PUTPROP LIMITED - Acquisition of Property known as Bank City Potchefstroom

Acquisition of Property known as Bank City Potchefstroom

 PUTPROP LIMITED
Incorporated in the Republic of South Africa
(Registration Number 1988/001085/06)
Share code: PPR ISIN: ZAE000072310
(“Putprop” or “the Company” or “the Group”)



ACQUISITION OF PROPERTY KNOWN AS BANK CITY POTCHEFSTROOM


1. INTRODUCTION AND RATIONALE

   The board of directors of Putprop (“the Board”) is pleased to inform shareholders that Putprop has
   entered into an agreement of sale dated 8 April 2014 (“the Agreement”) with Bronze Door Properties
   Proprietary Limited (“Bronze Door” or the “Sellers”) to acquire the Bank City business enterprise, from
   Bronze Door (“the Acquisition”). Bronze Door owns property situated in the township of Potchefstroom,
   Registration Division I.Q., Province of the North West known as Bank City, upon which it conducts the
   business of a letting enterprise.

   The Acquisition complies with the company’s stated objective of strategic investments focussed on
   industrial and commercial opportunities, where yields are enhancing in the medium and long term as well
   as broadening of the current tenant base to reduce the risk of over dependence on a limited number of
   tenants.

2. THE ACQUISITION

   2.1 Details of Bronze Door

           Bronze Door owns the property situated on Portion 3 of erf 1718, (in extent 5400 square metres) in
           the township of Potchefstroom Registration Division I.Q. Province of the North West together with
           all the improvements thereon, known as Bank City (“the Property”). Bronze door currently rents out
           the individual and separate premises located on the Property to various tenants.
           Putprop will benefit from revenues generated from the rentals of the commercial and retail portions
           of Bank City. It is estimated that the retail and commercial portions will comprise of a GLA of
           2521.84 square metres. The weighted average rental per square metre has been estimated at
           R82.52.

   2.2 Purchase consideration

       The total purchase consideration of R21 500 000, (twenty one million five hundred thousand Rand)
       (“Consideration”) will be settled entirely in internally generated cash. The Consideration shall be
       secured by way of:
       -      an acceptable bank guarantee of R16 500 000 (sixteen million five hundred thousand Rand)
              made payable to the conveyancers within 15 (fifteen) days of fulfilment of the conditions
              precedent. Such guarantee is to be payable upon registration of transfer; and
       -      a deposit in the amount of R5 000 000 (five million Rand) cash, to be paid into the trust account
              of the conveyancers 5 (five) days after acceptance by Bronze Door of the Sale Agreement.
       -      The deposit is fully refundable in the case of the Agreement being cancelled or the transfer not
              being registered for whatever reason.

       A valuation of the Property was performed prior to the Acquisition by Putprop’s directors, who are
       not registered as professional valuers in terms of the Property Valuers Profession Act, 2000(No 47
       of 2000). The Property was valued at an estimated amount of R23 500 000 (twenty three million five
       hundred thousand Rand.

   2.3 Transfer of property

        The transfer of the property shall be effected by the Sellers nominated attorney within a reasonable
        time after the purchaser has secured the full purchase consideration and made payment to the
        conveyancer of transfer duty and all other costs of transfer and matters incidental thereto.

   2.4 Debtors

        The debtors as prior to the effective date shall remain vested in the Sellers.

   2.5 Warranties

        The Sellers have provided warranties which are normal in a transaction of this nature.

   2.6 Effective date 

        The effective date of the Acquisition shall be the date of transfer of the property to the Company,
        being the fulfilment date of all suspensive conditions. No costs have been incurred by Putprop in
        relation to the Acquisition, other than estimated legal costs of R50 000 (fifty thousand Rand.

   2.7 Conditions Precedent

        All conditions precedent in respect of the Acquisition have been fulfilled.

3. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION

   The table below sets out the unaudited pro forma financial effects of the Acquisition, on Putprop’s
   earnings per share, headline earnings per share, net asset value per share and tangible net asset value
   per share.

   The unaudited pro forma financial effects have been prepared to illustrate the impact of the Acquisition
   on the reported financial information of Putprop for the six months ended 31 December 2013, had the
   Acquisition occurred on 1 July 2013 for income statement purposes and on 31 December 2013 for
   balance sheet purposes.

   The unaudited pro forma financial effects have been prepared using accounting policies that comply with
   International Financial Reporting Standards and that are consistent with those applied in the interim
   results for the six months ended 31 December 2013 and the audited results of Putprop for the year
   ended 30 June 2013.

   The unaudited pro forma financial effects, which are the responsibility of the directors, are provided for
   illustrative purposes only and, because of their pro forma nature may not fairly present Putprop’s
   financial position, changes in equity, results of operations or cash flow.


                                                               Before the        After the        Percentage
                                                               Acquisition       Acquisition       change (%)
   Basic earnings per share (cents)                              56.4                   57.6             2.1
   Headline earnings per share (cents)                           42.8                    44.0            2.8
   Net asset value per share (cents)                          1 189.3                 1 191.8            0.2
   Tangible net asset value per share (cents)                 1 189.3                 1 191.8            0.2
   Weighted average number of shares in issue                  28 793                  28 793              -
   Total number of shares in issue                             28 793                  28 793              -

   Notes:
    1. The amounts in the “Before the Acquisition” column have been extracted from the unaudited financial
       results of Putprop for the six months ended 31 December 2013.

    2. The amounts in the “After the Acquisition” column reflect the financial effects of the Acquisition on
       Putprop.

    3. The effects on earnings per share and headline earnings per share are calculated based on the
       assumption that the Acquisition was effected on 1 July 2013.

    4. The effects on net asset value per share and tangible net asset value per share are calculated based
       on the assumption that the Acquisition was effected on 31 December 2013.

    5. The consideration will be settled entirely in internally generated cash resulting in a loss of interest
       income at the rate of 5% per annum.

    6. The Property is currently fully utilised, this fact has been applied in calculating the pro formas.

4. CLASSIFICATION OF THE ACQUISITION 

   The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of the
   JSE Limited.


10 April 2014
Sponsor
Merchantec Capital

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