| Mon 24 Oct 2005, 15:56 | | CBS Property Portfolio Limited - Abridged Pre-list |
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CBS Property Portfolio Limited - Abridged Pre-listing Statement
CBS PROPERTY PORTFOLIO LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/009523/06)
JSE code: CBS & ISIN: ZAE000073995
("CBS")
ABRIDGED PRE-LISTING STATEMENT
Prepared and issued in terms of the Listings Requirements of the JSE Limited
("JSE") relating to a private placing of CBS linked units by way of an offer
for subscription of 37 000 000 linked units at an issue price of 675 cents
per linked unit ("the private placing")
This is not an invitation to the public to subscribe for linked units, but is
issued in compliance with the Listings Requirements of the JSE for the purposes
of giving the public information about CBS.
At the date of listing, and assuming 100% subscription the authorised share
capital of CBS will comprise 200 000 000 ordinary shares with a par value of 0.5
cent each, and an issued share capital of 80 275 054 ordinary shares with a par
value of 0.5 cent each, linked to 80 275 054 unsecured variable rate debentures
("debentures"), with each debenture having a nominal value of 499.5 cents ("the
CBS linked units").
This announcement contains the salient information in respect of CBS which is
more fully described in the Pre-listing statement. For a full appreciation of
the proposed listing of CBS linked units on the JSE, the Pre-listing statement,
which is available on request as set out in paragraph 7 below, should be read in
its entirety.
1. INTRODUCTION
CBS Properties was established in 1993 and commenced business as promoters
and managers of syndicated investment properties in the Western Cape. CBS,
the entity that is to be listed, was established in October 2003 through the
decision to consolidate nine separately held CBS managed investment
properties.
Since its inception CBS has increased the size of its property portfolio
through acquiring quality properties such that its property portfolio has
increased from R300 million in October 2003 to approximately R987 million at
the anticipated date of listing.
The CBS property portfolio recently experienced a substantial increase in
the portfolio through the acquisition of:
* mainly Gauteng located properties from the Yieldgro Properties Limited
("Yiedgro");
* acquistions from Growhtpoint Properties Limited; and
* acquisition of the Malvern Centre situated in Kwazulu Natal,
collectively ("the acquisitions").
Properties are selected on the basis of their ability to deliver consistent
income and capital growth.
The primary objective of introducing CBS to the "Financial - Real Estate"
sector of the JSE, is to provide investors with the opportunity to
participate in the underlying income streams and capital growth of a
diversified retail and commercial property portfolio.
2. THE PROPERTY PORTFOLIO
2.1. Analysis of the property portfolio
Following the implementation of the acquisitions the CBS property
portfolio will consist of 28 properties with a total gross lettable area
("GLA") of 190 475m? and a market value of approximately R987 million
("the property portfolio").
* The property portfolio is a balanced portfolio with a geographic
spread in three of the country"s major metropolitan areas. The
property portfolio has a bias towards Cape properties which represent
approximately 48% of the portfolio with the balance situated in
Gauteng (32%) and Kwazulu Natal ("KZN") (20%). The sectoral spread of
the property portfolio indicates that the properties are biased
towards retail which comprises approximately 53% of the property
portfolio.
Graphs relating to the geographical and sectoral spread can be found in
Section 4 of the Pre-listing statement.
2.2. Details of the property portfolio
Property name Market GLA
value
R"000 m2
Cape
Matador Centre, 51 500 12 453
Palm Grove, Durbanville 69 500 7 782
Buitengracht Centre, Cape Town 25 750 5 742
Amway House, Cape Town 52 500 5 577
Park n" Shop, Meadowridge 52 000 7 429
Melville"s Corner, Plettenberg Bay 55 300 7 976
35 Wale Street, Cape Town 70 000 9 596
Circle Centre, Somerset West 42 750 7 525
Centre Point, Milnerton 74 100 13 672
Medpark , Goodwood 11 016 1 361
Avis Car Mall, Cape Town 6 391 971
Gauteng
Brait Place, Illovo 80 000 8 366
Avis Car Mall, Edenvale 9 859 2 400
Constantia Kloof, Roodepoort 11 303 1 518
Duplex Liquid Meters, Edenvale 11 303 2 600
Motor City Centre, Edenvale 10 088 2 038
Wedgefield Bryanston, Bryanston 49 978 4 938
46% interest in the Wedge, Sandton 78 906 5 841
Centex Close, Sandton 8 406 2 480
Cleveland, Johannesburg 11 104 12 925
Dover Street, Ferndale 2 927 992
Harley Street, Ferndale 7 258 1 892
Motown Randburg, Ferndale 27 782 12 693
Rustenberg Centre, Rustenburg 3 995 3 586
Truchurch, Pretoria 24 115 5 497
KZN
Malvern Centre, Durban 63 533 22 138
Victoria Maine, Durban 34 152 7 494
Village Market, Westville 41 609 12 993
987 125 190 475
3. FINANCIAL INFORMATION
3.1. Transfer of properties
It is possible that certain of the properties namely the Growthpoint and
Malvern Centre acquisitions, comprising approximately 22% of the gross
market value of the CBS property portfolio may not yet be transferred and
registered in the name of CBS by the listing date as a result of
procedural issues.The individual properties that may be affected are
listed below:
* Centex Close, Sandton
* Motown Randburg, Ferndale
* Harley Street, Ferndale
* Dover Street, Ferndale
* Cleveland, Johannesburg
* Truchurch, Pretoria
* Rustenburg Centre, Rustenburg
* Village Market, Westville
* Victoria Maine, Durban
* Malvern Centre, Durban
CBS purchased each of the aforementioned properties included in the CBS
property portfolio with effect from 1 November 2005 and CBS has contractual
rights to the net income generated from all the properties with effect from
1 November 2005. If the transfer of the properties takes place on a date
later than 31 October 2005, the purchase price will be increased by an
amnount equal to 0.5% per month on the purchase consideration. As a result,
the physical transfer of the properties will not affect the forecast income
of CBS for the 12 month periods to 31 October 2005 and 31 October 2006 as
set out 3.3 below.
3.2. Pro forma consolidated balance sheet
The pro forma consolidated balance sheet, after the adjustments necessary
to account for the acquisitions and the subscription of all the linked
units forming part of the private placing, has been prepared for
illustrative purposes only, and because of its nature, may not give a true
reflection of CBS" financial position.
In order to provide potential investors with appropriate financial
information should the properties referred to above not be transferred to
CBS, the pro forma historical financial information in respect of the CBS
property portfolio has been prepared based on two scenarios:
Scenario A - assumes that all the properties comprising the CBS property
portfolio are transferred to CBS by the listing date;
Scenario B - assumes that 78% of the gross value based on market value of
the properties comprising the CBS property portfolio are
transferred to CBS by the listing date, assuming that none
of the properties potentially subject to procedural delays
in terms of the acquisitions are transferred into the name
of CBS by the listing date, and that the transfers of the
relevant properties take place subsequent to the listing
date.
Until such time as these properties are transferred, the linked
units relating to these properties will not be issued and the
debt funding relating to these properties will not be drawn
down.
Set out below is the summarised pro forma consolidated balance sheets of
CBS as at 30 June 2005 showing CBS" financial position before and after
the private placing as follows. A detailed pro forma balance sheet showing
the adjustments in more detail is included in the Pre-listing statement.
CBS As at 30 Consolidated Consolidated
June 2005 Scenario A Scenario B
R R R
Assets
Non current
Assets 513,981,515 1,020,343,567 795,463,036
Investment
properties 513,981,515 1,005,493,567 780,613,036
Goodwill
14,850,000 14,850,000
-
Current assets
27,844,023 36,290,918 36,290,918
Trade and
receivables 3,506,821 3,685,792 3,685,792
Debtor Sale of
Bracken Parks 17,203,000 17,203,000 17,203,000
Amounts owing by
group company 634,191
Cash and Bank
6,500,011 15,402,126 15,402,126
-
Total assets
541,825,538 1,056,634,485 831,753,954
Equity and
liabilities
Capital and
reserves 80,306,192 161,402,187 135,642,737
Issued capital
135,000 401,375 347,182
Share premium
1,058,937 78,841,778 59,874,375
Distributable
reserve 79,112,255 82,159,034 75,421,180
-
Non current
liabilities 449,803,184 859,283,370 660,162,290
Shareholders
loans @ R9.99 145,295,024 - -
Debentures @
R4.995 400,973,895 346,835,492
Long term
liabilities 289,121,155 439,354,362 295,514,362
Deferred tax
15,387,005 18,955,113 17,812,436
Current
liabilities 11,716,162 35,948,928 35,948,927
Trade and other
payables 2,651,038 13,336,885 13,336,885
Short term
portion of long 51,079 51,079 51,079
term loans
Tenant deposits
2,770,819 2,770,820 2,770,820
Payable on
property 9,472,060 9,472,060
acquisitions
Bank overdraft
- -
Investor
interest accrual 6,243,226 10,318,084 10,318,084
-
Total Equity
and liabilities 541,825,538 1,056,634,485 831,753,954
3.3. CBS consolidated profit forecast
The CBS consolidated profit forecast has been prepared for illustrative
purposes only, to provide information about net income that will be earned
on the property portfolio for the 12 month periods ending 31 October 2005
and 2006.
Forecast
12 months 12 months
ended ended
31 October 31 October
2005 2006
R"000 R"000
Revenue 69 694 140 042
Straight lining of rental income 7 444 3 913
Operating expenses (27 284) (46 436)
Profit on sale of fixed property 5 218
Interest income 613 12 749
Operating profit before interest paid 55 685 110 268
Fair value adjustment for straight lining (7 444) (3 913)
of rental income
Interest paid - long term borrowings (29 878) (50 812)
Interest paid - debenture holders (18 363) (55 543)
Operating profit after interest - -
Net profit - -
Linked units in issue on listing * 42 379 280 80 275 054
Distribution per linked unit (cents) 62 69
Proft per linked unit (cents) - -
Headline earnings per linked unit (cents) - -
Yield (based on distribution) per linked 9.20% 10.25%
unit with a linked unit price of 675 cents
(%)
* Based on a maximum subscription of 37 000 000 CBS linked units
The profit forecast is based on the assumption that circumstances which
effect CBS" business, but which are outside of the control of the
directors, will not change in such a way as to materially affect the
trading situation of CBS. In particular the forecast is based on the
following assumptions:
* the economic conditions and political stability in South Africa will not
deteriorate;
* there are no unforeseen economic factors that will affect the tenants"
abilities to meet their commitments in terms of the existing lease
agreements;
* contracted revenue is based on existing lease agreements. Uncontracted
revenue amounts to 4.41% as a percentage of total revenue for the 12
month periods ending 31 October 2005 and 31 October 2006;
* where a lease expires in respect of existing tenants within the forecast
period, this lease will be renewed or a new tenant will be secured
within a reasonable time period, at fair market rates, which in all
instances have been assumed to be lower than current rental levels;
* operating expenditure has been determined after taking into account
historical costs and information contained in the lease agreements;
* no future properties will be acquired;
* the forecast includes the information with regards to the sale of
Bracken Parks and Tokai Village;
* net income after interest will be distributed to linked unit holders in
full excluding any fair value adjustments;
* CBS places 37 million linked units in terms of the private placing;
* rental escalation does not exceed 8% per annum; and
* the company tax rate does not exceed 29%.
The above assumptions are material to the forecast and the actual
financial results of CBS will depend on them. Unforeseen events or
circumstances may also occur subsequent to the date of this pre-listing
statement and the actual results achieved during the 12 month periods
ending 31 October 2005 and 2006 may therefore differ materially from the
forecast.
4. DIRECTORS AND MANAGEMENT OF CBS
4.1. Directors
The full names, ages, qualifications, business addresses and occupations
of the directors are as follows:
Name (Age) Address Position/
Occupation
Non-Executive
directors
Colin Jeffrey Traub 5 On St George"s Non-Executive
(68) St George"s Mall director
Cape Town
8001
Paul Sulcas (61) 21 Geneva Drive Independent Non-
Camps Bay Executive director
8005
Ivan William Klerck 7th Floor, Non - Executive
(64) Buitengracht Centre Chairman
125 Buitengracht
Street
Cape Town
8001
Jeff Molobela (50) 40A 12th Street Independent Non-
Parkmore Executive director
2194
Eugene Loubser (56) 61 South Road Non-Executive
Linden Ext director
Randburg
2194
Executive directors
Gary Morton Fisher 7th Floor, Managing director
(39) Buitengracht Centre
125 Buitengracht
Street
Cape Town
8001
Sean David Mackay 7th Floor, Financial director
(38) Buitengracht Centre
125 Buitengracht
Street
Cape Town
8001
Derek Greenberg Primegro Place Executive director
(58) 18 Rivonia Road
Illovo
Sandton
2196
Martin Ettin (58) Primegro Place Executive director
18 Rivonia Road
Illovo
Sandton
2196
4.2. Property and asset management
4.2.1 Asset management
The function of asset management services has been delegated by CBS
to a joint venture between CBS Asset Management (Proprietary) Limited
and Caribbean Estates (Proprietary) Limted ("the asset manager") the
Executives of which are also executive directors of CBS. The
agreement entered into between CBS and the asset manager for the
management of the CBS property portfolio ("asset management and
management agreement") will continue for an initial period of seven
years.
For these outsourced services, the monthly remuneration payable by
CBS to the asset manager consists of a minimum monthly fee,
equivalent to 1/12th of 0.5% of the average market capitalisation of
CBS on the JSE for the last five business days of the relevant month
plus the outstanding debt of CBS at the end of each relevant month.
After the three year period, the total annual fee will be performance
based and determined by comparing the performance of CBS relative to
other companies or entities in the loan stock sector of the JSE with
a structure and size comparable with that of CBS.
The asset manager will also be entitled to an asset management fee of
1?% of the total purchase price plus costs, on all new acquisitions,
including the acquisitions.
4.2.2 Property management
CBSPM was previously an independently held property management
company, of which certain of the CBS directors were the sole
shareholders, which was contracted to perform certain property
management duties on behalf of CBS. In order to position CBS
strategically, CBS decided to restructure the management by having
the operational management conducted in house. Accordingly CBS
acquired CBS Property Management (Proprietary) Limited ("CBSPM") for
a consideration of R14 850 000, with effect from 1 September 2005.
The purchase price was settled via the issue of CBS linked units at
R13 per linked unit. R2 350 000 of the purchase consideration was
allocated to existing CBS employees at the discretion of those CBS
directors who are the sellers of CBSPM, in recognition of their
commitment to the success of CBS.
5. THE PRIVATE PLACING
5.1. Dates and times
The private placing will not be underwritten and is subject to a minimum
subscription of 14 814 814 CBS linked units being achieved.
Issue and offer price per linked unit (cents) 675
Number of linked units to be offered 37 000 000
Rand value of minimum subscription of 14 900 R100 575
linked units per subscriber acting as
pricinpal
Maximum amount to be raised in terms of the R249 750 000
private placing
2005
Opening date of the private placing (09:00) Tuesday, 25 October
Closing date of the private placing (16:00) Friday, 28 October
CBS linked units in terms of the private Wednesday, 2
placing listed on the JSE in the "Financial - November
Real Estate" sector of the JSE list on or about
These dates are subject to change at the discretion of CBS. Any changes
will be announced on SENS and published in the press.
Commitments have been received for approximately 11.8 million linked units
at 675 cents per linked unit, and an additional 2.9 million linked units
have been reserved for existing CBS linked unit holders at 675 cents per
linked unit. Accordingly the remaining private placing is approximately
R150 million to R170 million.
5.2. Conditions precedent to the listing
The listing is subject to the fulfilment of the following conditions
precedent:
5.2.1 the achievement of the minimum spread requirements as per the JSE
Listings Requirements;
5.2.2 subscription for a minimum number of 14 814 814 linked units;
and
5.2.3 the sanctioning of the scheme of arrangement by the High Court of
South Africa (Cape of Good Hope Provincial Division) and the
registering of the Order of Court with the Registrar of
Companies.
6. LISTING ON THE JSE
The JSE has approved the listing of a maximum of 80 275 054 linked units,
subject to CBS obtaining the requisite spread of unitholders and the
succesful completion of the private placing in the "Financial- Real Estate"
sector of the JSE list with effect from the commencement of business on
Wednesday, 2 November 2005 or such other date as may be approved by the JSE.
The linked units will trade under the abbreviated name "CBSPROP" and the JSE
code "CBS".
7. COPIES OF THE PRE-LISTING STATEMENT
Copies of the Pre-listing statement may be obtained during normal business
hours, from the offices of CBS, 7th Floor, Buitengracht Centre Street, Cape
Town or from the offices of Investec Bank Limited, 100 Grayston Drive,
Sandown, Sandton until the closing of the private placing on Friday, 28
October 2005 at 16:00.
Cape Town
24 October 2004
Investment bank Attorneys Independent valuers
of the CBS property
portfolio
Investec Corporate Jowell Glyn & Marais Mills Fitchett
Finance
&
Smith Tabata Buchanan
Boyes
Lead Sponsor CBS Debenture Trustee Independent
reporting
accountants and
auditors
Investec Bank Limited JGM Trustees BDO Spencer Steward
Co Sponsor Schnaid Rubin & Co
BJM
Date: 24/10/2005 03:56:25 PM Produced by the JSE SENS Department
