| Wed 8 May 2002, 0:00 | | Shops for Africa Limited |
|
(Incorporated in the Republic of South Africa)
(Registration number 2000/018084/06)
Share Code: SFA ISIN: ZAE000031241
("Shops for Africa" or "the Company")
ACQUISITION OF THE CLEARY PARK SHOPPING CENTRE
1. Introduction
Further to the cautionary announcements published in the press on 21
December 2001, 1 February 2002 and 18 March 2002, Trinity Capital
(Proprietary) Limited and Catalyst Property Asset Managers (Proprietary)
Limited are authorised to announce that, subject to the fulfilment of the
conditions precedent set out in paragraph 2.5 below, Shops for Africa has
entered into an agreement to acquire the Cleary Park Shopping Centre ("the
Cleary Park Centre") from Cleary Park Property (Proprietary) Limited ("the
acquisition").
2. The acquisition
2.1 The Cleary Park Centre
The Cleary Park Centre:
- is located on Stanford Road, Cleary Estate, Port Elizabeth, Eastern Cape,
servicing principally the C and D
income groups;
- is situated on 10,5 hectares with a total lettable area of approximately
24 015 m2 generating an initial net income yield of approximately 15,3% with
an average rental per square metre of R44.37;
- includes an area of 45 000 m2 of excess land available for future
development;
- has 104 tenants, of which 75% are national, with the anchor tenant being
Shoprite, and has a vacancy factor of 6%; and
- has a favourable lease expiry profile with leases representing no more
than 20% of the rental income expiring in any one year, with the Shoprite
lease extending to 2011.
2.2 Rationale for the acquisition
One of Shops for Africa's primary objectives is to acquire additional
focused retail properties servicing the C and D income groups of Southern
Africa. The Cleary Park Centre is just such an opportunity given the yield
at which it is being acquired and the potential for growth in the
surrounding catchment area.
The acquisition:
- is in line with the Company's stated objective of acquiring suitable
properties which would increase its market capitalisation on the JSE
Securities Exchange South Africa ("the JSE") which in turn should lead to
improved tradability and liquidity for Shops for Africa linked unit holders;
- reduces the overall loan to value ratio from 59% to 57%;
- increases the national tenant representation in the portfolio from 55% to
58%;
- reduces the vacancy percentage of the portfolio;
- will introduce another institutional shareholder in the form of BoE
Limited which is the ultimate vendor of the property; and
- will improve the Company's geographic spread of properties by providing an
exposure to the Eastern Cape.
2.3 Terms of the acquisition
The Company is to acquire the Cleary Park Centre from Cleary Park Property
(Proprietary) Limited for a purchase consideration of R52 600 000 which is
to be settled as follows:
- R28 525 001 by the issue of 11 186 275 new Shops for Africa linked units
at an aggregate issue price of R2.55 per linked unit; and
- the balance of R24 074 999 in cash which will be funded by a loan from a
third party financial institution, details of which will be provided in the
circular referred to in paragraph 5 below.
The number of issued linked units in the Company post the settlement of the
purchase consideration will increase from 54 709 840 to 65 896 115.
2.4 Financial effects
Based on the interim financial information of the Company for the four
months ended 31 October 2001, the pro forma financial effects of the
acquisition on earnings per linked unit, headline earnings per linked unit
and net asset value per linked unit are set out below.
Before the After the Percentage
acquisition acquisition change
(cents) (cents) (2) %
Net asset value per ordinary
linked unit 234 (1) 237 (3) 1.3
Distribution to linked unit holders 12.1 (1) 11.8 (4) (2.5)
Earnings per linked unit 3.7 (1) 4.2 (5) 13.5
Headline earnings per linked unit 3.7 (1) 4.2 (5) 13.5
Linked units in issue 54 709 840 65 896 115
1 The "before acquisition" pro forma financial information is based on the
published unaudited interim results of the Company for the four months ended
31 October 2001.
2 Based on the assumption that the Company has acquired the Cleary Park
Centre and the transfer of the property has
taken place.
3 The "after acquisition" net asset value per linked unit was calculated on
the assumption that the acquisition took place on 31 October 2001 after
taking into account the settlement of the purchase consideration in terms of
which R28 525 001 is settled by the issue of 11 186 275 new Shops for Africa
linked units and R24 074 999 in cash.
4 The "after acquisition" distribution to linked unit holders was
calculated on the assumption that all recurring property income after
financing expenses be distributed to linked unit holders. As a consequence
thereof no tax effect has been taken into account. The adjustments to
earnings and headline earnings per linked unit in note 5 below were also
made in arriving at the "after acquisition" distribution to linked unit
holders.
5 The "after acquisition" earnings and headline earnings per linked unit
have been calculated on the assumption that the acquisition took place as at
1 July 2001, as this was the date from which the Company commenced trading
with all properties in the Property Portfolio having been transferred
following listing on the JSE on 29 June 2001. The "after acquisition"
earnings and headline earnings per linked unit have been calculated with the
inclusion of an amount of R2 120 000 from the Cleary Park Centre (which was
arrived at by dividing the audited results for the Cleary Park Centre for
the year ended 30 September 2001 on a straight-line basis). Earnings and
headline earnings per linked unit have also been adjusted for the interest
expense arising on the debt funding of the acquisition for a four-month
period of R959 740 (calculated at the relevant interest rates applicable to
the period under review) and the total estimated transaction costs of R1 240
000 which have been apportioned for a four-month period to ensure
compatibility of information.
6 The pro forma financial effects have been prepared for illustrative
purposes only and because of its nature, may not give a true picture of the
Company's financial position or results of operations.
2.5 Conditions precedent
The acquisition is subject to, inter alia, the fulfilment of the following
conditions precedent:
- approval in general meeting by the requisite majority of Shops for Africa
linked unit holders of the resolution necessary to give effect to the
acquisition;
- obtaining the necessary regulatory approvals, including but not limited to
that of the Competition Commission; and
- approval by the Committee of the JSE for the listing of the 11 186 275 new
Shops for Africa linked units.
3. General meeting
The details of the general meeting of Shops for Africa linked unit holders
required for the purpose of considering and, if deemed fit, passing with or
without modification, the resolution necessary to give effect to the
acquisition, will be set out in the circular referred to in paragraph 5
below.
4. Opinions and recommendations
The directors of the Company have considered the terms and conditions of the
acquisition and are of the opinion that they are fair and reasonable to
Shops for Africa linked unit holders and unanimously recommend that Shops
for Africa linked unit holders vote in favour of the resolution to implement
the acquisition at the aforestated general meeting.
The Shops for Africa directors intend to vote in favour of the resolution
necessary to implement the acquisition in respect of the Shops for Africa
linked units beneficially owned by them or under their control.
5. Documentation
A circular, which is subject to the approval of the Committee of the JSE,
containing full details of the acquisition and incorporating a notice of
general meeting, is in the course of preparation and will be posted to Shops
for Africa linked unit holders in due course.
Cape Town
8 May 2002
