| Wed 30 Nov 2011, 16:15 | | VKE - Vukile Property Fund Limited - Financial effects regarding the strategic |
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VKE
VKE
VKE - Vukile Property Fund Limited - Financial effects regarding the strategic
acquisition of a portfolio of 20 properties and a specific issue of linked units
for cash and withdrawal of cautionary announcement
Vukile Property Fund Limited
(Incorporated in the Republic of South Africa)
Registration number 2002/027194/06
JSE Share code: VKE
ISIN: ZAE000056370
NSX Share code: VKN
("Vukile" or "the company")
FINANCIAL EFFECTS REGARDING THE STRATEGIC ACQUISITION OF A PORTFOLIO OF 20
PROPERTIES AND A SPECIFIC ISSUE OF LINKED UNITS FOR CASH AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1 Introduction
Vukile linked unitholders ("unitholders") are referred to the detailed
cautionary announcement ("announcement") dated 14 November 2011. This
announcement advised that the company had made an offer to Sanlam Life Insurance
Limited ("Sanlam") dated 3 November 2011 in terms of which Vukile would acquire
the property letting enterprises in respect of a portfolio of properties (the
"Acquisition") which offer had been accepted by Sanlam. The announcement
provided unitholders with the requisite pertinent information on the properties.
However, as the company`s results for the six months ended 30 September 2011 had
not yet been released on SENS, financial effects were not included in the
aforesaid announcement. The interim results have since been released on SENS and
the company is now in a position to provide meaningful information on the
financial effects of the Acquisition.
2 The specific issue for cash
In order to raise the requisite equity capital for the Acquisition, the company
will be undertaking a specific issue of linked units for cash when the
Acquisition becomes unconditional (the "issue for cash")(together the "issue for
cash" and the Acquisition will be referred to as (the "Transaction").
The issue for cash will:
- comprise a maximum of seventy million linked units;
- be placed by an independent party through a "bookbuild" process so as to
achieve the highest possible price per linked unit; and
- be done at a placement price which is at a 0% - 5% discount to the 5 day
VWAP of the linked units traded on the JSE Limited.
3 Pro forma forecast information
Based on an effective date of the Acquisition of 1 June 2012, the forecast
financial information relating to the Transaction for the 10 months ending 31
March 2013 and the year ending 31 March 2014 is set out below. The forecast
financial information is the responsibility of the directors and has not been
reviewed and reported on by the reporting accountant in terms of Section 8 of
the JSE Listing Requirements.
On the basis of the above, the financial effects of the Transaction are as
follows:
Ten months Year ending
ending 31 31 March 2014
March 2013
Forecast property revenue 215 477(3) 263 509(4)
(1) (2)
Property expenditure (93 804) (119 240)
Operational net income 121 673 144 269
Net profit after tax 9 465 77 836
Earnings available for 71 303 96 538
distribution
Forecast yields (5) 8.80% 9.50%
Notes:
1 Contracted rental income for the 10 months to 31 March 2013 is 63% and for
the 12 months to 31 March 2014 is 44% based on existing signed lease
agreements.
2 Uncontracted rental income for the 10 months to 31 March 2013 is 37% and
for the 12 months to 31 March 2014 is 56% of the total forecast gross
rental. Leases expiring during the periods have been forecast on a lease by
lease basis, with particular regard as to the likelihood of existing
tenants renewing their leases. Where appropriate, a vacancy provision has
been allowed based on the expected lettability of the particular premises.
Revenues forecast for the period after the expiry of the leases have been
included in uncontracted revenue and have been based on current market
related rentals.
3 Includes straight line rental accruals of R12 million.
4 Includes straight line rental accruals of R1.7 million.
5 Based on operational net income for the 10 months to 31 March 2013
annualised to a full year and 12 months to 31 March 2014, based on a total
purchase consideration at 1 June 2012 of R1.496 billion, inclusive of
costs.
4 Pro-forma financial information
The specific issue for cash is indivisible from the Acquisition and thus the pro
forma financial effects of the issue for cash are not disclosed separately from
the financial effects for the Acquisition.
The table below sets out the unaudited pro forma financial effects of the
Transaction on net asset value ("NAV") and tangible net asset value ("TNAV") per
linked unit based on the unaudited results of the company for the six months
ended 30 September 2011. The unaudited pro forma financial effects are the
responsibility of the directors and have been prepared for illustrative purposes
only to provide information relating to how the Transaction may have impacted
unitholders on the relevant reporting date and, due to their nature, may not
give a fair reflection of Vukile`s financial position after implementation of
the Transaction.
Unaudited Transaction Vukile post Increase
30 the (%)
September Transaction
2011
NAV per 1 087 43 1 130 3.96
linked unit
(cents)
TNAV per 978 60 1 038 6.13
linked unit
(cents)
Linked 351 015 65 180 678 416 195 896 18.6
units in 218
issue
Assumptions:
The financial effects have been calculated on the basis of the following
assumptions:
- Assets increased by R1.496 billion, being the purchase consideration
inclusive of transaction costs.
- Long term bank finance is increased by R540 million to partly fund the
Transaction.
- An estimated 65.2 million linked units are issued at a price of R14.67,
representing the 5 day VWAP at 14 November 2011, to partly fund the
Transaction.
- TNAV has been calculated by deducting goodwill and intangible assets of
R70.3 million and R312.8 million respectively from NAV.
5 Withdrawal of cautionary announcement
Unitholders are advised that as the financial effects of the Transaction have
now been disclosed, caution is no longer required to be exercised when dealing
in their linked units.
Johannesburg
30 November 2011
Merchant Bank and Transaction Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Reporting Accountants
Grant Thornton
Independent Valuation Experts
Quandrant Properties (Proprietary) Limited and Jones Lang LaSalle (Proprietary)
Limited
Date: 30/11/2011 16:15:01 Produced by the JSE SENS Department.
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