| Wed 25 Apr 2012, 15:35 | | ANP - Annuity - Abridged Pre-Listing Statement |
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ANP - Annuity - Abridged Pre-Listing Statement
Annuity Properties Limited
(formerly Niqsha Beleggings CC)
Incorporated in the Republic of South Africa
(Registration number 2011/145994/06)
(Tax number 9050047191)
Share code: ANP ISIN: ZAE000165643
("Annuity" or "the company")
ABRIDGED PRE-LISTING STATEMENT
Abridged pre-listing statement relating to the listing of Annuity on the
securities exchange operated by the JSE Limited ("JSE") with effect from the
commencement of business on Friday, 4 May 2012.
This abridged pre-listing statement is not an invitation to the public to
subscribe for or an offer to the public to purchase linked units in Annuity. It
is issued in compliance with the JSE Listings Requirements for the purpose of
giving information to the public with regard to Annuity.
The information in this abridged pre-listing statement has been extracted from
the detailed pre-listing statement for Annuity, dated 25 April 2012 ("the pre-
listing statement"). For a full appreciation of Annuity the pre-listing
statement should be read in its entirety.
1. INTRODUCTION
Annuity is a limited liability, variable loan stock company, converted into
a Public Company on 12 December 2011, formed for the purpose of investing
in direct real estate, where the directors believe there is potential for
income generation and capital growth.Annuity has entered into agreements
for the acquisition of four high quality commercial and retail properties
based in Gauteng and the Western Cape, namely the Oakfields shopping centre
("the Oakfields property"), the Sasfin head office ("the Sasfin property"),
the Woolworths` Call Centre ("the Woolworths` Call Centre property") and
the Cell C head office ("the Cell C property") (collectively, "the
portfolio"). The total portfolio value of these four properties is R586.5
million, further details of which are set out in paragraph 4 below.
The JSE has granted Annuity a listing in respect of 93 340 341 linked units
in the "Real Estate - Real Estate Holdings and Development" sector of the
Main Board of the securities exchange operated by the JSE, under the
abbreviated name "Annuity", share code: ANP and ISIN: ZAE000165643, with
effect from the commencement of trading on Friday, 4 May 2012 ("the
listing").
The linked unit holder spread requirements of the JSE have been met by way
of a private placement to selected investors to subscribe for a maximum of
75 597 314 linked units at R5.00 per linked unit, representing a maximum
subscription value of R377 986 570. The private placement, which was
subject to a minimum overall subscription of linked units to the value of
R184 228 000 being achieved and the listing of all issued linked units on
the JSE, has been fully subscribed and the linked unit holder spread
requirements of the JSE have been met.
The proceeds of the private placement will be used by Annuity to acquire
the portfolio as set out above. All of the properties will be acquired for
cash, except for the Sasfin property, which will be acquired for a
combination of cash (80% of the purchase consideration) and linked units
(20% of the purchase consideration). The total purchase consideration of
the portfolio including acquisition costs and listing related fees is
R602.1 million, to be funded through debt of R139.5 million and equity of
R462.6 million.
In terms of the transfer and registration of the properties into the name
of Annuity, the Woolworths` Call Centre property was acquired and
transferred into Annuity`s name on 23 March 2012. The Oakfields property
and the Sasfin property will be transferred to Annuity on listing and the
Cell C property is anticipated to be transferred to Annuity within four
weeks after listing.
2. THE PROMOTERS OF ANNUITY
The promoters of Annuity are Derek Greenberg, Martin Ettin, Lionel
Levinsohn, Schalk Strydom, Daniel Rubenstein, Steven Levinsohn and Joshua
Greenberg ("the promoters").
With more than 50 years of collective experience in the listed property
sector, the promoters boast a track record of building successful listed
property portfolios and generating attractive investment returns for
investors.
In 1999, Derek Greenberg, Lionel Levinsohn and Martin Ettin, the co-
founders of Annuity, co-founded Primegro Properties Limited ("Primegro"), a
property loan stock company which listed on the JSE in November 1999 with a
portfolio value of circa R600 million. Following the implementation of an
aggressive growth strategy over the ensuing three and a half year period,
Primegro`s market capitalisation increased significantly to circa R2.2
billion by May 2003, at which point Primegro merged with Growthpoint
Properties Limited ("Growthpoint").
In 2005, Derek Greenberg and Martin Ettin introduced and sold a significant
sized portfolio to CBS Properties Limited ("CBS"), an unlisted, Cape
focused property loan stock company, whereafter they joined the company and
listed it on the JSE in November 2005. At the time of listing, CBS had a
portfolio value of circa R1.1 billion, which doubled to circa R2.3 billion
in two years to October 2007, at which point it was acquired by the Public
Investment Corporation Limited ("PIC").
In addition to Messrs Greenberg, Ettin and Levinsohn, the management team
includes:
- Panico Theocharides, a CA (SA) with more than 13 years investment
banking and corporate advisory experience and previously a member of
Sasfin Holdings Limited`s ("Sasfin") executive committee. Panico has
extensive experience in all aspects of dealmaking. He advised
Growthpoint, Metboard Properties Limited, and Vukile Property Fund
Limited on various transactions over the years;
- Schalk Strydom, a CA (SA) with extensive experience in the financial
services sector, including specialist forensic accounting and
litigation support services. Schalk has advised many clients over the
years on mergers and acquisitions, restructuring and property
acquisitions. In addition Schalk has acted as an expert witness in
arbitration and High Court proceedings on various accounting and
business valuation matters as well as damages claims;
- Steven Levinsohn is a professional property valuer, registered with
the South African Council for the Property Valuers Profession. He
worked as a consultant for CB Richard Ellis Mass Appraisal Services
and was a portfolio manager at Primegro, where he was later promoted
to valuations director. In 2004, Steven joined Investec Property Group
as head of valuations and left to pursue his own interests in 2007.
Steven is a well established and respected valuer in the property
valuations industry; and
- Daniel Rubenstein, a CA (SA) well networked in the property industry.
Daniel established a joint venture with Nandos for the development of
its retail properties and has provided advisory services to Brait in
sourcing private equity transactions on their behalf. He co-founded
Etana Financial Products Proprietary Limited, a niche financial
guarantee business. He has a proven track record of sourcing
attractive property investment opportunities and raising acquisition
finance, both debt and equity.
Derek Greenberg, Martin Ettin and Lionel Levinsohn, together with the other
promoters, are seeking to establish and list Annuity as a new property loan
stock company which aims to provide competitive yields, underpinned by
flagship properties and an aggressive acquisition pipeline.
3. THE PURPOSE OF THE LISTING
The purpose of the listing of the linked units on the JSE is to:
- provide investors, both institutional and private, with an opportunity
to participate over the long term in the income streams and capital
growth of the company;
- provide the company with a platform to raise capital to pursue growth
and investment opportunities in the future;
- to enhance the liquidity and tradeability of the linked units;
- provide the company with access to a central trading facility thereby
providing liquidity to linked unit holders; and
- enhance the public profile and general public awareness of the
company.
4. PROPERTY INFORMATION
On listing, the property portfolio will comprise the Oakfields property,
Sasfin property and Woolworths` Call Centre property, valued at R456.5
million, with a total gross lettable area ("GLA") of 30 229 m2. The Cell C
property will be transferred into Annuity`s name after listing at which
time the portfolio will be valued at R586.5 million with a total GLA of 36
048 m2.
The Oakfields property is situated in the residential suburb of Northmead
Ext 4, Gauteng, on the corner of Oak Road and Hanekam Street. The A-grade
neighbourhood shopping centre has been recently renovated and is currently
100% tenanted, with 70% national tenants, including Pick `n Pay as the
anchor tenant, occupying almost 40% of the GLA.
The Sasfin property is situated in the suburb of Waverley, Johannesburg,
Gauteng, on a mid block stand in Scott Street. The A-grade offices, which
have been recently constructed, have excellent exposure from the M1 Freeway
overlooking Melrose Arch, and are the head offices of Sasfin Bank Limited,
a niche financial services business, owned by JSE-listed Sasfin.
The Woolworths` Call Centre property, also known as The Old Match Factory,
is a national heritage building situated in the old and established suburb
of Observatory, Cape Town, on the corner of Lower Main Road and Howe
Street. The buildings have recently been internally refurbished to A-grade
quality, retaining the outside facade with the original roof as stipulated
by the heritage rights granted to the property, and are utilised as the
call centre facilities for Woolworths Financial Services, a joint venture
between JSE-listed companies, Woolworths Holdings Limited and ABSA Group
Limited.
The Cell C property is situated in a prime location at 150 Rivonia Road,
corner of Marion Road and Rivonia Road, Sandown, Gauteng. The property
enjoys easy access to the Sandton CBD and is in close proximity to major
highways. The property comprises two office blocks located in an urban
office park environment of five units, and all five A-grade blocks are
occupied by well-known telecommunications operator, Cell C Proprietary
Limited ("Cell C"), as the company`s head office.
The portfolio`s sectoral profile by revenue contribution, excluding the
Cell C property is 70% offices and 30% retail and including the Cell C
property is 77% offices and 23% retail. The portfolio`s sectoral profile by
GLA, excluding the Cell C property is 62% offices and 38% retail and
including the Cell C property is 68% offices and 32% retail.
The geographic profile by revenue contribution, excluding the Cell C
property is 70% Gauteng and 30% Western Cape and including the Cell C
property is 77% Gauteng and 23% Western Cape. The geographic profile by
GLA, excluding the Cell C property is 63% Gauteng and 37% Western Cape and
including the Cell C property is 69% Gauteng and 31% Western Cape.
Amongst its comparable peers, Annuity has the distinct advantage of a
portfolio with a 0% vacancy profile. The company has secured long term
leases for the Woolworths` Call Centre property and the Sasfin property
with large national tenants, Woolworths Financial Services and Sasfin Bank
Limited. Due to the demand for retail space at the Oakfields property and
the current lease profile, this retail property currently has a 0% vacancy
profile as at date of listing.
The Cell C property which will transfer after listing will also be single
tenanted by Cell C, a large national tenant.
The annualised weighted average rental per square metre in the portfolio as
at 31 March 2013 is as follows:
Office Retail
Excluding Cell C R117.76 R84.15
Including Cell C R130.07 R84.15
The annualised weighted average rental escalation by GLA in the portfolio
as at 31 March 2013 is as follows:
Office Retail
Excluding Cell C 8.14% 7.29%
Including Cell C 8.34% 7.29%
5. MANAGEMENT OF THE FUND
Annuity will be managed by Annuity Asset Managers Proprietary Limited ("the
manager") in terms of the asset management agreement entered into between
Annuity and the manager, and the properties will be managed by Annuity
Property Managers Proprietary Limited ("the property manager") in terms of
the property management agreement entered into between Annuity and the
property manager. The management team of the manager has significant
experience and a reputable track record in managing large property
companies. This management team will be responsible for managing the
company in an efficient manner, diligently and in good faith in accordance
with acceptable and prevailing industry standards, within an approved
budget, so as to achieve an optimum long-term yield and capital growth of
the company.
The manager and property manager are owned by the promoters and Sasfin,
which owns its interests through a wholly owned subsidiary. Sasfin has a
put option on its interest in the manager, in terms of which it is entitled
to put this interest to Annuity for a cash purchase consideration, during a
period of five years from the date of listing. In the event that Sasfin
exercises its put option, the manager will purchase and cancel these shares
in the manager in consideration for a reduction in the asset management fee
charged by the manager to Annuity.
A summary of the services to be provided by each of the manager and the
property manager, the fees payable by Annuity in respect thereof and the
terms of each of the asset management and property management agreements
are set out in the pre-listing statement.
6. INVESTMENT STRATEGY
Annuity`s objective is to establish a property portfolio with a value in
excess of R5 billion in the next five years, consisting of sustainable
income producing properties in the commercial, retail and industrial
sectors. Capital and income returns will be optimised for linked unit
holders through the regular review of the portfolio and pursuit of value
adding investment opportunities, identified through the promoters`
dealmaking abilities and entrenched networks within the industry.
Annuity may also, from time to time, develop and/or redevelop properties to
enhance value and support longer-term income and capital growth.
Annuity`s growth and investment strategy is to:
- deliver above average market returns;
- invest in a mix of retail, commercial and a small percentage of
quality industrial properties comprising A and B grade buildings
located in larger metropolitan areas;
- target an optimal tenant mix comprising 60% national tenants with a
minimum lease term of 5 years; and
- optimise and secure long-term distribution and capital growth.
7. PROSPECTS
The directors are of the opinion that the strength and experience of
Annuity`s management team, together with the track record and industry
network of the promoters, positions the company to realise its strong
growth prospects.
The promoters have held negotiations with various vendors seeking to
dispose of attractive investment properties. As at the date of this
abridged pre-listing statement, these negotiations had not progressed to
formal written agreements and linked unit holders will be advised of these
acquisition opportunities when appropriate.
Sasfin`s participation in Annuity provides an additional source of property
deal flow through Sasfin`s relationships and networks in the industry.
8. SALIENT FINANCIAL INFORMATION
The tables below set out the salient unaudited forecast financial
information and salient unaudited pro forma financial position information
of Annuity.
Unaudited forecast financial information:
Salient information Forecast for the 11 Forecast for
months ending 31 the year
March 2013 ending 31
March 2014
Linked units in issue on 93 340 341 93 340 341
listing
Distribution per linked 41.22 48.03
unit (cents)
Earnings per linked unit 49.28 41.65
(cents)
Headline earnings per 41.50 52.64
linked unit (cents)
Distribution growth (based 6.09%
on annualised
distributions)
Annualised forward yield 9.06% 9.61%
(based on a linked unit
price of R5.00)
Unaudited pro forma financial position information including the Cell C
property:
Number of linked units in issue 93 340 341
Net asset value per linked unit (cents) 499.49
Net tangible asset value per linked unit 499.49
(cents)
9. PRIVATE PLACEMENT
The offer, which was fully subscribed, comprised a private placement by
Annuity by way of an offer for subscription for a maximum of R377 986 570
comprising up to 75 597 314 linked units at a price of R5.00 per linked
unit, to selected investors, including, inter-alia:
- institutional investors in South Africa;
- the private clients of selected stockbroking companies in South
Africa; and
- other selected private investors.
10. MAJOR LINKED UNIT HOLDERS
As at the last practicable date prior to publication of the pre-listing
statement, being 16 April 2012 ("last practicable date"), the company did
not have a controlling linked unit holder. On listing date, the PIC will
own 39.6% of Annuity. The linked unit holder profile, highlighting linked
unit holders who will hold more than 5% in the linked unit capital of the
company on listing date, is as follows:
Name Number of linked Percentage
units held of linked
unit
holding in
Annuity
Major linked unitholders
PIC 36 962 774 39.6%
36One Asset Management 7 000 000 7.5%
Sasfin 6 716 000 7.2%
Other 42 661 567 45.7%
Total 93 340 341 100%
As a result of the private placement, the PIC will become a 39.6% linked
unit holder in Annuity. In terms of section 123 of the Companies Act, 71 of
2008, as amended and the Takeover Regulations a linked unit holder
acquiring control, being 35% or more of the linked units in a regulated
company, is required to make an offer to all linked unit holders of the
same class. The issue of the linked units in terms of the private placement
will therefore require the PIC to make a mandatory offer at a price of R5
per linked unit to the minority linked unit holders of Annuity within 30
days of the listing date ("the mandatory offer"), unless a waiver of the
requirement to make such mandatory offer is given by a majority of the
linked unit holders and the Takeover Regulation Panel ("TRP").
The majority of Annuity linked unit holders holding Annuity linked units as
at the last practicable date have waived, and the TRP has provided an
exemption from compliance with, the requirement for the PIC to make the
mandatory offer.
11. DIRECTORS
The full names, ages, capacities, and business addresses of the directors
of Annuity are outlined below:
Name and age: Jabu Moleketi (54)
Capacity: Independent non-executive chairman
Qualifications: MSc & PGrad Dip Econ Principles (UOL), AMP (HBS)
Business address: 196 Francis Street, Observatory, Johannesburg, 2198
Name and age: Derek Greenberg (64)
Capacity: Joint chief executive officer
Qualifications: B.Sc (Eng), MBA, B.Com (Acc), Valuer
Business address: 15W, Apartment 37A, 63rd Street, New York, New York
10023 and c/o Francois Marais of Glyn Marais (2nd
Floor, The Place, 1 Sandton Drive, Sandton, 2196)
Name and age: Panico Theocharides (42)
Capacity: Joint chief executive officer
Qualifications: B.Com (Hons), CA (SA)
Business address: Boundary Place, 18 Rivonia Road, Illovo, Sandton, 2196
Name and age: Schalk Strydom (42)
Capacity: Chief financial officer
Qualifications: B.Com (Hons), CA (SA), Registered Auditor SA,
Certificate in Forensic Accounting and Capital Gains
Tax
Business address: Boundary Place, 18 Rivonia Road, Illovo, Sandton, 2196
Name and age: Daniel Rubenstein (30)
Capacity: Executive director
Qualifications: B.Com (Acc) Hons, CA (SA)
Business address: Boundary Place, 18 Rivonia Road, Illovo, Sandton, 2196
Name and age: Martin Ettin (64)
Capacity: Non-executive director
Qualifications: BA Law, LLB
Business address: 514 Blackstone Boulavard, Providence, Rhode Island,
02906 USA and c/o Francois Marais of Glyn Marais (2nd
Floor, The Place, 1 Sandton Drive, Sandton, 2196)
Name and age: Eugene Loubser (63)
Capacity: Independent non-executive director
Business address: Unit no 11, Amberfield, 101 11th Avenue, Fairland,
Johannesburg, 2030
Name and age: Anthony Chait (58)
Capacity: Independent non-executive director
Qualifications: B.Acc (Wits), CA (SA), HDip Tax Law (Wits), HDip Int
Tax (UJ)
Business address: 57 Sixth Road, Hyde Park, 2196
Name and age: Sarah Williams (34)
Capacity: Independent non-executive director
Qualifications: B.Com (Hons), CA (SA)
Business address: The Pivot, Block E, 1st Floor, The Y Office,
Montecasino Boulevard, Fourways, 2191
Name and age: Tyrone Soondarjee (50)
Capacity: Non-executive director
Qualifications: B.Compt (Hons), CA (SA)
Business address: 29 Scott Street, Waverley, 2090
Name and age: Roland Sassoon (66)
Capacity: Alternate director to Tyrone Soondarjee
Qualifications: FCIS
Business address: 29 Scott Street, Waverley, 2090
Derek Greenberg and Martin Ettin are South African citizens and American
permanent residents and all the other directors are South African citizens
and residents.
12. 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 period from the listing date to 30 September 2012, which is expected to
be paid in December 2012.
It is the directors` intention to declare a bi-annual dividend and
distribution thereafter, based on results for the years ending 31 March and
the interim periods ending 30 September.
There are no arrangements in terms of which future dividends or
distributions are waived or agreed to be waived.
13. COPIES OF THE PRE-LISTING STATEMENT
Copies of the full pre-listing statement may be obtained from:
- Annuity at Boundary Place, 18 Rivonia Road, Illovo, Sandton, 2196;
- the sponsor and corporate advisor to Annuity, Sasfin Capital, a
division of Sasfin Bank Limited, at 29 Scott Street, Waverley,
Johannesburg, 2090;
- the independent sponsor to Annuity, KPMG Services Proprietary Limited
at 85 Empire Road, Parktown, Johannesburg, 2193; or
- the transfer secretaries, Link Market Services South Africa
Proprietary Limited at 13th Floor Rennie House, 19 Ameshoff Street,
Braamfontein, 2017,
during normal office hours between 25 April 2012 and 15 May 2012.
Waverley
25 April 2012
Corporate advisor and sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)
Independent sponsor
KPMG
Independent valuer
JHI
Independent reporting accountants and auditors
PKF Chartered Accountants and Business Advisors
Attorneys
Glyn Marais in association with SNR Denton
Debenture trustee
Ironwood Trustees
Date: 25/04/2012 15:35:01 Produced by the JSE SENS Department.
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