ABOUT SURF 2
SURF 2 is an unlisted retail property fund which commenced on 2 June 2017. SURF 2 retail property portfolio comprises two retail properties namely:
- Katoomba Marketplace anchored by a Woolworths supermarket and a Big W discount department store.
- Mittagong Village anchored by a Dan Murphy’sTM liquor store (sold on 1 June 2020).
SURF 2 management are actively focused on maximising sustainable income and over the fund life the fund’s total returns. SURF 2 achieves secure income from a strong tenancy profile with 94% of the income from leases to Woolworths Group Ltd.
Resumption of Distributions: updated on 1 July 2020
Following the sale of the SURF 2 shopping centre at Mittagong 100% of the Fund’s remaining income from Katoomba Marketplace, the Fund’s remaining property, is generated from the anchor tenant Woolworths Limited.
Mittagong was sold at a disposal value (before selling costs) in line with book value and in line with an external valuation as at December 2019. SURF 2’s NTA has decreased from $1.00 per unit as at 31 December 2019 to $0.99 per unit as at 30 June 2020 on a like for like basis due mainly to Mittagong selling costs.
The net proceeds from the sale of Mittagong were used to repay a portion of the secured debt facility. As a result the Fund’s gearing has reduced significantly from 47% in December 2019 to 35.1% at June 2020.
As you are aware the SURF 2 distribution for the quarter ended March 2020 was suspended, however with the sale of Mittagong and the consequent reduction in debt, the Board is pleased to advise that distributions for SURF 2 will be reinstated. The next distribution for the quarter ended June 2020 is scheduled to be paid in late July 2020. The distribution amount is 3.50 cents per unit which includes the payment of the suspended distribution for the quarter ended 31 March 2020.
It is also noted that the Fund’s interest rate swap has been terminated which will reduce future interest costs if rates remain unchanged. Should interest rates increase, this will increase future interest costs which could potentially reduce distributions, although the risk is considered low.
As per the PDS the expiry of the Fund is mid 2022. An update will be provided closer to this time on the wind up and termination of the Fund or if an extension or other action is recommended.
The market disruption caused by COVID-19 has been extreme and it is impossible to predict when market disruption will end. This may also impact property sale values.
|Period Ended||Date Paid||Distribution (cpu)|
|30 September 2020||16 October 2020||1.75|
|30 June 2020||31 July 2020||3.50|
|31 March 2020||N/A||Nil|
|31 December 2019||28 January 2020||1.75|
|30 September 2019||16 October 2019||1.75|
|30 June 2019||31 July 2019||1.75|
|31 March 2019||23 April 2019||1.75|
|31 December 2018||21 January 2019||1.75|
|30 September 2018||16 October 2018||1.75|
|30 June 2018||31 July 2018||1.75|
|31 March 2018||20 April 2018||1.75|
|31 December 2017||22 January 2018||1.75|
|30 September 2017||16 October 2017||1.75|
|30 June 2017||31 July 2017||0.556|
|Financial Report||30 June 2020|
|Financial Report||30 June 2019|
|Financial Report||30 June 2018|
|Financial Report||30 June 2017|
Distribution Tax Components
In respect of each income tax year, you will be required to include your share of the net income of the SURF2 in your assessable income for tax purposes. SCA Property Group will provide unitholders with Annual Taxation Statements by August of each year.
You should not complete your tax return for the prior tax year before you receive this Annual Taxation Statement.
Distributions from SURF2 may include various components, the tax treatment of which may differ. If you are an Australian tax resident and an individual, distributions from SURF2 received after June will generally need to be included in your tax return for the preceding tax year.
Annual Taxation Statement
If you are an Australian tax resident and an individual you will receive an Annual Taxation Statement by August each year. Amounts in this Annual Taxation Statement will generally need to be included in your tax return for the preceding taxation year.
You should not complete your tax return for the preceding taxation year until you receive the Annual Taxation Statement.
To obtain your Annual Taxation Statement go to www.investorserve.com.au or contact the SURF2 information line on 1300 780 316 (within Australia) or +61 2 9290 9600 (outside Australia) to request the Annual Taxation Statement to be sent to you.
Resident withholding tax deductions
If you are classified as an Australian tax resident for Australian tax purposes you will have resident withholding tax deducted at the rate of 47% on the full amount of your future distributions unless you provide your Tax File Number (TFN) or Australian Business Number (ABN).
TFN withholding tax is a refundable credit. That is, if the credit exceeds the tax liability you would otherwise have, it will be refunded to you by the Australian Taxation Office. For further information you should contact your own tax advisor.
Go to www.investorserve.com.au in order to provide your TFN or ABN or your bank account or financial institution account information and other details online for your holding. Alternatively contact the SCP Information Line on 1300 780 316 (within Australia) or +61 2 9290 9600 (outside Australia) to request the forms to be sent to you.
Q: When will SURF2 make distributions?
A: SURF2 intends to make distributions quarterly in the month after each calendar quarter. The distribution for the June calendar quarter may be delayed to determine the final annual taxation components.
Q: How do I change my bank or EFT or address details or get details of may distribution or other unitholder records?
A: Please contact the SURF2 Unit Registry on 1300 780 316.
SURF2 Unitholder Enquiries
If you have any queries relating to a unitholding in SURF2 please call the SURF2 information line:
1300 780 316 (within Australia)
+61 2 8016 2885 (outside Australia)
Or you may contact:
SURF@boardroomlimited.com.au or log onto www.investorserve.com.au to update your bank account, TFN, ABN or other details.
SCA Property Group
Level 5, 50 Pitt Street
Sydney NSW 2000
Telephone: 02 8243 4900