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CBS Property Portfolio Limited - Announcement Regarding The Acquisition Of
Properties
CBS PROPERTY PORTFOLIO LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/009523/06)
(JSE code: CBS ISIN: ZAE000073995)
("CBS" or "the company")
Announcement regarding the acquisition of properties
1. INTRODUCTION
Linked unitholders are advised that CBS has entered into various agreements
("the agreements") with three different vendors ("the vendors") regarding the
acquisition of seven properties ("the acquisitions"), the details of which are
as follows:
Vendor Property Effective date of
acquisitions
Toich Group Gateway Park 31 December 2005
Gateway Creek 31 December 2005
Green Oaks 31 December 2005
Moslein Portfolio 144 Hendrik 1 January 2006
Verwoed Drive
150 Hendrik 1 January 2006
Verwoed Drive
152 Hendrik 1 January 2006
Verwoed Drive
Simonstown Boardwalk Simonstown On date of
Centre (Proprietary) Broadwalk Centre transfer
Limited
2. RATIONALE FOR THE ACQUISITIONS
CBS" objective is to offer growth in income and capital over the medium to long
term. In doing so CBS seeks acquisition opportunities which will enhance the
quality of the CBS property portfolio as well as the long-term sustainable
growth. CBS also seeks to maintain its exposure to a sectorally well-balanced,
geographically diversified property portfolio. CBS" directors are of the opinion
that the acquisitions are in line with the above investment criteria. The
estimated initial annual forward yield of the acquisitions is 10.38%, which
enhances the yield of the CBS portfolio.
3. ACQUISITION CONSIDERATION
CBS will acquire the acquisitions for a total purchase consideration of R122.540
million in cash. Detailed below is the purchase consideration for each of the
individual properties acquired:
Property Acquisition consideration
R"000
Gateway Park R19 500
Gateway Creek R27 300
Green Oaks R26 700
144 Hendrik Verwoed Drive R5 701
150 Hendrik Verwoed Drive R5 611
152 Hendrik Verwoed Drive R6 688
Simonstown Boardwalk Centre R31 040
Valuations of the abovementioned properties have been performed by the directors
of CBS in determining the acquisition consideration.
4. PRO FORMA FINANCIAL INFORMATION RELATING TO THE ACQUISITIONS
The financial effect of the acquisitions on CBS"s net asset value per linked
unit has not been disclosed as the effects are not material. Pro forma forecast
information for the 12 months ending 31 October 2006 is set out below. The Pro
forma forecast financial information is the responsibility of the directors and
has been prepared for illustrative purposes only, and because of its nature, it
may not fairly present CBS" financial position, changes in equity, results of
operations or cash flows.
Forecast
Forecast Pro forma Pro forma
as per adjustmen forecast
SENS ts for inclusive
announceme acquisiti of
nt 1 ons (2) acquisitio
November ns
2005
12 months 12 months
ending ending
31 October 31 October
2006 2006
R"000 R"000
Forecast profit available for (61 870) (886) (62 756)
interest paid - debenture
holders
Linked units in issue (1) 90 690 461 90 690 461
Distribution per linked unit 68 1 69
(cents)
Yield (based on distribution)
per linked unit and a linked 9.34% 9.48%
unit price of 730 cents as at
close of business 2 December
2005 (%)
Notes
1.The linked units in issue in respect of the 31 October 2006 forecast assumes
that all the linked units relating to the properties acquired from Growthpoint
Properties Limited and the acquisition of the Malvern Centre have been issued.
2. Prior to the use of the cash raised from the private placing for the
acquisitions, a portion of the cash was used to reduce the gearing of CBS and a
portion of the cash was placed on call to fund the Malvern and Growthpoint
acquistions. The pro forma adjustments reflect the additional return of 1.38%
that the acquisitions yield over and above the reduction in interest expense of
9% on third party debt for a period of 10 months, assuming that the Simonstown
Broadwalk Centre is transferred by 1 January 2006, as well as the reduced
deduction of interest on third party debt that was assumed in the forecast as
per the SENS announcement on 1 November 2005, due to the greater than expected
delay in the transfer of the properties acquired from Growthpoint Properties
Limited and the Malvern Centre. Detailed below is the reconciliation of the
split between the acquisitions of the increase in profit available for
distribution to debenture holders and the reduction of the reduced interest
expense:
Increase in profit Pro forma
available for adjustment
distribution: R"000
Toich Group (586)
Moslein Portfolio (421)
Simonstown (425)
Boardwalk Centre
(Proprietary)
Limited
Total (1 432)
Less: Reduced 546
interest income
Net Pro Forma (886)
adjustment
6. CONDITIONS OF THE ACQUISITIONS
5.1 The acquisition of the properties from the Toich Group, are subject, inter
alia, to the following suspensive conditions:
* approval of the acquisition by CBS by 9 December 2005;
* the approval of the Competition Commission to the extent required, within 21
(Twenty One) business days of the acceptance by CBS of the due diligence
exercise; and
* the conclusion of the various formal agreements, within 7 (Seven) business
days of the signature date being 2 December 2005.
5.2 The acquisition of the property from Simonstown Boardwalk Centre
(Proprietary) Limited is subject to the following resolutive condition:
* Simonstown Boardwalk Centre (Proprietary) Limited procures a cession of the
leasehold rights over Erven 3068 and 1071 Simonstown in favour of CBS on or
before transfer date.
6. PROPERTY DETAILS
Details regarding the properties are detailed below:
Property Property Sector Gross Single Weighted Vacancy
location lettable or multi average by
area m2 tenanted rental rentable
per m2 area
Gateway Midrand, Commercial 3 416 Multi 61.78 -
Park Gauteng tenanted
Gateway Midrand, Commercial 3 719 Multi 79.16 -
Creek Gauteng tenanted
Green Oaks Midrand, Commercial 4 666 Multi 66.48 -
Gauteng tenanted
144 Randburg, Commercial 2 033 Multi 52.02 -
Hendrik Gauteng tenanted
Verwoed
Drive
150 Randburg, Commercial 1 954 Multi 51.89 -
Hendrik Gauteng tenanted
Verwoed
Drive
152 Randburg, Commercial 2 356 Multi 50.16 -
Hendrik Gauteng tenanted
Verwoed
Drive
Simonstown Simonstown, Retail, 3 827 Multi * 155.45 -
Boardwalk Cape Town Hotel & tenanted
Centre Conference
* includes rental income generated from hotel
7. CATEGORISATION OF THE ACQUISTIONS
The acquisitions are classified as a Category 3 transaction in terms of the JSE
Listings Requirements
Cape Town
5 December 2005
Investment Bank Transaction Sponsor
Investec Corporate Investec Bank
Finance Limited
Date: 05/12/2005 04:24:24 PM Produced by the JSE SENS Department
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