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IPF - Investec Property Fund Limited - Acquisition of British American

Release Date: 27/03/2012 11:01
Code(s): IPF
Wrap Text

IPF - Investec Property Fund Limited - Acquisition of British American Tobacco Property INVESTEC PROPERTY FUND LIMITED (Incorporated in the Republic of South Africa) (Registration Number 2008/011366/06) Share code: IPF ISIN: ZAE000155099 ("Investec Property Fund" or "the Fund") ACQUISITION OF BRITISH AMERICAN TOBACCO PROPERTY 1. Introduction Linked unit holders are hereby advised that Investec Property Fund, a company primarily involved in property investment, has entered into an agreement ("Sale and Purchase Agreement") to acquire a property in Waltloo, Pretoria, occupied by British American Tobacco South Africa ("the Property") from Maggs Street Property Proprietary Limited (the "Vendor"), a 100% subsidiary of Investec Property Limited, for R40 million ("the Purchase Consideration") ("the Proposed Transaction"). The Purchase Consideration will be funded by debt and paid in cash to the Vendor upon registration of transfer of the Property into the name of the Fund. 2. Rationale for the Proposed Transaction The Proposed Transaction is consistent with the Fund`s objective to build a quality portfolio of properties with strong contractual cash flows in order to achieve value enhancement and sustainable distributions to unitholders. Given the high-quality multinational tenant and the terms of the lease, the Property is being acquired at an attractive yield of 10.25% which the directors believe offers good value and will improve the earnings and growth prospects of the Fund. The independent valuation set out in 5 below supports this view. 3. Description of the Property The Property is located at 285 Maggs Street, Waltloo, Pretoria comprising Erf 172 Waltloo Extension 1 Township, Pretoria. The building is located in an area dominated by large industrial users and is also adjacent to the well-established industrial area of Silverton, north east of Pretoria. The Property is conveniently situated, offering easy access to the N1 and the N4 highways. Sufficient shade netted parking bays are also provided on site. The Property is an industrial warehouse facility providing Gross Lettable Area ("GLA") of 13,170mSquared such that the Fund is acquiring the property at R3,037 per mSquared. The GLA comprises 87% warehouse space and 13% of offices. The Property was specifically redeveloped for British American Tobacco South Africa ("BATSA") who is the sole tenant on the Property. The premises provide warehousing facilities for British American Tobacco PLC ("BAT"). BATSA is a wholly owned subsidiary of BAT, the multinational tobacco company headquartered in London, United Kingdom. BAT has a market cap of approximately R731 billion and operates in more than 180 countries employing about 50,000 people worldwide. The current lease with BATSA commenced in December 2011 providing a gross rental of R30.04 per mSquared, escalating at 8% annually. The lease extends for a 5 year term with the option to renew for a further 5 years thereafter. Any rates increases above 8% are recoverable from the tenant. In terms of the lease the Fund will be responsible for insurance and repairs and maintenance. 4. Redevelopment The tenant required a redevelopment of the property as a condition to the lease and this has been completed by the Vendor prior to commencement of the lease. 5. Valuation of the Property An independent valuation of the Property, has been performed by Mills Fitchet Magnus Penny Proprietary Limited ("Independent Valuer"), which at R43.4 million exceeds the Purchase Consideration by 8.5%. The Independent Valuer is an independent registered valuer as defined in section 13 of the JSE Listings Requirements ("Listings Requirements"). 6. Effective date The effective date for the Proposed Transaction is 1 December 2011 and there are no outstanding conditions to the Proposed Transaction other than for transfer to take place. With the effective date being 1 December 2011the Fund is entitled to receive the net property income from this date and is paying the Vendor interest on the Purchase Consideration at a rate of Jibar plus 2.25%. The Purchase Consideration will be paid to the Vendor on the date of transfer of the Property into the name of the Fund. 7. Financial effects As the Purchase Consideration will be funded by debt, the Proposed Transaction will not have a material effect in the first year as it does not contribute more than 3% to 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 the Fund. 8. Small related party transaction The Proposed Transaction constitutes a small related party transaction in terms of the Listings Requirements as Investec Property Limited, a wholly-owned subsidiary of Investec Limited, holds 100% of the Vendor`s issued share capital and is the manager of the Fund. The JSE Limited has been provided with a summary of the sworn valuation of the Property by the Independent Valuer. The full valuation report is available for inspection at the registered office of the Fund during normal business hours until 30 April 2012. Johannesburg 27 March 2012 Investment Bank and Sponsor Attorneys Date: 27/03/2012 11:01:46 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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