| Mon 5 Dec 2011, 15:15 | | SGA/SGB - Synergy Income Fund Limited - Abridged pre-listing statement |
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SGA/SGB - Synergy Income Fund Limited - Abridged pre-listing statement
SYNERGY INCOME FUND LIMITED
(formerly Capital Land Retail Fund Limited)
(Incorporated in the Republic of South Africa on 13 November 2007)
(Registration number 2007/032604/06)
JSE share code for A linked units: SGA ISIN Code: ZAE000161550
JSE share code for B linked units: SGB ISIN Code: ZAE000162293
("Synergy" or "the company")
ANNOUNCEMENT TO INVESTORS SETTING OUT THE ABRIDGED PRE-LISTING STATEMENT
REGARDING THE LISTING OF SYNERGY ON THE JSE LIMITED, CONFIRMING THE PRICING AT
WHICH SYNERGY A LINKED UNITS ARE TO BE OFFERED TO INVESTORS, NOTIFYING INVESTORS
OF A POTENTIAL VENDOR CONSIDERATION PLACING AND DEALING WITH CERTAIN MATTERS
ANCILLARY TO THE OFFER
ABRIDGED PRE-LISTING STATEMENT
This abridged pre-listing statement relates to:
- an offer to invited investors to subscribe for a maximum of up to 35 144
571 Synergy A linked units ("the private placement") at an offer price now
set at R8.58 per Synergy A linked unit, being a forward yield of 9.4%; and
- the listing on the JSE Limited ("JSE") of up to 35 144 571 Synergy A linked
units and 60 000 000 Synergy B linked units ("the listing").
This abridged pre-listing statement is not an invitation to the public to
subscribe for linked units in the company, but is issued in compliance with the
JSE Limited ("JSE") Listings Requirements for the purposes of giving information
to the public in relation to Synergy and to invited investors in relation to the
private placement.
This announcement contains the salient information in respect of Synergy, which
is more fully described in the pre-listing statement which was issued to invited
investors ("the pre-listing statement"). For a full appreciation of Synergy, the
private placement and the listing, the pre-listing statement should be read in
its entirety.
Introduction
Subject to obtaining a spread of public linked unitholders acceptable to the
JSE, the JSE has granted Synergy a primary listing of a maximum of up to 35 144
571 Synergy A linked units and 60 000 000 Synergy B linked units in the "Real
Estate - Real Estate Holdings and Development" sector of the JSE lists, in terms
of the FTSE classification, under the abbreviated name "Synergy A", JSE share
code "SGA" and ISIN ZAE000161550 in respect of the Synergy A linked units and
abbreviated name "Synergy B", JSE share code "SGB" and ISIN ZAE000162293 in
respect of the Synergy B linked units, with effect from the commencement of
trade on Wednesday, 14 December 2011.
Background to Synergy
Synergy was incorporated as a public company on 13 November 2007.
Synergy was established by Capital Land Asset Management (Proprietary) Limited
("Capital Land Asset Management") as a property income fund investing in and
managing convenience retail centres with the benefits of Synergy`s close
association with the SPAR Group Limited ("SPAR").
Capital Land Asset Management prefers specialised property funds to generalist
funds that invest across multiple sectors of investment property. This
preference reflects the view that focussed specialisation will drive superior
investment performance in listed property income funds in South Africa. Synergy
specialises in convenience retail, with a key differentiator being its
relationship with SPAR.
Capital Land Asset Management has a close association with SPAR, which
culminated in the conclusion of a co-operation agreement with the objective of
creating and operating a specialised retail property investment fund comprising
retail shopping centres anchored by SPAR to participate in and benefit from the
investment and development opportunities arising from the retail growth of SPAR
in South Africa. The primary objective of Synergy is to establish a vehicle that
will support the growth and development of SPAR`s retail network within the
framework of the SPAR new business development strategy.
Currently, the retail footprint of SPAR in South Africa comprises approximately
850 SPAR retail outlets nationwide. This South African retail footprint is
increasing by approximately 40 new SPAR outlets each year.
SPAR`s retail growth is premised on property development activities underpinned
by independent demographic research. Through SPAR, Synergy has access to a
number of opportunities arising from the development pipeline, which is a key
differentiator in positioning Synergy for acquisitive growth.
The relationship with SPAR positions Synergy to achieve scale and critical mass
as a property investment fund focussed on convenience retail and to grow through
attractive acquisitions following the expansion of the SPAR retail footprint.
Through SPAR, Synergy is in close contact with the independent retailers who
operate the SPAR outlets anchoring Synergy owned retail centres. The result is
that these retail assets are more effectively managed in an integrated
management partnership between the independent retailer who anchors the centre
and Capital Land Asset Management.
Where appropriate, tenant risk on SPAR outlets may be mitigated by a corporate
head office lease.
As a result of these factors, Synergy`s retail property investment risk is
significantly reduced by operating in a structured investment partnership with
SPAR.
Synergy`s primary objectives are:
- to provide a growing income stream to linked unitholders through the
acquisition and management of quality retail assets;
- to invest in a well diversified portfolio of properties located in strong
demographic nodes demonstrating good growth opportunities, supporting the
growth and development of the SPAR retail network; and
- to provide a sustainable, superior long-term distribution and capital
growth to linked unitholders.
Synergy has, as at the date hereof, acquired and taken transfer of two
properties (the "initial portfolio") and has entered into binding acquisition
agreements in respect of a further 10 properties. Of these, transfer of two is
imminent, with the balance subject to various conditions, all as further
detailed in the pre-listing statement. The initial portfolio represents a GLA of
22 008 m2 comprising:
- Sediba Plaza Shopping Centre is centrally located within the heart of
Hartebeespoort which is close to Johannesburg and Pretoria and has a
growing population both permanently and weekenders; and
- KwaMashu Shopping Centre which is located 25 kilometres north of the Durban
Central Business District, which is highly accessible by foot (from the
taxi and train station through the western ramp, and from the east side of
the residential area) and by car.
The main purposes of the listing and private placement are to:
- provide South African investors the opportunity to participate in the
income streams and future capital growth through an investment in Synergy;
and
- fund a portion of the purchase consideration payable in respect of the
Ruimsig Boulevard Shopping Centre, Taxi City Shopping Centre and the King
Senzangakhona Shopping Centre ("acquisition portfolio one").
Leadership and Management
William Brooks is the chief executive officer of Synergy. He, together with Uys
Meyer the financial director, founded Capital Land Asset Management in 2007. The
management team of Capital Land Asset Management are experienced asset managers
with strong deal making expertise.
The asset management and property management of the company`s portfolio will be
undertaken by Capital Land Asset Management. Capital Land Asset Management is
entitled to sub-contract the property management services or any portion thereof
to third party administrators and in this regard Capital Land Asset Management
has appointed Spire Property Management (Proprietary) Limited as property
manager.
Linked Unit Capital and Distribution Policy
The linked unit capital of the company is divided into A ordinary shares and B
ordinary shares. Each A ordinary share is indivisibly linked to an unsecured
variable rate subordinated A debenture and each B ordinary share is indivisibly
linked to an unsecured variable rate subordinated B debenture. For so long as
there are both A and B linked units in issue, unless otherwise authorised by an
ordinary resolution passed by the A debenture holders, the total number of A
linked units in issue may never exceed the total number of B linked units in
issue.
After the expiry of the 5th anniversary of the listing date, the A debentures
are redeemable at any time by a resolution of the board, provided the redemption
is authorised by resolution approved by linked unitholders in combined general
meeting, as is more fully dealt with under "Ancillary Matters" below. If so
redeemed, the A linked units will be redeemed by the company at the volume
weighted average sales price of an A linked unit over the 60 trading days
immediately preceding the date on which the redemption resolution is passed.
It is the directors` intention to make semi-annual interest distributions, which
are expected to be declared for the periods ending 30 June and 31 December each
year.
The distribution in respect of the period from the listing date to 31 December
2011 will be paid together with the distribution in respect of the six month
period ending 30 June 2012, unless the board declares a special distribution
prior to this date.
Prospects
Synergy`s objective is to grow a specialised retail property investment fund
comprising of convenience shopping centres anchored by and operated in
partnership with SPAR. It is the directors` opinion that specialisation will
increasingly be a key driver of property investment performance in South Africa.
Synergy`s key competitive advantage is a strategic association and operating
relationship with SPAR. Synergy will create value for its investors through
owning and managing quality retail assets in a focused specialised investment
vehicle. Fundamental to the growth strategy of Synergy is access to development
opportunities that present themselves through Synergy`s relationship with SPAR.
SPAR expands its retail footprint by approximately 25 000 m2 to 50 000m2 of
retail trading area annually. All of its new store investments are backed by
independent demographic research reports supporting the site selections, site
development plans and the development feasibilities. SPAR`s retail growth in
South Africa drives a significant number of retail development opportunities
upon which Synergy can leverage its growth. The spread of assets will therefore
include a geographic spread of assets across the demographic range of South
Africa underpinned by strong rental income predominantly from the large
retailers of South Africa.
SPAR supports Synergy`s sustainable growth by providing:
- access to retail development opportunities;
- access to attractive acquisition opportunities;
- access to SPAR development personnel in each region who understand their
markets and identify strategic opportunities;
- established relationships with many convenience retail developers;
- access to extensive demographic research;
- ability to anchor developments with corporate head leases; and
- property management expertise through integrated management structures and
continual assessment.
Further to this strategy, Synergy has concluded acquisition agreements in
respect of acquisition portfolio one and the Richdens Centre, Hubyeni Shopping
Centre, Nzhelele Shopping Centre, the Van Riebeeckshof Shopping Centre, Highland
Mews, Ermelo Game Centre and the Renbro Centre ("acquisition portfolio two")
which collectively have a GLA of 108 013m2 and have been independently valued by
Mills Fitchet Magnus Penny (Proprietary) Limited at R897 800 000.
In respect of acquisition portfolio one, transfer of the Ruimsig Boulevard
Shopping Centre and Taxi City Shopping Centre is expected imminently, while the
acquisition of the King Senzangakhona Shopping Centre is conditional on approval
of the Competition Authorities being obtained.
The acquisition of the Richdens Centre, Hubyeni Shopping Centre and the Nzhelele
Shopping Centre is subject to:
- Synergy confirming in writing that loan finance is in place in order to
fund the purchase price;
- the Competition Authorities unconditionally approving Synergy`s acquisition
of these properties; and
- Synergy advising SA Corporate Real Estate Fund, the owner of the
properties, by 17h00 on 20 January 2012 whether it will acquire and take
transfer of the Richdens Centre.
The acquisition of the Van Riebeeckshof Shopping Centre, Highland Mews, Ermelo
Game Centre and the Renbro Centre is subject to:
- Synergy obtaining the funding necessary to settle the purchase
consideration payable to SA Corporate Real Estate Fund. Synergy intends
raising this funding by way of a vendor consideration placement;
- obtaining the requisite approval from the Competition Authorities; and
- any pre-emptive rights in respect of Ermelo Game Centre and Renbro Centre
having been waived.
Details of the Offer
The private placement comprises an offer to invited investors to subscribe for
up to a maximum of 35 144 571 Synergy A linked units at an offer price now set
at R8.58 per Synergy A linked unit.
There is no minimum amount which, in the opinion of the directors, must be
raised pursuant to the private placement.
Conditions Precedent to the Private Placement and the Listing
The private placement and the listing are conditional on the minimum spread
requirements of the JSE being satisfied in respect of both the A and the B
linked unit capital.
Salient Dates and Times
The table below sets out the salient dates and times in respect of the private
placement and the listing.
2011 (1)
Abridged pre-listing statement published on SENS Monday, 5 December
Opening date of the private placement (09:00) Monday, 5 December
Abridged pre-listing statement published in the Monday, 5 December
press
Closing date of the private placement (12:00)(2) Thursday, 8 December
Results of private placement released on SENS Monday, 12 December
Results of private placement released in the Monday, 12 December
press
Notification of allotments Tuesday, 13 December
Listing of linked units on the JSE (09:00) Wednesday, 14 December
Accounts at CSDP or broker updated and debited in Wednesday, 14 December
respect of dematerialised linked unitholders(3)
Notes:
1. These dates and times are South African dates and times and are subject to
amendment. Any such amendment will be released on SENS and published in the
press.
2. Invited investors may only receive linked units in dematerialised form and
must advise their CSDP or broker of their acceptance of the private
placement in the manner and cut-off time stipulated by their CSDP or
broker.
3. CSDP`s effect payment on a delivery-vs-payment basis.
Applicants should consult their broker or CSDP to ascertain the timing for
submission of applications as this may vary depending on the broker or CSDP in
question.
Directors
The full names, nationalities and business addresses of the directors of Synergy
are set out below.
Directors of Synergy
Martin Kuscus Independent non-executive chairman
Nationality South African
Business address 68C Waterfront Street,
Hartebeespoort
William Brooks Chief executive officer
Nationality South African
Business address 23rd Floor, Triangle House, 22
Riebeeck Street, Cape Town
Uys Meyer Financial director
Nationality South African
Business address 23rd Floor, Triangle House, 22
Riebeeck Street, Cape Town
Craig Coetzee Non-executive director
Nationality South African
Business address 22 Chancery Lane, Pinetown
Sean Segar Independent non-executive director
Nationality South African
Business address 1 Ameshoff Street, Braamfontein
Maurice Mdlolo Non-executive director
Nationality South African
Business address Libridge Building, 5th Floor West,
25 Ameshoff Ave, Braamfontein
Amanda Ramsden Independent non-executive director
Nationality South African
Business address 23rd Floor, Triangle House, 22
Riebeeck Street, Cape Town
Lizwi Mtumtum Independent non-executive director
Nationality South African
Business address Unit B7, The Stables Business Park,
13 Third Road, Linbro Park
Pre-listing Statement
The pre-listing statement is available only in English. Copies may be obtained
during normal business hours between 08h30 and 17h00 from Monday, 5 December
2011 to Wednesday, 14 December 2011 from:
- the registered offices of Synergy at 23rd Floor, Triangle House, 22
Riebeeck Street, Cape Town, 8000, South Africa;
- Java Capital (Proprietary) Limited at 2 Arnold Road, Rosebank,
Johannesburg, 2196, South Africa; and
- Computershare Investor Services (Proprietary) Limited at Ground Floor, 70
Marshall Street, Johannesburg, 2001, South Africa.
OFFER PRICE OF A LINKED UNITS
Synergy has determined that the A linked units being offered in terms of the
private placement will be offered at R8.58 per A linked unit, which is within
the range indicated in the pre-listing statement.
POTENTIAL VENDOR CONSIDERATION PLACING
As set out in the pre-listing statement, the authorised but unissued linked unit
capital of the company has been placed under the control of the board of
directors. Under the JSE`s Listings Requirements Synergy may issue linked units
in order to settle the consideration payable for the acquisition of assets and
accordingly the board has authorised a vendor consideration placing of up to 28
571 430 B linked units at an issue price of R5.25 per unit shortly after listing
in order to fund the balance of the consideration payable in respect of
acquisition portfolio one.
Further details of any such placing will be announced in due course.
ANCILLARY MATTERS
The board of Synergy has resolved that, without the consent in each case of a
resolution of its linked unitholders in combined general meeting, which
resolutions will require at least 75% of the votes exercisable by the holders of
A and B linked units present in person or by proxy or representative and
entitled to vote at such combined meeting being cast in favour thereof:
- Synergy`s debt gearing levels will not be allowed to exceed 50% of the
value of its property portfolio as independently valued from time to time;
and
- the A linked units will not be redeemed,and that amendments to the
company`s memorandum of incorporation and debenture trust deed to this
effect will be proposed at the company`s next annual general meeting.
Monday, 5 December 2011
Corporate advisor, legal advisor, sponsor and joint bookrunner
Java Capital
Independent sponsor
Deloitte & Touche Sponsor Services (Proprietary) Limited
Independent reporting accountants and auditors
Moore Stephens BKV Inc.
Attorneys
DLA Cliffe Dekker Hofmeyr Inc.
Date: 05/12/2011 15:15:10 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
