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Martprop Property Fund - Unaudited Interim Results and Distribution Declaration
Martprop Property Fund
Share code: MTP
ISIN code: ZAE000037271
Unaudited Interim Results and Distribution Declaration
- Market capitalisation exceeds R2 billion
- Loan to property value ratio 11%
- Units traded in last six months 265 million
- Disposals R56 million
- Distribution per unit increased by 2%
- Acquisitions and developments R218 million
- Vacancy factor 3%
- Retail exposure increased to 30%
The directors of Marriott Property Fund Managers Limited, management company of
Martprop Property Fund (Martprop) submit their report on the unaudited results
of the Martprop group for the six months ended 31 January 2005.
CONSOLIDATED BALANCE SHEET
31.01.2005 31.01.2004 31.07.2004
(R000) (Unaudited) (Unaudited) (Audited)
Assets
Non-current assets
Investment properties 1 723 138 1 411 289 1 447 185
Current assets
Trade and other receivables 32 271 18 755 21 200
Cash resources and short-term
investments 21 177 103 389 78 159
TOTAL ASSETS 1 776 586 1 533 433 1 546 544
Unitholders` funds and liabilities
Unitholders` funds 1 525 301 1 408 750 1 415 139
Non-current liabilities
Interest bearing borrowings 127 500 18 211 -
Interest rate swap derivative 2 375 2 350 2 116
Deferred capital gains 3 343 2 795 2 079
taxation
Current liabilities
Trade and other payables 24 138 8 443 29 617
Capital gains taxation and
Secondary taxation
on companies 3 281 4 022 6 945
Distributions payable 90 648 88 862 90 648
TOTAL UNITHOLDERS` FUNDS AND
LIABILITIES 1 776 586 1 533 433 1 546 544
CONSOLIDATED INCOME STATEMENT
Six months to Six months Year
to to
31.01.2005 31.01.2004 31.07.200
4
(R000) Note (Unaudited) (Unaudited) (Audited)
Revenue (rental income) 116 917 108 317 212 948
Net property income 100 956 88 791 176 924
Interest received 3 898 1 687 5 711
Interest paid (7 571) (5 595) (4 662)
(Deficit)/surplus on
revaluation of interest
rate swap derivative (258) 350 584
Fund expenses (6 915) (4 100) (8 439)
Headline earnings 1.1 90 110 81 133 170 118
Capital deficit on disposal
of investment properties (848) (1 568) (2 800)
Write-up on revaluation
of investment properties 112 819 50 776 62 668
Taxation on property
revaluation (1 271) (524) (3 101)
Net profit 200 810 129 817 226 885
Units in issue (000) 725 184 725 184 725 184
Units in issue - weighted*
(000) 725 184 669 377* 697 128*
Headline earnings -
weighted* (cents per unit) 1.1 12,43 12,12* 24,40*
Net profit - weighted*
(cents per unit) 1.1 27,69 19,39* 32,55*
Distributable income (cents
per unit) 1.1 12,50 12,25 24,75
CONSOLIDATED STATEMENT OF CHANGES IN UNITHOLDERS` FUNDS
Six months Six months Year
to to to
31.01.2005 31.01.2004 31.07.2004
(R000) (Unaudited) (Unaudited) (Audited)
Unitholders` funds at beginning
of period 1 415 139 1 178 277 1 178 277
Capital movements 110 442 230 508 239 206
Write-up on revaluation of
investment properties 112 819 50 776 62 668
Capital deficit on disposal of
investment properties (848) (1 568) (2 800)
Taxation on property
revaluation (1 271) (524) (3 101)
(Deficit)/surplus on
revaluation of interest rate
swap derivative (258) 350 584
Loss in investment property
companies carried forward - (1 311) (930)
84 167 903 units issued - 189 518 189 518
Transfer to revenue of
distribution prepaid received
on units issued - (6 733) (6 733)
Maintenance reserves
Net transfers from maintenance
reserves (280) (35) (2 344)
Revenue movements - - -
Net profit 200 810 129 817 226 885
Transfers to capital (110 442) (47 723) (56 421)
Net transfers from maintenance
reserves 280 35 2 344
Unclaimed distributions
written-back repaid - - (58)
Transfer from capital of
distribution prepaid received - 6 733 6 733
Available for distribution 90 648 88 862 179 483
Distribution attributable to
unitholders (90 648) (88 862) (179 483)
Unitholders` funds at end of
period 1 525 301 1 408 750 1 415 139
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Six months Six months Year
to to to
31.01.2005 31.01.2004 31.07.2004
(R000) (Unaudited) (Unaudited) (Audited)
Cash flow from operating
activities
Net profit for the period 200 810 129 817 226 885
Adjustment for:
Interest received (3 898) (1 687) (5 711)
Interest paid 7 571 5 595 4 662
Write-up on revaluation of
investment properties
net of taxation (111 548) (50 252) (59 567)
Capital deficit on disposal of
investment properties 848 1 568 2 800
Deficit/(surplus) on
revaluation
of interest rate swap 258 (350) (584)
derivative
Operating profit before working
capital changes 94 041 84 691 168 485
Working capital changes and
taxation (20 220) (8 752) 9 558
Cash generated from operations 73 821 75 939 178 043
Interest received 3 898 1 687 5 711
Interest paid (7 571) (5 595) (4 662)
Distributions paid (90 648) (76 971) (165 757)
Net cash (outflow)/inflow from
operating activities (20 500) (4 940) 13 335
Cash outflow from investing
activities (163 982) (42 830) (68 124)
Cash inflow from financing
activities
Increase/(decrease) in interest
bearing borrowings 127 500 (47 433) (65 644)
Units issued - 182 785 182 785
Distribution pre-payments
received - 6 733 6 733
Net (decrease)/increase in cash (56 982) 94 315 69 085
Cash resources at beginning of
period 78 159 9 074 9 074
Cash resources at end of period 21 177 103 389 78 159
OTHER INFORMATION
Six months Six months Year to
to to
31.01.2005 31.01.2004 31.07.2004
(R000) (Unaudited) (Unaudited) (Audited)
Debt funding facility (R000)
Loan facility 350 000 350 000 350 000
Less: Facility utilised 127 500 18 211 -
Drawdown on facility 197 500 35 711 17 500
Facility repaid, available
for re-advance (70 000) (17 500) (17 500)
Facility available at end of
period 222 500 331 789 350 000
Adjusted for future capital
commitments and
proceeds on disposal (86 937) (58 918) (173 101)
Capital commitments (153 200) (115 527) (223 277)
Proceeds on disposal 66 263 56 609 50 176
Anticipated available loan
facility 135 563 272 871 176 899
Capital cash 7 161 38 106 8 846
Vacancy factor (based on lettable
area) 3% 5% 4%
Valuation analysis (cents per
unit)
Net asset value (including
interim distribution
yet to be paid) 223 207 208
Listed market price 288 222 225
Capitalised interest (R000) 1 483 798 2 998
NOTES TO THE FINANCIAL STATEMENTS
1. This group interim report has been prepared using accounting policies which
are in accordance with South African Statements of Generally Accepted Accounting
Practice and are consistent with those applied in preparation of the audited
financial statements for the year ended 31 July 2004.
1.1 Headline earnings and distribution attributable to unitholders
31.01.2005 31.01.2004 31.07.2004
(Unaudited) (Unaudited) (Audited)
R000 CPU R000 CPU R000 CPU
Net profit (earnings) - 200 810 27,69 129 817 19,39* 226 885 32,55*
(weighted CPU)
Adjustments for:
Capital deficit on
disposal of
investment properties 848 1 568 2 800
Write-up on
revaluation
of investment
properties
net of taxation (111 (50 (59
548) 252) 567)
Headline earnings -
(weighted CPU) 90 110 12,43 81 133 12,12* 170 118 24,40*
Deficit/(surplus) on
revaluation of interest
rate swap derivative 258 (350) (584)
Net transfers from
maintenance reserves 280 35 2 344
Unclaimed distributions
written-back repaid - - (58)
Losses in investment
property companies
carried forward - 1 311 930
Distributable income 90 648 82 129 172 750
Distribution pre-
payment received - 6 733 6 733
Distribution 90 648 12,50 88 862 12,25 179 483 24,75
attributable to
unitholders**
*Weighted earnings and weighted headline earnings are based on a weighted number
of units of 669 376 793 units for the six months to 31 January 2004 and 697 127
804 units for the twelve months to 31 July 2004.
**Distribution per unit is based on 725 183 772 units in issue.
1.2 Primary operational segments for the six months ended 31 January 2005
Business segment Industrial Office Retail Corporate Group
Income statement
Revenue 73 961 11 778 31 178 - 116 917
Net property income 66 503 8 181 26 272 - 100 956
Interest received 1 668 318 162 1 750 3 898
Interest paid - - - (7 571) (7 571)
Fund expenses - - - (6 915) (6 915)
Deficit on revaluation
of
interest rate swap
derivative - - - (258) (258)
Capital deficit on
disposal
of investment (428) (185) (235) - (848)
properties
Write-up/(down) on
revaluation of
investment properties 81 255 (1 33 116 - 112 819
552)
Taxation on property
revaluation (1 264) - (7) - (1 271)
Net profit 147 734 6 762 59 308 (12 994) 200 810
Balance sheet
Investment properties 1 080 440 130 511 - 1 723
700 998 138
Current assets 21 206 4 362 11 616 16 264 53 448
Total assets 1 101 646 135 523 16 264 1 776
062 614 586
Interest bearing - - - 127 500 127 500
borrowings
Interest rate swap
derivative - - - 2 375 2 375
Deferred capital gains
taxation 3 343 - - - 3 343
Current liabilities 9 273 2 171 2 726 9 968 24 138
Capital gains taxation
and
Secondary taxation
on companies 2 935 154 192 - 3 281
Distributions payable - - - 90 648 90 648
Total liabilities 15 551 2 325 2 918 230 491 251 285
Acquisition and
development
of investment 22 733 271 195 - 218 084
properties 080
COMMENTS
1. Results
Distributable income for the six months to 31 January 2005 amounts to 12,50
cents per unit, resulting in growth of 2,0% over the 12,25 cents per unit for
the corresponding period in 2004. Net property income increased by 14% over the
same period last year, primarily due to recent retail acquisitions and
developments, which was partially offset by higher interest charges and service
fee. During the period under review R0,28 million was released from maintenance
reserves, leaving remaining reserves of R1,7 million. The strong unit price of
the Fund gave rise to increased Fund expenses, although unitholders have
benefited from the capital appreciation in their Martprop units. During the
period under review 36,5% of the Fund`s units in issue were traded.
The property portfolio has been revalued, resulting in an increase of R112,8
million in the carrying value of the Fund`s properties at 31 January 2005. The
investment demand for direct property has increased considerably in recent
months, with capitalisation rates falling and values increasing. This trend is
expected to continue in the medium term given the investment environment.
2. Property portfolio
In the six month period Martprop has successfully completed the developments of
Stellenbosch Square, a community shopping centre anchored by Pick `n Pay and
Woolworths, the first phase of the Pick `n Pay Centre in Tokai and a
distribution centre for the Fuel Group in Centurion.
The acquisition of an undivided half share in Musgrave Centre in Durban for
R187,5 million, with SA Retail Properties Limited, was finalised in September
2004. The performance of this asset has been most encouraging and the trade over
the festive season very clearly illustrates the strong position which the centre
holds in the local Durban market. In addition, agreement was reached by Martprop
and SA Retail to proceed jointly with the development of the first phase of a
sub-regional shopping centre located in Umlazi, Durban. The capital cost of the
first phase is estimated at R125,0 million, out of a total development cost of
R150,0 million. The development has continued to receive strong tenant interest
from major national retailers and the local community, resulting in an expected
initial development yield of 11,25%. Negotiations are underway to dispose of one
third of the development to an Empowerment Fund.
The sale of twelve properties have been concluded for a total sum of R55,9
million. Agreements have been concluded for the sale of a further thirteen
properties at a price of R66,3 million. These disposals will contribute to the
Fund`s vacancy level, by area, being reduced to 1,7% post transfer, and are a
continuation of management`s initiatives to raise the overall quality of the
Fund`s properties and optimise future earnings growth.
Following the said portfolio activity, Martprop`s exposure to the retail sector
has increased to 30%. This is in line with the Fund`s investment strategy and
management is of the view that unitholders will benefit from this strategic
approach. The current geographic and sectoral weightings are set out below.
Geographic Weightings Sectoral Weightings
Kwa-Zulu Natal 55% Industrial 62%
Cape Province 12% Commercial 8%
Gauteng 33% Retail 30%
The performance and quality of the Fund`s property portfolio was highlighted
when Martprop was awarded, for the second consecutive year, the Financial Mail
IPD award for the top listed industrial portfolio in 2004. With the improvement
in performance of industrial property across the board, Martprop
is very well placed to entrench long term growth from these assets and this will
be enhanced by the increased retail exposure.
3. Funding
At 31 January 2005 the Fund`s capital borrowings amounted to R197,5 million.
This represents 11% of the value of the Fund`s investment properties. Capital
commitments of R153,2 million will be settled by the receipt of proceeds on
disposal of existing properties and through the balance of R152,5 million
available of the loan facility.
4. Restructure of the Fund
The registration of transfer of the majority of properties from the underlying
subsidiary companies to the Fund is ongoing. The entire process is anticipated
to be completed by 31 July 2005.
5. Future prospects
The property market and, in particular, the industrial sector has performed well
and management is of the view that Martprop`s reconstructed portfolio is well
positioned to yield growing earnings to unitholders.
6. Trading statements
In terms of paragraph 3.4 (b) (v) of the Listings Requirements of the JSE,
Martprop in agreement with the JSE, has adopted distributable earnings per unit
as the financial results measurement for trading statement purposes. It is
effective for the financial year ending 31 July 2005.
DISTRIBUTION DECLARATION AND IMPORTANT DATES
Notice is hereby given of the declaration of distribution no. 20 in respect of
the income distribution period 1 August 2004 to
31 January 2005. The distribution amounts to 12,50 cents per unit.
Last date to trade cum distribution Wednesday, 16 March 2005
Units will trade ex-distribution Thursday, 17 March 2005
Record date to participate in
the distribution Thursday, 24 March 2005
Payment of distribution Tuesday, 29 March 2005
Unit certificates may not be dematerialised or re-materialised between Thursday,
17 March 2005 and Thursday, 24 March 2005 both days inclusive.
MARRIOTT PROPERTY SERVICES (PTY) LIMITED
SECRETARIES
25 February 2005
Registered office
Marriott at Kingsmead
Kingsmead Office Park
Durban 4001
PO Box 207
Durban 4000
Tel: (031) 366-1111
Transfer secretaries
Computershare Investor Services
2004 (Pty) Limited
9th Floor, 70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Tel: (011) 370-5000
Exchange Sponsors
39 First Avenue
Hyde Park 2196
PO Box 411216
Craighall
2024
www.martprop.co.za
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