| Thu 31 May 2012, 13:38 | | AIA/AIB - Ascension Properties Limited - Abridged pre-listing statement |
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JSE
APL1
AIA/AIB - Ascension Properties Limited - Abridged pre-listing statement
ASCENSION PROPERTIES LIMITED
(formerly Grey Jade Trade and Invest 85 (Proprietary) Limited)
(Incorporated in the Republic of South Africa on 23 August 2006)
(Registration number 2006/026141/06)
A-linked units: JSE code: AIA ISIN: ZAE000161881
B-linked units: JSE code: AIB ISIN: ZAE000161899
("Ascension" or "the Company")
ABRIDGED PRE-LISTING STATEMENT
This abridged Pre-listing statement relates to:
- an offer to subscribe for up to 65 000 000 A-linked units at an offer
price of R3.80 per A-linked unit with an initial forward yield of 10%
and growth in distributions of 5% per annum;
- an offer to subscribe for up to 400 000 000 B-linked units at an offer
price of R1.90 with an initial forward yield of 9.06% and forecast
growth in distributions of 10.8% for the year ending June 2014;
(collectively "the Private Placement")
- the subsequent listing ("the Listing") of all the A-linked units and the
B-linked units in the Company on the "Real Estate - Real Estate Holdings
and Development" sector of the JSE Limited ("JSE").
Prior to the opening of the Private Placement, the Company had received
subscription commitments for A-linked units and B-linked units in excess of
the minimum capital raise of R260 million.
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 Listings Requirements for the purposes of giving information to the
public in relation to Ascension and to invited investors in relation to the
Private Placement.
This announcement contains the salient information in respect of Ascension,
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 Ascension, the Private Placement and the Listing, the Pre-listing
statement should be read in its entirety.
Introduction
The JSE has granted Ascension approval for the Listing of up to 66 500 000 A-
linked units and 598 560 000 B-linked units with effect from the commencement
of business on Monday, 11 June 2012 in the "Real Estate - Real Estate
Holdings and Development" sector of the JSE lists under the abbreviated names
"Ascen A", JSE Code "AIA" and ISIN Code "ZAE000161881" for the A-linked
units, and "Ascen B", JSE Code "AIB" and ISIN Code "ZAE000161899" for the B-
linked units. It is anticipated that the Listing will be effective as from
the commencement of trade of the JSE on Monday, 11 June 2012 ("the Listing
Date").
Overview of Ascension
Ascension was established on 23 August 2006 as a black owned and managed
property loan stock company to invest in assets and opportunities within the
commercial property sector in South Africa, focussing on Government tenanted
commercial office buildings.
The Company currently owns a portfolio of nine office properties located
primarily in Gauteng and the Western Cape ("Existing Properties"). In
addition, Ascension has entered into agreements for the acquisitions of a
further eight properties ("Acquisition Properties").
On transfer of the Acquisition Properties, the property portfolio will
consist of the Existing Properties and the Acquisition Properties ("Property
Portfolio").
The Company offers investors an attractive initial forward yield derived from
centrally located buildings with secure income streams underpinned by strong
anchor tenants (including the National Department of Public Works ("DPW")),
with significant income growth potential and weighted average escalations in
the rental from its Property Portfolio of approximately 8.7% per annum.
Ascension is positioned to take advantage of opportunities for acquisitive
and organic growth. Initial acquisitive growth will be achieved through the
transfer of some or all of the Acquisition Properties, depending on the
outcome of the Private Placement. Initial organic growth will be achieved
through the renovation of some of the Existing Properties with the intention
to secure further anchor tenants and maximise earnings from Existing
Properties. With the extensive experience of the management team coupled with
the potential in the existing portfolio and the pipeline of targeted
opportunities, Ascension is positioned to achieve its goal to grow into a
multi-billion Rand fund over the next few years.
Investment strategy
The objective of Ascension is to grow its asset base by investing in well-
priced income producing properties to optimise capital and income returns
over time for linked unit holders. The Company may also, from time to time
and on a selective basis, redevelop properties to enhance value and support
longer-term income and capital growth.
The primary objectives of Ascension are to:
- provide an income stream through the acquisition of mainly office
investment properties secured by long leases with stable tenants such as
the South African Government;
- invest in a focussed property portfolio that provides good growth
opportunities;
- optimise and secure long-term distribution and capital growth; and
- allow linked unit holders to participate in the net income (after
providing for related expenditure) by distributing the majority of the
net income to linked unit holders.
Should the opportunity arise, the Company may consider the acquisition of or
investment in other property funds that will contribute favourably over time
to the capital and income returns for linked unit holders.
Directorate
The full names, ages, business address, occupations and capacities of the
directors of Ascension are outlined below:
Full name Age Qualification Capacity Business
Address
Ashraf 42 B.Comm Chief c/o 2nd
Moegamat CFA Level III executive Floor,
Mohamed officer Sunclare
Building,
Dreyer
Street,
Claremont,
7700
Henry Dednam 38 Chartered Financial c/o 2nd
Accountant director Floor,
Sunclare
Building,
Dreyer
Street,
Claremont,
7700
Shaun Louis 51 Chartered Executive c/o 2nd
Rai Accountant director Floor,
Sunclare
Building,
Dreyer
Street,
Claremont,
7700
Frederick 63 Businessman Executive c/o 2nd
Wayne Arendse director Floor,
Sunclare
Building,
Dreyer
Street,
Claremont,
7700
Andrew 53 BA (Honours) Independent c/o 2nd
Christoffel Masters of Arts non- Floor,
Nissen Degree executive Sunclare
chairman Building,
Dreyer
Street,
Claremont,
7700
Mervyn Burton 53 B.Compt Independent c/o 2nd
(Honours) non- Floor,
CA(SA) executive Sunclare
director Building,
Dreyer
Street,
Claremont,
7700
Bronwyn Bayvel 35 B.Comm Independent c/o 2nd
non- Floor,
executive Sunclare
director Building,
Dreyer
Street,
Claremont,
7700
Haroon Takolia 61 B Com Hons B Independent c/o 2nd
Compt (CA) (SA) non- Floor,
MBA Wits executive Sunclare
director Building,
Dreyer
Street,
Claremont,
7700
Jeremy de 38 Chartered Alternate to c/o 2nd
Villiers Accountant Shaun Rai Floor,
and company Sunclare
secretary Building,
Dreyer
Street,
Claremont,
7700
Shaun Rai and Wayne Arendse are the founders of Ascension.
Management of the Property Portfolio
The asset management function of the Company is undertaken by Ascension
Property Management Company (Proprietary) Limited ("the Manager").
In accordance with the terms of a letter from the DPW, it is imperative to
Ascension`s investment strategy of securing long term leases with Government
tenants, that, inter alia, Ascension be managed by an asset manager which is
100% black owned and controlled. Furthermore, a number of the existing leases
in the Property Portfolio have been or are in the process of being secured
and renewed, for further periods of up to 10 years, on the condition that
Ascension remains managed by an asset manager which is 100% black owned and
controlled for the duration of the lease agreements.
The board of directors and management have substantial collective experience
and track records in the property industry. All of the shareholders and
directors of the Manager are black persons for BEE purposes.
The property management function of the Company is outsourced on market
related terms to Broll Property Group (Proprietary) Limited.
Overview of the Property Portfolio
The Existing Properties comprise Schreiner Chambers, Spectrum, Bathopele,
Mishumo House, Sigma, 45 on Castle, Bergstan House, Nedbank Centre and Matrix
House. The Acquisition Properties comprise NBC, PROROM, 90 Market Street, 92
Market Street, 540 Pretorius Street, River Park 1 and 2, Riverview 1 and 2
and VWL. The Acquisition Properties will be transferred subject to the
fulfilment of conditions as set out below.
1. Transfer of NBC is subject to the relevant competition authority
unconditionally approving the sale and purchase of NBC.
2. Transfer of PROROM is subject to Ascension:
a) raising funds through its Listing for the sum of R38 000 000; and
b) delivering to the seller, Vukile Property Fund Limited, or the
conveyancer one or more guarantees issued by a bank or other
financial institution acceptable to Vukile Property Fund Limited
for payment of the purchase price by no later than 7 June 2012.
In order to be in a position to fulfil or waive the condition set out in
paragraph 2a) above, Ascension would need to raise adequate capital
under the Private Placement.
3. Transfer of 90 Market Street is subject to Ascension obtaining a first
mortgage bond over 90 Market Street for not less than R3 500 000 from
Investec Bank Limited by no later than 6 June 2012.
4. Transfer of 92 Market Street is subject to Ascension obtaining a first
mortgage bond over 92 Market Street for not less than R5 500 000 from
Investec Bank Limited by no later than 6 June 2012.
5. Transfer of 540 Pretorius Street is subject to:
a) Ascension obtaining a first mortgage bond over 540 Pretorius Street
for not less than R81 500 000 from Investec Bank Limited by no
later than 5 June 2012; and
b) the relevant competition authority unconditionally approving the
sale and purchase of 540 Pretorius Street.
6. Transfer of River Park 1 and 2 is subject to:
a) Ascension obtaining a first mortgage bond over the River Park 1 and
2 properties for the total purchase price on terms and conditions
acceptable to it;
b) Koejaweldorp Beleggings CC, the seller, entering into a head lease
agreement with Ascension to provide a rental guarantee in the
amount of R6 447 194.56 before the transfer date in lieu of the
vacant space for a period of 36 months from the transfer date. The
lease agreement will confirm that Koejaweldorp Beleggings CC is
free to sublet the vacant space to any party for whatever rental it
wishes;
c) the current tenant, the DPW, entering into a new lease agreement
directly with Ascension and the simultaneous cancellation of the
existing lease agreement with Koejaweldorp Beleggings CC; and
d) the relevant competition authority unconditionally approving the
sale and purchase of River Park 1 and 2.
In order to be in a position to fulfil or waive the condition set out in
paragraph 6a) above, Ascension would need to raise adequate capital
under the Private Placement.
7. Transfer of Riverview 1 and 2 is subject to:
a) Ascension obtaining a first mortgage bond over the Riverview 1 and
2 properties for the total purchase price on terms and conditions
acceptable to it;
b) Coffee Break Investments (Proprietary) Limited, the seller,
entering into a head lease agreement with Ascension to provide a
rental guarantee in the amount of R6 366 787.73 before the transfer
date, in lieu of vacant office space and the vacant parking bays
equal to 36 months of proposed rental. The monthly payments in
respect of the guarantee will be paid until Ascension enters into a
formal lease agreement with the DPW or an alternative tenant or the
date on which the tenant takes occupation of the premises. Both
Coffee Break Investments (Proprietary) Limited and Ascension will
have the right to procure suitable tenants for the vacant areas;
c) the DPW, the current tenant, entering into a new lease agreement
directly with Ascension and the simultaneous cancellation of the
existing lease agreement with Chamber Lane Properties 30
(Proprietary) Limited; and
d) the relevant competition authority unconditionally approving the
sale and purchase of Riverview 1 and 2.
In order to be in a position to fulfil or waive the condition set out in
paragraph 7a) above, Ascension would need to raise adequate capital
under the Private Placement.
8. Transfer of VWL is subject to:
a) Ascension raising financing facilities from a bank or other
financial institution in the sum of R103 000 000 against the
security of a first mortgage bond over VWL by no later than 23 July
2012; and
b) the relevant competition authority unconditionally approving the
sale and purchase of VWL by 23 July 2012.
The Property Portfolio consists of 17 properties with the Existing Properties
having a total gross lettable area of 70 576m2 and the Acquisition Properties
having a total gross lettable area of 50 188m2.
An independent valuer has valued the Existing Properties at approximately
R524 100 000 and the Acquisition Properties at R457 250 000.
Linked unit capital
In order to safeguard the fixed return on the A-linked units, the number of A-
linked units in issue may never exceed the number of B-linked units in issue
unless otherwise agreed by a majority of A-linked unit holders.
The A-linked units become redeemable by the Company, from the fifth
anniversary of the Listing Date, with the consent of at least 75% of all
linked unit holders, at the then prevailing market value of the A-linked
units, based on the 90-day volume weighted average trading price of the A-
linked units on the JSE immediately prior to the redemption notice.
Alternatively, the A-linked units may be converted to B-linked units from the
fifth anniversary of the Listing Date, with the consent of at least 75% of
all linked unit holders. Any such conversion would be on an equitable basis
taking into account the current relative market values of the A-linked units
and B-linked units and any other relevant factors and would be subject to
confirmation of fairness to A-linked unit holders by an independent expert.
Distribution policy
The A-linked unit and B-linked unit structure provides different risk and
reward profiles for the holder of A-linked units and B-linked units.
The A-linked units have a first right to the net distributable income of the
Company and provide investors with a preferential claim to distributions. The
A-linked units comprise one A-share linked to one A-debenture. The A-linked
units will have a preferred claim to distributions. The A-debenture is bond
like in nature, with distributions increasing at 5% per annum from 1 July
2013 for five years and at the lower of 5% and CPI thereafter.
The B-linked units comprise one B-share linked to one B-debenture. The B-
linked units receive the residual net income after settlement of the A-linked
unit distribution entitlement.
Prospects
The directors are of the opinion that the group`s investment strategy and the
strength, experience and proven track record of the Manager will provide the
group and its investors with strong prospects in the property sector.
The Property Portfolio is composed of quality assets with a strong robust
tenant base which, coupled with low vacancies and medium to long-term expiry
profiles, provide adequate stability for the creation of earnings and capital
growth over the long term.
As one of only three black managed listed property funds in South Africa, the
directors anticipate that Ascension will continue to be in a position to take
advantage of opportunities to secure long term leases with Government
tenants. As a BEE empowered listed property fund, Ascension is an ideal BEE
partner to other listed property funds and institutional property investors.
In addition, smaller BEE players in the property sector looking to exit their
Government portfolios may opt to dispose of their properties to Ascension in
exchange for linked units in Ascension.
The A-linked unit structure provides a low risk profile for investors. The
distributions on the A-debentures rank ahead of the distributions on the B-
debentures and Ascension`s distributable income for the year ending 30 June
2013 would need to fall by more than 70% from forecast levels for the
distribution payments on the A-debenture to be at risk.
Details of the Private Placement
The Private Placement will be constituted by way of an offer to invited
investors to subscribe for up to 65 000 000 A-linked units at an offer price
of R3.80 per A-linked unit and up to 400 000 000 B-linked units at an offer
price of R1.90 per B-linked unit.
The Private Placement is conditional on a minimum subscription of linked
units of R260 million being raised in terms of the Private Placement. Pre-
commitments already received are in excess of the amount required to fulfil
this condition. Investors who provided these early commitments in amounts of
R25 million or more will receive a commitment fee equal to 2% of the Rand
amount subscribed for.
Purpose of the Private Placement
The main purposes of the Private Placement and the Listing 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 Company;
* obtain a spread of investors in order to enhance the liquidity and
tradability of the linked units;
* raise capital to reduce debt and fund the Acquisition Properties;
* provide the Company with access to a central trading facility thereby
providing liquidity to linked unit holders;
* provide the Company with a platform to raise funding to pursue growth
and investment opportunities in the future; and
* enhance the public profile and general public awareness of Ascension.
Anticipated application of proceeds of Private Placement
If the Private Placement is fully subscribed, Ascension will raise R550 000
000. This amount will be applied as follows:
* approximately R14 720 000 will be used to defray the preliminary and
issue expenses incurred pursuant to the Listing;
* approximately R6 440 000 will be applied to reduce shareholder loans;
and
* R472 000 000 will be used to fund the Acquisition Properties; and the
balance of R56 840 000 will be used to partly settle loans from Investec
Bank Limited.
Salient dates and times
2012
Opening date of the Private Placement (12:00) Thursday, 31 May
Closing date of the Private Placement (16:00) Tuesday, 5 June
by which date invited investors are required
to submit their application form to Java
Capital in order to qualify for participation
in the Private Placement
Results of the Private Placement released on Thursday, 7 June
SENS on
Results of the Private Placement published in Friday, 8 June
the press on
Notification of allotments Friday, 8 June
Linked units listed on the JSE Monday, 11 June
Accounts at CSDP or broker updated and Monday, 11 June
debited in respect of dematerialised linked
unit holders
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.
Cape Town
31 May 2012
Corporate advisor, Sponsor and Bookrunner
Java Capital
Independent sponsor
Sasfin Capital, a division of Sasfin Bank Limited
Independent reporting accountants and auditors
Grant Thornton
Attorneys
Cliffe Dekker Hofmeyr Inc
Date: 31/05/2012 13:38:01 Produced by the JSE SENS Department.
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