| Fri 5 Dec 2003, 17:27 | | DISTRIBUTABLE PROFIT FORECAST, FINANCIAL EFFECTS, |
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Prima Property Trust - DISTRIBUTABLE PROFIT FORECAST, FINANCIAL EFFECTS,
DECLARATION OF SPECIAL DISTRIBUTION, SALIENT DATES AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
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 number 1969/011594/06)
("PPTM")
DISTRIBUTABLE PROFIT FORECAST, FINANCIAL EFFECTS, DECLARATION OF
SPECIAL DISTRIBUTION, SALIENT DATES AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1.Introduction
Prima unitholders are referred to the announcement published on 13 November 2003
in terms of which Java Capital advised that:
Prima had concluded agreements for the acquisition of 53 property letting
businesses ("businesses") as going concerns 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");
Prima would be declaring a special distribution for the period 1 July 2003 to 31
October 2003.
This announcement sets out the details of the special distribution, the
distributable profit forecast for Prima for the year ending 30 June 2004 and the
historical financial effects of the acquisitions on Prima unitholders.
2.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 in an amount of 3.2 cents per Prima unit. The Prima units to be
issued pursuant to the acquisitions will not be entitled to receipt of the
special distribution.
The salient dates for the special distribution are set out in paragraph 6 below.
3.Forecast
The historical financial effects set out in paragraph 4 below do not provide a
meaningful reflection of the effect of the acquisitions on Prima"s future
earnings. In order to provide unitholders with more meaningful financial
effects, a forecast of distributable profit for Prima for the year ending 30
June 2004 is set out below. This forecast has been reviewed by Grant Thornton,
whose report is available for inspection at the registered office of Prima.
R"000
Revenue 68 345
Operating income 48 683
Interest received 831
Interest paid (9 177)
Distributable profit before taxation 40 337
Taxation -
Distributable profit after taxation 40 337
Units in issue (`000) 406 092
Weighted average units in issue (`000) 326 190
Distributable profit per unit (cents) 12,4
Forecast distributable profit per unit (cents)
- four months ended 31 October 2003 3,2
- eight months ending 30 June 2004 8,6
Notes:
The forecast distributable profit for the year ending 30 June 2004 has been
prepared based on the following assumptions:
Revenue is based on existing lease agreements.
There will be no unforeseen economic factors that will affect the lessees"
abilities to meet their commitments in terms of the existing lease agreements.
Leases expiring during the period have been forecast on a lease-by-lease basis
and in circumstances where the tenant has indicated that they are satisfied with
the premises, it is assumed that the leases will continue at the current rentals
and escalations for the majority of the tenants.
Future vacant space has been forecast on a property-by-property basis and
current vacant space has been assumed to remain vacant in the future.
There will be no change in the fair value of the properties between the date of
the forecast and 30 June 2004.
Operating expenditure has been determined based on discussions with the property
managers and the vendors and on historical costs.
Properties to be acquired have been included in the forecast from 1 November
2003, the effective date in terms of the acquisition agreements and also the
date on which control effectively passed to Prima in respect of the
acquisitions. It is anticipated that the transfer of the properties will take
place on 1 February 2004. From the effective date to the transfer date interest
will accrue in respect of the cash portion of the purchase consideration at an
average rate of 12,2% per annum.
The total purchase consideration in respect of the properties being acquired
amounts to R347 383 850. This amount will be settled by the payment of R139 112
612 in cash and by the issue of 231 984 382 Prima units. The cash portion of
the purchase consideration will be financed by a loan secured by mortgage bonds
over Prima"s properties bearing interest at 1,5% below the prime lending rate
per annum. A forecast rate of 10,5% per annum has been applied, on the
assumption that the prime lending rate will be 12,0% per annum.
The promoter"s fee of R6,9 million payable in respect of the acquisitions will
be settled by the issue of 7,72 million Prima units.
Prima"s positive cash balances will attract interest at a forecast rate of 6,75%
per annum. Once the loan facility used to finance the acquisitions is in place,
positive cash balances will be set off against the total loan outstanding in
order to calculate the interest payable on the loan.
Prima will not make any other acquisitions or disposals prior to 30 June 2004.
Prima is a property unit trust and as such is not expected to have any liability
for taxation once all profits are distributed.
As this is a distributable profit forecast it does not take into account capital
items which may occur and which will have no impact on profits available for
distributions when all profits are distributed.
4. Annualised forward yield
If the 8,6 cents is extrapolated for a full year, the annualised forecast
distribution is 12,9 cents. At an issue price of 90 cents per Prima unit the
annualised forward yield for current investors is 14,36%.
5. Financial effects
The pro forma financial effects of the acquisitions set out in the table below
have been prepared for illustrative purposes only to provide information on how
the acquisitions may have impacted on Prima. Because of their nature, the pro
forma financial effects may not give a fair reflection of Prima"s financial
position after the acquisitions or the effect of the acquisitions on future
earnings.
After After After
Before Redefine Hyprop Resilient
acquisitions acquisition acquisition acquisition
Historical
earnings
per unit
(cents) 13,07 11,78 11,21 13,01
Historical
headline
earnings
per unit
(cents) 13,07 12,17 12,37 13,01
Historical net
asset value
per unit
(cents) 77,82 82,60 78,46 78,70
Historical
tangible net
asset
value per unit
(cents) 77,82 82,60 78,46 78,70
After After issue
Corpcapital of units for After all Change
acquisition cash transactions %
Historical
earnings
per unit (cents) 12,78 12,49 9,91 (24,13)
Historical
headline earnings
per unit (cents) 13,06 12,49 12,15 (6,98)
Historical net
asset value
per unit (cents) 77,82 78,36 82,80 6,40
Historical
tangible net
asset
value per unit
(cents) 77,82 78,36 82,80 6,40
Notes:
1. The historical earnings, headline earnings, net asset value and net tangible
asset value per Prima unit as set out in the "Before acquisitions" column of the
table are based on Prima"s audited results for the year ended 30 June 2003.
2. The historical earnings per Prima unit as set out in each of the columns of
the table are based on the assumptions that:
each of the transactions took effect on 1 July 2002;
each of the acquisitions was funded by the requisite borrowings (raised in
respect of the acquisitions and the pro rata portion of the costs);
the Prima units to be issued in partial consideration for the acquisitions and
the issue of units for cash were issued on 1 July 2003; and
interest on the borrowings has been raised at 15,22%.
3. In respect of each of the calculations of historical earnings per Prima unit,
the net income before interest and taxation figures utilised are as follows:
for the year ended 31 August 2003, in respect of the Redefine portfolio;
for the six months ended 30 June 2003, in respect of the Hyprop portfolio;
for the seven months ended 30 June 2003, in respect of the Resilient portfolio;
for the five months ended 1 October 2003, in respect of the Corpcapital
portfolio; and
for periods ranging from three months to a year, as extracted from management
accounts, in respect of each of the minor acquisitions.
4.Fair value adjustments have been made to each of the purchase considerations
payable in respect of the acquisitions to reflect the relevant portfolio at the
independent valuers" valuation. In addition a pro rata portion of the costs
attributable to each of the portfolios has been capitalised to the portfolio in
question. The adjustments to each portfolio are set out below:
in respect of the Redefine acquisition, an adjustment of approximately R1,1
million;
in respect of the Hyprop acquisition, an adjustment of approximately R2,1
million;
in respect of the Resilient acquisition, an adjustment of approximately R0,6
million;
in respect of the Corpcapital acquisition, an adjustment of approximately R0,5
million; and
in respect of the minor acquisitions, an adjustment of approximately R4,2
million.
5.The historical headline earnings per Prima unit as set out in each of the
columns of the table have been calculated on the same basis as the historical
earnings per Prima unit after each of the transactions respectively, but exclude
the fair value adjustments made in respect of each of them.
6.The historical net asset value and tangible net asset value per Prima unit as
set out in each of the columns of the table are based on the assumptions that:
each of the transactions took effect on 30 June 2003;
each of the acquisitions was funded by the requisite borrowings (raised in
respect of each of the acquisitions and the pro rata portion of the costs);
the Prima units to be issued in partial consideration for the acquisitions and
the issue of units for cash were issued on 30 June 2003;
fair value adjustments effected in respect of each of them have been included;
and
the cost of the issue of units for cash has been capitalised to the cost of the
respective property portfolios on a pro rata basis.
6.Salient dates and times
The salient dates and times relating to the special distribution and the
acquisitions are as follows:
Last date to trade cum interest for receipt
of the special distribution Tuesday,, 23 December 2003
Ex-date for the special distribution Wednesday, 24 December 2003
Record date for the special distribution Friday, 2 January 2004
Pay date for the special distribution Monday, 5 January 2004
Last day to lodge forms of proxy for general
meeting - 10:00 Tuesday, 6 January 2004
General meeting of Prima unitholders - 10:00 Wednesday, 7 January 2004
Result of general meeting published on SENS Wednesday, 7 January 2004
Result of general meeting published in the press Thursday, 8 January 2004
Anticipated date of transfer Tuesday, 13 January 2004
Anticipated date of listing of consideration units Thursday, 15 January 2004
Unitholders may not dematerialise or rematerialise their Prima units between
Wednesday, 24 December 2003 and Friday, 2 January 2004 both days inclusive.
The dates and times relating to the general meeting may be changed at the
instance of Prima. Any such changes will be published on SENS and in the press.
7. Circular and withdrawal of cautionary
A circular providing full details of the acquisitions will be sent to Prima
unitholders during December 2003. Unitholders are no longer required to exercise
caution in their dealings in Prima units.
Rosebank
5 December 2003
Corporate advisor and sponsor to Prima
Java Capital
Legal advisor to Prima
Java Capital
Trustee
ABSA Bank Limited
Reporting accountants and auditors
Grant Thornton
Chartered Accountants (SA)
Independent advisor
Grant Thornton
Corporate Finance (Pty) Ltd
Date: 05/12/2003 05:22:12 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
