| Wed 29 Nov 2006, 17:02 | | CBS - Acquisition Of Properties And General Issue |
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CBS
CBS
CBS - Acquisition Of Properties And General Issue Of Shares For Cash
CBS Property Portfolio Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/009523/06)
Share code: CBS & ISIN: ZAE000073995
("CBS")
ACQUISITION OF PROPERTIES AND GENERAL ISSUE OF SHARES FOR CASH
1. INTRODUCTION
CBS linked unitholders are advised that CBS has concluded an agreement on
29 November 2006 with Class A Trading 711 (Proprietary) Limited and the
Trustees for the time being of the Truzen 11 Trust, being an associated
company and trust of Zenprop Property Holdings (Proprietary) Limited
respectively (the "vendors") to acquire 2 properties in Midrand,
Johannesburg, being the properties commonly known as the T-Systems
Building and the Siemens Building (the "properties") (the "proposed
acquisition").
The aggregate purchase consideration for the proposed acquisition is R302
165 316 (the "purchase consideration").
2. THE PROPOSED ACQUISITION
2.1Rationale and Salient Details
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 existing CBS property portfolio as well as its
long-term sustainable growth in distributions to linked unitholders. CBS
also seeks to maintain its exposure to a sectorally well-balanced,
geographically diversified property portfolio. The board of directors of
CBS ("the board") are of the opinion that the proposed acquisition is in
line with such investment criteria
The properties consist of premium and A-grade quality office buildings
which have above average annual rental escalations with a weighted average
annual rental escalation of 9.0% per annum. Both properties are occupied
by single tenants and are triple net leases, with the tenant being
responsible for all expenses.
The properties will have an effective date as at the date of transfer or 1
April 2007, which ever is the earlier.
Property Vendor Property Apportion- Office Alloc- Number Struct-
ment ated ured
of purchase Area Office of & formal
Location price in Rental Parking Parking
for offices Sq. m. Bays (approx)
R Millions R/Sqm Sq. m.
Siemens Truzen Erf 125 & 124.13 52.86 409 7150
126 15,544
Building 11 Erand
Trust Gardens
Extension
53
Midrand
T Class A Erf 16 & 120.58 9,689 79.86 438 13140
Systems 17
Building Trading Midridge
Park
(Pty) Extension
7
Limited Midrand
Property Vendor Property Estimated Appor- Total Total
tionment annual
Attributable of Property Acqui-
purchase sition
Location Monthly price Net Cost
Parking
Income for Income
parking
Rands R Rands R
Millions Millions
Siemens Truzen Erf 125 & 130,230 17.88 11,422,405 142
126
Building 11 Erand
Trust Gardens
Extension
53
Midrand
T Class A Erf 16 & 164,910 39.42 11,263,738 160
Systems 17
Building Trading Midridge
Park
(Pty) Extension
7
Limited Midrand
As part of the proposed acquisition, the vendors:-
* in respect of the T-Systems building, have undertaken to develop the
adjacent land to such building, when called upon by the tenant to do
so, with CBS having a right to call and the vendors having a right to
put at a price determined by applying a captilisation rate of the
lower of 9% or the forward yield of CBS to the net forward income ;
and
* in respect of the Siemens building, have provided a rental guarantee
to CBS in the amount of R 600 000 (six hundred thousand rand) as
regards certain signage rights on the building which fronts onto the
N1 highway.
2.2 Purchase Consideration
It is intended that the purchase consideration is to be settled as to
76.4% in cash (being R231 million) by way of a vendor placing, 3.6% in
cash from existing cash resources and facilities (R11 million) and the
remaining 20% (R60 million) by way of interest free loans from the vendors
for a period of 7 years.
3. CONDITIONS
The proposed acquisition is subject, inter alia, to the following
resolutive conditions:
3.1 CBS conducting a confirmatory due diligence; and
3.2 obtaining the necessary regulatory approvals including the
Competition Authorities.
4. VALUATION of THE PROPERTIES
THE PROPERTIES WILL BE VALUED BY AN INDEPENDENT EXTERNAL VALUER,
REGISTERED AS A PROFESSIONAL VALUER IN TERMS OF THE PROPERTY VALUERS
PROFESSION ACT, 47 OF 2000 AS AMENDED AND AS REQUIRED IN TERMS OF SECTION
13 OF THE LISTINGS REQUIREMENTS OF THE JSE LIMITED ("LISTINGS
REQUIREMENTS"). WHERE RELEVANT, EXTRACTS FROM THE VALUATION REPORT
CONTAINING FURTHER DETAILS OF THE PROPERTIES WITHIN THE CBS PROPERTY
PORTFOLIO WILL BE PUBLISHED IN THE CIRCULAR REFERRED TO IN PARAGRAPH 7
BELOW.
5. GENERAL ISSUE OF SHARES FOR CASH
At the annual general meeting of the Company held on 26 April 2006, the
requisite majority of CBS linked unitholders approved an ordinary
resolution authorising the board to issue linked units for cash in
accordance with paragraph 5.52 of the Listings Requirements ("general
authority"). In accordance with the general authority CBS has successfully
placed 15 000 000 linked units ("the placed linked units"), equating to
approximately 10% of CBS"s issued linked units, with the Public Investment
Corporation. It is anticipated that the placed linked units will be listed
on the JSE in the first week of December 2006 and will rank pari-passu
with the existing linked units in issue. The placed linked units will be
issued at a price of 795 cents per linked unit, being a 2% discount to the
30 day Volume Weighted Average Price on 17 November 2006, being the date
on which the CBS board agreed to the placement.
The proceeds from the placed shares will be used to fund further
acquisitions.
6. FINANCIAL INFORMATION FOR THE PROPOSED ACQUISITION AND GENERAL ISSUE
OF SHARES FOR CASH
The impact of each of the proposed acquisition and the general issue of
linked units for cash referred to in 5 above on forecast revenue, forecast
operational net income and net income after tax of the CBS property
portfolio is set out below:
Rand million Before After issue of After issue
proposed linked units for of linked
acquisition cash units for
and general cash and
issue of Proposed
linked units acquisition
for cash
Forecast revenue 228 228 240
Operational net income 160 160 172
Interest Paid to 117 140
debenture holders 128
Profit after tax - -
-
Linked units in issue 157 010 158 172 010 158 200 000 000
after proposed
transaction
Respective issue 7.95 8.25
prices
Forward yield cents on 74.44 74.72
weighted average
linked units in issue 74.79
Forward yield at 9.06%
respective issue
prices 9.41%
The general issue for linked units for cash has no impact on the
historical financial effects.
The Before proposed acquisition and general issue of linked units for
cash figures are based on the Pro Forma forecast for the year ended 31
October 2007, which was included in the circular posted to CBS linked
unitholders on 19 May 2006.
In respect of the proposed acquisition, the rental escalation of 9% only
applies for 7 months of the forecast period.
The financial effect calculations for the general issue of linked units
have been adjusted to include the increase in cash and net interest
received from 1 December 2006.
The above forecast financial information is the responsibility of the
board and has not yet been reviewed but will be reported on by the
reporting accountants and their report in this regard will be contained in
the circular referred to in paragraph 7 below and will lie open for
inspection.
7. CIRCULAR TO CBS LINKED UNIT HOLDERS IN RESPECT OF THE PROPOSED
ACQUISITION AND IMPLEMENTATION OF A STAFF SHARE INCENTIVE SCHEME
In terms of the Listings Requirements, the proposed acquisition is
classified as a category 2 transaction. Accordingly a circular
incorporating the relevant information will be posted to CBS linked
unitholders within due course.
CBS is in the process of implementing a staff share incentive scheme. The
information required in terms of Schedule 14 of the Listings Requirements
will also be included in the circular.
The circular is subject to the approval of the JSE.
Cape Town
29 November, 2006
Investment bank Sponsor Legal adviser
Investec Corporate Finance Investec Bank Limited Jowell Glyn Marais
Date: 29/11/2006 05:02:09 PM Produced by the JSE SENS Department
