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Proposed Acquisition of additional Properties and renewal of Cautionary announcement
ANNUITY PROPERTIES LIMITED
(formerly Niqsha Beleggings CC)
(Incorporated in the Republic of South Africa)
(Registration Number 2011/145994/06)
Share code: ANP ISIN: ZAE000165643
(“Annuity” or “the Company”)
PROPOSED ACQUISITION OF ADDITIONAL PROPERTIES AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
A. INTRODUCTION
Further to the cautionary announcement dated 30 July 2012, Annuity is pleased to announce that it has
agreed broad terms with the relevant vendors for the acquisition of the properties set out below (the
“Property Acquisitions”). The Property Acquisitions are consistent with Annuity’s growth and investment
strategy of building a quality property portfolio, offering long term distribution and capital growth underpinned
by strong underlying contractual cash flows. The details of the Property Acquisitions are set out in Section B
below. The Property Acquisitions are not inter-conditional on one another.
A combined circular detailing the terms of the Property Acquisitions as well as the BCX Property Acquisition
and the Atrium Acquisition (unitholders are referred to the announcement dated 30 July 2012 for the details
relating to the BCX Property Acquisition and Atrium Acquisition) and convening a general meeting of Annuity
linked unitholders will be posted in due course.
B. THE PROPERTY ACQUISITIONS
1. THE PORTFOLIO ACQUISITION
1.1 THE PORTFOLIO ACQUISITION
Annuity has agreed the terms, on an exclusive basis, with TCG Properties Proprietary Limited
(“Riverhorse Vendor”) and Blackstar Properties Proprietary Limited (“Virgin Active Vendor”) for,
respectively:
- the Riverhorse building (the “Riverhorse Property”), together with all leases and assets,
including available bulk, forming necessary parts of the letting enterprise as a going
concern (the “Riverhorse Letting Enterprise”), located in Riverhorse Valley, Durban
(collectively, the “Riverhorse Acquisition”); and
- the acquisition of the Virgin Active building (the “Virgin Active Property”), together with
all leases and assets forming necessary parts of the letting enterprise as a going concern
(the “Virgin Active Letting Enterprise”), located in Bryanston, Sandton (collectively, the
“Virgin Active Acquisition”),
(hereinafter collectively, the “Portfolio Acquisition”). The Riverhorse Vendor and the Virgin Active
Vendor are considered to be associated companies as defined in terms of the Listings
Requirements of the JSE (“JSE Listings Requirements”). Accordingly, the purchase
considerations of the Riverhorse Acquisition and Virgin Active Acquisition have been aggregated in
considering the categorisation of the aforementioned acquisitions. The Riverhorse Acquisition and
the Virgin Active Acquisition are not inter-conditional on one another.
The effective date of the Riverhorse Acquisition shall be the date of transfer of the Riverhorse
Property into the name of Annuity which is expected to take place by 31 December 2012. The
Virgin Active Property will transfer into Annuity’s name following completion of the development
project to Annuity’s satisfaction, which is expected to take place by 31 March 2013. The transfer of
the Riverhorse Property and Virgin Active Property to Annuity is subject to fulfilment of the
conditions precedent set out in 1.4 below.
1.2 PURCHASE CONSIDERATION
The purchase consideration for the Riverhorse Letting Enterprise and the Virgin Active Letting
Enterprise amounts to R118,000,000 and R120,000,000, respectively, and is payable in cash
against transfer of each of the properties into the name of Annuity. The purchase consideration will
be settled utilising a combination of debt and the issue of new Annuity linked units.
1.3 INFORMATION RELATING TO THE PORTFOLIO ACQUISITION
The Riverhorse Property
The Riverhorse Property is conveniently located in a growing industrial hub of Riverhorse Valley,
situated alongside the N2 between Durban and Umhlanga. The premium property has excellent
exposure to the N2 freeway and its close proximity to other major road linkages making it an
extremely desirable business location. This property has a total gross lettable area of 12,489m² and
comprises multi-tenanted retail and industrial components. The Riverhorse Letting Enterprise is
occupied by high-quality tenants with good quality credit ratings and highly defensive
characteristics, including Builders Warehouse, a Massmart Holdings Limited company and Cecil
Nurse, a Bidvest Group Company, which occupy approximately 65% and 17% of the gross lettable
area, respectively.
The Riverhorse Acquisition is consistent with Annuity’s strategy to create a sectorally well-
balanced, geographically diversified property portfolio that delivers above average market returns.
The property specific information for the Riverhorse Property is detailed below:
Description of the property: Portion 118 of Erf 1, Riverhorse Valley
Location: 23 Riverhorse Valley, Durban, Kwa-Zulu Natal
Single or multi-tenanted: Multi-tenanted
Grade: A Grade
Industrial: 4,361m²
GLA (m²):
Retail: 8,128m²
Available bulk (m²): 3,000m²
Weighted average gross rental per square Industrial: R71.41/m²
metre (R/m²): Retail: R60.34/m²
The Virgin Active Property
The Virgin Active Property is situated in a rapidly expanding residential area at 12 Cross Road,
Bryanston, Sandton, on the corner of the William Nicol and Main Road intersection. The property is
in close proximity to major roads, premier shopping destinations and high end residential suburbs.
The Virgin Active Letting Enterprise offers a high quality tenant profile, with Virgin Active occupying
82% of the gross lettable area on a 15 year triple net lease. Virgin Active is a chain of health clubs
in South Africa, Namibia, Italy, Spain, Portugal, Australia and the United Kingdom. The company
launched in 1998 in the United Kingdom as part of Richard Branson's Virgin Group.
After the completion of the development, the Virgin Active Property will boast a double storey gym
facility and a small office and retail component.
The property specific information for the Virgin Active Property is detailed below:
Description of the property: Erf 787, Bryanston Township
12 Cross Road, Bryanston, Johannesburg,
Location:
Gauteng
Single or multi-tenanted: Multi-tenanted
Grade: A Grade
Gym: 4,300m²
Office: 510m²
GLA (m²): Retail: 287m²
Storage: 147m²
Gym: R155.00/m²
Weighted average gross rental per square Office: R128.91/m²
metre (R/m²): Retail: R232.82/m²
Storage: R50.00/m²
The directors of Annuity are of the view that the Riverhorse Acquisition and the Virgin Active
Acquisition will enhance the quality of Annuity’s existing portfolio as well as its long term
sustainable growth in distributions to linked unitholders.
1.4 CONDITIONS PRECEDENT TO THE PORTFOLIO ACQUISITION
The Portfolio Acquisition is subject to the fulfilment of, inter alia, the following conditions precedent:
a) the conclusion of formal deeds of sale for the purchase of the Riverhorse Letting Enterprise
and Virgin Active Letting Enterprise by Annuity;
b) the requisite majority of the Riverhorse Vendor shareholders and Virgin Active Vendor
shareholders adopting a special resolution in terms of Sections 112 and 115 of the Companies
Act, No. 71 of 2008, as amended, ("Companies Act") approving the disposal of the
Riverhorse Property and Virgin Active Property, respectively;
c) the completion of a due diligence review to the satisfaction of Annuity;
d) the board of directors of Annuity (the “Annuity Board”) adopting an ordinary resolution
approving the Riverhorse Acquisition and Virgin Active Acquisition after the completion of a
satisfactory due diligence review;
e) regulatory approvals that may be required including, but not limited to, the approval of the JSE,
Annuity linked unitholder approval and, where applicable, Competition Authority approval in
terms of the Competition Act 89 of 1998; and
f) the raising of the necessary debt and equity capital required to fund the Portfolio Acquisition.
1.5 CATEGORISATION
The Portfolio Acquisition is a Category 1 acquisition in terms of the JSE Listings Requirements thus
requiring Annuity linked unitholder approval.
1.6 PRO FORMA FINANCIAL EFFECTS
The due diligence reviews and independent valuations of the Portfolio Acquisitions are in the
process of being finalised and the pro forma financial effects will be published in due course.
2. THE LANGEBERG MALL ACQUISITION
Annuity has entered into a binding and exclusive arrangement with Ferox Investments Proprietary Limited
(“Langeberg Mall Vendor”) to acquire the Langeberg Mall (the “Langeberg Mall Property”), together with
all leases and assets forming necessary parts of the letting enterprise as a going concern (the “Langeberg
Mall Letting Enterprise”), located in Hartenbos, Mossel Bay (collectively, the “Langeberg Mall
Acquisition”) for a purchase consideration of R400,000,000. Detailed financial and related specific property
information will be released in due course.
The Langeberg Mall Property is a unique shopping and dining destination which was developed in 2006; it is
the largest and one of the most prestigious shopping centres in Mossel Bay that is focused on middle-
income residents and tourists. This open air mall, with hints of the town’s maritime history is situated just off
the N2 and en route between Mossel Bay and Hartenbos on the Garden Route.
Langeberg Mall comprises of a diverse retail mix, with a variety of high-quality national retail tenants which
offer fashion, food, jewellery, financial services and beauty outlets. The Langeberg Mall Acquisition provides
Annuity with a unique opportunity to acquire a large, well managed retail asset that is compatible with
Annuity’s existing portfolio on a strong underlying contractual cash flow basis. This acquisition will improve
the geographic spread of Annuity’s retail-tenanted buildings resulting in less concentration in Johannesburg.
C. RENEWAL OF CAUTIONARY
Linked unitholders are referred to the cautionary announcement dated 16 July 2012, the subsequent
renewal of the cautionary announcement dated 30 July 2012 and the contents of this announcement. The
unitholders are hereby advised that the negotiations are still in progress which, if successfully concluded,
may have an effect on the price of Annuity’s linked units.
Accordingly, linked unitholders are advised to continue to exercise caution when dealing in their linked units
until a further announcement is made.
Illovo
28 August 2012
Lead Investment Bank and
Transaction Sponsor to Annuity Joint Investment Bank to Annuity
Investec Bank Limited Sasfin Capital
Sponsor to Annuity Attorneys to Annuity
Rand Merchant Bank Glyn Marais Inc
Date: 28/08/2012 02:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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