| Thu 1 Mar 2001, 0:00 | | Marriot Property Fund - Interim Results And Distri |
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MARRIOT PROPERTY FUND
The directors of Marriott Property Fund Managers Limited, management company of
Marriott Property Fund (Martprop) submit their report on the unaudited results
of the Martprop group for the six months ended 31 January 2001.
CONSOLIDATED BALANCE SHEET
(R000) 31.01.2001 31.01.2000 31.07.2000
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets
Fixed property 1 138 272 1 217 472 1 133 632
Current assets
Cash resources and short-term
investments 123 493 135 058 126 148
Trade and other receivables 21 683 17 367 17 674
TOTAL ASSETS 1 283 448 1 369 897 1 277 454
Unitholders' funds and
liabilities
Unitholders' funds 1 264 005 1 358 447 1 267 516
Current liabilities
Trade and other payables 19 443 11 450 9 938
TOTAL UNITHOLDERS' FUNDS
AND LIABILITIES 1 283 448 1 369 897 1 277 454
CONSOLIDATED INCOME STATEMENT
(R000) Six months to Six months to Year to
31.01.2001 31.01.2000 31.07.2000
(Unaudited) (Unaudited) (Audited)
Revenue (rental income) 85 973 85 394 171 962
Net property income 69 672 71 186 141 839
Interest received 6 439 8 366 14 639
Fund expenses (2 539) (2 423) (4 899)
73 572 77 129 151 579
Capital loss - property
disposals - (10) (10)
Writedown on revaluation
of property / investments
(note 5) - - (88 916)
Net profit 73 572 77 119 62 653
Units in issue (000) 629 251 629 251 629 251
Earnings (cents per unit) 11,69 12,26 9,96
Headline earnings income
(cents per unit) 11,69 12,26 24,09
Headline earnings are based on net profit before capital loss and write down on
revaluation of property / investments.
CONSOLIDATED STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS
(R000) Six months to Six months to Year to
31.01.2001 31.01.2000 31.07.2000
(Unaudited) (Unaudited) (Audited)
Unitholders' funds at
beginning of period 1 267 516 1 358 411 1 358 411
Capital movements (272) (10) (89 054)
Write down on revaluation
of property/investments - - (88 916)
Loss on disposal of
properties - (10) (10)
Other (272) - (128)
Maintenance reserves
Net movement (93) 46 (1 841)
Revenue movements (3 146) - -
Net profit 73 572 77 119 62 653
Transfers from capital 272 10 89 054
Unclaimed distributions
written back - - 618
Net transfers from/ (to)
maintenance reserves 93 (46) 1 841
Available for distribution 73 937 77 083 154 166
Distributions paid (77 083) (77 083) (154 166)
Unitholders' funds at end
of the period 1 264 005 1 358 447 1 267 516
DISTRIBUTION RECONCILIATION
Six months to Six months to Year to
31.01.2001 31.01.2000 31.07.2000
(Unaudited) (Unaudited) (Audited)
Available for distribution
- R000 73 937 77 083 154 166
- Cents per unit 11,75 12,25 24,50
Distributions declared in
respect of : (cents per unit)
- 1st half ended 31 January 11,75 12,25 12,25
- 2nd half ended 31 July 12,25
11,75 12,25 24,50
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
(R000) Six months to Six months to Year to
31.01.2001 31.01.2000 31.07.2000
(Unaudited) (Unaudited) (Audited)
Cash inflows from operating
activities
Net profit for the period 73 572 77 119 62 653
Adjustment for:
Interest received (6 439) (8 366) (14 639)
Writedown on revaluation of
property / investments - - 88 916
Capital loss on disposal of
properties/investments - 10 10
Operating profit before
working capital changes 67 133 68 763 136 940
Working capital changes 5 496 (1 608) (3 011)
Cash generated from operations 72 629 67 155 133 929 Interest
received 6 439 8 366 14 639
Distributions paid (77 083) (77 083) (153 962)
Net cash inflow/(outflow)
from operating activities 1 985 (1 562) (5 394)
Cash outflows from investing
activities (4 640) (5 633) (10 711)
Net (decrease)/increase
in cash (2 655) (7 195) (16 105)
Cash at beginning of period 126 148 142 253 142 253
Cash at end of period 123 493 135 058 126 148
OTHER INFORMATION
31.01.2001 31.01.2000 31.07.2000
(Unaudited) (Unaudited) (Audited)
Uncommitted cash (R000) 49 011 50 120 39 524
Expected net proceeds from
sale of properties (R000) 19 612 4 500 13 582
Vacancy factor
(based on lettable area) 5% 6% 5%
Valuation analysis
(cents per unit)
Net asset value
(prior to distribution for
period under review) 201* 216 201
Listed market price 184 180 175
Discount to net asset value 8% 17% 13%
Capitalised interest (R000) 215 217 288
* The net asset value of the Fund amounts to 201 cents per unit (based upon the
property valuations at the Fund's 31.07.2000 year end) as compared with 216
cents per unit as at 31 January 2000. This decrease in value is attributable
to the writedown on the revaluation of the property portfolio at 31 July 2000.
The effect of this writedown is referred to in the consolidated income
statement and statement of changes in equity above. The listed market price of
Martprop at 31 January 2001 was 184 cents per unit, which is a 8% discount to
net asset value.
COMMENTS
1. Results
Considering the economic conditions which have prevailed in recent years and
the impact of these on the industrial property market, the distribution to
unitholders is considered by the Fund's management to be highly satisfactory.
The amount available for distribution for the six months amounts to 11,75 cents
per unit (2000: 12,25 cents per unit). This decrease is attributable to lower
interest earnings as a result of lower interest rate yields and rentals
reverting to market related levels.
2. Property portfolio
Three properties have been sold for a total of R7,36 million all of which were
at their most recent valuations. Further agreements have been reached for the
sale of four properties for a combined open market value of R20,15 million.
These disposals are all in line with management's objectives of enhancing the
quality of both the portfolio and the rental stream flowing therefrom.
It is management's stated intention to focus the Fund's investments in the
industrial sector and with the passage of time will seek to significantly
reduce Martprop's exposure to the retail and commercial sectors. The
geographic profile of the portfolio will also be revised in this process to
recognise the growth of the Johannesburg International Airport/Midrand
corridor, which has proven to be a strategic node for warehousing and
distribution facilities.
3. Acquisition of a R64,25 million property portfolio
Further to the cautionary announcement dated 12 February 2001 management has
reached agreement with Improvon Developments (Pty) Limited ("Improvon"), on
behalf of property owning companies controlled by Improvon, to acquire certain
properties for a total consideration of R64,25 million. The transaction is
effective 22 June 2001 and is to be settled by way of a cash payment by
Martprop of R44,25 million and the remainder by an issue of units in Martprop.
The units will be issued at a price equal to the volume weighted average unit
price for the month of February 2001, net of the distribution of 11,75 cents
per unit declared below. In view of the effective date of the transaction
being 22 June 2001, an interim distribution for the period 1 February to 22
June 2001 will be declared on 1 June 2001.
The units to be issued as consideration for the above acquisition have been
placed with institutions on behalf of Improvon. The acquisition is subject to
the approval of the Competition Commission, the trustees of the Fund and the
JSE Securities Exchange SA for the listing of the units to be issued.
The property portfolio acquired by Martprop consists of ten industrial
properties situated in the Johannesburg International Airport growth node and
is let to sound tenants.
Martprop's investment policy is to ensure, through proactive asset management,
long term income and capital growth by maintaining a premier quality portfolio.
This, along with the other investment policy criteria of sustaining critical
mass and enhancing Martprop's industrial sector emphasis, is met by the
acquisition of the Improvon property portfolio.
The effects of the acquisition on the net asset value per unit and earnings per
unit are not material.
4. Prospects
There has been a positive trend in the take up of space and the industrial
element of the fund, which is some two thirds of the portfolio, has an
exceptional occupancy level in excess of 98%. Over the past six months a
substantial portion of the Fund's leases have been renewed or reviewed with
rentals reverting to market levels and, with average escalations of 10% per
annum going forward, management is confident that this growth in property
earnings will begin to flow through to unitholders in the next financial year.
Following the government's commitment in the recently announced Budget to
stimulate the economy, management expects industrial rentals to pick up as
South Africa's GDP rises above the threshold of the past three years.
A further positive factor has been the announcement to entrench Durban as
Africa's busiest container port.
The commitment of R1,3 billion into the infrastructure of the port will impact
favourably on the KZN industrial sector and , with some 25% of the portfolio
invested in warehousing and distribution facilities in the greater Durban area,
these benefits will flow through to the Fund.
5. Accounting policies
The group results have been prepared in accordance with South African
statements of Generally Accepted Accounting Practice. In view of the recent
amendments to these statements, the accounting policies of the Group have been
amended. The most significant impact, as a result of this, relates to the
accounting for the maintenance provisions / reserves, distributions and
property / investment reevaluations, all of which have resulted in the
restatement of prior year results.
Fixed properties are regarded as investment properties and are revalued at year
end, but not at the half year stage.
6. STRATE
The JSE Securities Exchange South Africa's implementation of the Share
Transactions Totally Electronic (STRATE) settlement system has commenced and
all listed entities will be required to transfer to STRATE. Accordingly
Martprop's planned dematerialisation is scheduled for 1 October 2001.
Shareholders will be kept informed of the developments in this regard.
DISTRIBUTION DECLARATION
Notice is hereby given of the declaration of Distribution No. 11 in respect of
the income distribution period 1 August 2000 to 31 January 2001. The
distribution amounts to 11,75 cents per unit and is payable to unitholders
registered as such in the books of the Fund at the close of business on 16
March 2001. Cheques will be posted on or about 30 March 2001.
BY ORDER OF THE BOARD
MARRIOTT PROPERTY SERVICES (PTY) LIMITED
SECRETARIES
1 MARCH 2001
Registered office
Marriott at Kingsmead
Kingsmead Office Park
Durban 4001
P O Box 207
Durban 4000
Transfer secretaries
Mercantile Registrars Limited
8th Floor,
11 Diagonal Street
Johannesburg 2001
P O Box 1053
Johannesburg 2000
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