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ACP
ACP
ACP - Acucap - Acquistion and withdrawal of cautionary
ACUCAP PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2001/021725/06)
Share code: ACP & ISIN: ZAE000037651
("Acucap" or "the company")
ANNOUNCEMENT REGARDING THE ACQUISTION OF THE INTAPROP INVESTMENTS (PROPRIATARY)
LIMITED ("Intaprop") AND WITHDRAWAL OF CAUTIONARY
1 INTRODUCTION
Linked unitholders of Acucap are referred to the cautionary announcement on 21
May 2007 where unitholders were advised that Acucap has reached agreement with
the shareholders of Intaprop (amongst them Norman Whale an independent non-
executive director of Acucap) to acquire with effect from 1 August 2007 (the
"effective date") 100% of the shares in and claims on loan account against
Intaprop. Acucap has today entered into a formal agreement ("the agreement")
with the shareholders of Intaprop ("the sellers") to acquire Intaprop ("the
acquisition"), subject to the approval of the Competition Authorities.
2 RATIONALE FOR THE ACQUISITION
Whilst Acucap`s strategy is to remain sectorally weighted towards retail assets,
it has always maintained a moderate exposure to good quality office buildings
situated in strong nodes and generally tenanted by corporates on long leases.
The Intaprop portfolio consisting of a small number of high value, well located,
good quality office buildings is entirely consistent with Acucap`s office
strategy. Through a single transaction, it enhances the quality of Acucap`s
office exposure and meaningfully extends the lease expiry profile.
The offices acquired from Intaprop collectively represent a portfolio that is
highly sought after in a market where opportunities to acquire such assets are
scarce. The properties are located in Sandton, Bryanston and Illovo and are,
with the exception of 82 Grayston Drive that is currently under construction,
full let to predominantly blue chip national and international tenants. Whilst
the transaction does increase Acucap`s exposure to the office sector, it does
not change Acucap`s overall bias towards the retail sector.
3 CONSIDERATION FOR THE ACQUISITION
The consideration for the acquisition is R563 315 072 payable in Acucap units to
be issued at R32.00 each.
The value attributed to the properties by independent registered valuer Quadrant
Property Group on 22 June 2007 is R562 450 000 as at the effective date. This
includes 82 Grayston Drive, which is currently under construction, and to which
a value of R122 500 000 has been attributed. The agreement makes provision for
an adjustment to the purchase price of 82 Grayston Drive, based on the actual
letting achieved and the sellers have underwritten all costs to complete and
tenant the building. In addition, Intaprop will have net cash balances of R9 800
000 on the effective date to cover potential future Capital Gains Taxation
liabilities.
4 FINANCIAL INFORMATION RELATING TO THE ACQUISITION
The reviewed profit forecast as published in the circular to unitholders in
respect the scheme of arrangement with Atlas Properties Limited dated 27 June
2007 indicated that the distribution for the year ending 31 March 2008 would be
214.20 cents. Based on the forecast information relating to the acquisition, the
revised profit forecast including the acquisition will increase distributions
for the year ending 31 March 2008 by 0.97% to 216.27 cents.
The forecast information relating to the acquisition for the eight months ending
31 March 2008 and the 12 months ending 31 March 2009 is set out below.
Property Description Forecast Uncontracted Forecast Uncontracted
for the revenue as a for the revenue as a
eight % of the year % of the
months total ending total
ending revenue 31 March revenue
31 March 2009
2008
R`000 % R`000 %
Microsoft Revenue 7,033 8.0% 11,185 14.9%
Head Office
Operational 6,961 11,067
net income
82 Grayston Revenue - - - -
Drive
Operational - -
net income
Tiger Revenue 4,916 0.0% 7,847 0.0%
Brands
Operational 4,869 7,771
net income
4 Fricker Revenue 3,958 0.0% 6,129 0.0%
Road
Operational 3,933 6,023
net income
Kagiso Revenue 3,302 0.0% 5,363 0.0%
House
Operational 3,279 5,324
net income
Chaplin Revenue 1,623 0.0% 2,589 0.0%
Corner
Operational 1,284 2,041
net income
Wellness Revenue 1,015 2.0% 1,629 20.1%
Centre
Operational 1,006 1,595
net income
Piazza Revenue 436 0.0% 698 0.0%
Properties
Operational 432 681
net income
Notes:
1 Profit after tax has not been disclosed as it has been assumed that all
income before distribution will be distributed to linked unitholders.
The pro-forma financial effects of the acquisition indicates Acucap`s net asset
value and net tangible asset value per linked unit increased by 4.49% on the
assumption that the excess of the purchase price payable for the acquisition
over the net asset value of Intaprop is capitalised to investment properties.
Costs of the acquision have been capitalized to the investment properties. The
pro-forma financial effects have been prepared in terms of IFRS and are the
responsibility of the directors of Acucap.
The profit forecast and forecast financial information relating to the
acquisition have not been reviewed or reported on by the accountants in terms of
Section 8 of the JSE Limited Listings Requirements ("Listings Requirements").
5 RELATED PARTY TRANSACTION
In terms of section 10.7 of the Listing Requirements, the transaction is
classified as a small related party transaction as Norman Whale, a non-executive
independent director of Acucap, is a beneficiary of The Pendennis Investment
Trust that currently owns 28.667% of Intaprop. On conclusion of the transaction,
The Pendennis Investment Trust will own a maximum of 4.9% of the Acucap issued
units prior to this transaction.
6 PROPERTY DETAILS
Details regarding the properties are set out below:
Property Location Sector Gross Single Weighted Parking Vacancy
Rentable or multi average provide by
area tenanted net rental d / rentable
m2 (incl. 100m2 area
parking) of m2
per m2 rentabl
R e area
Microsoft Bryansto Office 9,535 Multi 91.26 5.9 0%
Head n
Office
82 Sandton Office 6,323 Multi 126.59 4.7 See note
Grayston 1
Drive
Tiger Bryansto Office 6,773 Single 89.86 4.4 0%
Brands n
4 Fricker Illovo Office 4,683 Multi 104.99 5.2 0%
Road
Kagiso Illovo Office 3,808 Single 107.64 4.8 0%
House
Chaplin Illovo Office 1,615 Multi 99.41 4.9 0%
Corner
Wellness Bryansto Office 1,500 Multi 83.86 4.8 0%
Centre n
Piazza Illovo Retail 497 Multi 108.62 n/a 0%
Propertie
s
Total 34,734 101.37 0%
Notes
The sellers will enter into a head lease over the 82 Grayston Drive property
until such time that the property is 90% let in accordance with the minimum
letting requirement agreed to, or until one year after the property is 70% let,
whichever occurs the sooner. Practical completion of the property is projected
for 31 July 2007.
7 CATEGORISATION OF THE ACQUISITION
The acquisition is a Category 3 transaction in terms of the Listings
Requirements.
8 WITHDRAWAL OF CAUTIONARY
Unitholders no longer need to exercise caution when dealing in the securities of
Acucap.
Cape Town
6 July 2007
Corporate advisor and sponsor
Java Capital
Date: 06/07/2007 17:08:31 Produced by the JSE SENS Department.
