Par Value:
Closing Price: 7.05
Total Shares Issued: 180972300.00
Market Capitalization: 1,275,854,715
EPS: 0.82
PE: 8.598
ILAM FAHARI I-REIT reports 6 month results ended 30th June 2021
HY Revenue 135.221664m versus 166.924249m
HY Other Income 11.829475m versus 13.202863m
HY Operating Income [106.300761m] verus [101.880986m]
HY Profit for the Period 42.211791m versus 86.033091m
HY EPS 0.23 versus 0.48
Net Asset Value 20.50
Commentary
Rental and related income decreased significantly by 22% owing to aforementioned loss of revenue from anchor tenant at Greenspan Mall
Tuskys supermarket Naivas now onboarded
ILAM Fahari I REIT [@ILAMReit] six months ended 30 Jun 2021 results: @MwangoCapital
https://twitter.com/MwangoCapital/status/1420240181765058562?s=20
Rental income down 22% to Ksh 136.7M
Interest income down 10%
Property expenses up 9%
Fund operating expenses remained stable
AUM Ksh 3.8B
Net profit down 51% to Ksh 42.2M
FY Results through 31st December 2020 versus through 12 months through Dec 2019
FY Revenue 324,669m versus 353.886m
FY Other Income 22.875m versus 25.323m
FY Operating Expenses [229.611m] versus [225.636m]
FY Bad Debts Provision [33.118m] versus [0.122941m]
Increase in Fair Value of Investment Property 30.091m versus 21.654m
FY Net Profit 148.025m versus 175.228m
FY Total Assets 3.883b versus 3.878b
FY NAV 20.86 versus 20.80
FY Distributable EPS 0.74 versus 0.80
FY Basic EPS 0.82 versus 0.97
FY Headline EPS 0.65 versus 0.85
Dividend 60cents a share 8.77% Yield
ILAM Fahari IREIT Audited Condensed Results for the Year Ended 31st December 2020. @tradingroomke
https://twitter.com/tradingroomke/status/1372788571380219907?s=20
Commentary
a significant provision for bad debts as a result of non-performance of Anchor tenant at Greenspan Mall
Conclusions
8.77% is a good Yield.
2020 was a difficult year.
Looks inexpensive.
Stanlib Fahari I Reit FY 2019 results through 31st December 2019 vs. 31st December 2018
FY Rental and related income 344.346639m vs. 309.763210m +11.164%
FY Straight lining of lease income 9.539368m vs. 22.486262m -57.577%
FY Revenue 353.886007m vs. 332.249472m +6.512%
FY Interest income 24.996287m vs. 56.433877m -55.707%
FY Property expenses [114.334308m] vs. [108.850390m] +5.038%
FY Fund operating expenses [111.301743m] vs. [130.221511m] -14.529%
FY Property expenses [114.334308m] vs. [108.850390m] +5.038%
FY Operating expenses [225.636051m] vs. [239.071901m] -5.620%
FY Fair value adjustment to investment property 31.194053m vs. 65.606465m -52.453%
FY Straight lining of lease income [9.539368m] vs. [22.486262m] -57.577%
FY Increase in fair value of investment property 21.654685m vs. 43.120203m -49.781%
FY Net profit for the year 175.228248m vs. 193.491759m -9.439%
FY Fair value adjustment to investment property [21.654685m] vs. [43.120203m] -49.781%
FY Headlineearnings153.573563mvs.150.371556m +2.129%
FY Straight line lease accrual movement [9.539368m] vs. [22.486262m] -57.577%
FY Distributable earnings 144.034195m vs. 127.885294m +12.628%
Basic Earnings per unit 0.97 vs. 1.07 -9.439%
Headline Earnings per unit 0.85 vs. 0.83 +2.410%
Distributable earnings per unit 0.80 vs. 0.71 +12.676%
Total Assets 3.878449025b vs. 3.852621474b +0.670%
FY Net asset value per unit 20.80 vs. 20.58 +1.069%
Investment property 3.456600000b vs. 3.365700000b +2.701%
Investment securities 238.925753m vs. 83.809515m +185.082%
Cash and cash equivalents at end of period 96.063143m vs. 302.822720m -68.277%
COMMENTARY
1. Basis for preparation
The audited condensed consolidated financial statements of STANLIB Fahari I REIT (the REIT) for the year ended 31 December 2019 have been prepared in accordance with the requirements of International Financial Reporting Standards (IFRSs), the Nairobi Securities Exchange and the Capital Markets (Real Estate Investment Trusts) (Collective Investment Schemes) Regulations, 2013.
The consolidated financial statements for the year ended 31 December 2019 were audited by KPMG Kenya and received an unqualified audit opinion. These will be available on the REITs website as detailed in Note 6 below.
2. Business review
Financial highlights
Distributable earnings grew by 13% to KShs. 144.0 million compared to KShs. 127.9 million in the comparative period as a result of the significant decrease in fund operating expenses caused by the recovery of VAT input which had previously been capitalised to fund expenses. Rental income grew by 11% in line with lease escalations and as a result of income from the new cinema at Greenspan Mall as well as full year income contribution from the 67 Gitanga Place office building acquired at the end
of May 2018. Property expenses grew by 5% mainly due to recognition of expenses from 67 Gitanga Place for the full year whilst only seven months were included in the comparative period. In addition, the tax leakage from the provision for irrecoverable withholding tax by tenants grew by 22% to KShs. 16.5 million (2018: KShs. 13.5 million).
Net earnings decreased by 9% to KShs 175.2 million mainly due to the reduction in fair value gain on revaluation of investment property compared to prior year on the back of a depressed real estate sector with continued downward pressure on rentals especially in the retail sector.
Development and other capital projects at Greenspan Mall
Construction of a 30 screen cinema was completed in May 2019 and the cinema formally launched in October. The cinema is operated by Motion Cinema who have signed a 10 year lease agreement. Other capital projects completed at Greenspan Mall include sinking of a new borehole and installation of a steel tank in order to reduce water expenses and improve reliability of supply.
3. Distribution
In light of the significant capital projects recently undertaken at Greenspan Mall and the likely negative impact of the coronavirus pandemic on cashflows, the REIT Manager has recommended, and the REIT Trustee has approved maintaining the distribution at the same level as prior year. A first and final distribution of KShs 135,729,225 (i.e. KShs 0.75 per unit) will thus be paid by no later than 31 May 2020.
This amounts to a 94% pay out ratio.
4. Change of REIT Manager
In November 2019, STANLIB Kenya Limited (SKL) together with The Cooperative Bank of Kenya Limited (Coop Bank) in their respective capacity of REIT Manager and REIT Trustee issued a joint media announcement to the effect that SKL had entered into a sale of business agreement (Agreement) with ICEA LION Asset Management Limited (ILAM), dated 6 November 2019. In terms of this Agreement, SKL would sell to ILAM certain of its assets which form a substantial part of the assets of its business of managing funds, assets and investments of third parties in Kenya.
The assets being acquired by ILAM include SKLs investment management mandates and all rights, obligations and benefits of SKL in terms of or in connection with SKLs role as Promoter and REIT
Manager in relation to the REIT. The transaction and the appointment of ILAM as the replacement REIT Manager have been approved by the Competition Authority of Kenya and the Capital Markets Authority (CMA). Accordingly, SKL has tendered its resignation as REIT Manager. Unitholders will be notified of the effective date in due course.
5. Coronavirus impact on publishing of the annual report and the AGM
In recognition of the business disruption caused by the coronavirus pandemic, the CMA has granted regulatory flexibility on the timelines for publishing and filing of annual reports as well as holding of AGMs to June 2020. As a result, the REITs annual report for 2019 will be published at the end of April 2020 instead of the normal deadline of 31 March 2020. In addition, the distribution will be paid in May 2020 instead of by 30 April 2020 as in previous years.
The AGM is expected to take place at a later date. As the date is not yet confirmed, no AGM notice and proxy form accompany this publication. The same will be published separately at a later stage through the REIT’s website and in the newspapers. Unitholders will also be advised via sms and/or email.
6. Website information
The REIT Managers annual report and audited financial statements will be available on the STANLIB Fahari I REIT website at www.stanlibfahariireit.com from 29 April 2020.
Approval of the Financial statements
The financial statements were approved for issue by the Trustee and the Board of the REIT Manager on 28 April 2020 and signed on their behalf by:
Stanlib Fahari I Reit FY 2018 results through 31st December 2018 vs. 31st December 2017
FY Rental and related income 309.763210m vs. 279.433136m +10.854%
FY Straight lining of lease income 22.486262m vs. [8.743959m] +357.163%
FY Revenue 332.249472m vs. 270.689177m +22.742%
FY Interest income 56.433877m vs. 99.852345m -43.383%
FY Property expenses [108.850390m] vs. [96.292615m] +13.041%
FY Fund operating expenses [130.221511m] vs. [135.632948m] -3.990%
FY Property expenses [108.850390m] vs. [96.292615m] +13.041%
FY Operating expenses [239.071901m] vs. [231.925563m] +3.081%
FY Fair value adjustment to investment property 65.606465m vs. 22.012769m +198.038%
FY Straight lining of lease income [22.486262m] vs. 8.743959m -357.163%
FY Increase/ [decrease] in fair value of investment property 43.120203m vs. 30.756728m +40.198%
FY Net profit for the year 193.491759m vs. 171.126409m +13.069%
Basic Earnings per unit 1.07 vs. 0.95 +12.632%
Headline Earnings per unit 0.83 vs. 0.78 +6.410%
Distributable earnings per unit 0.71 vs. 0.82 -13.415
Total Assets 3.852621474b vs. 3.761627663b +2.419%
Fair value of investment property 3.262953647b vs. 2.379739909b +37.114%
Investment securities 83.809515m vs. 529.000000m -84.157%
Equity 3.723943826b vs. 3.666181292b +1.576%
Cash and cash equivalents at end of period 302.822720m vs. 688.190218m -55.997%
Business review
Financial highlights
Net earnings grew by 13% to KShs 193.5 mln in 2018 2017 KShs 171.1 mln. This favourable result was mainly due to an increase in fair value gain on revaluation of investment property.
The portfolios market valuation was bolstered by the contribution of a modern 3 screen cinema at Greenspan Mall which is due to come on stream in Q2 2019 underpinned by a 10 year lease.
Recent successful renewal of key tenant leases has also boosted the malls future cash flows and expiry profile and will counter the challenge of vacancies in the portfolio.
Despite the increase in net profit, distributable earnings declined by 14% to KShs 127.9 mln 2017 KShs 149.1 mln as a result of a temporary increase in vacancies as well as tax leakages in the form of irrecoverable withholding tax at property subsidiary company level.
The long anticipated legislation to exempt REIT owned subsidiaries is expected to curb the tax leakages going forward.
Interest income declined substantially in line with the utilisation of excess cash to purchase an A grade three storey office building situated in Lavington. The transaction was completed on 29 May 2018 with rental income accruing from that date.
Robust debt collection and tenant engagement processes are yielding the desired outcome tenant arrears declined significantly and remained within target at end of 2018.
Property development in progress
Construction work to install a three screen cinema with about 100 seats each at Greenspan Mall is nearing completion and the tenant is expected to begin operating from Q2 2019. This development will strengthen the malls entertainment offering and is expected to increase foot traffic, benefit existing and future tenants and increase rental income.
Distribution
Despite the slight decline in distributable earnings, the distribution remains flat year on year. Having considered the cash flow requirements and availability of funds, the REIT Manager has recommended and the Trustee has approved a first and final distribution of KShs. 135,729,225 in relation to the year ended 31 December 2018 2017 KShs. 135,729,225. The distribution amounts to 75 cents per unit 2017
75 cents per unit and is payable by no later than 30 April 2019.
Stanlib Fahari I Reit FY 2017 results through 31st December 2017 vs. 31st December 2016
FY Rental and related income 279.433136m vs. 248.572436m +12.415%
FY Straight lining of lease income [8.743959m] vs. 89.004050m -109.824%
FY Revenue 270.689177m vs. 337.576486m -19.814%
FY Interest income 99.852345m vs. 111.209231m -10.212%
FY Other income 101.606067m vs. 137.856149m -26.296%
FY Property expenses [96.292615m] vs. [94.631625m] +13.779%
FY Fund operating expenses [135.632948m] vs. [180.422344m] -24.825%
FY Property expenses [96.292615m] vs. [84.631625m] +13.779%
FY Operating expenses [231.925563m] vs. [265.053969m] -12.499%
FY Fair value adjustment to investment property 22.012769m vs. 8.000000m +175.160%
FY Straight lining of lease income 8.743959m vs. [89.004050m] +109.824%
FY Increase/ [decrease] in fair value of investment property 30.756728m vs. [81.004050m] +137.969%
FY Operating profit 171.126409m vs. 129.374616m +32.272%
FY Finance costs vs. [23.374328m]
FY Net profit for the year 171.126409m vs. 106.000288m +61.440%
Basic Earnings per unit 0.95 vs. 0.59 +61.017%
Headline Earnings per unit 0.78 vs. 0.89 -12.360%
Distributable earnings per unit 0.82 vs. 0.54 +51.852%
Total Assets 3.761627663b vs. 3.715011411b +1.255%
Fair value of investment property 2.379739909b vs. 2.345995950b +1.438%
Investment securities 529.000000m vs. 733.035734m -27.834%
Equity 3.666181292b vs. 3.585541033b +2.249%
Cash and cash equivalents at end of period 688.190218m vs. 440.186650m +56.341%
Stanlib I REIT FY17 Results via Kestrel
Property expense ratio remained flat at 34%
Rental income increased by 12% y/y to Kes 279.4m. 2 assets were acquired mid-year in 2016 so accounted for only 6 months of rental in 2016 vs full year in 2017.
Interest income declined from Kes 111m to Kes 99.8m.
FV gain increased to KES 22m from Kes 8m. Op profit Kes 171.1m in 2017 vs 128.4m. One off REIT costs did not recur in 2017.
Rent escalation on commercial property (ex Greenspan) is 12.5% every 2 years.
The commercial property was funded from cash balances, REIT was under invested in property per CMA regulations prior to this and had sought exemption. 33% of assets was held in cash.
Total property portfolio return was 8.5% vs 8.9% in 2016. Tenant debtors is Kes 42m (excl. provisions), all related to Greenspan mall
Lease expiry profile is staggered and healthy.
Average vacancy rate is 6.5%, all at Greenspan mall (the mall itself has a vacancy rate of 8.1%)
Setting up a cinema at Greenspan mall. 3 screen 3D cinema with total capacity of 300 people. 6,416 sq ft, 10 year lease term, 11.7% yield from cinema vs 7.5% from the mall on average.
Stanlib bought a new commercial building at a price of Kes 850m. Low rise grade A commercial property. 41,300 sq ft, 100% let. 73.8m annual rent, escalation of 15% every 2 years.
Stanlib Fahari I-Reit FY 2017 results through 31st December 2017 vs. 31st December 2016
FY Rental and related income 279.433136m vs. 248.572436m +12.415%
FY Straight lining of lease income [8.743959m] vs. 89.004050m -109.824%
FY Revenue 270.689177m vs. 337.576486m -19.814%
FY Interest income 99.852345m vs. 111.209231m -10.212%
FY Other income 101.606067m vs. 137.856149m -26.296%
FY Property expenses [96.292615m] vs. [94.631625m] +13.779%
FY Fund operating expenses [135.632948m] vs. [180.422344m] -24.825%
FY Property expenses [96.292615m] vs. [84.631625m] +13.779%
FY Operating expenses [231.925563m] vs. [265.053969m] -12.499%
FY Fair value adjustment to investment property 22.012769m vs. 8.000000m +175.160%
FY Straight lining of lease income 8.743959m vs. [89.004050m] +109.824%
FY Increase/ [decrease] in fair value of investment property 30.756728m vs. [81.004050m] +137.969%
FY Operating profit 171.126409m vs. 129.374616m +32.272%
FY Finance costs vs. [23.374328m]
FY Net profit for the year 171.126409m vs. 106.000288m +61.440%
Basic Earnings per unit 0.95 vs. 0.59 +61.017%
Headline Earnings per unit 0.78 vs. 0.89 -12.360%
Distributable earnings per unit 0.82 vs. 0.54 +51.852%
Total Assets 3.761627663b vs. 3.715011411b +1.255%
Fair value of investment property 2.379739909b vs. 2.345995950b +1.438%
Investment securities 529.000000m vs. 733.035734m -27.834%
Equity 3.666181292b vs. 3.585541033b +2.249%
Cash and cash equivalents at end of period 688.190218m vs. 440.186650m +56.341%
H1 Rental and related income 137.969452m vs. 120.855334m +14.161%
H1 Straight lining of lease income [2.674906m] vs. 88.625294m -103.018%
H1 Other income 52.850748m vs. 87.346054m -39.493%
H1 Operating Expenses [112.546133m] vs. [160.844428m] -30.028%
H1 Increase/ [decrease] in fair value of investment property 2.674906m vs. [88.625294m] +103.018%
H1 Operating profit 78.274067m vs. 47.356960m +65.285%
H1 Finance costs vs. [22.955567m]
H1 Net profit for the period 78.274067m vs. 24.401393m +220.777%
Basic EPS 0.43 vs. 0.13 +230.769%
Headline EPS 0.42 vs. 0.49 -14.286%
Distributable EPS 0.43 vs. 0.13 +230.769%
Total Assets 3.694459035b vs. 3.677967790b +0.448%
Total Equity 3.573328950b vs. 3.515729819b +1.638%
Net Asset Value per share 19.75 vs. 19.43 +1.647%
Cash and cash equivalents at the end of the period 393.999343m vs. 363.138822m +8.498%
No interim dividend
Company Commentary
currently owns 3 properties [a shopping centre and two semi office light industrial buildings] valued at 2.4b.
The REIT as delivered growth of 221% in earnings for the 6 month period ended 30th June 2017
currently ungeared
FY Revenue 337.576486m
FY Rental and related income 248.572436m
FY Straight lining of lease income 89.004050m
FY Interest income 111.209231m
FY Other income 137.856149m
FY Fund operating expenses [180.422344m]
FY Operating expenses [265.053969m]
FY Increase in fair value of investment income [81.004050m]
FY Operating profit 129.374616m
FY Finance costs [23.374328m]
FY Net profit for the period 106.000288m
Basic Earnings per unit 0.59
Headline Earnings per unit 0.89
Distribution earnings per unit 0.54
Investment property 2.439729976b
Total assets 3.715011411b
Cash and cash equivalents at end of period 440.186650m
Commentary
Net Asset value per Unit 19.81
Dividend 0.50 a share
Conclusions
I will have to dig deeper but the Discount to NAV is noteworthy.
STANLIB Fahari I REIT 7 months results through 30th June, 2016
Revenue 117.939894m
Other income 77.882552m
Operating expenses [113.675700m]
Operating profit 82.146746m
Finance costs [22.982868m]
Profit before Tax 59.163878m
Total comprehensive income for the period 53.009839m
EPS 0.293
Headline EPS 0.232
Investment property 2.417755551b
Total assets 3.689666182b
Equity 3.531975591b
Cash and cash equivalents at the end of the period 1.111781269b
Units Issued 180,972,300 |
