| Wed 14 Dec 2005, 8:41 | | Pangbourne Properties Limited - Acquisition Of A P |
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Pangbourne Properties Limited - Acquisition Of A Portfolio Of Properties
PANGBOURNE PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/002352/06)
Share code:PAP ISIN:ZAE000005252
("Pangbourne" or "the Company")
ACQUISITION OF A PORTFOLIO OF PROPERTIES
INTRODUCTION
Pangbourne is pleased to announce that it has concluded an agreement to acquire
a portfolio of 48 properties from Transnet Retirements Funds Property Trust
("TRFPT") (excluding the V&A Waterfront), comprising a mixture of industrial,
commercial and retail properties, including rights to a shopping centre
development, referred to in more detail in paragraph 3.3 below ("the TRFPT
portfolio") ("the acquisition"). Subject to the fulfilment of the conditions
precedent set out in paragraph 3.2 below ("the acquisition conditions
precedent"), the expected date of transfer of the TRFPT portfolio is 31 March
2006 ("the transfer date").
The TRFPT portfolio includes a number of retail properties more suited to
Siyathenga Property Fund Limited ("Siyathenga") in which Pangbourne has an
interest (addressed in more detail in paragraph 4.1 below) and Pangbourne has
agreed the terms of a transaction involving the disposal to Siyathenga of these
properties simultaneously with the acquisition ("the Siyathenga disposal").
THE TRFPT PORTFOLIO
There are 48 properties in the TRFPT portfolio, comprising 440 000 m2 of gross
lettable area. The following fifteen of the 42 properties remaining in
Pangbourne after the Siyathenga disposal represent 60% of those properties by
value, as determined by the board of directors of Pangbourne.
Property Gross Lettable Area Location
(m2)
N1 Value Centre, 16 073 Western Cape
Goodwood
International 13 499 Gauteng
Healthcare
Distributors, Linbro
Park
Wedgewood Office 9 634 Gauteng
Park, Bryanston
Sandown Office Park, 5 650 Gauteng
Sandton
Jan Smuts Industrial 24 363 Gauteng
Park, Jet Park
Cullinan, 34 105 Gauteng
Olifantsfontein
Lebedu, Sunninghill 5 375 Gauteng
Menlyn Motor City, 5 373 Gauteng
Menlyn
Cambridge, Paulshof 10 877 Gauteng
PG Site, Germiston 23 546 Gauteng
Menlyn Home City, 4 572 Gauteng
Menlyn
Robertson Dekex, 20 433 Gauteng
Isando
Amalgamated 13 168 Gauteng
Appliances, Germiston
AAD/KIC, 24 685 Gauteng
Elandsfontein
PG Bison, Germiston 11 628 Gauteng
THE ACQUISITION
Terms of the acquisition
Pangbourne will acquire the TRFPT portfolio for a purchase consideration of R1
404 million, to be discharged through a cash payment of R702 million and the
delivery to TRFPT of a minimum of 33 468 216 new Pangbourne combined units ("the
Pangbourne consideration units"), 18 920 393 iFour Properties Limited ("iFour")
linked units ("the iFour consideration units") and a maximum of 30 000 000
Siyathenga linked units ("the Siyathenga consideration units").
In the event that the Siyathenga disposal becomes unconditional following the
fulfilment of the acquisition conditions precedent, Pangbourne will renounce in
favour of TRFPT that number of Siyathenga linked units that Siyathenga will
issue to Pangbourne to settle the required number of Siyathenga consideration
units. If the Siyathenga disposal is implemented, Pangbourne"s interest in
Siyathenga will dilute to 37 percent.
In the event that the Siyathenga disposal does not become unconditional due to
the non-fulfilment of the conditions precedent as set out in paragraph 4.2
below, ("the Siyathenga conditions precedent"), Pangbourne will deliver to TRFPT
its holding of Siyathenga linked units to settle the required number of
Siyathenga consideration units.
TRFPT may elect, by 31 January 2006, to reduce the number of Siyathenga
consideration units to a minimum of 23 000 000, in which case the number of
Pangbourne consideration units will be increased accordingly to a maximum of 37
671 537. Should this election take place and have a material effect on the
financial information set out in paragraph 7 below, a further announcement will
be published.
The unit prices in respect of the Pangbourne consideration units, the iFour
consideration units and the Siyathenga consideration units have been calculated
with reference to the 30-day trade-weighted average price thereof on the JSE
Limited ("the JSE") at 1 December 2005, adjusted for the estimated Pangbourne
and iFour distributions for the period 1 July 2005 to 30 November 2005 and the
estimated Siyathenga distribution for the period 5 August 2005 to 30 November
2005, which are to be refunded by TRFPT on receipt.
Pangbourne"s interest in iFour will reduce to 37 percent as a consequence of the
acquisition.
The acquisition conditions precedent
The acquisition will become operative and be implemented when the following
conditions precedent are fulfilled, namely that Pangbourne:
procures letters of support for the acquisition by 31 January 2006 from its
major combined unitholders;
obtains the approval from the JSE of the circular to Pangbourne combined
unitholders by 13 February 2006;
obtains the approval of the Competition authorities by 13 March 2006; and
obtains the approval by Pangbourne shareholders and Pangbourne debenture holders
of the requisite resolutions relating to the acquisition at the general meeting
of Pangbourne shareholders and the general meeting of Pangbourne debenture
holders to be convened in terms of the circular by 13 March 2006 ("the
Pangbourne general meetings").
The Boardwalk Shopping Centre development in Richards Bay ("Boardwalk Two")
In addition to acquiring the Boardwalk shopping centre, Pangbourne has acquired,
as part of the TRFPT portfolio, the TRFPT rights and obligations to the
agreements that it has with a developer in respect of the construction of a
shopping centre development adjacent thereto, with a maximum cost to completion
of R360 million. The agreements with the developer are conditional, inter alia,
upon formal agreements being concluded with the uMhlathuze Municipality
(Richards Bay, KwaZulu-Natal), by 31 August 2007. As the Boardwalk shopping
centre is included in the Siyathenga disposal, Pangbourne has granted Siyathenga
a right of first refusal to acquire Boardwalk Two.
THE SIYATHENGA DISPOSAL
Terms of the Siyathenga disposal
Pangbourne will dispose of six retail properties, referred to in more detail in
paragraph 4.2 below, acquired as part of the TRFPT portfolio, to Siyathenga in
exchange for R505.2 million, excluding any fees and costs, to be discharged
through the payment of R270.83 million in cash and the issue to Pangbourne, in
renounceable form, of 39 994 881 new Siyathenga linked units. In addition,
Siyathenga will pay to Pangbourne an aggregate fee of R15.07 million in respect
of the introduction of the properties included in the Siyathenga disposal, the
facilitation of the TRFPT acquisition and the Siyathenga disposal (including the
transactional costs) and placement of the Siyathenga consideration units.
Description of the property portfolio
The property portfolio comprises the six properties set out in the table below.
Property GLA (m2) Location
The Boardwalk, Richards Bay 25 933 KZN
Thrupps Centre, Illovo 13 085 Gauteng
Dions Value Centre, Alberton 13 091 Gauteng
Menlyn Dealership, Menlyn 11 688 Gauteng
Strydom Commercial Park, Randburg 15 494 Gauteng
Rutherford Estate Office Park, 9 180 Gauteng
Waverley*
*commercial property
Siyathenga conditions precedent
The Siyathenga disposal will become operative and be implemented when the
following conditions precedent are fulfilled:
the registration of Siyathenga Properties Three (Proprietary) Limited as a VAT
vendor by 13 February 2006;
the approval of the JSE being obtained to the circular to linked unitholders by
13 February 2006;
the approval of the Competition authorities being obtained by 13 March 2006;
the approval of Siyathenga shareholders (excluding Pangbourne) in general
meeting to the requisite resolutions relating to the acquisition 13 March 2006;
and
the TRFPT transaction becoming unconditional by 13 March 2006.
RATIONALE FOR THE ACQUISITION AND THE SIYATHENGA DISPOSAL
Pangbourne"s objective is to provide sustainable growth in distributions to
investors at a rate exceeding inflation to investors through investment in
specialised portfolios of property assets.
Sustainability is achieved through ensuring that the assets in which Pangbourne
invests in terms of age, quality and relevance, are able to deliver returns into
the future. Investment in specialised funds forms an integral part of that
strategy because it enables Pangbourne to take advantage of and anticipate
trends within the property cycle.
Growth in distributions is achieved through yield enhancing acquisitions,
proactive asset and property management and cost effective funding structures.
In this regard the introduction of Yard Capital Limited as a strategic
empowerment partner and Pangbourne"s participation in the PROPS Commercial
Mortgage Backed Securitisation ("PROPS CMBS") programme, has enabled Pangbourne
to uniquely position itself to acquire the TRFPT portfolio of quality properties
at a yield that will enhance the value and returns of its own portfolio, for a
settlement consideration consisting of cash, Pangbourne combined units and iFour
and Siyathenga linked units.
The TRFPT portfolio comprises modern well-located, retail, industrial and office
properties that are suitable for allocation into specialised funds. The
acquisition will not only increase the size of Pangbourne"s directly held
portfolio but, because the acquired properties are mostly less than ten years
old, will also significantly improve the quality of the age profile of the
Pangbourne portfolio. The size of the transaction will allow Pangbourne to
achieve the critical mass required to take advantage of the PROPS CMBS programme
and enable the Company to reduce its cost of capital in line with its strategy
of growth in distributions.
Pangbourne"s transformation strategy has been a significant factor in the
acquisition of the TRFPT portfolio and will position the Company to pursue
further acquisitions as government fulfills its targets of utilising disposal of
property assets to achieve national transformation objectives.
The increase of Pangbourne"s asset base as a result of the acquisition will
allow it to benefit from enhanced economies of scale in management efficiencies
and systems. Furthermore, the commensurate increase in market capitalisation
will provide investors with greater liquidity through the increase in the number
of Pangbourne combined units in issue.
VALUATION OF THE TRFPT PORTFOLIO
The TRFPT portfolio is being valued by Norman Griffiths & Associates, an
independent external valuer, who is registered as a professional valuer in terms
of the Property Valuers Profession Act, 47 of 2000, as defined by Section 13 of
the Listings Requirements of the JSE ("the Listings Requirements"). Extracts
from the valuation report containing further details of the properties within
the TRFPT portfolio will be published in due course.
FINANCIAL INFORMATION
The impact of the acquisition and the Siyathenga disposal on forecast revenue,
forecast operational net income, forecast net profit after tax, and forecast
distributable earnings of the TRFPT portfolio is set out in the table below.
Acquisition Acquisition and
Siyathenga
disposal
For the For the For the For the
three twelve three twelve
months months months months
ending ending ending ending
30 June 30 June 30 June 30 June
2006 2007 2006 2007
Revenue (R"000) 36 159 149 901 24 850 103 688
percent uncontracted rental 19.5 35.0 16.8 35.9
income (%)
Operational net income 15 335 50 759 12 958 48 843
(R"000)
Net profit after tax 4 611 21 347 3 891 17 434
(R"000)
Distributable earnings 8 294 35 783 8 471 36 619
(R"000)
The above forecast financial information has been reviewed and will be reported
on by the reporting accountants and their report in this regard will be
contained in the circular referred to in paragraph 10 below and will lie open
for inspection.
In line with previous transactions between Pangbourne and its associate
companies, in addition to the forecast financial effects of the Siyathenga
disposal as set out in the table above, Pangbourne will receive from Siyathenga
an introductory, facilitation and placement fee referred to in paragraph 4.1
above. This fee is excluded from the above forecast financial information.
The pro forma impact of the acquisition without the Siyathenga disposal and with
the Siyathenga disposal on net asset value ("NAV") and tangible net asset value
("TNAV") per Pangbourne combined unit is set out in the table below.
Acquisition Acquisition and Siyathenga
disposal
Before After Percentage Before After Percentage
the the change the the change
Acqui- Acqui Acqui Acqui
sition sition sition sition
(cents) (cents) (cents) (cents)
NAV per 776 883 14 776 872 12
combined
unit
TNAV per
combined 769 877 14 769 866 13
unit
The NAV and TNAV value per Pangbourne combined unit, as set out in the "Before
the acquisition" column of the table, are based upon the pro forma balance sheet
of Pangbourne at 30 June 2005 and 179 081 000 combined units in issue.
The NAV and TNAV per Pangbourne combined unit, as set out in the "After the
acquisition" column of the table, are based upon 212 549 000 combined units in
issue and the assumptions that:
the acquisition was implemented on 30 June 2005; and
the consideration units were issued in full on 30 June 2005.
The above pro forma financial effects have been reviewed and will be reported on
by the reporting accountants and their report in this regard will be contained
in the circular referred to in paragraph 10 below and will lie open for
inspection.
OPINION, RECOMMENDATION AND UNDERTAKING
The board of directors of Pangbourne ("the board") is of the opinion that the
terms of the acquisition are beneficial to Pangbourne combined unitholders and
those members of the board who hold Pangbourne combined units undertake to vote
in favour of the acquisition. Accordingly, the board recommends that Pangbourne
combined unitholders vote in favour of the resolutions to be proposed at the
Pangbourne general meetings.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement dated 23 November 2005 is hereby withdrawn and
Pangbourne combined unitholders are no longer required to exercise caution when
dealing in their combined units.
PANGBOURNE GENERAL MEETINGS AND DOCUMENTATION
A circular, setting out the full details of the acquisition and the Siyathenga
disposal, and containing notices of the Pangbourne general meetings, will be
posted to Pangbourne unitholders on or about Monday, 13 February 2006.
The Pangbourne general meetings will take place consecutively on 7 March 2006,
commencing at 10:00 at Pangbourne House, 3rd Floor, 382 Jan Smuts Avenue,
Craighall, Johannesburg.
Craighall
14 December 2005
Investment bank and sponsor Corporate law advisers
Standard Bank Edward Nathan
Reporting accountants Attorneys
Knowles Husain Lindsay
Deloitte & Touche Inc.
Chartered Accountants (SA)
Registered Accountants and Auditors
Property valuer
Norman Griffiths & Associates
Date: 14/12/2005 08:41:37 AM Produced by the JSE SENS Department
