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SAC
SAC
SAC - SA Corporate - Acquisition of a Portfolio of 51 Properties and Further
Cautionary
SA Corporate Real Estate Fund
(formerly Martprop Property Fund)
(Incorporated in the Republic of South Africa)
Share Code: SAC ISIN Code: ZAE000083614
A Collective Investment Scheme in property registered in terms of the Collective
Investment Schemes Control Act, No. 45 of 2002 and managed by SA Corporate Real
Estate Fund Managers Limited
(formerly Marriott Property Fund Managers Limited)
(Registration number 1994/009895/06)
("SA Corporate" or "the Fund")
ANNOUNCEMENT REGARDING THE ACQUISITION OF A PORTFOLIO OF 51 PROPERTIES ("THE
ACQUISITION") AND FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
Unitholders are referred to the announcement dated 7 May 2007, where they
were advised that SA Corporate has entered into agreements dated 3 May 2007
("the agreements") with Collins Property Group to acquire the property
portfolio known as Buffcol ("the property portfolio") for a total purchase
price of R1 022 282 365. The acquisition has been categorised as a
Category 3 acquisition in terms of the JSE Limited Listings Requirements
("the Listings Requirements").
The effective date of the acquisition is the date of transfer. Transfer of
the properties is expected to take place during August 2007.
2. Rationale for the acquisition
The acquisition of the Buffcol portfolio is motivated by the following key
factors:
2.1 The portfolio of 51 properties has a favourable composition of South
Africa`s leading retail, industrial and office tenants. The ten
largest properties in the portfolio (by value) account for
approximately 45% of the portfolio value and these properties are
anchored by established national and listed companies on long leases.
The portfolio`s top 10 tenants are Chep SA, Bosch, Afrox Healthscheme,
Shell SA, MSA, Unitrans Motors, Tiger Wheel and Tyre, Supply Chain
Services, The SA Police Services and BDO Spencer Stewart.
2.2 The lease expiry profile of the Buffcol portfolio is favourable with
the majority of the leases expiring between 2012 and 2015 and 77% of
the leases expiring after 2011. Lease expiries are staggered and
don`t present a risk profile at any particular period.
2.3 Rentals within the portfolio are considered to be at current market
rental levels escalating at rates of between 8% and 9%. With the
demand for superior industrial property and consequent rental growth
which is currently being experienced, the portfolio is expected to
offer good reversionary growth on lease expiry.
2.4 The initial yield of the acquisition portfolio of 8,15% is considered
market related and commensurate with the current state of the property
investment market, especially considering the size of the portfolio
and shortage of quality investment property. The small premium paid
over the sum of the individual property valuations is considered
justifiable given the size of the portfolio being acquired.
2.5 The IRR of the Buffcol portfolio at 14,40% is marginally enhancing
relative to the SA Corporate standing portfolio IRR and competitive
relative to alternative investment opportunities.
2.6 The vacancy factor in the Buffcol portfolio is currently zero. This
compares to the SA Corporate standing portfolio vacancy of 1,5% and
demonstrates the quality and favourable profile of the Buffcol
portfolio.
2.7 The average valuation of the investments expressed as a value per m2
is R5,900/m2. This is considered at or below market levels and
commensurate with the profile and quality of the underlying
investments.
2.8 The asset value of the SA Corporate portfolio with the acquisition of
the Buffcol portfolio would increase to more than R7,8bn from the
current level of R6,8bn. This will enhance the critical mass and
sectoral and geographic diversification of the Fund and ensure that SA
Corporate remains within the top 3 in the sector in market
capitalisation value.
3. Financial information relating to the acquisition
The forecast property information for the four months ending 31 December
2007 and year ending 31 December 2008 is set out below. The forecast
financial information has not been reviewed or reported on by SA
Corporate`s auditors in terms of Section 8 of the Listings Requirements and
is the responsibility of the directors of SA Corporate Real Estate Fund
Managers Limited.
Description Forecast for Uncontracted Forecast for Uncontracted
the four revenue as a the year revenue as a
months ending % of the ending 31 % of the
31 December total December 2008 total
2007 (1) revenue (1) revenue
% %
R`000 R`000
Revenue 28 867 - 91 341 1,3
Operational - -
net income 27 357 86 486
Notes:
Profit after tax has not been disclosed as it has been assumed that all
income before distribution will be distributed to unitholders.
4. Suspensive conditions of the acquisition
The acquisition is still subject to the following suspensive conditions:
- approval from the relevant competition authorities;
- procurement of funding for the acquisition; and
- JSE and other statutory and regulatory approvals, to the extent
required.
It is the Board`s intention to fund the acquisition through a combination
of debt and equity funding. The finalisation of the ratio of debt to equity
funding has been delegated, within approved parameters, to a sub-committee
of the board, and has not been finalised at the date of this announcement.
Property portfolio details
Details regarding the property portfolio are set out below:
Property Location Sector Gross Single or
lettable multi
area tenanted
m2
22 Voortrekker Cape Hospital 3,067 Single
Street,
Malmesbury
28 Durham Road, Cape Hospital 4,198 Single
Umtata
94 Intersite KZN Industrial 2,396 Single
Avenue,
Springfield
106/9 Bain Gauteng Industrial 15,209 Single
Street, Boksburg
16 Quality Gauteng Industrial 2,550 Single
Street, Isando
15 Tedstone Road, Gauteng Industrial 9,486 Single
Wadeville
16 Nourse Avenue, Cape Industrial 3,104 Single
Epping
5 Bofors Circle, Cape Industrial 5,870 Single
Tygerberg
10 Industrial Cape Industrial 3,259 Single
Avenue,
Springfield
2 Beechfield KZN Industrial 3,700 Single
Crescent,
Springfield
Cnr Rudo Nel & Gauteng Industrial 10,786 Single
Tudor Streets,
Boksburg
Intersite Ave, KZN Industrial 2,734 Single
Springfield
Baltex Road, KZN Industrial 4,376 Single
Isipingo
Baltex Road, KZN Industrial 3,372 Single
Isipingo
Baltex Road, KZN Industrial 2,128 Single
Isipingo
Heidelburg Ave, Gauteng Industrial 7,898 Single
Production Park,
City Deep
Cnr Marcia & Gauteng Industrial 1,529 Single
Broadway, Bruma
William Nichol Gauteng Industrial 1,171 Single
Drive, Lonehill
The Triangle, Cape Industrial 1,173 Single
Stellenbosch
15 Patrick Road, Gauteng Industrial 2,275 Single
Jet Park
9 Twilight Road, KZN Industrial 973 Single
Umhlanga
15th Road, Gauteng Industrial 10,443 Single
Randjespark
252 Montrose Ave, Gauteng Industrial 2,419 Single
Northriding
33 Ontdekkers Gauteng Industrial 6,386 Single
Road, Wilropark
Cnr Paul Smit & Gauteng Industrial 19,437 Single
Title Road,
Anderbolt
Cnr Eagle Ave & KZN Industrial 3,026 Single
Iris Road, Mkuze
Cnr Eagle Ave & KZN Industrial 3,408 Single
Falcon St, Mkuze
Main Street, KZN Industrial 2,991 Single
Ginginglovu
2 Kuba Ave, KZN Industrial 1,044 Single
Riverhorse Valley
2 Kuba Ave, KZN Industrial 1,296 Single
Riverhorse Valley
2 Kuba Ave, KZN Industrial 2,068 Single
Riverhorse Valley
24 Chancery Lane, KZN Office 3,497 Single
Pinetown
13 Wellington Gauteng Office 3,300 Single
Street, Parktown
Chancery Lane KZN Vacant Land 4,358 Single
(next to Spar),
Pinetown
17 Timber Lane, KZN Office 1,970 Single
Pietermaritzburg
191 Chapel KZN Office 3,234 Single
Street,
Pietermaritzburg
10 Yarborough KZN Office 3,400 Single
Road,
Pietermaritzburg
238 Church KZN Retail 1,720 Single
Street,
Pietermaritzburg
385/387 West KZN Retail 1,100 Single
Street, Durban
156 Old Main KZN Retail 1,100 Single
Road, Isipingo
563 Berea Road, KZN Retail 900 Single
Durban
467 Main Road, KZN Retail 1,500 Single
Tongaat
655 Rachel De Gauteng Retail 2,809 Single
Beer Street,
Pretoria North
Kabani, Cape Retail 1,659 Single
Motherwell
20 Kirsten Ave, Cape Retail 655 Single
Kommetjie
22 Kerk Street, Mpumalanga Retail 900 Single
Motherwell
549 Gert Maritz Gauteng Retail 1,566 Single
Street, Pretoria
North
2A Seeiso St, Gauteng Retail 2,237 Single
Attridgeville
210 Church KZN Retail 1,950 Single
Street,
Pietermaritzburg
212 Church KZN Retail 1,963 Single
Street,
Pietermaritzburg
54 Main Road, Cape Retail 3,017 Single
Vishoek
Total
Property Weighted Purchase price Value of
average of property property
rental Rm Rm (2)
per m2
R
22 Voortrekker 78.37 35,003,650 30,100,000
Street,
Malmesbury
28 Durham Road, 77.81 47,567,647 42,500,000
Umtata
94 Intersite 19.10 6,665,971 7,100,000
Avenue,
Springfield
106/9 Bain 7.20 15,943,438 14,400,000
Street, Boksburg
16 Quality 23.89 8,872,405 8,700,000
Street, Isando
15 Tedstone Road, 11.35 15,677,703 15,500,000
Wadeville
16 Nourse Avenue, 15.70 7,098,641 9,100,000
Epping
5 Bofors Circle, 30.67 26,222,476 24,200,000
Tygerberg
10 Industrial 63.20 30,021,560 28,900,000
Avenue,
Springfield
2 Beechfield 29.77 16,042,920 15,100,000
Crescent,
Springfield
Cnr Rudo Nel & 28.70 45,083,738 44,400,000
Tudor Streets,
Boksburg
Intersite Ave, 54.67 21,766,569 19,400,000
Springfield
Baltex Road, 67.08 38,856,724 39,700,000
Isipingo
Baltex Road, 44.55 19,885,439 22,700,000
Isipingo
Baltex Road, 79.83 22,487,148 22,700,000
Isipingo
Heidelburg Ave, 43.88 50,471,863 49,300,000
Production Park,
City Deep
Cnr Marcia & 84.13 18,732,457 18,400,000
Broadway, Bruma
William Nichol 52.97 9,032,580 8,800,000
Drive, Lonehill
The Triangle, 59.45 10,155,013 10,800,000
Stellenbosch
15 Patrick Road, 26.64 8,824,602 8,100,000
Jet Park
9 Twilight Road, 78.52 11,125,680 10,800,000
Umhlanga
15th Road, 56.73 86,276,432 80,700,000
Randjespark
252 Montrose Ave, 76.72 27,027,367 28,100,000
Northriding
33 Ontdekkers 52.75 49,061,765 48,900,000
Road, Wilropark
Cnr Paul Smit & 8.59 24,317,242 24,300,000
Title Road,
Anderbolt
Cnr Eagle Ave & 26.75 11,788,835 10,200,000
Iris Road, Mkuze
Cnr Eagle Ave & 34.74 17,243,968 14,500,000
Falcon St, Mkuze
Main Street, 24.74 10,776,699 8,300,000
Ginginglovu
2 Kuba Ave, 65.58 9,970,267 9,700,000
Riverhorse Valley
2 Kuba Ave, 46.08 8,697,961 8,500,000
Riverhorse Valley
2 Kuba Ave, 45.16 13,600,291 13,200,000
Riverhorse Valley
24 Chancery Lane, 48.81 24,858,252 24,200,000
Pinetown
13 Wellington 78.74 37,839,068 29,100,000
Street, Parktown
Chancery Lane N/A 3,500,000 3,500,000
(next to Spar),
Pinetown
17 Timber Lane, 46.98 13,479,478 12,700,000
Pietermaritzburg
191 Chapel 44.69 21,047,961 22,200,000
Street,
Pietermaritzburg
10 Yarborough 77.58 36,248,347 37,400,000
Road,
Pietermaritzburg
238 Church 41.21 10,322,363 9,400,000
Street,
Pietermaritzburg
385/387 West 137.30 21,993,993 20,600,000
Street, Durban
156 Old Main 63.39 8,273,187 6,800,000
Road, Isipingo
563 Berea Road, 46.64 6,112,800 5,500,000
Durban
467 Main Road, 31.75 6,935,063 6,800,000
Tongaat
655 Rachel De 14.08 5,761,084 4,700,000
Beer Street,
Pretoria North
Kabani, 22.26 5,378,851 4,100,000
Motherwell
20 Kirsten Ave, 56.67 5,406,131 4,600,000
Kommetjie
22 Kerk Street, 45.06 5,906,117 5,200,000
Motherwell
549 Gert Maritz 28.02 6,389,148 5,600,000
Street, Pretoria
North
2A Seeiso St, 20.53 6,687,999 6,400,000
Attridgeville
210 Church 70.02 19,884,624 18,900,000
Street,
Pietermaritzburg
212 Church 91.03 26,023,617 24,100,000
Street,
Pietermaritzburg
54 Main Road, 59.03 25,935,231 20,500,000
Vishoek
Total 1,022,282,365 969,400,000
Notes:
There are currently no vacancies relating to the property portfolio.
The value of the property portfolio of R969 400 000 was arrived at by the
independent registered valuer, Broll CB Richard Ellis, as at 30 June 2007.
Further cautionary announcement
The financial effects of the acquisition on net asset value and tangible net
asset value per unit will be provided in a further announcement once the ratio
of debt to equity funding has been finalised.
Accordingly, unitholders are advised to exercise caution when dealing in SA
Corporate`s securities until the further announcement has been made.
Durban
28 May 2007
Investment bank and sponsor
Nedbank Capital
Date: 28/05/2007 14:03:01 Produced by the JSE SENS Department.
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