| Wed 6 Apr 2011, 14:00 | | IPF - Investec Property Fund Limited - Abridged pre-listing statement |
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IPF
IPF - Investec Property Fund Limited - Abridged pre-listing statement
Investec Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2008/011366/06)
ISIN ZAE000155099
Share Code IPF
("Investec Property Fund" or "the Fund")
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of Investec Property Fund
on the securities exchange operated by the JSE Limited ("JSE") with effect from
the commencement of business on Thursday, 14 April 2011 ("Listing Date").
This abridged pre-listing statement is not an invitation to the public to
subscribe for Investec Property Fund Linked Units, but is issued in compliance
with the Listings Requirements of the JSE for the purpose of providing
information to the public with regards to the Fund. This abridged pre-listing
statement contains extracts of the salient features of the Investec Property
Fund pre-listing statement dated 18 March 2011 ("Pre-listing Statement"), which
extracts are contextualised by, and should be read with, that Pre-listing
Statement.
1 INTRODUCTION
1.1 Background and nature of business
The Fund was incorporated as a public company under the name Afropulse 405
Limited as a newly formed property investment company in South Africa on 7 May
2008. The Fund`s name was changed to Investec Property Fund Limited on 6 April
2011.
The Fund is a limited liability, variable loan stock company formed with the
purpose of investing in direct real estate.
At the Listing Date, the authorised share capital of the Fund will comprise
1,000,000,000 shares with a par value of 1 cent each. The Fund will have a total
issued capital of R1,700,000,000 comprising 170,000,000 shares with a par value
of 1 cent each, linked to 170,000,000 variable rate, unsecured, subordinated
debentures of R1,698,300,000 in aggregate with each debenture having a nominal
value of 999 cents (together comprising a "Linked Unit"). The Fund will be
ungeared on listing.
The Fund has a financial year which ends on 31 March of each year.
Apart from the conclusion of the sale and purchase agreements ("Sale and
Purchase Agreements") which provided for the acquisition of the initial property
portfolio set out in 5 below ("Property Portfolio"), the Fund has been dormant
since incorporation and has no trading history.
1.2 Future prospects and strategy
The objective of the Fund is to grow its asset base by investing in well-priced
income producing properties to optimise capital and income returns over time for
holders of its Linked Units ("Linked Unit Holders"). The Fund may also, from
time to time, redevelop properties to enhance value and support longer-term
income and capital growth.
The primary objectives of the Fund are to:
- provide an income stream through the acquisition and redevelopment of
office, retail and industrial investment properties;
- invest in a well diversified property portfolio that provides good growth
opportunities;
- optimise and secure long-term distribution and capital growth;
- allow Linked Unit Holders to participate in the net income (after providing
for related expenditure) by distributing significantly all the net income
to Linked Unit Holders.
1.3 Purpose of the listing
The main purposes of the listing of the issued Linked Units of the Fund are to:
- provide investors, both institutional and private, with an opportunity to
participate over the long term in the income streams and future capital
growth of the Fund;
- obtain a spread of investors in order to enhance the liquidity and
tradability of the Linked Units;
- provide the Fund with access to capital markets;
- provide the Fund with access to a central trading facility thereby
providing liquidity to Linked Unit Holders;
- provide the Fund with a platform to raise funding to pursue growth and
investment opportunities in the future;
- enhance the public profile and general public awareness of the Fund.
2 LISTING AND PARTICULARS OF THE PRIVATE PLACING
Approval of an application for the listing of 170,000,000 Linked Units in the
"Real Estate Holdings and Development" sector of the JSE, under the name
"Investec Property Fund Limited" has been granted by the JSE, subject to the
Fund confirming the required spread of Linked Unit Holders.
2.1 Structure
On 1 April 2011, 170,000,000 Linked Units were issued to Investec Limited
("Investec") at a subscription price of R10. In terms of this subscription,
Investec acquired a 100% interest in the Fund, thereby raising total
subscription proceeds of R1,700,000,000. With effect from this date, the Fund
utilised R1,696,500,000 of the subscription proceeds to acquire the Property
Portfolio. The surplus subscription proceeds of R3,500,000 remaining in the
Fund will be utilised for working capital requirements.
2.2 Details of the Private Placing
The offer comprised of a private placing by Investec by way of an offer for sale
of 85,000,000 Linked Units ("Private Placing"). Therefore following the Private
Placing, Investec will hold 50% of the Fund`s issued Linked Units.
The Private Placing was offered at the price range described in 2.4 below, to:
- institutional investors in South Africa; and
- the private clients of selected stockbroking companies in South Africa.
2.3 Time and date of the opening and closing of the Private Placing
2011
Opening date of the Private Placing (09:00) Tuesday,
22 March
Closing date of the Private Placing (16:00) by Friday, 1 April
which date invited investors were required to
submit their applications to the Corporate Finance
Division of Investec Bank Limited (the
"Bookrunner") in order to qualify for participation
in the Private Placing
Date upon which investors were notified of their Wednesday, 6 April
selection to participate in the Private Placing and
the number of Linked Units which they have been
allocated
Investec Property Fund Linked Units listed on the Thursday, 14 April
JSE
2.4 Offer price
Linked Units offered for sale in terms of the Private Placing were offered at a
price range between R9.50 and R10.50 per Linked Unit. Offers could, however, be
outside of the price range. The offer price was exclusive of Securities Transfer
Tax and is payable in full in Rand without deduction or set-off.
The Bookrunner solicited indications of interest from selected investors to
acquire Linked Units in terms of the Private Placing as part of a "book-
building" process. Following this book-building process, and after consultation
with Investec, the price of the Linked Units offered for sale in the Private
Placing, was set at R9.50 per Linked Unit.
2.5 Allocation
The basis of allocation of the issued Linked Units was determined by the
Bookrunner in its sole discretion, after consultation with the nominated
representative of the board of directors of the Fund. Applicants in the Private
Placing have been provided with notice of their allocations. No preference of
allotment was given to any applicant. Due to the level of demand, applicants
received fewer Linked Units than the number they applied for.
Any dealing in Linked Units prior to delivery of the Linked Units is entirely at
the applicant`s own risk.
3 DIRECTORS OF THE FUND
Full name Age Capacity Business address
Sam Hackner 55 Executive chairman 100 Grayston
Drive, Sandown,
Sandton, 2196
Michael P Crawford 68 Lead independent Stratford House,
non-executive The Braes,
director Bryanston Drive,
Bryanston, 2021
Samuel R Leon 61 Chief executive 100 Grayston
officer Drive, Sandown,
Sandton, 2196
David A J Donald 60 Executive 100 Grayston
financial director Drive, Sandown,
Sandton, 2196
Brian Molefe 44 Independent non- 759 Camelford
executive director Road, Cornwall
Hill Estate,
Irene, Pretoria,
0157
Moses M Ngoasheng 53 Independent non- Safika House, 89
executive director Central Street,
Houghton, 2198
A fourth independent non-executive director will be appointed following the
listing. In terms of the JSE Listings Requirements, all Directors will retire at
the first annual general meeting of the Fund but will make themselves available
for re-election by the Linked Unit Holders.
4 MANAGEMENT OF THE FUND
The Fund will be managed by Investec Property Limited (the "Manager") in terms
of an asset management and property management agreement ("Manco Agreement").
The Manager is a wholly-owned subsidiary of Investec. The management team of
the Manager has significant experience and a reputable track record in managing
and developing large property funds. This management team will be responsible
for managing the Fund in an efficient manner, diligently and in good faith in
accordance with acceptable and prevailing industry standards, within an approved
budget, so as to obtain the optimum long-term yield and capital growth of the
Fund.
The Manco Agreement is available for inspection. A summary of the services to be
provided by the Manager and the fees payable by the Fund in respect thereof is
set out in the Pre-listing Statement.
The Manco Agreement will operate for an initial period of seven years and in the
event of a breach, may be terminated on six months` notice by the Fund or
otherwise with the approval of a majority of the votes cast by Linked Unit
Holders (excluding the votes of any Linked Unit Holders who are related parties
of the Manager and their associates) in a general meeting of the Fund called by
the Fund or the Linked Unit Holders.
If the Manager is not in default and Linked Unit Holders require the termination
of the Manco Agreement, the Manager shall be entitled to sell the asset
management business to the Fund which shall be obliged to purchase the business
for fair market value. Fair market value shall be an amount equivalent to the
anticipated aggregate fees payable to the Manager in terms of the Manco
Agreement for the year following the date of termination, determined by
multiplying the last month`s fees payable prior to the date of termination by
12, capitalised at a rate equivalent to the forward yield of the Fund determined
as at the date of termination. In the event of any dispute between the parties
as to the calculation of the termination purchase price, the dispute shall be
referred to an expert for determination.
5 PROPERTY PORTFOLIO
The Fund acquired the Property Portfolio from Investec for a total purchase
consideration of R1,696,500,000. The Property Portfolio had been independently
valued at R1,771,000,000 by Mills Fitchet ("Independent Valuer"). A detailed
list of the Property Portfolio is set out in Annexure 1 to the Pre-listing
Statement. As at the date of this announcement 28 of the 29 properties have been
transferred to the Fund, representing 98.17% of the Property Portfolio by value.
The remaining property to be transferred is Aeroton Table Choice where rates
clearance certificates remain outstanding.
The Property Portfolio consists of 29 properties with a total GLA of
368,530mSquared. An analysis of the Property Portfolio by market value, sector,
tenancy, geographical spread and by lease expiry profile is set out in the Pre-
listing Statement.
The 10 largest properties by market value in the Property Portfolio include:
Property name Mills Acquisition Acquisition Percentage
Fitchet price at cost / price/mSquar of total
valuation Directors` ed acquisition
(R`000) valuation (R/mSquared) price
(R`000)
Woolworths House 288,000 288,000 9,463 17.0%
Investec Offices 215,000 215,000 32,860 12.7%
Durban
Alrode Multipark 180,000 180,000 2,080 10.6%
345 Rivonia 130,000 130,000 11,350 7.7%
Boulevard
373 Pretorius 125,000 125,000 9,370 7.4%
Street
4 Protea Place 115,000 90,000 12,941 5.3%
5 Walnut Road 85,000 71,000 5,057 4.2%
Benoni Multipark 83,000 70,000 1,757 4.1%
Makro Montague 80,000 80,000 7,120 4.7%
Gardens
Business 57,500 57,500 8,580 3.4%
Connexion
Randjiespark
Total for 10 1,358,500 1,306,500 5,754 77%
largest
properties
Total Property 1,771,000 1,696,500 4,601 100%
Portfolio
Note:
The amount of R1,696,500,000 represents the aggregate of the Directors`
valuation of the 29 properties acquired which equals the aggregate cost thereof
as set out in the respective Sale and Purchase Agreements.
The Directors` valuations agreed to those of the Independent Valuer in respect
of 23 of the 29 properties to be acquired. In the case of 6 properties, the
Directors` valuation was less than that of the Independent Valuer for reasons
set out in the Pre-listing Statement. This resulted in the Directors` valuation
of the entire Property Portfolio being R74,500,000 less than that of the
Independent Valuer`s valuation in aggregate.
The average gross rental per square metre (excluding vacancies) for the
Property Portfolio by sector is as follows:
- Office: R103.74/mSquared
- Industrial: R30.86/mSquared
- Retail: R41.56/mSquared
The weighted average rental escalation (by GLA) for the Property Portfolio
is:
- Office: 7.6%
- Industrial: 8.8%
- Retail: 8.1%
6 FINANCIAL INFORMATION
The table below sets out the salient unaudited profit forecast information of
the Fund and should be read in conjunction with the unaudited profit forecast
information disclosed in the Pre-listing Statement. Such information has been
prepared for illustrative purposes only and because of its nature may not fairly
reflect the financial position and results of the Fund. The unaudited profit
forecast is the responsibility of the Directors of the Fund.
Unaudited
forecast
for the
year ending
31 March 2012
(R`000)
Revenue
Gross rental and related revenue, excluding straight-line 214 055
rental revenue adjustment
Straight-line rental revenue adjustment 28 159
Rental revenue 242 214
Property expenses (54 093)
Net rental and related revenue 188 121
Operating expenses
Fund expenses (2 383)
Asset management fee (8 483)
Operating profit 177 255
Finance income 3 816
Profit before debenture interest and taxation 181 071
Debenture interest (152 742)
Profit before taxation 28 329
Taxation (7 902)
Profit after taxation attributable to equity holders/Total 20 427
comprehensive income
Reconciliation of attributable earnings to distributable
earnings
Attributable earnings 20 427
Debenture interest 152 742
Earnings 173 169
Straight-line rental revenue adjustment (28 159)
Deferred tax on straight-line rental revenue adjustment 7 885
Distributable earnings 152 895
Distributed to Linked Unit Holders 152 895
Interest on debentures 152 742
Dividends on ordinary shares 153
Undistributed earnings -
Linked Units in issue on listing 170,000,000
Distribution per Linked Unit (cents) 89.94
Earnings per Linked Unit (cents) 101.86
Headline earnings per Linked Unit (cents) 101.86
Forward yield (based on distribution) per Linked Unit with 9.0%
a Linked Unit price of 1 000 cents (assuming sold at the
midpoint of the offer range)
Notes to the unaudited forecast for the year ending 31 March 2012 are set
out in Annexure 7 to the Pre-listing Statement.
In terms of the Private Placing, 85,000,000 Linked Units were issued to
investors at a price of R9.50 per Linked Unit, providing a yield to such
investors of 9.47%. This was calculated on the basis of a distribution of
89.94 cents on an acquisition price of R9.50 per Linked Unit.
7. DIVIDENDS AND DISTRIBUTION POLICY
The directors anticipate that the first dividend and distribution payable to
Linked Unit Holders will be the dividend and distribution in respect of the
six month period ending 30 September 2011 which is expected to be paid in
December 2011.
It is the directors` intention to declare a dividend and distribution
biannually, which is expected to be paid in June and December, as stated in
the amended debenture trust deed governing the debentures of the Fund
("Debenture Trust Deed"). The Debenture Trust Deed was amended following the
publication of the Pre-listing Statement to provide for interim and final
distribution payments in December and June, respectively, as previously it
provided for payments in January and July respectively.
8. COPIES OF THE PRE-LISTING STATEMENT
Copies of the Pre-listing Statement can be obtained during normal business
hours from:
- the Corporate Finance Division of Investec Bank Limited, 100 Grayston
Drive, Sandown, Sandton, 2196;
- KPMG Services (Proprietary) Limited, 85 Empire Road, Parktown, 2193 and
Computershare Investor Services (Proprietary) Limited, 70 Marshall Street,
Johannesburg, 2001
06 April 2011
Corporate Advisor and Sponsor:
Investec Bank Limited
Transactional Sponsor:
KPMG Services (Proprietary) Limited
Attorneys:
Glyn Marais Inc
Independent Valuers:
Mills Fitchet Magnus Penny (Proprietary) Limited
Debenture Trustee:
Ironwood Trustees (Proprietary) Limited
Independent Reporting Accountants and Auditors:
Ernst & Young Inc
Date: 06/04/2011 14:00:02 Produced by the JSE SENS Department.
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