| Thu 21 Jun 2012, 11:14 | | AIA/AIB - Ascension Properties Limited - Update on property portfolio |
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AIA AIB
ASCEN
AIA/AIB - Ascension Properties Limited - Update on property portfolio,
forecasts and pro forma financial effects following private placement,
including an additional acqusition
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")
UPDATE ON PROPERTY PORTFOLIO, FORECASTS AND PRO FORMA FINANCIAL EFFECTS
FOLLOWING PRIVATE PLACEMENT, INCLUDING AN ADDITIONAL ACQUSITION
ACQUISITION OF 14 LONG STREET, CAPE TOWN
Ascension has concluded an agreement for the acquisition of a rental
enterprise in respect of and including the office building known as 14 Long
Street, Cape Town ("14 Long Street"), for an amount of R67 million ("the
acquisition" or "the 14 Long Street acquisition").
The vendor of 14 Long Street is Manaka Property Investments (Proprietary)
Limited and the acquisition will be with effect from the date of transfer of
ownership of 14 Long Street into Ascension`s name.
The acquisition will be funded from the Company`s available debt facilities.
14 Long Street (Erf 4483, Cape Town in the Western Cape) is a B-grade office
block with 9 346 square metres of office space, 485 square metres of retail
space and 126 undercover parking bays. The property is well positioned and
located close to the Matrix House complex and 45 on Castle properties in the
portfolio (which are fully detailed in the Pre-Listing Statement issued on 31
May 2012 ("the PLS")). A number of tenants will be relocated from the Matrix
House complex to 14 Long Street in order to create space for the Department
of Arts and Culture who have committed to renting 10 441 square metres in the
Matrix House complex. The weighted average rental per square meter of 14 Long
Street will be R91.70 following the successful relocation of the Matrix House
tenants.
The board is satisfied that the value of the property is in line with the
acquisition price being paid for it by the Company. The directors of the
Company are not independent and are not registered as professional valuers or
as professional associate valuers in terms of the Property Valuers Profession
Act, No 47 of 2000.
The acquisition is subject to Ascension furnishing the vendor, within a
period of seven days from request thereof by the vendor, which request will
not be made prior to the payment by the vendor of the rates clearance amount,
but no later than sixty days from 18 June 2012 (being the contract date),
with an acceptable guarantee issued by a registered bank for the payment of
the purchase price to the vendor on the transfer date.
Set out below are the forecast revenue, operating profit, net profit after
taxation and distributable earnings of 14 Long Street ("the 14 Long Street
forecasts") for the 11 months ending 30 June 2013 and the year ending 30 June
2014 ("the forecast periods"). The 14 Long Street forecasts have been
prepared on the assumption that the acquisition will be implemented on 1
August 2012.
The 14 Long Street 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 Ascension. The 14 Long Street forecasts
have not been reviewed or reported on by the independent reporting
accountants.
The 14 Long Street forecasts presented in the tables below have been prepared
in accordance with the Company`s accounting policies and in compliance with
IFRS.
11 months ending 30 June Year ending 30 June
2013 2014
R`000 R`000
Gross property rental 11 288 13 304
income and recoveries
Straight-line rental 388 39
income
Total revenue 11 676 13 343
Operating profit* 9 096 10 303
Net profit after 279 28
taxation*
Distributable earnings 3 436 4 512
* Includes the effects of straight-lining rental income and the related
deferred taxation charge and asset management fees.
The 14 Long Street forecasts incorporate, inter alia, the following material
assumptions:
- Contracted revenue is based on existing lease agreements.
- Uncontracted revenue amounts to 58.3% for the 11 months ending 31 June
2013 and the year ending 31 June 2014 and relates to the relocation of
existing tenants (the majority of whom have indicated their willingness
to relocate) and the conclusion of additional lease agreements currently
being negotiated.
- All existing lease agreements are valid.
- Debenture interest will be paid to A- and B-linked unitholders in
accordance with the provisions of the debenture trust deed.
UPDATE ON PROPERTY PORTFOLIO, FORECASTS AND PRO FORMA FINANCIAL EFFECTS
As announced on 7 June 2012, Ascension raised an aggregate amount of R374
million in its pre-listing private placement, through the placement of
65,000,000 of its A-Linked Units at an issue price of R3.80 per A-Linked
Unit, raising an amount of R247 million, and the placement of 66,827,231 of
its B-Linked Units at an issue price of R1.90 per B-Linked Unit, raising an
amount of R127 million.
Given the amount raised the board has not proceeded with the conditional
acquisitions of River Park 1 and 2 and Riverview 1 and 2, as further
described and detailed in the PLS.
In addition, the Company has become aware of potentially lengthy delays in
the transfer of the NBC building due to issues with the occupancy certificate
required to be provided by the vendors. Further updates in this regard will
be released as appropriate.
Measured at 1 August 2012, the Company`s loan to value ratio will increase
from 29.8% to 35.4% as a consequence of the above adjustments to the property
portfolio and the 14 Long Street acquisition. These changes to the portfolio
do not have a significant impact on the forecast distributions for
Ascension`s linked units as presented in the PLS which, in terms of the
distribution for B-linked units, is expected to improve marginally as a
result.
The aforegoing statement and the forecasts underlying such statements are the
responsibility of the board of Ascension and have not been reviewed or
reported on by the independent reporting accountants.
The table below sets out the unaudited pro forma financial effects of the
acquisition and other adjustments as detailed in the notes and assumptions
below (together "the adjustments") on Ascension`s net asset value (NAV) per B-
Linked Unit and tangible net asset value ("TNAV") per B-Linked Unit based on
the unaudited consolidated pro forma statement of financial position of
Ascension as at 31 December 2011 as presented in the PLS (which in turn was
based on the audited consolidated statement of financial position of
Ascension as at 31 December 2011). These unaudited pro forma financial
effects are the responsibility of the directors of Ascension and they have
been prepared for illustrative purposes only, in order to provide information
about the financial position of Ascension only, assuming that the acquisition
had been implemented on 31 December 2011.
Due to their nature, the unaudited pro forma financial effects may not fairly
present Ascension`s financial position subsequent to the acquisition. The
unaudited pro forma financial effects have not been reviewed or reported on
by the independent reporting accountants.
The adjustments have no effect on Ascension`s NAV and TNAV per A-Linked Unit
and financial effects in respect of NAV and TNAV per A-Linked Unit have
therefore not been included.
The unaudited pro forma financial effects have been prepared in accordance
with IFRS and the accounting policies of Ascension that were used in the
preparation of the unaudited consolidated pro forma statement of financial
position as at 31 December 2011 as presented in the PLS.
As forecast financial information for the acquisition has been prepared and
presented above, financial effects in respect of an unaudited consolidated
pro forma statement of comprehensive income have not been presented.
Final pro forma per Updated pro forma % change
the PLS
NAV and TNAV per B- 127.8 112.2 (12.2)
Linked Unit (cents)
NAV and TNAV per B- 131.7 118.9 (9.7)
Linked Unit
excluding deferred
tax (cents)
Number of B-Linked 358 034 265 387 (25.9)
Units in issue
(`000)
Notes and assumptions:
- The "Final pro forma per the PLS" column has been extracted without
adjustment from the PLS.
- The "Updated pro forma" column includes the effects of the
following:
* the acquisition of 14 Long Street for a purchase price of R67
million which will be entirely funded out the Company`s
existing debt facilities;
* the Company is not acquiring River Park 1 and 2 and Riverview
1 and 2 and transfer of the NBC building is assumed to be
indefinitely delayed, all as further detailed above; and
* Ascension raised R127 million through the private placement of
66,827,231 B-Linked Units of the maximum of R303 million that
could have been raised through the private placement of up to
159,474,000 B-Linked Units.
21 June 2012
Corporate Advisor and Sponsor
Java Capital
Date: 21/06/2012 11:14:01 Produced by the JSE SENS Department.
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