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AIA/AIB - Ascension Properties Limited - Proposed acquisition of 373 Pretorius Street, Pretoria ASCENSION PROPERTIES LIMITED (formerly Grey Jade Trade and Invest 85 (Proprietary) Limited) (Incorporated in the Republic of South Africa on 23 August 2006) (Registration number 2006/026141/06) A-Linked Units: JSE code: AIA ISIN: ZAE000161881 B-Linked Units: JSE code: AIB ISIN: ZAE000161899 ("Ascension" or "the Company") PROPOSED ACQUISITION OF 373 PRETORIUS STREET, PRETORIA INTRODUCTION Ascension has concluded an agreement for the acquisition of a rental enterprise in respect of and including the office building known as 373 Pretorius Street, Pretoria ("373 Pretorius Street" or "the property"), for an amount of R155 million ("the acquisition"). RATIONALE FOR THE ACQUISITION The property is well located in the Pretoria CBD. The acquisition is consistent with Ascension`s strategy of acquiring Government and other empowerment sensitive tenanted commercial office buildings situated predominantly in Gauteng and the Western Cape and represents an ideal opportunity to acquire a quality asset in a good location at an attractive 12 month forward yield from 1 October 2012 (being the expected date of transfer of the property) of approximately 11.1%. DETAILS OF THE PROPERTY 373 Pretorius Street (Erf 3255, Pretoria in Gauteng) is a B-grade office block with 13 340 square metres of office space and 166 basement parking bays. The weighted average rental per square meter of 373 Pretorius Street is R97.56 per square metre. The current lease with the City of Tshwane Metropolitan Municipality expires in January 2015. The board is satisfied that the value of the property is in line with the acquisition price being paid for it by the Company. The directors of the Company are not independent and are not registered as professional valuers or as professional associate valuers in terms of the Property Valuers Profession Act, No 47 of 2000. TERMS OF THE ACQUISITION AND CONDITIONS PRECEDENT The seller of 373 Pretorius Street is Investec Property Fund Limited and the acquisition will be with effect from the date of transfer of ownership of 373 Pretorius Street into Ascension`s name. The acquisition will be entirely funded from new debt facilities from Investec Bank Limited. The purchase agreement provides for warranties and indemnities that are standard for acquisitions of this nature. The acquisition is subject to the following suspensive conditions: - Within 21 days after the contract date (29 June 2012), Ascension advising the seller in writing that it is satisfied with the outcome of the due diligence investigation; - Within 45 days after the contract date, Ascension obtaining a loan secured by a first mortgage bond over the property for not less than R155 million from Investec Bank Limited, on terms and conditions acceptable to Ascension; and - Ascension obtaining all regulatory approvals required for the acquisition, including approval from the relevant Competition Authorities in terms of the Competition Act, 89 of 1998, for the implementation of the acquisition. FORECAST FINANCIAL INFORMATION OF THE ACQUISITION Set out below are the forecast revenue, operating profit, net profit after taxation and distributable earnings of 373 Pretorius Street ("the 373 Pretorius Street forecasts") for the 9 months ending 30 June 2013 and the year ending 30 June 2014. The 373 Pretorius Street forecasts have been prepared on the assumption that the acquisition will be implemented on 1 October 2012. The 373 Pretorius Street forecasts, including the assumptions on which they are based and the financial information from which they are prepared, are the responsibility of the directors of Ascension. The 373 Pretorius Street forecasts have not been reviewed or reported on by the independent reporting accountants. The 373 Pretorius Street forecasts presented in the table below have been prepared in accordance with the Company`s accounting policies and in compliance with IFRS. 9 months ending 30 June Year ending 30 June 2013 2014
R`000 R`000 Gross property rental 16 567 24 084 income and recoveries Straight-line rental 833 (269) income Total revenue 17 400 23 815 Operating profit* 13 501 17 570 Net profit/(loss) after 363 (510) taxation* Distributable earnings 2 627 4 491 * Includes the effects of straight-lining rental income and the related deferred taxation charge and asset management fees. The 373 Pretorius Street forecasts incorporate, inter alia, the following material assumptions: - Contracted revenue is based on existing lease agreements. - There is nil uncontracted revenue for the 9 months ending 31 June 2013 and for the year ending 31 June 2014. - All existing lease agreements are valid. - Debenture interest will be paid to A- and B-linked unitholders in accordance with the provisions of the debenture trust deed. IMPACT OF THE ACQUISITION ON AN ASCENSION A- AND B-LINKED UNIT The changes to the portfolio which were announced on SENS on 21 June 2012 together with the acquisition do not have an impact on the forecast distributions for Ascension`s A-linked units as presented in the pre-listing statement issued on 31 May 2012 ("the PLS") but are expected to result in the following forecast distributions per B-linked unit: Year ending 30 June 2013 Year ending 30 June
2014 Forecast distribution 17.21 19.07 per B-linked unit (cents) as included in the PLS Revised forecast 18.71 21.29 distribution per B- linked unit (cents) Based on the issue price in terms of the pre-listing private placement of R1.90 per B-linked unit, the revised forecast distributions per B-linked unit in the table above result in a yield of approximately 9.8% for the year ending 30 June 2013 and an expected growth rate of 13.8% between the years ending 30 June 2013 and 30 June 2014. The aforegoing forecast statements and the forecasts underlying such statements are the responsibility of the board of Ascension and have not been reviewed or reported on by the independent reporting accountants. UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION The unaudited pro forma financial effects of the acquisition on Ascension`s statement of financial position as at 31 December 2011 are not significant and have accordingly not been presented. Measured at 1 October 2012, the Company`s loan to value ratio will increase from 35.4% to 45.2% as a consequence of the acquisition. CATEGORISATION OF THE ACQUISITION The acquisition constitutes a category 2 transaction in terms of the JSE Listings Requirements and accordingly does not require approval by linked unitholders. 29 June 2012 Corporate Advisor and Sponsor Java Capital Date: 29/06/2012 15:45:02 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.
