| Wed 22 Aug 2012, 7:30 | | EMIRA PROPERTY FUND - Reviewed financial results for year ended 30 June 2012 and income distribution declaration |
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EMI 201208220007A
Reviewed financial results for year ended 30 June 2012 and income distribution declaration
EMIRA PROPERTY FUND
(A property fund created under the Emira Property Scheme, registered in terms of the Collective
Investment Schemes Control Act)
Share code: EMI
ISIN: ZAE000050712
("Emira" or "the Fund")
Reviewed financial results for the year ended 30 June 2012 and income distribution declaration
Highlights
Distributable Income R557,4m
Distribution 110,68 cents per PI
Net Asset Value 1153 cents per PI
Commentary
The board of directors of Strategic Real Estate Managers (Proprietary) Limited ("STREM") hereby
announces a distribution of 110,68 cents per Emira participatory interest (PI) for the twelve
months to 30 June 2012. This is a reduction of 2,5% on the previous comparable period, which
is in line with the prospects statement in the Fund's December 2011 interim results
announcement released in February 2012, and represents an income return for the twelve months
of 8,4%, being distributions actually paid out during the period under review. The percentage
of weighted average PIs in issue that traded in the twelve month period equated to 40%.
During the financial year, a significant amount of effort has gone into improving the quality
of the Emira portfolio through (i) the disposal of those properties deemed to be non-core (ii)
the acquisition of new properties, as well as (iii) the refurbishment of existing assets. This
focus on changing the quality of the portfolio, as well as the expansion of the skills
dedicated to the fund through the bolstering of the asset management team, has successfully
resulted in the reduction of vacancies and increased retention of tenants.
Disposals: The strategy to dispose of non-core buildings was met with good success, with 15
buildings being transferred out of the Fund or sold unconditionally for a total of R402,3m -
Crocker Road Industrial Park, Flexitainer, Ciros House, Umhlanga Centre, Dresdner House,
Hurlingham Office Park, Linkview, a unit at Georgian Place, Century Gate, Starsky House
and Gift Acres were all transferred, for a total of R266,4m, while two further properties
- Mutual Mews and 33 Heerengracht totalling R36,9 million - were transferred after the
financial year end. Midrand Business Park and Montana Value Centre have also been sold
unconditionally for R99,0 million, a premium to carrying value,but not yet transferred.
A further 14 non-core properties, worth approximately R496,8 million remain on the disposal list.
The disposal of these properties will significantly improve the quality of the portfolio,
reduce vacancies and also allow management to focus on larger buildings, with better income
growth prospects. The proceeds from the disposals are expected to be utilised for the Fund's
significant capital expenditure project pipeline,PI repurchases and any acquisitions that may
be concluded.
Acquisitions: As was reported previously, the board approved the acquisition of a new 13 782m2 A
grade office building being developed by Eris Property Group, on the corner of Corobay Avenue
and Aramist Avenue, in Menlyn Pretoria, for R311,5m. The development of the building, which is
70% pre-let to Worley Parsons for 10 years and has a 1 year gross rental warranty on the balance
of the vacant space from completion from the developer, was substantially completed at 30 June
2012 and is expected to yield 9,0% in the first year.
Emira also acquired two A-grade office buildings during the period - Corporate Park 66 which is
a 13 566m2 multi-tenanted office building situated in Centurion, Pretoria. It was acquired on
30 May 2012 at a cost of R214m and an expected forward yield of 9.4%. Amadeus Place is a
2 800m2 A-grade office building situated in the Turnberry Office Park, Bryanston, in which Emira
already owns an existing building. It was acquired on 27 June 2012 at a cost of R41m, at an
expected forward yield of 9,6% and has taken the Fund's exposure in this office park to R79.6m.
These acquisitions are in line with the fund's policy of reducing its exposure to B-grade office
space and increasing the quality of its portfolio by buying larger, high quality properties.
Refurbishments and extensions completed: Nine projects totalling R297,7 million were concluded
during the period, which included, amongst others, (i) the redevelopment of Podium Office Park
in Menlyn, comprising the construction of 9 090m2 of prime, ideally located office space at an
estimated total cost R165,9m (ii) a major refurbishment of 267 West (R36,3m) (iii) the
redevelopment of Cresta Corner to accommodate a new state of the art Audi dealership (R33,6m)
(iv) extensions to Market Square Shopping Centre for Edgars and Clicks (R28,8m) (v) the
refurbishment of Albury Office Park (R19,1m) and (vi) the reconfiguration of tenants at
Lynnridge Mall (R6,9m).
Refurbishments and extensions underway: Several other projects worth approximately R53,3
million are underway, the most significant of which include (i) the replacement of lifts and the
refurbishment of Braamfontein Centre (R16,8m) (ii) extensions to Kokstad Shopping Centre for
certain national tenants (R11,0m) (iii) the refurbishment of East Coast Radio House (R10,0m) and
(iv) the extension of Woolworths at Boskruin Shopping Centre (R9,5m).
In November 2011 the Board approved the implementation of a PI repurchase programme and at the
annual general meeting of the fund this programme also received the necessary support of Emira
PI holders. In terms of the programme, a portion of the proceeds from the sale of properties are
to be used to repurchase PIs in the open market, which would be earnings enhancing to the Fund.
By 30 June 2012 Emira had repurchased 7 145 747 PIs in the open market at a cost of R86,5m, an
average of R12,11 per PI.
Another highlight of the financial year has been a restructuring of a significant portion of the
fund's debt as well as the raising of new debt facilities. On 12 August 2011, Emira raised
funding of R500m, by way of a four-year secured corporate bond, at a favourable margin. The funds
were used to repay the R500m that was raised through the Freestone Finance Series 1 commercial
mortgage backed securitisation (CMBS) in 2006. Although the margin payable on the corporate bond
is higher than that paid on the CMBS, the facility is for four years, resulting in Emira's debt
facilities now being staggered between 2013 and 2019, reducing risk to Emira PI holders. A new
R500m facility was also raised with Rand Merchant Bank,which will be used for the capital
requirements of the fund as outlined below. Furthermore, the R200m Nedbank redeemable preference
share facility was repaid on 2 February 2012, by way of a new 3 year term loan received from
Nedbank.
In July 2011 Emira increased its stake in Growthpoint Properties Australia (GOZ), an
Australian property trust listed on the Australian Stock Exchange, by a further 4,4m stapled
securities at a price of AUD$1,90 per stapled security, through its participation in the AUD
$102,7m rights issue by GOZ. This took Emira's holding in GOZ to 23,8m stapled securities, or
6,3% of the securities in issue, which was valued at R418m at 30 June 2012 compared to the
cost to the Fund of R296m.
Results
The global economic conditions continued to impact the Fund's performance during the period, with
tenants, particularly in the office sector, unwilling to commit to new space due to the fragility
surrounding international and local economic growth. Further increases in municipal expenses also
placed a burden on the income statements of businesses in South Africa, resulting in the
shrinking of net rentals payable to landlords. The fund therefore needed to be competitive when
trying to attract or retain tenants. In contrast, the industrial sector continued to perform
well, with vacancies declining notably, which should result in improved industrial rentals in
the next 12 to 24 months.
Although income from listed investments rose substantially and management expenses declined as a
result of the amendments to the Trust Deed approved by PI holders in September 2010,
distributions payable declined due to a slight decline in net property income and rising finance
costs following the increased level of debt in the Fund due to on-going capital expenditure and
acquisitions.
Vacancies decreased from 11.5% in June 2011 to 10.2% by June 2012 due to a pleasing performance
in the retail and industrial portfolios, as well as the sale and transfer of non-core buildings
during the period. On an adjusted basis (excluding properties under refurbishment or redevelopment),
vacancies declined from 10.3% to 9.5%.
Excluding the straight-line adjustments from future rental escalations, revenue rose by 2.2% over
the comparable period. This was positively impacted by organic growth in income from the existing
portfolio, the conclusion of several capital projects in the previous financial year which
contributed for the full period under review and increased recoveries of municipal expenses, but
offset by rental reversions on new leases and the disposal of several properties listed below.
Property expenses rose by 7.8% year-on-year. Contractual cost escalations were well managed,
while leasing costs did not increase as significantly as expected. Double digit increases were
seen in maintenance and refurbishments - in order to improve the condition of the fund's
buildings - and the write-off and provision for bad debts.
The income from listed investments of R33.5m, representing the Fund's holding in GOZ, showed an
increase of 24.2% year-on-year. This was attributable to good growth in distributions, the
depreciation of the Rand against the Australian dollar during the period, as well as the
benefits of income from the additional units acquired by Emira in July 2011.
Asset management expenses declined by 10.1% on the comparable period, following the amendment to
the service charge payable to STREM in September 2010. Net interest costs excluding unrealised
gains or losses on interest rate swaps as well as capitalized interest rose by 10.4% as a result
of increased levels of gearing in the Fund.
Net asset value increased by 0,3% in the twelve months from 1150 cents (1181 cents excluding the
deferred tax provision) at 30 June 2011 to 1153 cents (1196 cents), largely as a result of the
payment of the balance owing to STREM in respect of the amendment to the service charge
arrangement, the repurchase of PIs during the period, deficits on interest rate swap valuations
and investment property and listed investment revaluations.
Distribution statement
for the year ended 30 June 2012
R'000 2012 2011 %
change
Operating lease rental income and tenant recoveries
excluding straight-lining of leases 1 259 787 1 232 911 2.2
Property expenses excluding amortised upfront lease costs (475 728) (441 113) 7.8
Per statement of comprehensive income (475 141) (444 230) 7.0
Amortised upfront lease costs (587) 3 117
Net property income 784 059 791 798 (1.0)
Income from listed investment 33 522 27 001 24.2
Per statement of comprehensive income 33 522 22 373 49.8
Pre-acquisition income received - 4 628 (100.0)
Management expenses (18 061) (20 085) (10.1)
Per statement of comprehensive income - (8 418) (100.0)
Reimbursement to STREM in respect of management expenses (18 061) (11 667) 54.8
Administration expenses (47 037) (45 244) 4.0
Per statement of comprehensive income (66 764) (57 013) 17.1
Management expenses incurred by STREM included in the above 19 727 11 769 67.6
Depreciation (10 739) (9 805) 9.5
Per statement of comprehensive income (10 757) (9 805) 9.7
Depreciation incurred by STREM included in the above 18 -
Net finance costs (184 373) (166 972) 10.4
Finance costs (189 571) (177 075) 7.1
Interest paid and amortised borrowing costs (208 205) (168 106) 23.9
Interest capitalised to the cost of developments 26 168 4 115 635.9
Preference share dividends paid (6 849) (11 895) (42.4)
STC on preference share dividends paid (685) (1 189) (42.4)
Investment income 5 198 10 103 (48.5)
Per statement of comprehensive income 5 274 6 098 (13.5)
Investment income earned by STREM (76) (102) (25.5)
Claw-back of distribution in respect of participatory interests issued
cum distribution - 4 107 (100.0)
Distribution payable to participatory interest holders 557 371 576 693 (3.4)
No of units in issue 500 864 482 508 010 229 (1.4)
Distribution per participatory interest (cents) 110,68 113,52 (2.5)
In accordance with the strategy of the Fund, certain properties that are underperforming or pose
excessive risk to the Fund are earmarked and disposed of.
Properties transferred out of Emira during the twelve months to June 2012
Property Sector Location GLA Valuation Sale Exit Effective Date
(m2) June 2011 Price Yield
(Rm) (Rm) (%)
Georgian Place (Section 17) Office Kelvin Gauteng 709 3,1 3,1 9,3 26 July 2011
Crocker Road Industrial Park Industrial Wadeville Gauteng 9882 22,0 22,0 11,6 25 August 2011
Flexitainer Industrial Midrand Gauteng 1725 6,5 6,5 12,6 13 October 2011
Ciros House Office Sandton Gauteng 1803 9,7 9,7 13,3 19 October 2011
Umhlanga Centre Retail Umhlanga 5816 35,7 37,5 8,9 15 November 2011
Kwa-Zulu Natal
Dresdner House Office Sandton Gauteng 886 11,2 11,2 4,5 01 December 2011
Hurlingham Office Park Office Hurlingham Gauteng 16206 113,3 113,3 9,3 08 December 2011
Linkview Office Randburg Gauteng 1496 7,3 7,3 11,3 08 December 2011
Century Gate Office Century City Western 1366 8,5 8,8 10,7 03 February 2012
Starsky House Industrial Kramerville Gauteng 2450 7,0 7,0 14,1 16 March 2012
Gift Acres Retail Lynnwood Ridge Pretoria 8982 65,3 40,0 6,2 29 March 2012
266,4 9,2
Properties sold but not yet transferred out of Emira at June 2012
Property Sector Location GLA Valuation Sale Price Exit Yield Effective/
(m2) June 2011 (R'm) (%) anticipated
(R'm) effective date
Mutual Mews Retail Rivonia Gauteng 1596 12,0 11,9 11,9 31 July 2012
33 Heerengracht Office Cape Town CBD 6744 19,2 25,0 -1,4 03 August 2012
Midrand Business Office Midrand Gauteng 13420 52,2 49,0 10,9 August 2012
Park
Montana Value Centre Retail Montana, Gauteng 9,717 39,2 50,0 6,3 September 2012
135,9 7,0
Vacancies
Vacancies decreased from 11,5% in June 2011 to 10,2% by June 2012, with industrial and retail
experiencing increased letting activity, although the office sector remained extremely
competitive. If the vacancies in the buildings that are currently either under refurbishment or
pending refurbishment are removed, Braamfontein Centre (6550m2), East Coast Radio House (1355m2),
Lynnridge Mall/Mews (3687m2) and Cresta Corner (1945m2), adjusted portfolio vacancies drop to
9.5%.
Office vacancies rose from 18,4% to 18,6% (17,9% adjusted) with the major vacancies, besides
those mentioned above, being located at Podium at Menlyn (9090m2), 500 Smuts Drive (Oracle House)
(5922m2), Fleetway House (5663m2) and Woodmead Office Park (4854m2).
Retail vacancies decreased from 7,5% to 6,5% (5,5% adjusted) - Worldwear Fashion Mall (5739m2),
Wonderpark Shopping Centre (2640m2) and Montana Value Centre (2629m2).
Industrial vacancies decreased substantially from 7,2% to 3,2%.The major industrial vacancies are
located at Industrial Village Kya Sands (2219m2), Executive City (2103m2), HBP Business Unit
(2428m2), and Industrial Village Rustivia (1603m2).
Number June 2011 Vacancy % Number June 2012 Vacancy %
of Buildings GLA (m2) June 2011 of Buildings GLA (m2) June 2012
Office 73 443 802 81 761 18,4 69 449 283 83 657 18,6
Retail 40 387 455 29 072 7,5 38 379 741 24 623 6,5
Industrial 48 354 823 25 494 7,2 42 340 244 10 783 3,2
Total 161 1 186 080 136 327 11,5 149 1 169 268 119 063 10,2
Valuations
One-third of Emira's portfolio is valued by independent valuers at the end of every financial year,
the balance being valued by the directors.
Total portfolio movement
Sector June 2011 R/m2 June 2012 R/m2 Difference Difference
(R'000) (R'000) (%) (R'000)
Office 3 794 720 8 550 3 884 752 8 647 2,4 90 032
Retail 2 905 769 7 500 3 027 980 7 974 4,2 122 211
Industrial 1 345 723 3 793 1 446 640 4 252 7,5 100 917
Property under development 130 996 454 346 246,8 323 350
8 177 208 8 813 718 636 510
Investment properties increased by R636,5m made up of capital expenditure, including capitalised
interest, of R701,3m, less disposals of R266,4m, depreciation of R10,8m and a net upward revision
in property values of R212,4m.
Debt
Emira has a moderate level of gearing, with debt to total assets equating to 28,0%. Available debt
facilities are at attractive margins and will enable the Fund to acquire good quality properties
with sustainable income streams.
In June 2011 a new three year, R500m facility was arranged with Rand Merchant Bank, which was
used to redeem the Freestone securitisation notes. This loan was repaid on 18 August 2011, using
the proceeds of a new issue of Domestic Medium Term Notes (DMTN) which were auctioned on 12
August 2011. The facility is being used to fund the Corobay and Podium projects which are
substantially complete.
The R200m preference share issue to Nedbank was redeemed on 2 February 2012 out of a new 3 year
term loan granted by Nedbank.
In order to take advantage of the current prevailing low interest rate environment, Emira raised
R 400m through the issue of 3 month commercial paper into the market on 16 August 2012, at a
margin of 25 basis points. The funds were utilised to redeem part of the Emira securitisation of
R 650m. The remaining amount of R 250m has to be repaid by March 2013 and discussions are being
held in order to put the required facilities in place.
Emira has entered into various swap agreements a summary of which is set out below. As a result,
84,3% of the Fund's debt at 30 June 2012 has been fixed for periods of between three and twelve
years. As at 30 June 2012, the weighted average cost of debt equated to 9,29%.
Weighted average Weighted average Amount % of Debt
rate % term (R'm)
Debt - Swap 9,73 7 years, 1 month 2 216,6 84,3
Debt - Floating 6,89 413,8 15,7
Total 9,29 2 630,4 100,0
Less: Costs capitalised
not yet amortised (5,5)
Per Statement of Financial Position 2 624,9
Movement in Debt
R'm
Opening balance 2 050,7
Interest bearing debt raised 1 274,2
Interest bearing debt repaid (700,0)
Total 2 624,9
Made up of:
Non-current 1 974,9
Current 650,0
Total 2 624,9
Directorate
Mr Warren Schultze previously a non-executive director, resigned on 20 August 2012. The Board
would like to thank Warren for his extremely valuable contribution to the growth and success
of Emira since the Fund's listing in November 2003.
Prospects
The take up of vacancies in the portfolio remains critical to the future performance of the fund.
Assuming a stable local and global economic outlook, as well as the increased focus on new letting,
tenant retention and the utilization of proceeds from the sale of non-core assets, the fund expects
to show an increase in distributions in the coming financial year.
The forecast financial information on which this statement has been based has not been reviewed
or reported on by the Fund's auditors.
Independent Review
The financial information has been reviewed by PricewaterhouseCoopers Inc., whose unqualified
reviewed conclusion is available for inspection at Emira's registered address. The distribution
statement was not reviewed.
Income Distribution Declaration
Notice is hereby given that a final cash distribution of 56,87 cents (2011: 58,31 cents) per
participatory interest has been declared payable to participatory interest holders, on 17
September 2012. The source of the distribution comprises net income from property rentals,
income earned from the Fund's listed property investment and interest earned on cash on deposit.
Please refer to the Statement of Comprehensive Income for further details. The distribution is
not regarded as a dividend and therefore no dividend withholding tax is payable on the
distribution amount.
Last day to trade cum distribution Friday, 7 September 2012
Participatory interests trade ex distribution Monday, 10 September 2012
Record date Friday, 14 September 2012
Payment date Monday, 17 September 2012
PI certificates may not be dematerialised or rematerialised between Monday, 10 September 2012 and
Friday 14 September 2012, both days inclusive.
By order of the STREM Board
Martin Harris
Company Secretary
Ben van der Ross James Templeton
Chairman Chief Executive Officer
Sandton
20 August 2012
Condensed consolidated statement of comprehensive income
Reviewed Audited
year ended year ended
R'000 30 June 2012 30 June 2011
Revenue 1 253 379 1 223 960
Operating lease rental income and tenant recoveries 1 259 787 1 232 911
Allowance for future rental escalations (6 408) (8 951)
Income from listed property investment 33 522 22 373
Property expenses (475 141) (444 230)
Management expenses - (8 418)
Payment in respect of amendment to existing service charge arrangement (68 250) (129 150)
Administration expenses (66 764) (57 013)
Depreciation (10 757) (9 805)
Operating profit 665 989 597 717
Net fair value adjustments 307 127 125 165
Net fair value gain on investment properties 218 242 89 551
Change in fair value as a result of straight-lining lease rentals 6 408 8 951
Change in fair value as a result of amortising upfront lease costs (587) 3 117
Change in fair value as a result of property appreciation in value 212 421 77 483
Revaluation of derivative financial instrument relating to share
appreciation rights scheme (243) -
Unrealised gain on fair valuation of listed property investment 89 128 35 614
Profit before finance costs 973 116 722 882
Net finance costs (325 175) (162 892)
Finance income 5 274 10 205
Interest received 5 274 6 098
Claw-back of distribution in respect of participatory interests
issued cum distribution - 4 107
Finance costs (330 449) (173 097)
Interest paid and amortised borrowing costs (208 205) (168 106)
Interest capitalised to the cost of developments 26 168 4 115
Preference share dividends paid (6 849) (11 895)
Unrealised (deficit)/surplus on interest-rate swaps (141 563) 2 789
Profit before income tax charge 647 941 559 990
Income tax charge (68 669) (18 269)
S A normal taxation (9 796) (322)
Deferred taxation (58 188) (16 758)
- Revaluation of investment properties (53 201) (12 100)
- Other timing differences including allowance for future rental
escalations (4 987) (4 658)
STC on preference share dividends paid (685) (1 189)
Profit for the year 579 272 541 721
Attributable to Emira equity holders 581 037 541 721
Attributable to minority interests (1 765) -
579 272 541 721
Total comprehensive income
Attributable to Emira equity holders 581 037 541 721
Attributable to minority interests (1 765) -
579 272 541 721
Reconciliation between earnings and headline earnings and distribution
Reviewed Audited
year ended year ended
R'000 30 June 2012 30 June 2011
Profit for the year 579 272 541 721
Adjusted for:
Net fair value gain on revaluation of investment properties (218 242) (89 551)
Deferred taxation on revaluation of investment properties 53 201 12 100
Headline earnings 414 231 464 270
*Adjusted for:
Allowance for future rental escalations 6 408 8 951
Amortised upfront lease costs (587) 3 117
Unrealised deficit/(surplus) on interest rate swaps 141 563 (2 789)
Revaluation of derivative financial instrument relating to
share appreciation rights scheme 243 -
Unrealised gain on fair valuation of listed property investment (89 128) (35 614)
Pre-acquisition income on GOZ units acquired in 2010 - 4 628
Payment in respect of amendment to existing service charge arrangement 68 250 129 150
Charge in respect of leave pay provision and share appreciation rights
scheme 1 608 -
S A normal taxation - capital gains tax arising on sale of properties 9 796 322
Deferred taxation - other timing differences 4 987 4 658
Distribution payable to participatory interest holders 557 371 576 693
Distribution per participatory interest
Interim (cents) 53,81 55,21
Final (cents) 56,87 58,31
Total (cents) 110,68 113,52
*Adjustments not reviewed
Number of participatory interests in issue at the end of the year 500 864 482 508 010 229
Weighted average number of participatory interests in issue 506 806 636 504 305 482
Earnings per participatory interest (cents) 114,30 107,42
The calculation of earnings per participatory interest is based on net profit for the year of R579,3 million
(2011: R541,7 million), divided by the weighted average number of participatory interests in issue during
the year of 506 806 636 (2011: 504 305 482).
Headline earnings per participatory interest (cents) 81,73 92,06
The calculation of headline earnings per participatory interest is based on net profit for the year, adjusted
for non-trading items, of R414,2 million (2011: R464,3 million), divided by the weighted average number
of participatory interests in issue during the year of 506 806 636 (2011: 504 305 482).
Condensed consolidated statement of financial position at 30 June 2012
Reviewed Audited
R'000 30 June 2012 30 June 2011
Assets
Non-current assets 8 603 145 7 622 477
Investment properties 8 006 870 7 174 508
Allowance for future rental escalations 140 296 147 089
Unamortised upfront lease costs 33 855 32 557
Fair value of investment properties 8 181 021 7 354 154
Listed property investment 418 459 268 235
Derivative financial instruments 3 665 -
Deferred taxation - 88
Current assets 126 504 190 433
Accounts receivable and prepayments 104 316 95 921
Cash and cash equivalents 22 188 94 512
Non-current assets held for sale 632 697 823 054
Total assets 9 362 346 8 635 964
Equity and liabilities
Participatory interest holders' capital and reserves 5 775 221 5 839 850
Non-current liabilities 2 317 506 1 508 621
Interest-bearing debt 1 974 919 1 350 748
Derivative financial instruments 126 614 -
Deferred taxation 215 973 157 873
Current liabilities 1 269 619 1 287 493
Short-term portion of interest-bearing debt 650 000 700 000
Accounts payable 265 616 237 060
Derivative financial instruments 69 161 54 212
Distribution payable to participatory interest holders 284 842 296 221
Total equity and liabilities 9 362 346 8 635 964
Condensed consolidated statement of changes in equity
for the year ended 30 June 2012
Participatory Revaluation Retained Non-controlling Total
interest and other earnings interest
R'000 reserves
Balance at 30 June 2010 3 511 484 2 116 482 (1 345) - 5 626 621
Participatory interests issued 244 442 244 442
Non-controlling interest in subsidiary acquired 3 759 3 759
Total comprehensive income for the year 541 721 541 721
Distribution to participatory interest holders (576 693) (576 693)
Transfer to fair value reserve (net of deferred taxation) (34 961) 34 961 -
Balance at 30 June 2011 3 755 926 2 081 521 (1 356) 3 759 5 839 850
Participatory interests repurchased (86 530) (86 530)
Total comprehensive income/(loss) for the year 581 037 (1 765) 579 272
Distribution to participatory interest holders (557 371) (557 371)
Transfer to fair value reserve (net of deferred taxation) 23 666 (23 666) -
Balance at 30 June 2012 3 669 396 2 105 187 (1 356) 1 994 5 775 221
Condensed consolidated statement of cash flows
Reviewed Audited
Year ended Year ended
R'000 30 June 2012 30 June 2011
Cash generated from operations 766 358 738 265
Finance income 5 274 10 205
Interest paid (208 205) (168 106)
Preference share dividends paid (6 849) (11 895)
Taxation paid (9 770) (1 267)
Payment in respect of amendment to existing service charge arrangement (68 250) (129 150)
Pre-acquisition income on stapled securities acquired - 4 628
Distribution to participatory interest holders (568 750) (554 826)
Cash flows from operating activities (90 192) (112 146)
Acquisition of, and additions to, investment properties and fixtures and fittings (675 077) (297 785)
Proceeds on sale of investment properties and fixtures and fittings 266 400 75 300
Acquisition of investment in listed property fund (61 096) (117 582)
Cash flows from investing activities (469 773) (340 067)
Participatory interests issued - 244 442
Participatory interests repurchased (86 530) -
Interest bearing debt raised 1 274 171 259 085
Interest bearing debt repaid (700 000) -
Cash balance from subsidiary acquired - 2 517
Cash flows from financing activities 487 641 506 044
Net (decrease)/increase in cash and cash equivalents (72 324) 53 831
Cash and cash equivalents at the beginning of the year 94 512 40 681
Cash and cash equivalents at the end of the year 22 188 94 512
Segmental information
Office Retail Industrial Administrative Total
and Corporate
Sectoral segments R'000 R'000 R'000 R'000 R'000
Revenue 530 455 524 243 198 681 1 253 379
Revenue 541 646 518 964 199 177 1 259 787
Allowance for future rental escalation (11 191) 5 279 (496) (6 408)
Segmental result
Operating profit 291 072 296 119 139 228 (60 430)* 665 989
Investment properties 4 339 098 3 027 980 1 446 640 8 813 718
Geographical segments
Revenue
- Gauteng 382 245 348 929 147 026 878 200
- Western and Eastern Cape 73 336 45 870 22 845 142 051
- Kwa-Zulu Natal 47 660 79 490 28 810 155 960
- Free State 27 214 49 954 77 168 530 455 524 243 198 681 - 1 253 379
Investment properties
- Gauteng 3 333 071 1 945 935 1 100 740 6 379 746
- Western and Eastern Cape 577 250 324 600 166 300 1 068 150
- Kwa-Zulu Natal 287 577 487 545 179 600 954 722
- Free State 141 200 269 900 411 100
4 339 098 3 027 980 1 446 640 8 813 718
*Includes income from listed property investment of R33,5m less management expenses of R68,3m and
general Fund expenses of R25,6m
Related parties and related party transactions
At 30 June 2012 the Fund's BEE partners - The Tiso Group, The Shalamuka Foundation, Avuka
Investments, The RMBP Broad Based Empowerment Trust and Mr B van der Ross - held 12,2% of the
participatory interests in issue.
The remaining participatory interests were widely held.
The following transactions were carried out with related parties:
Reviewed Audited
year ended year ended
R'000 30 June 2012 30 June 2011
Strategic Real Estate Managers (Proprietary) Limited
Expenditure comprising asset management fees - pre amendment to service
charge arrangement - 8 418
Expenditure comprising asset management fees - post amendment to service
charge arrangement 18 061 11 667
Cancellation payment in respect of amendment to existing service charge
arrangement 68 250 129 150
Relationship: Manager of Emira Property Fund
Basis of preparation and accounting policies
The condensed consolidated preliminary financial statements of Emira Property Fund ("Emira" or
"the Fund") have been prepared in accordance with International Financial Reporting
Standards ("IFRS") including IAS 34, and are in compliance with the Listings Requirements of
the JSE Limited. The accounting policies used in the preparation of these financial statements
are consistent with those used in the annual financial statements for the year ended 30 June
2011.
As a result of the amendment to the service charge arrangements, in terms of IFRS, the risk and
rewards of the manager of Emira, Strategic Real Estate Managers (Proprietary) Limited (STREM)
are deemed to be attributable to Emira. The financial statements of STREM have therefore been
consolidated with those of Emira, even though Emira has no direct or indirect shareholding in
STREM. This report was compiled under the supervision of Peter Thurling, CA(SA), the Chief
Financial Officer.
Fund Manager
Strategic Real Estate Managers (Pty) Limited
Directors of the Fund Manager
B.J. van der Ross (Chairman)*, J.W.A. Templeton (Chief Executive Officer), M.S. Aitken*,
B. H. Kent**, V Mahlangu**, N. E. Makiwane**, W McCurrie*, M.S.B. Neser**, V Nkonyeni *,
P.J. Thurling, U van Biljon.
*Non-Executive Director
**Independent Non-Executive Director
Registered address: 3 Gwen Lane, Sandton, 2146
Sponsor: Rand Merchant Bank (a division of FirstRand Bank Limited)
Transfer Secretaries: Computershare Investors Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001
Date: 22/08/2012 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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