| Tue 24 Jul 2001, 0:00 | | ApexHi: Announcement of Acquisition of a Property |
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1 Introduction
1.1 Further to the cautionary announcements published by ApexHi on 26 March
2001, 9 May 2001 and 26 June 2001, Corpcapital Corporate Finance is
authorised to announce that:
1.1.1 ApexHi has concluded agreements in relation to the acquisition of a
portfolio of rental enterprise businesses (comprising properties together
with their leases) ("the properties") for an aggregate purchase
consideration of R837 741 162, comprising R315 341 623 in cash and 52 239
954 "A" linked units ("A" units") and 52 239 954 "B" linked units ("B"
units") as set out in paragraph 5 below ("the acquisitions");
1.1.2 the board of directors of ApexHi has resolved to convert the existing
linked units ("the units") into "A" units and "B" units.
2 Rationale for the acquisitions
2.1 When forming ApexHi the strategy of the company was to achieve critical
mass by growing the portfolio and ensuring above average returns for
investors. The properties being acquired are generally in locations where
yields are higher than those of prime locations. The majority of these
properties have quality tenants where lease renewals are anticipated.
2.2 ApexHi's properties prior to the acquisitions were located
predominantly in the Johannesburg CBD and Braamfontein. The acquisitions
will provide ApexHi with a wider geographic spread. The new portfolio will
comprise 106 properties with 70% situated in Gauteng and the balance
situated in the Northern Province, KwaZulu-Natal, Free State, Northern and
Western Cape. The total space will include approximately 253 000 square
metres of retail, 120 000 square metres of industrial and 433 000 square
metres of offices. The enlarged ApexHi will have 1 125 tenants.
2.3 The acquisitions, amounting to approximately R838 million, will result
in ApexHi having a portfolio of properties with a value of approximately
R1,2 billion. This increased portfolio size will significantly reduce
ApexHi's exposure to volatility in its present income stream.
2.4 The substantially increased market capitalisation of ApexHi should
result in an enlarged pool of unitholders, an increase in the liquidity and
a potential rerating of the units.
3 The unit conversion process
3.1 The articles of association, the pre-listing statement and the first
supplemental debenture trust deed for ApexHi made provision for the
conversion of existing ApexHi units into "A" and "B" units by way of a
resolution of the board of directors of ApexHi. The board of directors has
now resolved, for the reasons set out in paragraph 4 below, to convert the
existing ApexHi units into "A" and "B" units.
3.2 The existing ApexHi units comprise a debenture with a nominal value of
R9,00 linked to an ordinary share with a par value of 0,02 of a cent each.
These units were originally issued at R10,00 per unit resulting in a premium
of 99,98 cents per unit. This premium will also be split on conversion into
"A" and "B" units.
3.3 On the conversion:
3.3.1 the R6,00 "A" debenture with a nominal value of R5,40 shall be linked
to an "A" ordinary share with a par value of 0,01 of a cent each and an
attributable share premium of 59,99 cents per unit; and
3.3.2 the R4,00 "B" debenture with a nominal value of R3,60 shall be linked
to a "B" ordinary share with a par value of 0,01 of a cent each and an
attributable share premium of 39,99 cents per unit.
3.4 The rights attaching to the "A" and "B" units with regard to income
distributions shall be as follows:
3.4.1 the "A" unitholder shall receive 18,89% on the nominal value of the
"A" debenture (which relates to 17% on a R6,00 unit) or 45% of the
distributable income, whichever is the greater; and
3.4.2 the "B" unitholder shall receive the balance of the distributable
income.
3.5 Income distributions on the "A" and "B" units shall be paid quarterly.
4 Rationale for the unit conversion
4.1 The "A" units will rank first for income distribution and the "B" units
will subordinate their distribution in favour of the "A" units. The credit
rating of the "A" units will be substantially enhanced due to the back
ranking of the income distribution by the "B" units.
4.2 The "A" and "B" units are listed separately and are not linked to each
other, enabling investors to select either "A" or "B" or a mix of "A" and
"B" units to suit their own individual risk profiles and income
requirements.
4.3 The "A" unit, issued at R6,00, will represent 60% of the total units in
issue, while the "B" unit, issued at R4,00 represents 40%. The "A" units
will be entitled to 45% of the distributable income with a minimum return of
17% on the R6,00 issue price. This minimum return on the "A" unit will
therefore suit the profile of the risk-averse investor. On the other hand,
the "B" unit, which is entitled to the balance of the distributable income,
once the minimum return of the "A" unit has been satisfied, caters for
investors who are prepared to take greater risk for the potential of greater
returns. Any future issues of "A" and "B" units will be issued in the 60:40
ratio.
4.4 This system of preferential income distribution, which will be
introduced to the "Real Estate" sector of the JSE Securities Exchange South
Africa ("JSE") lists for the first time, proposes to cater for differing
risk profiles of investors and thus increase liquidity and add value by way
of increased market capitalisation. The board of ApexHi is confident that
this innovative structure will be well received by the market.
5 The acquisitions
5.1 The ABSA acquisition
ApexHi has acquired 15 properties and a 25% share in a property owning
company from ABSA Pension Fund for an aggregate purchase consideration of
R149 250 000, to be discharged as follows:
* R96 000 000 in cash;
* R31 950 000 by the issue of 5 325 000 "A" units at an issue price of R6,00
per unit; and
* R21 300 000 by the issue of 5 325 000 "B" units at an issue price of R4,00
per unit.
5.2 The Aliwal acquisition
ApexHi has acquired a property from 2 Aliwal Street Durban (Pty) Ltd for a
total purchase consideration of R18 250 000, to be discharged in cash.
5.3 The Cavaleros acquisition
ApexHi has acquired six properties from Dougstan CC, Smadgeon Properties CC,
Cavalier Eighty-Two (Pty) Ltd, Cosvan Properties (Pty) Ltd, Cavaleros &
Company (Pty) Ltd and Creation Properties (Pty) Ltd, respectively, for an
aggregate purchase consideration of R51 731 462, to be discharged as
follows:
* R25 868 252 in cash, of which R735 500 is payable over a period of three
years;
* R15 517 926 by the issue of 2 586 321 "A" units at an issue price of R6,00
per unit; and
* R10 345 284 by the issue of 2 586 321 "B" units at an issue price of R4,00
per unit.
5.4 The Compass acquisition
ApexHi has concluded agreements with Compass Property Holdings Ltd
("Compass") and the property owning subsidiaries of Compass, in terms of
which ApexHi has acquired seven properties and certain of the current assets
and liabilities of Compass, for an aggregate purchase consideration of R136
000 000, to be discharged as follows:
* R81 600 000 by the issue of 13 600 000 "A" units at an issue price of
R6,00 per unit; and
* R54 400 000 by the issue of 13 600 000 "B" units at an issue price of
R4,00 per unit.
5.5 The Davis acquisition
ApexHi has acquired two properties from 176 Schoeman Street Pretoria (Pty)
Ltd and Pattersons Building Investments CC, respectively, for an aggregate
purchase consideration of R18 800 000, to be discharged as follows:
* R9 400 000 in cash;
* R5 640 000 by the issue of 940 000 "A" units at an issue price of R6,00
per unit; and
* R3 760 000 by the issue of 940 000 "B" units at an issue price of R4,00
per unit.
5.6 The Delpen acquisition
ApexHi has acquired a property from Pretoria Municipal Pension Fund for a
total purchase consideration of R9 000 000, to be discharged as follows:
* R4 500 000 in cash;
* R2 700 000 by the issue of 450 000 "A" units at an issue price of R6,00
per unit; and
* R1 800 000 by the issue of 450 000 "B" units at an issue price of R4,00
per unit.
5.7 The D & M Syndicate acquisition
ApexHi has acquired a property from the trustees for the time being of the
FNB Randfontein Trust (Master's Reference No. 4708/95) for a total purchase
consideration of R3 100 000, to be discharged as follows:
* R2 200 000 in cash;
* R540 000 by the issue of 90 000 "A" units at an issue price of R6,00 per
unit; and
* R360 000 by the issue of 90 000 "B" units at an issue price of R4,00 per
unit.
5.8 The Ferreiras acquisition
ApexHi has acquired three properties from Utile Holdings (Pty) Ltd, North
Riding Filling Station and Garage (Pty) Ltd and Ponto Sol Investments (Pty)
Ltd, respectively, for an aggregate purchase consideration of R46 850 000,
to be discharged as follows:
* R23 425 000 in cash;
* R14 055 000 by the issue of 2 342 500 "A" units at an issue price of R6,00
per unit; and
* R9 370 000 by the issue of 2 342 500 "B" units at an issue price of R4,00
per unit.
5.9 The Goldman Street acquisition
ApexHi has acquired a property from African Bank Ltd for a total purchase
consideration of R3 500 000, to be discharged as follows:
* R1 750 000 in cash;
* R1 050 000 by the issue of 175 000 "A" units at an issue price of R6,00
per unit; and
* R700 000 by the issue of 175 000 "B" units at an issue price of R4,00 per
unit.
5.10 The JMPF acquisition
ApexHi has acquired a property from Keenland Investments 110 (Pty) Ltd for a
total purchase consideration of R43 500 000, to be discharged as follows:
* R21 750 000 in cash;
* R13 050 000 by the issue of 2 175 000 "A" units at an issue price of R6,00
per unit; and
* R8 700 000 by the issue of 2 175 000 "B" units at an issue price of R4,00
per unit.
5.11 The Kimberley acquisition
ApexHi has acquired five properties from Pniel Road Investments CC, Panino
Properties CC, Hostprops 111 CC and Up Beat Props 1003 CC, respectively, for
an aggregate purchase consideration of R13 450 000, to be discharged as
follows:
* R7 000 010 in cash;
* R3 869 994 by the issue of 644 999 "A" units at an issue price of R6,00
per unit; and
* R2 579 996 by the issue of 644 999 "B" units at an issue price of R4,00
per unit.
5.12 The Martprop acquisition
ApexHi has acquired six properties from Camaje (Pty) Ltd, Black Sunbird
Investments (Pty) Ltd, Cisticola Investments (Pty) Ltd, Harling Investments
Ltd, Delegar Investments (Pty) Ltd and Stand 258 Strydom Park Ext 9 (Pty)
Ltd, respectively, for an aggregate purchase consideration of R26 050 001,
to be discharged as follows:
* R13 025 011 in cash;
* R7 814 994 by the issue of 1 302 499 "A" units at an issue price of R6,00
per unit; and
* R5 209 996 by the issue of 1 302 499 "B" units at an issue price of R4,00
per unit.
5.13 The Mesbart acquisition
ApexHi has acquired a property from Mesbart Properties CC for a total
purchase consideration of R1 900 000, to be discharged in cash.
5.14 The Meteor acquisition
ApexHi has acquired nine properties from Meteor Industrial Property Holdings
Ltd for an aggregate purchase consideration of R47 100 000, to be discharged
in cash.
5.15 The Redefine acquisition
ApexHi has acquired 15 properties together with the leasehold rights in
respect of a further rental earning property from Outward Investments (Pty)
Ltd and Terminus Klerksdorp (Pty) Ltd, respectively (subsidiaries of
Redefine Income Fund Limited), for an aggregate purchase consideration of
R164 113 000, to be discharged as follows:
* R98 467 800 by the issue of 16 411 300 "A" units at an issue price of
R6,00 per unit; and
* R65 645 200 by the issue of 16 411 300 "B" units at an issue price of
R4,00 per unit.
5.16 The Streicher acquisition
ApexHi has acquired 12 properties from the Barry Hertzog Streicher Family
Trust, the Welvaard Trust, the Elzella Trust, the Barry Streicher Trust, the
Berolina Trust, Revoluta Beleggings (Pty) Ltd, N Tvl Motors Pietersburg
(Pty) Ltd, FB Motors Erf 236 Trust and FB Motors Erf 343 CC, respectively,
for an aggregate purchase consideration of R77 146 700, to be discharged as
follows:
* R38 573 350 in cash;
* R23 144 010 by the issue of 3 857 335 "A" units at an issue price of R6,00
per unit; and
* R15 429 340 by the issue of 3 857 335 "B" units at an issue price of R4,00
per unit.
5.17 The Standard Bank acquisition
ApexHi has acquired four properties from The Standard Bank of South Africa
Ltd ("The Standard Bank") and Mulbro Properties (Pty) Ltd for an aggregate
purchase consideration of R20 000 000, to be discharged as follows:
* R12 000 000 by the issue of 2 000 000 "A" units at an issue price of R6,00
per unit; and
* R8 000 000 by the issue of 2 000 000 "B" units at an issue price of R4,00
per unit.
5.18 The Town Centre acquisition
ApexHi has acquired a property from High Com Property Holdings (Pty) Ltd for
a total purchase consideration of R8 000 000, to be discharged as follows:
* R4 600 000 in cash;
* R2 040 000 by the issue of 340 000 "A" units at an issue price of R6,00
per unit; and
* R1 360 000 by the issue of 340 000 "B" units at an issue price of R4,00
per unit.
6 Conditions precedent
The acquisitions are subject to, inter alia, the following conditions
precedent:
* the securing of all necessary consents from ApexHi unitholders to the
conclusion and implementation of the acquisitions, being 50% of debenture
holders present in person or by proxy and entitled to vote and 50% of
shareholders present in person or by proxy and entitled to vote;
* the securing of formal approval from the Listings Division of the JSE for
listing of the "A" and "B" units;
* the securing, to the extent necessary, of all approvals and consents for
the acquisitions required in terms of the Competition Act, 89 of 1998.
In addition to the conditions precedent set out above, the Compass
acquisition is also subject to the following conditions:
* the securing of all necessary approvals of Compass shareholders and
debenture holders to the conclusion and implementation of the Compass
acquisition; and
* the scheme of arrangement between Compass and its shareholders proposed
by a consortium, including Foord & Meintjes (Pty) Ltd (the details of which
are contained in the Compass announcement being published simultaneously
with the announcement), being implemented.
Save for the conditions precedent to the ABSA and Redefine acquisitions
which must be fulfilled (or waived) by 30 September 2001, all of the
conditions precedent to the acquisitions must be fulfilled or waived by no
later than 31 August 2001. The conditions precedent to the Compass
acquisition must be fulfilled (or waived) by 1 October 2001.
7 Borrowings
Long-term borrowings, amounting to R372 000 000, have been secured from The
Standard Bank in order to finance, inter alia, the cash commitments under
the acquisition agreements. The borrowings, after the acquisitions, will be
approximately 31% of the property value of ApexHi.
8 Voting
The JSE has ruled that the consent of the ApexHi unitholders is only
required in respect of the Streicher acquisition, the Redefine acquisition,
the ABSA acquisition and the Compass acquisition ("the principal
acquisitions").
In terms of the Listings Requirements of the JSE, the Redefine acquisition
constitutes a related party transaction. Accordingly, Redefine will not vote
its units in respect of the shareholder or debenture holder resolutions
relating to the Redefine acquisition and such resolutions will require the
approval of unitholders, other than Redefine.
Independent valuers have valued the properties being acquired in terms of
the acquisitions, including the Redefine properties. Details of the
valuations will be included in the circular to be sent to ApexHi
unitholders.
A promoters' fee, payable to Corpcapital Bank Limited, has been levied on
certain of the acquisitions and will be settled by issue of 1 181 287 "A"
units at R6,00 per unit and 1 181 287 "B" units at R4,00 per unit. In terms
of the Listings Requirements of the JSE, a special resolution in respect of
the specific issue of units for cash will be proposed to unitholders.
9 The financial effects of the acquisitions
The pro forma financial effects of the acquisitions on net asset value per
ApexHi unit are illustrated in the table below:
Cents per unit Cents per unit Cents per unit
Before the After the principal After the
acquisitions acquisitions acquisitions
Change
Historical
net asset value (1) 982,91 993,16 990,59
0,78%
Historical tangible
net asset value (1 & 2) 870,53 948,16 953,93
9,58%
Notes:
(1) The historical tangible net asset value and historical net asset value
per ApexHi unit, as set out in the "Before" column of the table, is based
upon ApexHi's take on balance sheet at 5 March 2001, in which the property
portfolio is stated at its historical cost. The historical tangible net
asset value and historical net asset value per ApexHi unit as set out in the
"After the principal acquisitions" column of the table is based upon the
assumptions that the principal acquisitions were concluded with effect from
1 July 2001 and that the aggregate purchase prices were settled by ApexHi by
the issue of the requisite "A" and "B" units and payment of the requisite
cash amount, on that date. The historical tangible net asset value and
historical net asset value per ApexHi unit, as set out in the "After the
acquisitions" column of the table is based upon assumptions that the
acquisitions were concluded with effect from 1 July 2001 and that the
aggregate purchase prices were settled by ApexHi by the issue of the
requisite "A" and "B" units and payment of the requisite cash amount, on
that date.
(2) The historical tangible net asset value excludes goodwill in respect of
the management contracts in Domayne Property Services.
No pro forma earnings and headline earnings effects ("earnings effects") per
ApexHi unit have been provided as ApexHi listed on 5 March 2001 and has not
released its results for the period to 30 June 2001 ("the results
announcement"). The results announcement, which should be released prior to
the shareholder and debenture holders meetings, will contain the earnings
effects.
10 Forecast distribution per unit
Set out below is the forecast distribution for ApexHi for the year ending 30
June 2002:
R'000
Turnover 461 165
Net operating income 212 726
Less: Interest on loan (47 935)
Net distributable income to unitholders 164 791
(164 791)
Net distribution to "A" unitholders (81 835)
Net distribution to "B" unitholders (82 956)
Net income after the distribution -
Total units in issue ('000) 160 460
"A" units 80 230
"B" units 80 230
Distribution per "A" unit (cents) 102,00
Distribution per "B" unit (cents) 103,40
Projected yield on "A" unit (percentage) 17
Projected yield on "B" unit (percentage) 26
The total distribution per "A" and "B" units amounts to 205,40 cents
resulting in an overall yield of approximately 21%.
The assumptions underlying the forecast distribution relate to revenue
sources and expenses. It is assumed that ApexHi as well as the properties to
be acquired will maintain the contractual and business relationships from
which their historical revenue has been derived. Forecast expenses are based
on historical costs, increased proportionately for inflation. It is assumed
that interest at a rate of 13% will be charged on interest bearing long-term
liabilities for the year ending 30 June 2002. The profit forecast assumes
market-related remuneration of executives and takes account of additional
expenses of maintaining a listing on the JSE.
11 The salient dates and times
The salient dates and times for this transaction for ApexHi unitholders is
set out in the table below:
2001
Last day for ApexHi shareholders to lodge forms of proxy
in respect of the ordinary and special resolutions to be
proposed at the general meeting of ApexHi shareholders
by not later than 10:00 on Friday, 24 August
Last day for ApexHi debenture holders to lodge forms of
proxy in respect of the ordinary and special resolutions
to be proposed at the general meeting of ApexHi debenture
holders by not later than 10:30 on Friday, 24 August
General meeting of ApexHi shareholders
to be held at 10:00 on Monday, 27 August
General meeting of ApexHi debenture holders
to be held at 10:30 on Monday, 27 August
Results of the ApexHi general meetings
to be published in the press on Wednesday, 29
August
The conversion of the units to "A" and "B" units
on the JSE on Monday, 3 September
Note:
The dates and times set out in the table above are subject to amendment. Any
amendment to these dates and times will be published in the press.
12 Circular
A circular containing the details of the acquisitions will be sent to ApexHi
unitholders within 28 days of this announcement.
Johannesburg
24 July 2001
Corporate advisor and sponsor
Corpcapital Corporate Finance
Reporting accountant and auditors
Deloitte & Touche
Legal advisor
Corpcapital Transaction Support
File name: apexhi cp 2307.doc
SENS Announcement Cover Page
Submitting Company Details
Submit Ince (Pty) Ltd Submitter Francois Genis
ting Contact
Compan Person
y
Story Details
Flash Announcement of Acquisition of a Property Portfolio and
Headline conversion of Existing Units into "A" and "B" Units
Announcem Formal
ent Type
Follows Price Listed CFO
Formal Sensit Company Approval
Announcem ive Release Required
ent Approval
Required
LID Name of CFO Tumi Letsebi
Instructi
on
Reference
No.
Other Requirements
Associated Cove Confirma
Story r tion of
Reference Page Release
No. Only Required
Release 23/07/2001 Dual Dual
Date & 16:00 List Listing
Time ing Exchange
(dd/mm/yyy
y hh:mm)
Other
Regulatory
Approvals
Required
Special Release 23/07 16:00. David Herr, Corpcapital, 2830098
Requests / 083 6040 111
similtaneous release with Compass and Redefine
Announcement Company Details
Listed Company Name Listed Listed Company
Company Authentication
Alpha Contact
Code
ApexHi Properties Limited
Sponsorship Details
Sponso Corpcapital Sponsor David Herr
r Name Contact
Person
Phone 2830098 Fax Number 2830065
Number
Area 011 Announceme
Code nt
Approved
by
Sponsor?
E-mail dherr@corpcapital.com
Addres
s
