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VIF - Vividend Income Fund Limited - Acquisition of a new property
Vividend Income Fund Limited
Previously known as Business Venture Investments No 1381 (Proprietary)
Limited
Incorporated in the Republic of South Africa
(Registration Number 2010/003232/06)
JSE Alpha Code: VIF
ISIN: ZAE000150918
("Vividend" or "the Company")
ACQUISITION OF A NEW PROPERTY
1. THE MONTCLAIR ACQUISITION
Linked unitholders of the Company are hereby advised that the Company
has entered into an agreement with SA Corporate Real Estate Fund to
acquire the property and letting enterprise, commonly known as "The
Montclair Mall" ("The Montclair Property"), located on Erven 1030, 1031,
1032, 1033, remaining extent of Erf 1034, portions 1 and 2 of Erf 1034
Sea View KwaZulu-Natal ("The Montclair Acquisition").
The effective date of the Montclair Acquisition shall be the date of
transfer of the Montclair Property into the name of the Company, which,
subject to fulfilment of the condition precedent, is expected on 1 July
2011.
2. RATIONALE FOR THE ACQUISITION
The Montclair Acquisition is consistent with Vividend`s strategy of
identifying and acquiring properties that have free cash flow yields
that provide adequate value enhancement to linked unitholders from the
effective date of their acquisition. The Montclair Acquisition is
consistent with the timelines, objectives and projections of Vividend
for the 2011 financial period.
Subsequent to the Montclair Acquisition, the Company will have allocated
R513 million (or 99%) of the R520 million raised on its 18 November 2010
listing to its Property Portfolio at a blended first year yield of
11.16%.
3. PURCHASE CONSIDERATION
The purchase consideration for The Montclair Acquisition is R78 500 000
(seventy eight million five hundred thousand rand), payable in cash
against transfer of the Montclair Property into the name of the Company.
4. PRO FORMA FINANCIAL EFFECTS OF THE MONTCLAIR ACQUISITION
The pro forma financial effects of the Montclair Acquisition on net
asset value and net tangible asset value per linked unit are not
significant and therefore have not been disclosed.
5. FORECAST INFORMATION ON THE MONTCLAIR ACQUSITION
The forecast financial information relating to the Montclair Acquisition
for the financial periods ended 31 August 2011 and 31 August 2012 is set
out below. The forecast financial information has not been reviewed or
reported on by a reporting accountant in terms of section 8 of the
Listings Requirements of the JSE Limited and is the responsibility of
the Company`s directors.
Forecast for the 2 Forecast for the 12
months ending 31 months ending 31
August 2011 August 2012
Gross Income 2,632,641 16,666,966
Property 1,030,219 6,744,508
Expenditure
Net Property Income 1,602,422 9,922,458
Property Income 0 0
after interest and
taxation
Annualised Yield on 10.62% 10.96%
the Property,
calculated with
reference to the
applicable
financial period
ended 31 August
Notes:
1. Gross Income includes all tenant recoveries while Property
Expenditure includes all Consumption Expenditure.
2. The Annualised Yield on Property calculation includes a
budgeted capital expenditure provision of R12 000 000, which
is allocated to the cost of the Montclair Acquisition and
which relates to a planned revamp of the Montclair Property.
This capital expenditure is budgeted for deployment within 18
months of the Transfer Date and is focused on extending the
average lease period beyond its current expiry profile.
3. The forecast information for the 2 months ending 31 August
2011 has been calculated from the anticipated effective date
of the Montclair Acquisition, being 1 July 2011.
4. Contractual income constitutes 97% of Gross Income for the
2 month period ending 31 August 2011 and 96% for the 12 month
period ending 31 August 2012.
5. Un-contracted income constitutes 3% of the Gross Income for
the 2 month period ending 31 August 2011 and 4% for the 12
month period ending 31 August 2012.
6. Vacant space is assumed to remain vacant during the
forecast periods.
7. Leases that expire during the forecast periods are
escalated at the prevailing escalation rates applicable to the
expired GLA at the date of expiry.
8. 100% of Net Property Income is distributed to linked unit
holders as interest in accordance with the Debenture Trust
Deed of the Company.
6. PROPERTY SPECIFIC INFORMATION
Details regarding the Montclair Acquisition are set out below:
Property name Montclair
Location 169 Wood Road, Montclair
Durban
GLA m2 11,758
Single or multi-tenanted Multi-tenanted
A Tenant percentage by GLA 61%
A Tenant percentage by Gross 49%
Income
Weighted average gross rental R80.33
per m2
Vacancy by GLA 771 or 6.6%
Annualised Property Yield, 10.84% (YR1)
calculated from the 11.30% (YR2)
anticipated Date of Transfer,
being 1 July 2011
Purchase price R78,500,000
Value R84,000,000
Notes:
1. The weighted average escalation percentage, calculated by
GLA, within the Montclair Property lease profile is 6.4%.
2. The weighted average lease period, calculated by GLA,
within the Montclair Property lease profile is 3.9 years.
3. The value of the Montclair Property of R84 000 000 was
arrived at by H.J.P Fouche of Active Blue Valuation Services
cc as at 10 March 2011. H.J.P Fouche is an independent valuer
and is registered as a professional associate valuer in terms
of the Property Valuers Profession Act, No 47 of 2000.
4. Save for costs associated with the transfer of the
Montclair Property, which amount to R95 000, no expenditure
will be incurred by the Company in connection with the
Montclair Acquisition.
5. The Annualised Property Yields are calculated with
reference to a total investment cost applicable to the
Montclair Acquisition of R90 500 000, which includes the
Purchase Consideration of R78 500 000 and the budgeted capital
expenditure provision of R12 000 000.
7. UNCONDITIONAL PURCHASE
The Montclair Acquisition is unconditional. The due diligence
investigation was concluded by the Company prior to the signing of the
purchase agreement with SA Corporate Real Estate Fund.
8. CATEGORISATION
The Montclair Acquisition is a Category 2 acquisition in terms of the
listings requirements of the JSE Limited.
Cape Town
10 May 2011
Sponsor
PSG Capital (Pty) Limited
Date: 10/05/2011 17:25:03 Supplied by www.sharenet.co.za
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