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Emira Property Fund - Results of private placement and commencement of listing

Release Date: 28/11/2003 09:00
Code(s): EMI
Wrap Text

Emira Property Fund - Results of private placement and commencement of listing Emira Property Fund A property fund created under the Emira Property Scheme, registered in terms of the Collective Investment Schemes Control Act Share code: EMI ISIN: ZAE000050712) ("Emira") Results of private placement and commencement of listing 1. Introduction Further to the abridged pre-listing statement published on 18 November 2003, RMB Corporate Finance is authorised to announce the results of the private placement and information relating to the commencement of the listing of Emira on the JSE Securities Exchange South Africa ("JSE"). 2. Results of the private placement In terms of Emira"s pre-listing statement, Emira offered 81 600 000 participatory interests ("PIs") at an issue price of 500 cents per PI in terms of a private placement. Subsequent to the issue of the pre-listing statement, Emira has reviewed its agreement with Primeview Properties (Proprietary) Limited ("the vendor"), the vendor of Market Square, Plettenberg Bay, in terms of which the purchase consideration of R79 million will be settled through a cash payment of R29 million and the issue of 10 million PIs at 500 cents per PI. The pre-listing statement stated that the purchase consideration would be settled in cash. Accordingly, Emira has reduced the number of PIs issued in terms of the private placement by 10 million PIs to 71 600 000 PIs, thereby raising R358 million. A further 10 million PIs will be issued to the vendor upon transfer of the property. 3. PIs in issue At the listing date, Emira has 262 133 684 PIs in issue. 4. Transfer of properties The listing was conditional upon 67 properties with a value of R1 236 million being transferred by the listing date. At today"s date, 56 properties have been transferred totaling R1,1 billion and a further nine properties have been lodged for transfer totaling R138 million. Although the conditions for listing relating to the transfer of properties, as set out the pre-listing statement, have not been fulfilled, Emira is confident that sufficient properties will be transferred in the immediate future to enable such conditions to be satisfied. The JSE has approved the listing on the basis that not all the properties will have been transferred by listing date and Emira has received confirmation from investors who have subscribed for PIs in terms of the private placement that they are in favour of proceeding with the listing, notwithstanding the fact that all properties have not been transferred by listing date. 5. Pro forma financial information The pro forma financial information presented below is based on the properties which will have been transferred to Emira by the listing date. The pro forma financial information has been prepared for illustrative purposes only and may not give an accurate reflection of Emira"s financial position and performance. The reporting accountants have reviewed the pro forma financial information and their report in this regard is available for inspection at the offices of Emira, 6 Protea Place, Sandton, 2196. 5.1 Pro forma balance sheet The revised pro forma balance sheet of Emira at the listing date is shown below: R"000 Non-current assets Investment properties - freehold 1 031 777 Investment properties - leasehold 54 732 Investment properties - total 1 086 509 Fixed assets 16 332 Current assets Sinking fund investment 22 297 Bank and cash 397 310 Assets 1 522 448 Participatory interests 1 299 520 Distributable reserve (197) 1 299 323 Borrowings 223 125 Equity and liabilities 1 522 448 PIs in issue ("000) 262 134 Net asset value per PI (cents) 496 The pro forma balance sheet listed above, has been prepared to reflect the assets and liabilities envisaged as being owned and owed, respectively, at the listing date, after taking account of the assumed conclusion of the following transactions: * transfer of the properties acquired as detailed in paragraph 4 above; * the raising of borrowings of R226,1 million; * the incurral of bond costs of R3 million in order to raise the borrowings referred to above and the capitalisation of these costs to the original borrowings in terms of the accounting policy in respect of borrowing financial instruments; * the settlement of listing and other transaction costs; * the settlement in full of the considerations payable for the acquisitions of the property portfolios by means of the issue of units and, in certain instances, the payment of cash; and * the acceptance, in full, of the offer of 71 600 000 Pls at 500 cents each, raising cash of R358 million. 5.2 Pro forma income statement The revised pro forma income statement of Emira for the most recent year- ends of the properties included in the Emira portfolio at the listing date is shown below: Pro forma aggregated historical
income statement R"000 Revenue 216 096 Operating income 129 642 Net finance costs (43 028) Net income available for distribution 86 614 The pro forma historical income statement information detailed above presents the aggregated audited or reviewed, actual financial results of the properties being acquired taking into account the reduced property portfolio as set out in paragraph 4 above, notwithstanding: * the fact that the financial reporting periods of the different portfolios/entities are not coterminous; * the fact that the financial reporting periods reflect results for less than 12 months in instances where trading income and expenditure have been earned or incurred for a period of less than a year; * the fact that the results reported incorporate costs arising from borrowings of different amounts to the borrowings which have been raised for the Emira Property Fund"s utilisation in the future; * the fact that certain properties acquired were under development during the pro forma reporting period and did not earn any income during this period, but will earn such income in the future; and * the fact that the results may incorporate certain transactions not concluded at arm"s length due to the properties being utilised by the vendors. 6. Profit forecast The revised profit forecast of Emira for the one-month period ending 31 December 2003 and the six-month periods ending 30 June 2004 and 31 December 2004 are shown below: Forecast for the Forecast for the Forecast for the
one month ended six months ended six months ended 31 December 2003 30 June 2004 31 December 2004 R"000 R"000 R"000 Revenue 19 307 152 952 165 177 Operating income 11 109 86 906 95 667 Net finance costs 176 11 567 11 948 Net income available for distribution 10 933 75 338 83 719 Distributions to PI holders (10 933) (75 338) (83 719) Retained income for period - - - PIs in issue for period ("000) 262 134 272 134 272 134 Net income per PI (cents) 4,2 27,7 30,8 Distribution per PI (cents) 4,2 27,7 30,8 Yield (based on annualised distribution and listing price) (%) - 11,1 12,3 The profit forecast is based on the following assumptions: 1. The property portfolio acquisitions are effective as at 1 December 2003 and consequently the fund is dormant for the period from 15 September 2003, the date of registration by the FSB, to 30 November 2003, except for the properties where transfers are delayed. These properties are included in the forecast at management"s best estimate of the date of the transfers, with all properties being transferred by 15 January 2004. 2. Revenue is largely based on existing lease agreements, with conservative assumptions being applied in estimating lease renewals and take up of vacant space. 3. Occupancy rates have been forecast assuming relative stability in letting prospects. 4. Finance costs on borrowings have been calculated with reference to the borrowing facilities and terms and conditions applicable thereto. 5. Cash on call has been offset against the floating rate borrowings where possible and if not, cash balances earn interest at a rate of 7%. 6. The mortgage bond costs have been capitalised to the borrowings and amortised over the terms of the facilities. 7. All net income after providing for amounts considered appropriate to cover provision for doubtful debts and repairs to and maintenance of properties will be distributed. 8. The distributions will take place within three months after the end of each reporting period. 9. In order to project conservative forecasts, no capital appreciation in the value of the property portfolios has been taken into account. 10. Despite the intention of Emira to grow the fund, no further properties have been acquired. All PIs will be in issue from January 2004. The reporting accountants have reviewed the revised profit forecast and their report in this regard is available for inspection at the offices of Emira, 6 Protea Place, Sandton, 2196. 7. Commencement of listing The listing of Emira in the Financial - "Real Estate" sector of the JSE lists will commence from the opening of trade today, 28 November 2003. Sandton 28 November 2003 Merchant bank and joint sponsor Rand Merchant Bank Corporate Finance A Division of FirstRand Bank Limited Registration number 05/01225/06 Reporting accountants PricewaterhouseCoopers Inc. Chartered Accountants (SA) Registered Accountants & Auditors (Registration no. 1998/012055/21) Attorneys Hofmeyr Herbstein Gihwala Cluver & Walker Inc. (Registration number 1997/001523/21) Reporting accountants Grant Thornton Kessel Feinstein Chartered Accountants (SA) Accountants, Auditors & Business Advisers Lead sponsor PricewaterhouseCoopers Corporate Finance (Pty) Ltd (Registration number 1970/003711/07) Date: 28/11/2003 09:00:06 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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