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ANNUITY PROPERTIES LTD - Acquisition of properties and renewal of cautionary

Release Date: 30/07/2012 15:15
Code(s): ANP     PDF:  
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Acquisition of properties and renewal of cautionary

                                      ANNUITY PROPERTIES LIMITED
                                       (formerly Niqsha Beleggings CC)
                                 (Incorporated in the Republic of South Africa)
                                    (Registration Number 2011/145994/06)
                                  Share code: ANP         ISIN: ZAE000165643
                                          (“Annuity” or “the Company”)




           ACQUISITION OF PROPERTIES AND RENEWAL OF CAUTIONARY ANNOUNCEMENT




A.   INTRODUCTION

     Further to the cautionary announcement dated 16 July 2012, Annuity is pleased to announce that it has
     agreed broad terms with the relevant vendors for the acquisition of the properties set out below (“the
     Property Acquisitions”). The Property Acquisitions are consistent with Annuity’s growth and investment
     strategy of building a quality property portfolio, offering long term distribution and capital growth underpinned
     by strong underlying contractual cash flows. The details of the Property Acquisitions are set out in Section B
     below. The Property Acquisitions are not inter-conditional on one another.

B.   THE PROPERTY ACQUISITIONS


1.   THE ATRIUM BUILDING

     1.1      THE ATRIUM ACQUISITION

              Annuity has agreed the terms, on an exclusive basis, with Tuffsan 180 Property Holdings
              (Proprietary) Limited (“the Atrium Vendor”) for the acquisition of the Atrium property (“the Atrium
              Building”), together with all leases and assets forming necessary parts of the letting enterprise as
              a going concern (“the Atrium Letting Enterprise”), located in Milpark, Braamfontein,
              Johannesburg (collectively “the Atrium Acquisition”).

              The Atrium Building is situated in a prime location within the Milpark, Braamfontein business
              district, and offers a high quality tenant profile, with Santam Limited (“Santam”) occupying
              approximately 70% of the gross lettable area on a 10 year lease and Tokiso Dispute Settlement
              (“Tokiso”) occupying 10% of the gross lettable area with more than 3 years remaining on such
              lease.

              The effective date of the Atrium Acquisition shall be the date of transfer of the Atrium Building into
              the name of Annuity, which subject to the fulfillment of the conditions precedent set out in 1.4
              below, is expected to take place by 30 November 2012.
1.2   INFORMATION RELATING TO THE ATRIUM BUILDING


       Description of the property:                          Portion 6 of Erf 51, Braamfontein Werf

                                                             41 Stanley Avenue, Milpark, Johannesburg,
       Location:
                                                             Gauteng

       Single or multi-tenanted:                             Multi-tenanted

       Grade                                                 B Grade
                                                                      
       GLA (m2):                                             13,484m2

       Weighted average gross rental per square                                 
                                                             Office: R76.72/m2
       metre (R/m2):


1.3   PURCHASE CONSIDERATION

      The purchase consideration for the Atrium Letting Enterprise amounts to R134,000,000 and is
      payable through a combination of linked units and cash, as follows:
          -    R6,000,000 in Annuity linked units against transfer of the Atrium Building into the name of
               Annuity. The Annuity linked units will be issued at a price equivalent to the Volume
               Weighted Average Price (“VWAP”) of Annuity linked units on the JSE Limited (“JSE”) for
               the 30 trading days prior to the date of transfer of the Atrium Building to Annuity; and
          -    the balance in cash, which will be settled utilising a combination of debt and the issue of
               new linked units.

1.4   CONDITIONS PRECEDENT TO THE ATRIUM ACQUISITION

      The Atrium Acquisition is subject to the fulfillment of, inter alia, the following conditions precedent:

      a)   the conclusion of a formal deed of sale for the purchase of the Atrium Letting Enterprise by
           Annuity;
      b)   the requisite majority of the Atrium Vendor shareholders adopting a special resolution in terms
           of Sections 112 and 115 of the Companies Act, No. 71 of 2008, as amended, ("Companies
           Act") approving the disposal of the Atrium Building;
      c)   the completion of a due diligence review to the satisfaction of Annuity;
      d)   the board of directors of Annuity (“the Annuity Board”) adopting an ordinary resolution
           approving the Atrium Acquisition after the completion of a satisfactory due diligence review;
      e)   regulatory approvals that may be required including, but not limited to, the approval of the JSE,
           Annuity linked unitholder approval and, where applicable, Competition Authority approval in
           terms of the Competition Act 89 of 1998; and
      f)   the raising of the necessary debt and equity capital required to fund the Atrium Acquisition.

      In terms of the Atrium Acquisition, the Atrium Vendor will guarantee the income of all the tenants,
      excluding Santam and Tokiso to Annuity’s satisfaction for a period of not less than 3 years from the
      date of transfer of the Atrium Building into the name of Annuity (“the Guarantee”). The Guarantee
      will be limited to a maximum of R6,000,000 over the period.

1.5   CATEGORISATION

      The Atrium Acquisition is a Category 1 acquisition in terms of the Listings Requirements of the JSE
      (“JSE Listings Requirements”) thus requiring Annuity linked unitholder approval.
2.   THE BCX PROPERTY

     2.1   THE BCX PROPERTY ACQUISITION

           Annuity has agreed the terms, on an exclusive basis, with Goldnew Investments (Proprietary)
           Limited (“the BCX Vendor”) for the acquisition of the BCX Building (“the BCX Property”), together
           with all leases and assets forming necessary parts of the letting enterprise as a going concern (“the
           BCX Letting Enterprise”), located in Midrand, Johannesburg (collectively “the BCX Property
           Acquisition”).

           Business Connexion Group Limited (“BCX”), the sole tenant, is a JSE-listed company and a black
           empowered integrator of innovative business solutions based on information and communications
           technology. BCX runs mission-critical ICT systems and manage products, services and solutions
           for JSE listed and key public sector organisations, parastatals and medium-sized companies.

           The effective date of the BCX Property Acquisition shall be the date of transfer of the BCX Property
           into the name of Annuity, which subject to the fulfillment of the conditions precedent set out in 2.4
           below, is expected to take place by 30 November 2012.

     2.2   INFORMATION RELATING TO THE BCX PROPERTY


            Description of the property:                       Erf 15, Midrige Park Extension 3 Township
                                                                  
                                                               16th Road, Randjespark, Midrand,
            Location:
                                                               Johannesburg, Gauteng

            Single or multi-tenanted:                          Single Tenant

            Grade                                              A Grade

            Length of lease                                    3 years
                                                                        
            GLA (m2):                                          2,542m2

            Weighted average gross rental per square                              
                                                               Office: R85.00/m2
            metre (R/m2):


     2.3   PURCHASE CONSIDERATION

           The purchase consideration for the BCX Letting Enterprise amounts to R38,147,168, and is
           payable through a combination of linked units and cash, as follows:
               -    R10,400,000 in Annuity linked units, equivalent to two million Annuity linked units issued
                    at a price of R5.20 per linked unit, against transfer of the BCX Property into the name of
                    Annuity. The issue price of the linked units represents a 1.8% discount to Annuity’s 30
                    day VWAP on the date broad terms for the BCX Property Acquisition were agreed with
                    the BCX Vendor; and
               -    the balance in cash, which will be settled utilising a combination of debt and the issue of
                    new linked units.

     2.4   CONDITIONS PRECEDENT TO THE BCX PROPERTY ACQUISITION

           The BCX Property Acquisition is subject to the fulfillment of, inter alia, the following conditions
           precedent:
              a)   the conclusion of a formal deed of sale for the purchase of the BCX Letting Enterprise by
                   Annuity;
              b)   the requisite majority of the BCX Vendor shareholders adopting a special resolution in terms of
                   Sections 112 and 115 of the Companies Act approving the disposal of the BCX Property;
              c)   the completion of a due diligence review to the satisfaction of Annuity;
              d)   the Annuity Board adopting an ordinary resolution approving the BCX Property Acquisition;
                   and
              e)   regulatory approvals that may be required including, but not limited to, the approval of the JSE,
                   Annuity linked unitholder approval and, where applicable, Competition Authority approval in
                   terms of the Competition Act 89 of 1998.

     2.5      CATEGORISATION

              The BCX Property Acquisition is a related party transaction in terms of the JSE Listing
              Requirements as Sasfin Holdings Limited, being one of the BCX Vendors is a 7.2% shareholder of
              Annuity and a 25% shareholder of Annuity Asset Managers (Proprietary) Limited, being the asset
              management company of Annuity. Accordingly in terms of the JSE Listings Requirements an
              independent valuation of the BCX property and Annuity linked unitholder approval is required.

C.   RENEWAL OF CAUTIONARY

     The due diligence reviews, independent valuations (where applicable) and pro forma financial effects of the
     Property Acquisitions, as detailed above, are in the process of being finalised and the pro forma financial
     effects will therefore be published in due course. Linked unitholders are also advised that Annuity is in
     further discussions which, if successfully concluded, may also have an effect on the price of Annuity’s
     securities. Accordingly, linked unitholders are advised to continue to exercise caution when dealing in their
     linked units until a further announcement is made.

     A combined circular detailing the terms of the Property Acquisitions and convening a general meeting of
     Annuity linked unitholders will be posted in due course.



              Johannesburg
              30 July 2012



        Lead Investment Bank and
       Transaction Sponsor to ANP                                 Joint Investment Bank to ANP

           Investec Bank Limited                                           Sasfin Capital
             Sponsor to ANP                                              Attorneys to ANP

           Rand Merchant Bank                                              Glyn Marais Inc

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