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Paraprop - Acquisition Of The Claremont Pick n Pay Centre
Release Date: 01/07/2004 13:32:02 Code(s): PRA
PARAPROP - ACQUISITION OF THE CLAREMONT PICK `N PAY CENTRE
PARAMOUNT PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1945/019928/06)
Share code: PRA
ISIN: ZAE000028577
(`Paraprop`)
ACQUISITION OF THE CLAREMONT PICK `N PAY CENTRE
1. Introduction
Linked unit holders are advised that Paraprop has entered into an agreement with
Sanlam Life Insurance Limited to acquire the rental enterprise conducted through
Remainder Erf 58221, City of Cape Town (`the property`) known as the Claremont
Pick `n Pay Centre with effect from 1 June 2004 (`the acquisition`). The rental
enterprise includes the property, all land and buildings erected on the
property, together with all fixed assets installed therein and current leases.
2. Rationale for the acquisition
The acquisition has been effected in line with Paraprop`s strategy of continuing
to grow its property portfolio in order to increase market capitalisation,
improve its capital structure and benefit from increased diversification. This
landmark 8-storey building comprising 16,521mSquared of lettable space occupies
a strategic location on the corner of Main and Campground Roads at the entrance
to the Claremont CBD. It lies opposite Paramount Place (ex Swiss Re) owned by
Paraprop and in close proximity to the Newlands Cricket grounds. The major
tenants are Pick `n Pay, which has a flagship store and, currently, their head
office in the building, and Newlands Surgical Clinic. There is significant
additional bulk on the site and the likely move by Pick `n Pay head office in
2006, combined with the programmed completion of the Claremont ring road, will
unlock significant redevelopment potential. The property is seen as a
redevelopment opportunity for Paraprop.
3. Consideration for the acquisition
The consideration for the Claremont Pick `n Pay Centre is R67 million. R51.6
million will be funded through a vendor placing of 15 000 000 Paraprop linked
units (`placing linked units`), issued at R3.44 per linked unit, being the 30
day traded weighted average closing price on the JSE Securities Exchange South
Africa prior to 13 May 2004. Irrevocable undertakings have been given by third
parties to acquire the placing linked units which will be issued to them at the
time of transfer of the property. The remaining consideration amount of R15.4
million will be funded through borrowings.
4. Financial effects of the acquisition
Based on the published consolidated unaudited results of Paraprop for the 6
months ended 30 April 2004, the pro forma financial effects of the acquisition
on Paraprop`s net asset value per linked unit (`NAV`) are set out below. This
pro forma financial information has been prepared for illustrative purposes only
and because of its nature may not give a true picture of Paraprop`s financial
position and results of operations, nor the effect and impact of the
transactions on Paraprop going forward.
Before the After the %
acquisition acquisition Change
(1) (2)
NAV (cents) 435 415 (4.6)
Linked units in 63 523 78 523
issue (`000)
Notes:
1) Based on the published consolidated unaudited results of Paraprop for the 6
months ended 30 April 2004.
2) Based on the assumption that the acquisition took place on 30 April 2004.
3) The effects of the acquisition on Paraprop`s headline earnings per linked
unit and earnings per linked unit have not been disclosed as these are not
material.
4) The effect of the acquisition on Paraprop`s net tangible asset value has not
been disclosed as no intangible assets were reflected on Paraprop`s balance
sheet at 30 April 2004.
5) Conditions precedent relating to the acquisition
All conditions precedent, save for the obtaining of Competition Commission
approval, have been fulfilled regarding the acquisition.
6) Further information
A circular containing full details of the acquisition will be posted to Paraprop
linked unit holders in due course.
Cape Town
1 July 2004
Investment bank and sponsor
Nedbank Capital
Property managers
Spire Property Services (Proprietary) Limited
Fund managers
Paraprop Asset Managers (Proprietary) Limited
Attorneys
Cliffe Dekker Inc.
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