| Wed 14 Dec 2005, 15:03 | | Siyathenga - Terms Announcement |
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Siyathenga - Terms Announcement
Siyathenga Property Fund Limited
(Registration number 2004/005198/06)
Share code: SYA
ISIN: ZAE00069530
("Siyathenga")
ACQUISITION OF A PORTFOLIO OF PROPERTIES
1. INTRODUCTION
Siyathenga is pleased to announce that its wholly-owned subsidiary,
Siyathenga Properties Three (Proprietary) Limited ("Siyathenga Three"), has
concluded an agreement with Pangbourne Properties Limited ("Pangbourne") to
acquire a portfolio of six properties ("the property portfolio") for an
aggregate consideration of R505.2 million ("the purchase consideration").
The property portfolio forms part of the portfolio acquired by Pangbourne
from the Transnet Retirement Funds Property Trust ("TRFPT") in a
transaction ("the TRFPT transaction") that is to be implemented
simultaneously with the acquisition of the property portfolio ("the
acquisition"). The expected date of transfer of the property portfolio is
31 March 2006, after the fulfilment of the conditions precedent set out in
paragraph 4.3 below ("the conditions precedent") which include the TRFPT
transaction becoming unconditional.
2. RATIONALE
The acquisition is in line with and supports Siyathenga"s stated objectives
given that:
the property portfolio to be acquired comprises high quality, select
and well-positioned predominantly retail properties, complemented by a
commercial office component;
- Siyathenga"s property portfolio gross asset value will be increased by
R505.2 million to approximately R1.3 billion, which is in line with
Siyathenga"s medium term growth objectives; and
the tradeability of the Siyathenga linked units will be enhanced by
the improvement in distributable earnings arising from the acquisition
and through the issue of additional linked units.
Furthermore, the acquisition provides suitable critical mass in its asset base,
creating the opportunity for Siyathenga to pursue a Commercial Mortgage Backed
Securitisation programme, which will reduce its cost of debt capital.
3. DESCRIPTION OF THE PROPERTY PORTFOLIO
The property portfolio comprises the six properties set out in the table below.
Property Gross Lettable Location
Area (m2)
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
4. SALIENT TERMS OF THE ACQUISITION
4.1 The purchase consideration
The purchase consideration is to be discharged through a cash payment
of R270.83 million and the issue to Pangbourne, in renounceable form,
of 39 994 881 new Siyathenga linked units at a price of R5.86 per
linked unit ("the consideration units"). In addition, Siyathenga will
pay to Pangbourne an aggregate fee of R15.07 million in respect of the
facilitation of the TRFPT transaction, the introduction of the
properties in the property portfolio, the transactional costs and the
placement of Siyathenga linked units with TRFPT ("the fees").
4.2 Related party transaction
Pangbourne currently has a 43% interest in Siyathenga and therefore,
in terms of the Listing Requirements of the JSE Limited ("JSE")
("Listings Requirements"), the acquisition is a related party
transaction.
On the basis that the property portfolio is being acquired at a
consideration equal to that at which it is being acquired by
Pangbourne in terms of the TRFPT transaction, the JSE has waived the
requirement that a fair and reasonable opinion be obtained from an
independent expert regarding the purchase consideration.
An independent expert will be appointed in due course to express an
opinion on the fees.
4.3 Conditions precedent to the acquisition
The acquisition will become operative and be implemented when the
following conditions precedent are fulfilled:
- the registration of Siyathenga Three 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 by 13 March 2006; and
- the TRFPT transaction becoming unconditional by 13 March 2006.
4.4 Extension to the Boardwalk Shopping Centre, Richards Bay
Pangbourne has acquired, as part of the TRFPT portfolio, the rights and
obligations to the agreements that TRFPT has with a developer in respect of
the construction of a shopping centre development as an extension to the
existing Boardwalk shopping centre. It is anticipated that the extension
will have 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. Pangbourne has granted Siyathenga a right of
first refusal to acquire the completed development.
5. VALUATION OF THE PROPERTY PORTFOLIO
The property 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. Extracts from the valuation report
will be published in due course.
6. FORECAST FINANCIAL INFORMATION
The impact of the acquisition on forecast revenue, forecast operational net
income, forecast net profit after tax and forecast distributable earnings
of the property portfolio is set out in the table below.
For the three For the twelve
months ending months ending 30
30 June 2006 June 2007
Revenue (R"000) 16 236 67 733
Percentage uncontracted rental 24.1% 33.5%
income (%)
Operational net income (R"000) 7 304 23 436
Net profit after tax (R"000) 6 052 26 969
Distributable earnings (R"000) 5 265 22 739
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 9 below and will lie open for
inspection.
The pro forma impact of the acquisition on net asset value ("NAV") and tangible
net asset value ("TNAV") per Siyathenga linked unit is set out in the table
below.
Before the After the Percentage
Acquisition Acquisition Change
(cents) (cents)
NAV per linked unit 500 550 10
TNAV per linked unit 500 550 10
Notes:
The NAV and TNAV per Siyathenga linked unit, as set out in the "Before the
acquisition" column of the table, are based upon the pro forma balance sheet of
Siyathenga at 7 June 2005, as contained in the prospectus issued on 24 June 2005
and 30 000 000 linked units in issue.
The NAV and TNAV per Siyathenga linked unit, as set out in the "After the
acquisition" column of the table, are based upon 69 994 000 linked units in
issue and the assumptions that:
the acquisition was implemented on 7 June 2005; and
the consideration units were issued in full on 7 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 9 below and will lie open for
inspection.
7. OPINION, RECOMMENDATION AND UNDERTAKINGS
The board of directors of Siyathenga ("the board") are of the unanimous
opinion that the terms of the acquisition are beneficial to Siyathenga
linked unitholders. Accordingly, the board recommends that Siyathenga
unitholders vote in favour of the relevant resolutions to be proposed at
the Siyathenga general meetings. Furthermore, those directors holding
Siyathenga linked units undertake to vote in favour of such resolutions in
respect of their own holdings of Siyathenga linked units.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement dated 23 November 2005 is hereby withdrawn and
Siyathenga linked unitholders are no longer required to exercise caution
when dealing in their linked units.
9. SIYATHENGA GENERAL MEETING AND DOCUMENTATION
A circular containing full details of the acquisition and notice of the
Siyathenga shareholders" meeting ("the general meeting") will be posted to
Siyathenga unitholders on or about Monday, 13 February 2005.
The general meeting will take place on Tuesday, 7 March 2006, at 12:00 at
Pangbourne House, 3rd Floor, 382 Jan Smuts Avenue, Craighall, Johannesburg.
Craighall
14 December 2005
Investment bank and sponsor Corporate law advisers
Standard Bank logo Edward Nathan logo
Reporting accountants Property valuer
Deloitte & Touche logo Norman Griffiths &
Associates
Attorneys
Knowles Husain Lindsay Inc.
Date: 14/12/2005 03:03:33 PM Produced by the JSE SENS Department
