| Wed 6 Jun 2012, 12:12 | | SGA/SGB - Synergy - Update regarding Transfers of Properties Comprising The SA |
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SGA SGB
SIFL
SGA/SGB - Synergy - Update regarding Transfers of Properties Comprising The SA
Corporate Real Estate Fund Portfolios, update regarding conditions to the
Setsing Crescent And Gugulethu Square Acquisitions and Updated Forecast of
Synergy`s Combined Property Portfolio
SYNERGY INCOME FUND LIMITED
(formerly Capital Land Retail Fund Limited)
(Incorporated in the Republic of South Africa on 13 November 2007)
(Registration number 2007/032604/06)
JSE share code for A linked units: SGA ISIN Code: ZAE000161550
JSE share code for B linked units: SGB ISIN Code: ZAE000162293
("Synergy" or "the company")
UPDATE REGARDING TRANSFERS OF PROPERTIES COMPRISING THE SA CORPORATE REAL ESTATE
FUND PORTFOLIOS, UPDATE REGARDING CONDITIONS TO THE SETSING CRESCENT AND
GUGULETHU SQUARE ACQUISITIONS AND UPDATED FORECAST OF SYNERGY`S COMBINED
PROPERTY PORTFOLIO
UPDATE REGARDING TRANSFERS
Unitholders are referred to the announcement released on SENS on 13 April 2012
regarding transfer of the properties comprising the SA Corporate Real Estate
Fund Portfolios, and are advised that registration of transfer of the following
properties took place on the dates mentioned below:
- The Village Centre (Richdens) on 24 May 2012
- Hubyeni Shopping Centre on 1 June 2012
- Nzhelele Valley Shopping Centre on 1 June 2012
- Renbro Shopping Centre on 1 June 2012
- Highland Mews Shopping Centre on 1 June 2012
- Ermelo Game Shopping Centre on 1 June 2012
Registration of transfer of Van Riebeeckshof Shopping Centre ("Van
Riebeeckshof") is expected to take place on or about 15 June 2012, however, the
parties have entered into an addendum to the sale agreement in respect of Van
Riebeeckshof thereby amending the effective date of transfer to 1 June 2012.
Synergy`s combined property portfolio now comprises 11 properties with a market
value of approximately R1,1 billion.
UPDATE REGARDING CONDITIONS TO THE SETSING CRESCENT AND GUGULETHU SQUARE
ACQUISITIONS AND UPDATED FORECASTS FOR THE 2013 YEAR AND THE 2014 YEAR
Unitholders are referred to the announcement released on SENS on 22 May 2012 and
the circular posted to linked unitholders on 22 May 2012 (the "circular"), which
contain full forecast statements of comprehensive income (the "forecasts") for
the years ending 30 June 2013 ("2013 year") and 30 June 2014 ("2014 year"), in
respect of the full property portfolio after acquisition of the Setsing Crescent
Shopping Centre ("Setsing Crescent") and the Gugulethu Square Shopping Centre
("Gugulethu Square")(the "acquisitions").
Synergy is pleased to advise unitholders that competition approval in respect of
the acquisitions was obtained sooner than anticipated and accordingly the
transfer of the properties is expected to take place during the month of August
2012 instead of 1 September as previously communicated to investors. The Merger
Clearance Certificate issued by the Competition Commission on 22 May 2012 is
subject to the following conditions which have been accepted by Synergy:
- Synergy is to negotiate with the Spar Group Limited ("Spar") and its
franchisees in the utmost good faith to have the exclusivity clauses in the
lease agreements between Synergy and Spar removed at the time of renewal of
those leases (being 2018 in the case of Setsing Crescent and 2019 in the
case of Gugulethu Square); and
- Synergy will procure that Spar will dispose of its 20% shareholding in
Synergy`s asset manager, Capital Land Asset Management (Proprietary)
Limited, within a period of six months from the date of the approval.
Subsequent to the transfer of these properties, Synergy`s combined property
portfolio will comprise 14 properties with a market value of approximately R1,7
billion.
The forecasts set out in full below have been updated for changes in the
following assumptions:
1. With regard to the vendor consideration placement, new A and B linked units
will be issued in the ratio achieved in the private placement at the time
of listing and the new A and B linked units will be issued at the 30 day
volume weighted average market price to 4 June 2012. Accordingly, it has
been assumed that 25 889 609 A linked units will be issued at R8.80 per A
linked unit and 13 640 168 B linked units will be issued at R5.62 per B
linked unit, raising gross proceeds of R304.5 million.
2. R299.9 million of the proceeds of the vendor consideration placement will
be utilised to fund the Setsing Crescent acquisition and the Gugulethu
Square acquisition and the balance of R4.6 million will be recognised as
interest received in respect of linked units issued cum distribution.
3. The balance of the purchase consideration of the acquisitions of R240.3
million is assumed to be funded through new debt facilities from Rand
Merchant Bank, a division of FirstRand Bank Limited, and Nedbank Limited.
4. Interest is assumed to be payable on the debt funding at a melded fixed and
variable rate of 8.9% per annum. Interest has been fixed on the debt
funding in respect of properties which have transferred to Synergy to date.
All other assumptions, notes, explanatory statements and guidance to the updated
forecasts are as stated in the announcement released on SENS on 22 May 2012 and
in the circular and remain unchanged.
In addition to the updated assumptions set out above, the update in the basic,
diluted and headline earnings per A and per B linked unit for the 2013 year and
the 2014 year includes corrections of a formulaic nature relating to the
allocation of per unit figures. This misallocation has not impacted on the
reported total distributable earnings attributable to linked unitholders.
The updated forecasts in this announcement, which replace prior forecasts, have
again been reviewed and reported on by the independent reporting accountants.
Forecast for Forecast for
the year the year
ending ending
30 June 2013 30 June 2014
R`000 R`000
Rental income 172 209 195 730
Recoveries 60 413 74 850
Straight line rental income accrual 27 278 11 990
Revenue 259 900 282 570
Property expenses (81 048) (98 278)
Administration costs and corporate costs (10 571) (11 747)
Asset management fee (8 411) (9 414)
Annual listing costs (2 160) (2 333)
Tenant installation and letting commissions (3 322) (3 698)
Profit from operations 164 959 168 847
Finance costs (57 691) (61 349)
Interest (57 306) (60 939)
Amortisation of debt raising fee (385) (410)
Interest received on linked units issued cum 4 581 -
distribution
Interest received on call 1 907 2 537
Profit before debenture interest 113 756 110 035
Debenture interest (86 864) (98 455)
Profit after debenture interest 26 892 11 580
Capital and other items not distributed 26 635 -
Change in fair value of investment properties 26 635 -
Profit before taxation 53 527 11 580
Taxation (12 497) (3 242)
Net profit after taxation for the year 41 030 8 338
attributable to Synergy shareholders
Reconciliation between earnings, headline
earnings and distributable earnings
Net profit after taxation for the year 41 030 8 338
attributable to Synergy shareholders
Adjusted for:
Debenture interest 86 864 98 455
Earnings attributable to linked unitholders 127 894 106 793
Adjusted for:
Change in fair value of investment properties (21 668) -
(net of deferred tax)
Headline earnings attributable to linked 106 226 106 793
unitholders
Adjusted for:
Amortisation of debt raising fee 278 295
Straight-line rental income accrual (net of (19 640) (8 633)
deferred tax)
Distributable earnings attributable to linked 86 864 98 455
unitholders
Estimated number of A linked units in issue 50 778 765 50 778 765
Estimated number of B linked units in issue 86 753 238 86 753 238
Weighted average number of A linked units in 46 463 830 50 778 765
issue
Weighted average number of B linked units in 84 479 877 86 753 238
issue
Basic and diluted earnings per A linked unit 121.67 92.85
(cents)
Basic and diluted earnings per B linked unit 84.47 68.75
(cents)
Headline earnings per A linked unit (cents) 105.12# 92.85#
Headline earnings per B linked unit (cents) 67.93## 68.75##
Distributable earnings per A linked unit (cents) 82.6550 86.7878
Distributable earnings per B linked unit (cents) 51.7476* 62.6897*
shown as 121.35 cents and 94.67 cents for the years ending 30 June 2013 and 30
June 2014, respectively in the forecast released on 22 May 2012
shown as 95.63 cents and 69.39 cents for the years ending 30 June 2013 and 30
June 2014, respectively in the forecast released on 22 May 2012
#shown as 102.15 cents and 94.67 cents for the years ending 30 June 2013 and 30
June 2014, respectively in the forecast released on 22 May 2012
##shown as 76.43 cents and 69.39 cents for the years ending 30 June 2013 and 30
June 2014, respectively in the forecast released on 22 May 2012
*shown as 56.65 cents and 61.51 cents for the years ending 30 June 2013 and 30
June 2014, respectively in the forecast released on 22 May 2012;
6 June 2012
Corporate advisor and sponsor
Java Capital
Independent reporting accountants and auditors
Moore Stephens BKV Inc
www.synergyincomefund.com
Date: 06/06/2012 12:12:01 Produced by the JSE SENS Department.
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