| Thu 13 Nov 2003, 8:56 | | ACQUISITIONS, ADOPTION OF NEW DEED, CHANGE IN |
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PRIMA PROPERTY TRUST - ACQUISITIONS, ADOPTION OF NEW DEED, CHANGE IN
SHAREHOLDING IN PPTM AND FURTHER CAUTIONARY
PRIMA PROPERTY TRUST
Share code PRM
ISIN: ZAE000005641
("Prima")
a collective investment scheme in property established in terms of the
Collective Investment Schemes Control Act, 45 of 2002 (the "Act") managed by
Prima Property Trust Managers Limited
(Registration No. 1969/011594/06)
("PPTM")
ACQUISITIONS, ADOPTION OF NEW DEED, CHANGE IN SHAREHOLDING IN PPTM AND FURTHER
CAUTIONARY
1. INTRODUCTION
Java Capital is authorised to announce that Prima has concluded agreements
for the acquisition of 53 property letting businesses ("businesses") as
going concerns with effect from 1 November 2003 for an aggregate purchase
price of R347 383 850 (inclusive of VAT at 0%), to be settled by the
payment of R139 112 612 in cash on the date on which each of the immovable
properties forming part of the businesses is registered in the name of
Prima and the balance by the issue of 231 984 382 Prima units, which units
shall rank for income distributions from 1 November 2003 (the
"acquisitions").
The acquisitions follow the receipt of approval from the regulatory
authorities for the acquisition by Corpcapital Limited"s property division
of the entire issued share capital of Prima"s manager, PPTM and the
adoption by Prima of a new deed (the "new deed") allowing Prima to gear up
to 30% of the value of its property portfolio and to issue units in
consideration for the acquisition of businesses. The appointments of Grant
Thornton Kessel Feinstein as Prima"s auditors and Absa Bank Limited as the
trustee of Prima have also been approved by the Financial Services Board.
Probity Business Services (Pty) Limited has been appointed as company
secretary to PPTM.
2. RATIONALE FOR THE ACQUISITIONS
Prima currently has a property portfolio valued at approximately R125
million. The new regulatory framework of the Act combined with the new deed
enables Prima to increase the size of its property portfolio by raising
mortgage finance to a maximum of 30% of the value of the property portfolio
and by the issue of Prima units in consideration for acquisitions.
The rationale for the acquisitions is to achieve critical mass by
assembling a property portfolio comprised of good quality A- and B-grade
properties with a wide geographic spread. Most of the properties in the
portfolio have capital values of under R15 million. The small capital value
property sector is currently not well covered by other funds listed on the
JSE, resulting in Prima operating in a niche and as such, being positioned
to acquire the best quality properties falling within this price band. Such
quality properties are in most cases being acquired at yields in excess of
14%. This justifies the rationale that operating in such a niche provides
Prima with the opportunity of acquiring good value.
The enlarged portfolio will comprise 61 properties, located predominantly
in Gauteng. The gross lettable area of the enlarged portfolio amounts to
approximately 209 000m2, comprising 61 000m2 of office, 58 000m2 of retail
and 90 000m2 of industrial space, accommodating 226 tenants in total.
The acquisitions will result in a portfolio value of R472 million and a
market capitalisation of approximately R380 million, thereby diversifying
Prima"s income stream and increasing liquidity in Prima units due to an
enlarged pool of unitholders.
3. TERMS OF THE ACQUISITIONS
The acquisitions are summarised in the table below.
No Vendor Subject of Purchase
acquisition price
1. Acucap Investments BMW dealership R13 316
(Pty) Limited Bruma 200
2. Aurmonde CC Morkels, von R5 018
Brandis Street, 000
Johannesburg
3. Corpcapital Corpbuild premises R4 700
Investments Two (the "Corpcapital 000
(Pty) Limited (a acquisition")
whollyowned
subsidiary of
Corpcapital Limited)
("Corpcapital")
4. Ellerine Properties Supermart, R4 400
(Pty) Limited Newcastle 000
5. Finagle Property Bradlows, R2 500
(Pty) Limited Krugersdorp 000
6. Hentiq 1343 (Pty) Greytown Shopping R14 850
Limited Centre & Ellerines, 000
Newcastle
7. Hyprop Investments A portfolio of 8 R66 500
Limited ("Hyprop") property letting 000
businesses
comprising office
premises (the
Hyprop
acquisition")
8. Master Tyre Mastertreads, R14 000
Properties (Pty) Sebenza 000
Limited
9. Nettlepalm Trading 1 property letting R5 700
(Pty) Limited business comprising 000
industrial premises
10. Oracleprops 6 (Pty) Acme stores in R6 800
Limited, Powaprops 1 Randfontein, 000
(Pty) Limited & Vanderbijlpark and
Motifprops 77 (Pty) Port Elizabeth
Limited
11. Redefine Income Fund A portfolio of 16 R117 070
Limited (through its property letting 000
whollyowned businesses
subsidiary Outward comprising office
Investments (Pty) premises (the
Limited) "Redefine
("Redefine") acquisition")
12. Resilient Property A portfolio of 10 R44 629
Fund (through its property letting 650
whollyowned businesses
subsidiary Resilient comprising a mix of
Properties (Pty) retail and office
Limited premises (the
("Resilient") "Resilient
acquisition")
13. 91 Stormill (Pty) Nameplate Centre, R7 800
Limited and 92 Roodepoort 000
Stormill (Pty)
Limited
14. Rowill Investments Rand Stadium R12 500
(Pty) Limited Toyota, 000
Johannesburg
15. Shelf Management Chambers House, R3 100
Prop CC Port Elizabeth 000
16. Spearhead Property BMW dealership, R12 000
Holdings Limited Lyndhurst 000
17. Southern-Denver Industrial premises R12 500
Properties (Pty) located in Spartan, 000
Limited Kempton Park
Total R347 383
850
4. CONDITIONS PRECEDENT TO THE ACQUISITIONS
The approval of the Competition Commission has been obtained in respect of
the Resilient, Hyprop and Redefine acquisitions.
The acquisitions are subject to, inter alia, the following conditions
precedent:
* the approvals required in terms of the Listings Requirements of the
JSE from Prima unitholders in respect of the Resilient, Hyprop and
Redefine acquisitions.
* the approval of the Redefine linked unitholders being obtained for the
Redefine acquisition.
5. FUNDING OF THE ACQUISITIONS
5.1 Gearing
The cash portions of the purchase prices payable in respect of the
acquisitions and the costs (other than the promoter"s fee) will be
funded by The Standard Bank of South Africa Limited ("SBSA"), which
has agreed to advance R144 000 000 against registration of mortgage
bonds over the enlarged portfolio. The funds advanced will bear
interest at a floating rate of 1,5% below the prime lending rate per
annum. The board of PPTM is considering fixing a portion of the Prima
debt and is currently evaluating various options available to it.
5.2 Issue Of Prima Units And Vendor Consideration Placement
231 984 381 units are to be issued by Prima in consideration for the
acquisitions. Of that number, 42 526 903 Prima units have been placed
by PPTM on behalf of the vendors for a total cash amount of R36 147
467,71.
6. RELATED PARTY TRANSACTIONS
The following transactions are related party transactions in terms of the
Listings Requirements of the JSE:
6.1 Corpcapital Acquisition
Prima has entered into an agreement for the acquisition from
Corpcapital Investments Two (Pty) Limited (a whollyowned subsidiary of
Corpcapital Limited) ("Corpcapital") of the Corpbuild premises (the
"Corpcapital acquisition") for a price of R4 700 000, to be settled by
the payment of R1 410 000 in cash and by the issue of 3 655 556 Prima
units at an issue price of 90 cents per unit.
Corpcapital owns 18 536 175 units in Prima, comprising approximately
11% of the total Prima units in issue. Accordingly, as Corpcapital is
regarded by the JSE as a material unitholder. the Corpcapital
acquisition constitutes a related party transaction. Given that the
transaction value comprises approximately 3% of the market
capitalisation of Prima as at the date of this announcement on SENS,
the transaction is regarded as a small related party transaction. As
such, an independent expert will be appointed to give an opinion as to
whether the transaction is fair and reasonable to Prima unitholders.
6.2 Redefine Acquisition
Redefine is a material Prima unitholder and therefore a related party
for JSE purposes. The Redefine acquisition is accordingly classified
as a related party transaction. An independent expert will therefore
be appointed to assess whether the transaction is fair and reasonable
to unitholders and Redefine will not be entitled to vote at the
general meeting of Prima unitholders in respect of the Redefine
acquisition.
7. PROPERTY MANAGEMENT
Prima is employing a two-tier management structure to manage the enlarged
portfolio. Broll Property Management (Pty) Limited will be employed as the
lead property manager, whose role will be twofold. Firstly, it will provide
the infrastructure and property management systems across the entire
portfolio. Secondly, it will oversee and coordinate the full management
function. Locally based, specialist managers will be employed to operate as
the handson property managers, handling the day-to-day management functions
in respect of the properties. The training of these specialist property
managers will, where necessary, be supplied by the lead property manager to
whom the locallybased managers will report.
8. SPECIAL DISTRIBUTION
The Prima units to be issued pursuant to the acquisitions will be entitled
to receipt of income distributions with effect from 1 November 2003.
Accordingly, the board of PPTM in conjunction with the Trustee, has
resolved to declare a special distribution to existing Prima unitholders
for the period 1 July 2003 to 31 October 2003. The Prima units to be issued
pursuant to the acquisitions will not be entitled to receipt of the special
distribution. Details of the special distribution will be announced on SENS
and in the press in due course.
9. SPECIFIC ISSUE OF UNITS FOR CASH
A promoter"s fee in an amount of 2% of the aggregate purchase consideration
payable in respect of the businesses being acquired by Prima (amounting to
R6 947 677) is payable to Corpcapital on the transfer date of the last of
the properties forming part of the portfolio. The fee is to be settled by
the issue of 7 719 641 Prima units at an issue price of 90 cents per unit.
The issue of units constitutes a specific issue of units for cash to a
related party in terms of section 5.50(a) of the JSE Listings Requirements.
Accordingly, the approval of 75% of Prima unitholders present and voting at
the general meeting (excluding the vote of Corpcapital) is required. In
addition, an independent expert will be appointed to assess whether the
issue of units for cash is fair and reasonable to Prima unitholders.
10. GENERAL ISSUE OF UNITS FOR CASH
Prima will propose at the general meeting of unitholders that it be granted
a general authority to issue units for cash.
11. FORECAST AND FINANCIAL EFFECTS
A forecast income statement and the pro forma financial effects of the
acquisitions, together with salient dates will be announced on SENS and in
the press shortly. Prima unitholders are accordingly advised to continue to
exercise caution in their dealings in Prima units until such time as a
final announcement is published.
Rosebank
12 November 2003
Corporate advisor and sponsor to Prima:
Java Capital (Proprietary) Limited
Legal advisor to Prima:
Java Capital (Proprietary) Limited
Reporting accountants and auditors:
Grant Thornton Kessel Feinstein
Trustee:
Absa Bank Limited
Date: 13/11/2003 07:00:23 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
