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GRT - Growthpoint Properties Limited - Acquisition of a 50% interest in the V&A
Waterfront and withdrawal of cautionary announcement
Growthpoint Properties Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/004988/06)
Share code: GRT ISIN ZAE000037669
("Growthpoint")
ACQUISITION OF A 50% INTEREST IN THE V&A WATERFRONT AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1 INTRODUCTION
Investec Bank Limited ("Investec") is authorised to announce that on 10
February 2011, Growthpoint together with the Public Investment Corporation
Limited ("PIC") representing the Government Employees Pension Fund
(collectively the "Purchasers") entered into an agreement with inter alia,
Strawinsky Properties BV and Istithmar South Africa FZE ("Sellers") to
acquire, in equal proportions, 100% of the Sellers` interests in Lexshell
44 General Trading (Proprietary) Limited ("Lexshell"), which is inter alia
the owner of the V&A Waterfront, with provision for the acquisition of the
remaining ordinary shares held by Lexshell`s empowerment shareholders (BEE
shareholders) (the "Transaction"). On successful completion of the
Transaction, the Purchasers intend to own 100% of Lexshell.
The Transaction is subject to the fulfilment of the suspensive conditions
set out in 5 below.
2 DESCRIPTION OF THE V&A WATERFRONT
The V&A Waterfront is a mixed-use property development located around the
historic Victoria and Alfred Basins which formed Cape Town`s original
harbour. The V&A Waterfront is an iconic destination that attracts up to
21 million visitors annually. The precinct includes shopping and
entertainment venues, offices and prominent hotels. The V&A Waterfront
tenancy profile includes a mix of high profile retail and business tenants
on long term leases.
The table below gives an overview of the developed property portfolio of
approximately 384,000m2 as at 31 March 2010:
Sector % of Gross % of GLA % Average base Weighted
rental income rental average
escalation (by lease expiry
GLA) (years)
Retail 59.9 23.2 7.8 4
Office 19.6 23.2 8.7 10
Hotels 11.8 21.8 Note 1 25
Fishing and 8.7 31.8 8.9 23
Industrial
Note 1: The nature of the hotel leases vary significantly between tenants
and are majority land leases
Retail activities within the V&A Waterfront are spread amongst various
buildings, with the largest being the Victoria Wharf shopping centre, and
contains a diverse mix of national tenants, high end international fashion,
jewellery and line shops. Offices primarily consist of A-grade rated
office buildings and include blue chip tenants such as Nedbank, BP head
office and Allan Gray. The hotel sector includes a combination of owned
hotels operated by key independent operators as well as land leases for
hotels such as the Cape Grace, One & Only and Table Bay. The Fishing and
Industrial property consists primarily of fish processing and freezing
operations for major South African fishing operators.
Approximately 220,000mSquared of bulk remains available for development
("Undeveloped Bulk"). The development rights provide flexibility in terms
of land use rights and timing of development.
3 RATIONALE FOR THE TRANSACTION
The V&A Waterfront is a landmark South African property asset and South
Africa`s top tourist destination. The developed property portfolio boasts a
well established and high quality portfolio of properties offering
attractive rentals, rental escalations and lease expiry profiles.
Whilst the Transaction is consistent with Growthpoint`s objectives of
providing its linked unitholders with long term sustainable income and
capital growth, the Transaction also creates the opportunity to unlock
significant value through the development of the Undeveloped Bulk
4 TRANSACTION VALUE AND THE SETTLEMENT OF THE PURCHASE CONSIDERATION
The Purchasers have agreed to a transaction value of R9.717 billion
("Transaction Value"). This relates to the repayment of the long term debt
of Lexshell, together with related costs ("Debt"), and the acquisition
and/or repayment of 100% of the equity interests in Lexshell ("Equity
Interests"). The Transaction Value will be adjusted with reference to the
consolidated net working capital of Lexshell at 31 December 2010, with 1
January 2011 being the effective date ("Effective Date") of the
Transaction.
The repayment of the Debt and payment of consideration for the Equity
Interests (the "Purchase Consideration") will be settled in cash once the
suspensive conditions set out in 5 are fulfilled, which is anticipated to
occur during April 2011 ("Closing Date").
On the Closing Date the Purchasers will fund the Debt repayment by
providing a new shareholder loan to Lexshell, and will provide for the
repayment of certain Equity Interests, being the preference shares held by
the Sellers ("Existing Preference Shares"), either by way of a further
shareholder loan or by way of a subscription for new preference shares
("New Preference Shares") in Lexshell. This will effectively result in
Lexshell being structured as a variable rate loan stock company.
The ordinary shares in Lexshell will be acquired at the resulting balance
of the Transaction Value.
The Purchasers will pay the Sellers interest amounting to R58 million per
quarter, or pro rata, commencing from the Effective Date until the Closing
Date.
Growthpoint has secured the necessary funding for its portion of the
Transaction Value, amounting to approximately R4,9 billion and will utilise
primarily long term debt funding raised from banks. It is the intention of
Growthpoint to refinance a portion of the initial funding with a
combination of corporate bond issuance and the issue of new equity when
appropriate.
5 SUSPENSIVE CONDITIONS TO THE TRANSACTION
The Transaction is subject to the fulfilment of the following suspensive
conditions by no later than 31 July 2011 (or such later date as the parties
may agree in writing)
- approval of the Transaction by the Competition Authorities;
- the Sellers obtaining the approval of the South African Exchange
Control Authority to remit the proceeds from the Transaction;
- the parties obtaining approval, to the extent necessary, from the
Securities Regulation Panel, in terms of the Securities Regulation
Code on Takeovers and Mergers; and
- Lexshell adopting a special resolution in terms of which the rights,
conditions and privileges attaching to the Existing Preference Shares
are amended and New Preference Shares are created.
6 FINANCIAL EFFECTS
The Transaction has no significant effect on the pro forma distribution per
linked unit, pro forma earnings per linked unit, pro forma headline
earnings per linked unit, pro forma net asset value per linked unit or pro
forma tangible net asset value per linked unit of Growthpoint.
7 CATEGORISATION OF THE TRANSACTION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
In terms of the Listings Requirements of the JSE Limited the Transaction is
a category 2 transaction for Growthpoint and as such linked unitholder
approval is not required for Growthpoint to implement the Transaction.
Growthpoint linked unitholders are referred to the cautionary announcement
dated (26 January 2011), and are advised that caution is no longer required
to be exercised by linked unitholders when dealing in their linked units.
Sandton
14 February 2011
Investment bank to the Purchasers Sponsor to Growthpoint
Investec Corporate Finance Investec Bank Limited
Attorneys to Growthpoint Legal adviser to PIC
Glyn Marais DLA Cliffe Dekker Hofmeyr
Debt Capital Markets Advisor Debt Providers and Underwriters
ABSA Capital Rand Merchant Bank and Standard Bank
Date: 14/02/2011 12:45:47 Supplied by www.sharenet.co.za
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