio over the last financial year.
Expiries and Average Ave New Average Average
terminations through escalation leases through escalation
rent at rate at and rent for new
expiry expiry renewals for new leases
leases
Regional 26 656 8.6% 28 410 8.2%
Retail 91.80 92.05
Other 36 152 8.6% 32 042 8.4%
retail 93.32 99.06
Offices 37 876 9.4% 39 192 8.9%
93.78 106.96
Industrial 1 235 8.7%
60.38
Total 100 684 100 879
The uplift in office rentals on was higher than reversions achieved in
retail rentals, although retail reversions are expected to outperform
office reversions in the year ahead, as shown in section 9 below.
Significantly, there has been no material change in average escalation
rates, and these contractual rent increases will continue to underpin
distribution growth through the economic cycle.
The pattern of expiries and renewals can be seen in the context of
Acucap`s overall portfolio in the table below, which reconciles the
opening and closing gross lettable area, taking into consideration
expiries, renewals, new leases, extensions to GLA, and acquisitions and
disposals.
Opening Expiries and New Net Properties Properties Closing
GLA terminations leases area purchased sold GLA
and added
renewals
Total 439 329 (96 740) 95 493 6 345 5 880 (29 201) 421 106
- let 432 069 (100 684) 95 493 5 386 5 604 (29 008) 408 860
- 7 260 3 944 959 276 ( 193) 12 246
vacant
9. FORWARD LEASE EXPIRIES
Over the next financial year, leases for 79,792m2 will expire,
representing 19% of the portfolio GLA. Details of the expiry rentals are
shown below, together with estimated renewal rentals. For offices, there
is an expected downward reversion of 8%, and for retail, an upward
reversion of 12%.
Area Net rental Net rental /
expired / m2 at m2 on
m2 expiry renewal
date
Offices
14,725 108.18 99.41
Retail
65,067 93.15 104.30
Over the longer-term, the fund continues to show a good, long-dated
lease expiry profile. Expiries in the office portfolio are between 3%
and 5% by income per annum over the next 4 years. The retail portfolio
shows higher levels of expiry by income over the next three years,
centred largely around Festival Mall and Key West, where low average
through rentals of just over R100/m2 present an opportunity for
meaningful upward rental reversions.
Lease
expiry:
Rental
income
Industrial Offices Retail Total
Total 2.18% 29.57% 68.25% 100.00%
vacant 0.03% 0.56% 2.23% 2.82%
2010 0.01% 5.13% 16.17% 21.30%
2011 0.13% 3.04% 12.13% 15.30%
2012 0.00% 3.78% 13.84% 17.62%
2013 0.02% 4.36% 8.61% 12.99%
2014 0.14% 8.15% 4.63% 12.92%
2015 + 1.86% 4.55% 10.64% 17.05%
10. MAJOR TENANTS BY AREA AND INCOME
Acucap`s twenty largest tenants account for 49.4% of its rental income,
with retail tenants contributing 38% and office tenants 11.4%, in line
with the fund`s high retail weighting in its property portfolio. The
tenants listed below indicate the high quality of Acucp`s rental cash
flows.
tenant group
Shoprite 7.7%
SA Government and 4.5%
parastatals
Pick `n Pay 4.0%
Edcon 3.6%
Mr Price 2.9%
Pepkor 2.7%
Foschini Group 2.6%
Microsoft 2.3%
Nedbank 1.9%
Absa 1.8%
Woolworths 1.8%
Tiger Brands 1.8%
Virgin Active 1.7%
Clicks 1.7%
Masmart 1.6%
Old Mutual 1.5%
Standard Bank 1.4%
Truworths 1.3%
Kagiso 1.3%
First National 1.2%
Bank
Total 49.4%
11. VACANCIES
Total vacancies by income have remained low at 2.82%. The chart below
shows the vacancy attributable to each segment of the Acucap portfolio.
Included is temporary vacancies created to allow for redevelopment
activities. Excluding these effects, the vacancy is 2.06% by income.
Vacancy
Industrial 0.03%
Offices 0.56%
Retail 1.47%
Retail - 0.76%
planned
Leased 97.18%
Total 100.00%
12. COST TO INCOME
Costs remain well controlled, with the net cost to income ratio at
11.3%, which is now at its lowest level in the last 5 yeas. Acucap has
established its own in-house administration business, Acucap Management
Services (`AMS`), a wholly owned subsidiary of Acucap. The company is
seeing the benefits of in-house administration, which gives improved
control at a property level, and it continues to enjoy the advantages of
having a smaller number of properties in its portfolio. Acucap has been
in the process of rationalising its in-house administration costs since
the start-up of this function in the 2008 financial year, and sees
further scope for improvement in the cost ratios shown below.
2009 2008 2007 2006 2005
Net cost to income 11.3% 14.2% 12.6% 12.2% 12.7%
13. UNIT HOLDER SUMMARY
A summary of Acucap`s unit holder profile is set out below. There has
been a 15% increase in the number of unit holders, and liquidity in
Acucap`s linked units has also shown a pleasing increase,
notwithstanding the long-term nature of many of Acucap`s major unit
holders.
2009 2008
Coronation 25 832 284 17.6% 15 132 090 11.0%
Stanlib 23 695 843 16.2% 21 770 681 15.8%
Public Investmentment 20 023 350 13.7% 17 300 678 12.6%
Corporation
Directors and employees 13 130 335 9.0% 11 739 835 8.5%
Thesele Group (Pty) 8 420 994 5.7% 8 420 994 6.1%
Limited
Nedbank 9 552 918 3.8% 5 552 818 4.0%
Old Mutual 3 783 009 2.6% 12 812 041 9.3%
Investec 3 546 613 2.4% 9 198 015 6.7%
107 985 346 73.6% 101 927 152 74.1%
Other shareholders 38 684 753 26.4% 35 542 947 25.9%
146 670 099 100.0% 137 470 099 100.0%
Number of unitholders 2014 1753
Weighted average units
145,002,154 119,917,882
Units traded
51,778,423 40,341,648
Liquidity 35.7% 33.6%
14. PROSPECTS
While South Africa`s direct property market has so far remained
generally sound, a slowing economy will bring pressure to bear on market
rental levels, portfolio occupancy rates and the solvency of smaller and
more vulnerable tenants. With its defensive portfolio, efficient cost
structure and committed management team, Acucap is well placed to
weather these challenges and produce a good result for the year ahead,
although the expected distribution growth will be lower than the 10%
achieved in the current year. The expected distributions for 2010 have
not been reviewed and reported on by Acucap`s auditors.
15. PAYMENT OF DEBENTURE INTEREST
Notice is hereby given that a final distribution of 122.76 cents per
linked unit has been approved in respect of the six month period ended
31 March 2009. The last date to trade the linked units cum distribution
is Friday 19 June 2009 and the record date will be Friday 26 June 2009.
The linked units will start trading ex-distribution from 22 June 2009.
Distributions will be made to unit holders on Monday 29 June 2009.
Linked unit certificates may not be dematerialised or rematerialised
between Monday 22 June and Friday 26 June 2009 both days inclusive.
On behalf of the Board
BS KANTOR PA THEODOSIOU
(Chairman) (Managing Director)
4 June 2009
Registered Office
Suite A11 Westlake Square
Westlake Drive
Westlake
CAPE TOWN
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street
JOHANNESBURG
http://www.acucap.co.za
info@acucap.co.za
Share Code: ACP
ISIN : ZAE 000037651
Directors: Prof BS Kantor (Chairman), PA Theodosiou* (Managing Director), FM
Berkeley, RC Frolich, N Mandindi, C B Marlow *, M S Moloko, JH Rens*, B
Stevens, NDC Whale
* Executive
Sponsor
Nedbank Capital
Date: 04/06/2009 16:42:01 Produced by the JSE SENS Department.
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