| Fri 29 Jun 2012, 15:45 | | AIA/AIB - Ascension Properties Limited - Proposed acquisition of 373 Pretorius |
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AIA AIB
ASCEN
AIA/AIB - Ascension Properties Limited - Proposed acquisition of 373 Pretorius
Street, Pretoria
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")
PROPOSED ACQUISITION OF 373 PRETORIUS STREET, PRETORIA
INTRODUCTION
Ascension has concluded an agreement for the acquisition of a rental enterprise
in respect of and including the office building known as 373 Pretorius Street,
Pretoria ("373 Pretorius Street" or "the property"), for an amount of R155
million ("the acquisition").
RATIONALE FOR THE ACQUISITION
The property is well located in the Pretoria CBD. The acquisition is consistent
with Ascension`s strategy of acquiring Government and other empowerment
sensitive tenanted commercial office buildings situated predominantly in Gauteng
and the Western Cape and represents an ideal opportunity to acquire a quality
asset in a good location at an attractive 12 month forward yield from 1 October
2012 (being the expected date of transfer of the property) of approximately
11.1%.
DETAILS OF THE PROPERTY
373 Pretorius Street (Erf 3255, Pretoria in Gauteng) is a B-grade office block
with 13 340 square metres of office space and 166 basement parking bays. The
weighted average rental per square meter of 373 Pretorius Street is R97.56 per
square metre. The current lease with the City of Tshwane Metropolitan
Municipality expires in January 2015.
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.
TERMS OF THE ACQUISITION AND CONDITIONS PRECEDENT
The seller of 373 Pretorius Street is Investec Property Fund Limited and the
acquisition will be with effect from the date of transfer of ownership of 373
Pretorius Street into Ascension`s name.
The acquisition will be entirely funded from new debt facilities from Investec
Bank Limited.
The purchase agreement provides for warranties and indemnities that are standard
for acquisitions of this nature.
The acquisition is subject to the following suspensive conditions:
- Within 21 days after the contract date (29 June 2012), Ascension advising
the seller in writing that it is satisfied with the outcome of the due
diligence investigation;
- Within 45 days after the contract date, Ascension obtaining a loan secured
by a first mortgage bond over the property for not less than R155 million
from Investec Bank Limited, on terms and conditions acceptable to
Ascension; and
- Ascension obtaining all regulatory approvals required for the acquisition,
including approval from the relevant Competition Authorities in terms of
the Competition Act, 89 of 1998, for the implementation of the acquisition.
FORECAST FINANCIAL INFORMATION OF THE ACQUISITION
Set out below are the forecast revenue, operating profit, net profit after
taxation and distributable earnings of 373 Pretorius Street ("the 373 Pretorius
Street forecasts") for the 9 months ending 30 June 2013 and the year ending 30
June 2014. The 373 Pretorius Street forecasts have been prepared on the
assumption that the acquisition will be implemented on 1 October 2012.
The 373 Pretorius 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 373 Pretorius Street forecasts
have not been reviewed or reported on by the independent reporting accountants.
The 373 Pretorius Street forecasts presented in the table below have been
prepared in accordance with the Company`s accounting policies and in compliance
with IFRS.
9 months ending 30 June Year ending 30 June
2013 2014
R`000 R`000
Gross property rental 16 567 24 084
income and recoveries
Straight-line rental 833 (269)
income
Total revenue 17 400 23 815
Operating profit* 13 501 17 570
Net profit/(loss) after 363 (510)
taxation*
Distributable earnings 2 627 4 491
* Includes the effects of straight-lining rental income and the related deferred
taxation charge and asset management fees.
The 373 Pretorius Street forecasts incorporate, inter alia, the following
material assumptions:
- Contracted revenue is based on existing lease agreements.
- There is nil uncontracted revenue for the 9 months ending 31 June 2013 and
for the year ending 31 June 2014.
- 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.
IMPACT OF THE ACQUISITION ON AN ASCENSION A- AND B-LINKED UNIT
The changes to the portfolio which were announced on SENS on 21 June 2012
together with the acquisition do not have an impact on the forecast
distributions for Ascension`s A-linked units as presented in the pre-listing
statement issued on 31 May 2012 ("the PLS") but are expected to result in the
following forecast distributions per B-linked unit:
Year ending 30 June 2013 Year ending 30 June
2014
Forecast distribution 17.21 19.07
per B-linked unit
(cents) as included in
the PLS
Revised forecast 18.71 21.29
distribution per B-
linked unit (cents)
Based on the issue price in terms of the pre-listing private placement of R1.90
per B-linked unit, the revised forecast distributions per B-linked unit in the
table above result in a yield of approximately 9.8% for the year ending 30 June
2013 and an expected growth rate of 13.8% between the years ending 30 June 2013
and 30 June 2014.
The aforegoing forecast statements 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.
UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The unaudited pro forma financial effects of the acquisition on Ascension`s
statement of financial position as at 31 December 2011 are not significant and
have accordingly not been presented.
Measured at 1 October 2012, the Company`s loan to value ratio will increase from
35.4% to 45.2% as a consequence of the acquisition.
CATEGORISATION OF THE ACQUISITION
The acquisition constitutes a category 2 transaction in terms of the JSE
Listings Requirements and accordingly does not require approval by linked
unitholders.
29 June 2012
Corporate Advisor and Sponsor
Java Capital
Date: 29/06/2012 15:45:02 Produced by the JSE SENS Department.
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