| Wed 25 Apr 2012, 14:43 | | REB - Rebosis Properties Limited - Financial effects relating to the proposed |
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REB
REB
REB - Rebosis Properties Limited - Financial effects relating to the proposed
acquisition of a property portfolio and withdrawal of cautionary
REBOSIS PROPERTIES LIMITED
(formerly Business Venture Investments No. 1389 (Proprietary) Limited)
Registration number 2010/003468/06
JSE code: REB ISIN: ZAE000156147
("Rebosis" or the "company")
FINANCIAL EFFECTS RELATING TO THE PROPOSED ACQUISITION OF A PROPERTY PORTFOLIO
AND WITHDRAWAL OF CAUTIONARY
INTRODUCTION
Linked unitholders are referred to the announcement released on SENS on 7
December 2011 in which it was announced that Rebosis had concluded agreements
for the acquisition of letting enterprises and properties from the following
vendors:
- Square Peg Properties (Proprietary) Limited and Rymer Trading CC (the
"Capital Towers acquisition" in respect of the acquisition of "Capital
Towers");
- Ziningi Properties (Proprietary) Limited (the "Revenue Building and 270
Jabu Ndlovu Street acquisition" in respect of the acquisition of the
"Revenue Building" and "270 Jabu Ndlovu Street");
- Swish Property Four (Proprietary) Limited (the "First Avenue acquisition"
in respect of the acquisition of the "First Avenue Building");
- Dream World Investments 374 (Proprietary) Limited (the "Harrison Street
acquisition" in respect of the acquisition of "28 Harrison Street"); and
- Trifecta Prop 11 (Proprietary) Limited (the "SASSA Campus acquisition" in
respect of the acquisition of "SASSA Campus");
(each "a transaction" or "an acquisition" and together the "transactions").
Linked unitholders are referred to the announcements released on SENS on 5 March
2012 and 20 April 2012 in which it was announced that Rebosis would no longer be
proceeding with the First Avenue and the Capital Towers acquisitions.
The purpose of this announcement is to present the financial effects of the
transactions, excluding the First Avenue and the Capital Towers acquisitions but
including the effects of the debt funding and vendor consideration placement.
FORECAST FINANCIAL INFORMATION
Set out below are:
- the summarised forecast statements of comprehensive income (the
"transaction forecasts") of the Revenue Building and 270 Jabu Ndlovu Street
acquisition, the Harrison Street acquisition and the SASSA Campus
acquisition on a stand-alone basis for the two-month period ending 31
August 2012 and the year ending 31 August 2013; and
- together with the existing Rebosis property portfolio, a full forecast
statement of comprehensive income (the "combined property portfolio
forecast") for the year ending 31 August 2012 and the year ending 31 August
2013,
collectively the "forecasts".
The forecasts have been prepared on the assumption that the transactions will be
implemented on 1 July 2012 and on the basis that the transaction forecasts
include forecast results for the two-month period ending 31 August 2012 and the
year ending 31 August 2013. The combined property portfolio forecast includes
actual results for the existing property portfolio for the six-month period
ended 29 February 2012 and forecast results for the existing property portfolio
for the six-month period ending 31 August 2012 and the year ending 31 August
2013.
The forecasts, including the assumptions on which they are based and the
financial information from which they are prepared, are the responsibility of
the directors of Rebosis. The forecasts have not been reviewed or reported on by
the independent reporting accountants.
The forecasts presented in the tables below have been prepared in accordance
with the company`s accounting policies and in compliance with IFRS.
Summarised forecast in respect of the Revenue Building and 270 Jabu Ndlovu
Street acquisition:
Forecast Forecast
for the for the
two-month year
period ending
ending 31 August
31 August 2013
2012
R`000 R`000
Rental income 4 423 27 575
Straight line rental income accrual 311 1 406
Total revenue 4 734 28 981
Net property income 3 532 21 531
Net operating profit* 3 446 20 999
Profit for the period/year after debenture 8 172 1 013
interest*
Distributable earnings attributable to linked 1 986 12 821
unitholders
Summarised forecast in respect of the Harrison Street acquisition:
Forecast Forecast
for the for the
two-month year
period ending
ending 31 August
31 August 2013
2012
R`000 R`000
Rental income 6 218 39 030
Straight line rental income accrual 806 263
Total revenue 7 024 39 293
Net property income 4 462 23 316
Net operating profit* 4 366 22 720
Profit for the period/year after debenture 2 714 190
interest*
Distributable earnings attributable to linked 2 221 14 569
unitholders
Summarised forecast in respect of the SASSA Campus acquisition:
Forecast Forecast
for the for the
two-month year
period ending
ending 31 August
31 August 2013
2012
R`000 R`000
Rental income 2 630 16 208
Straight line rental income accrual 393 2 349
Total revenue 3 023 18 557
Net property income 2 607 15 945
Net operating profit* 2 546 15 568
Profit for the period/year after debenture 6 896 1 691
interest*
Distributable earnings attributable to linked 1 345 8 466
unitholders
* Includes the effects of straight lining rental income and the related
deferred taxation charge, asset management fees and fair value adjustments
(for the two-month period ending 31 August 2012 only) and the related
deferred taxation charge.
The combined property portfolio forecast:
Forecast Forecast
for the for the
year year
ending 31 ending 31
August August
2012 2013
R`000 R`000
Rental income 421 420 525 327
Straight line rental income accrual 90 866 32 253
Net income from facilities management income 15 520 15 885
Total revenue 527 806 573 465
Property expenses (101 402) (138 020)
Administration and corporate costs (15 589) (16 396)
Net operating profit 410 815 419 049
Finance costs (133 003) (158 121)
Finance income 2 914 2 156
Antecedent interest 8 263 -
Profit before debenture interest 288 989 263 084
Debenture interest (200 120) (233 315)
Profit after debenture interest 88 869 29 769
Capital and other items not distributed 3 255 -
Change in fair value of investment properties and 4 858 -
financial instruments
Transaction expenses (1 603) -
Profit before taxation 92 124 29 769
Taxation (77 798) (9 031)
Profit for the year 14 326 20 738
Reconciliation between earnings, headline earnings
and distributable earnings
Profit for the year attributable to equity holders 14 326 20 738
Adjusted for: 200 120 233 315
Debenture interest
Earnings attributable to linked unitholders 214 446 254 053
Adjusted for:
Change in fair value of investment properties (net 7 724 -
of deferred taxation)
Change in fair value of investment properties 9 495 -
Deferred taxation (1 771) -
Headline earnings attributable to linked 221 170 254 053
unitholders
Adjusted for:
Change in fair value of financial instruments (net (10 334) -
of deferred taxation)
Change in fair value of financial instruments (14 353) -
Deferred taxation 4 019 -
Straight line rental income accrual (net of (65 424) (23 222)
deferred taxation)
Straight line rental income accrual (90 866) (32 253)
Deferred taxation 25 442 9 031
Deferred taxation - rate adjustment 50 108 -
Structuring fee amortisation 1 997 2 484
Transaction expenses 1 603 -
Distributable earnings attributable to linked 200 120 233 315
unitholders
Number of linked units in issue 248 147 248 147
699 699
Weighted average number of linked units in issue 224 478 248 147
544 699
Basic and diluted earnings per linked unit (cents) 95.53 102.38
Headline earnings per linked unit (cents) 98.97 102.38
Distributable earnings per linked unit (cents) 85.57 94.02
Yield based on R10.05 issue price per linked unit 8.51% 9.36%
The forecasts incorporate the following material assumptions in respect of
revenue and expenses that can be influenced by the directors:
1 Rebosis management`s forecasts are based on information derived from the
property managers, historical information and work performed by the
independent property valuer.
2 Contracted revenue is based on existing lease agreements. Uncontracted
revenue amounts to 8%, 0% and 0% for the Revenue Building and 270 Jabu
Ndlovu Street acquisition, the Harrison Street acquisition and the SASSA
Campus acquisition, respectively, for the two-month period ending 31 August
2012 and 12%, 0% and 0% for the Revenue Building and 270 Jabu Ndlovu Street
acquisition, the Harrison Street acquisition and the SASSA Campus
acquisition, respectively, for the year ending 31 August 2013. Uncontracted
revenue amounts to 2.3% for the combined property portfolio for the year
ending 31 August 2012 and 10.2% for the combined property portfolio for the
year ending 31 August 2013.
3 All existing lease agreements are valid and enforceable.
4 Turnover rental (rental income based on the actual turnover of the tenant)
has only been forecast for those tenants who have previously paid turnover
rental.
5 Current vacant space has been forecast on a property-by-property basis and
has been assumed to remain vacant unless it is deemed probable that such
space will be let. Vacant space has been assumed to be let during the
forecast periods only if management are at an advanced stage of discussions
with prospective tenants and where offers to tenants have been made.
6 Forecast rental income in respect of the combined property portfolio not
yet contracted for but which has been guaranteed amounts to 0.6%of total
forecast rental income for the year ending 31 August 2012 and less than
0.1% of total forecast rental income for the year ending 31 August 2013.
7 Leases expiring during the forecast periods have been forecast on a lease-
by-lease basis, and in circumstances where discussion with the lessee has
proven positive, are forecast to be let at current market rates.
8 Rebosis management`s forecast property operating expenditure has been
determined based on management`s review of historical expenditure, where
available, and discussions with the property managers and agreed to
supplier service contracts.
9 Consumption based recoveries are consistent with the independent property
valuer`s statements of comprehensive income and historical financial
information.
10 Properties will be paid for as and when they are transferred. The dates of
transfer are assumed to be 1 July 2012 in respect of all transactions.
11 It has been assumed that with regard to the vendor consideration placement,
new linked units will be issued at market prices (estimated using the
closing price prior to the date of this announcement). Accordingly, it has
been assumed that 28 402 986 linked units will be issued at R10.05 per
linked unit, raising gross proceeds of R285.4 million.
12 The Revenue Building and 270 Jabu Ndlovu Street are assumed to be acquired
for a purchase consideration of R182.4 million (including capitalised
transaction costs of R1.2 million). 28 Harrison Street is assumed to be
acquired for a purchase consideration of R212.4million (including
capitalised transaction costs of R1.4 million). SASSA Campus is assumed to
be acquired for a purchase consideration of R127.9 million (including
capitalised transaction costs of R0.9 million). The total purchase
consideration for the transactions amounts to R524.1 million and is
inclusive of capitalised transaction costs of R3.5 million and costs to be
expensed of R1.6 million.
13 Total transaction costs are assumed to be approximately R4.1 million.
Transaction costs include, inter alia, debt raising fees and capital
raising fees.
14 The full R285.4 million of the proceeds from the vendor consideration
placement are assumed to be utilised to partially fund the transactions.
15 The balance of the purchase consideration of R238.6 million is assumed to
be funded through new debt facilities from Rand Merchant Bank, a division
of FirstRand Bank Limited and Nedbank Limited.
16 The transactions are assumed to have a loan-to-value ratio of approximately
44%.
17 Interest is assumed to be payable on the debt funding at a melded fixed and
variable rate of 8.13% per annum based on two-year debt funding of which
80% is assumed to be fixed.
18 Fair value adjustments have been provided for in respect of the two-month
period ending 31 August 2012 for the transactions and in respect of the six
months ended 29 February 2012 for the existing property portfolio. No fair
value adjustments have been provided for in respect of the year ending 31
August 2013.
The forecasts incorporate the following material assumptions in respect of
revenue and expenses that cannot be influenced by the directors:
19 There will be no unforeseen economic factors that will affect either the
lessees` ability to meet their commitments in terms of the existing lease
agreements or the forecast future profitability of the transactions.
20 In terms of the asset management agreement with Billion Asset Managers
(Proprietary) Limited ("Billion Asset Managers"), Rebosis shall pay Billion
Asset Managers a monthly fee equivalent to 1/12th of 0.3% of the aggregate
of the market capitalisation and the borrowings of Rebosis.
21 In terms of the property management agreement with Billion Property
Services (Proprietary) Limited ("Billion Property Services"), Rebosis shall
pay Billion Property Services a monthly fee for providing the services of a
property managing agent in respect of letting, property maintenance and
property accounting as a percentage of the gross revenue collected from or
paid by tenants .
22 No properties will be acquired and no properties will be disposed of during
the forecast periods other than those being acquired in terms of the
transactions.
23 Debenture interest will be paid to linked unitholders in accordance with
the provisions of the debenture trust deed.
UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
The unaudited pro forma financial effects of the transactions on Rebosis`
statement of financial position as at 29 February 2012 are not significant and
have accordingly not been presented.
CONDITIONS PRECEDENT
Linked unitholders are advised that the transactions are subject to fulfilment
of the following outstanding conditions precedent:
- a successful capital raising through the allotment and issue of
consideration units for the balance of the purchase consideration; and
- obtaining approval from the Competition Authorities for the Revenue
Building and 270 Jabu Ndlovu Street acquisition and for the SASSA Campus
acquisition.
WITHDRAWAL OF CAUTIONARY
Rebosis linked unitholders are referred to the cautionary announcements, the
last of which was released on SENS on 20 April 2012, and are advised that
following the release of the financial effects of the transactions, caution is
no longer required to be exercised by linked unitholders when dealing in their
linked units.
25 April 2012
Corporate advisor and sponsor
Java Capital
Date: 25/04/2012 14:43:01 Produced by the JSE SENS Department.
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