To view the PDF file, sign up for a MySharenet subscription.

CAPITAL PROPERTY FUND - Disposal of a portfolio of properties to Ascension Properties Limited

Release Date: 18/09/2012 07:05
Code(s): CPL     PDF:  
Wrap Text
Disposal of a portfolio of properties to Ascension Properties Limited

Capital Property Fund
(a portfolio in Capital Property Trust Scheme, a Collective Investment Scheme in Property established in terms of the
Collective Investment Schemes Control Act, No. 45 of 2002)
(Registration number 1980/009531/06)
JSE code: CPL ISIN: ZAE000001731
(“Capital”)
Managed by Property Fund Managers Limited
(Registration number 1980/009531/06)
(“PFM”)

DISPOSAL OF A PORTFOLIO OF PROPERTIES TO ASCENSION PROPERTIES LIMITED

INTRODUCTION

Unitholders of Capital are advised that Capital and various subsidiaries of Capital (collectively, “the
vendors”) have concluded agreements with Ascension Properties Limited (“Ascension” or “the
purchaser”) to dispose of a portfolio of property letting enterprises (“disposal properties”) (each a
“disposal” and together “the disposals”) to the purchaser.

PROPOSED TERMS OF THE DISPOSALS

In terms of the disposal agreements the letting enterprises in respect of the disposal properties will be
disposed of with effect from 1 December 2012.

If the transfer date for the disposal properties is after 1 December 2012, then interest will be payable on the
cash portion of the selling price calculated at the rate of 0.75% per month from 1 December 2012 to the
actual date of transfer, both days inclusive, calculated daily and compounded monthly in arrears.

The aggregate selling price for the disposal properties is R989 196 354 and is payable against transfer of
ownership of each of the properties comprising the disposal properties into the name of the purchaser. The
selling price for the disposal properties will be settled by Ascension in part by way of a cash payment of
R494 598 177 and the balance by way of an issue of Ascension A-linked units and Ascension B-linked units
(“consideration units”) in the following proportions:

-    R370 948 633 will be settled through the issue of 91 592 255 Ascension A-linked units to the vendors at
     an issue price of R4.05 per Ascension A-linked unit; and
-    R123 649 544 will be settled through the issue of 61 824 772 Ascension B-linked units to the vendors at
     an issue price of R2.00 per Ascension B-linked unit.

The cash payment is to be secured by an unconditional and irrevocable bank guarantee from Ascension to
each of the vendors. Ascension will secure the transfer and allotment of the consideration units by delivering
a renounceable letter of allotment to each of the vendors.

The consideration units are to be issued “ex” entitlement to the interest distribution for the period prior to the
effective date, 1 December 2012.
                                                                                                               2


In order to achieve this, the directors of Ascension will declare and pay a special distribution for the period
ending 30 November 2012 together with the distribution for Ascension’s first income period, being the
period from date of listing, 11 June 2012, to and including 30 June 2012.

The disposal agreements contain warranties that are typical for disposals of this nature.

RATIONALE FOR THE DISPOSALS

The disposals are in line with Capital’s strategy to focus on A-grade industrial properties and offices and to
reduce its holding of non-core properties that do not fit this strategy.

It is Capital’s intention to unbundle the consideration units to Capital unitholders subject to the requisite
approvals being obtained from regulators and from Capital’s unitholders after the date of transfer. Capital
will use its best endeavours to unbundle the consideration units to its unitholders after the date of transfer.
Should regulatory or unitholder approval not be obtained for the proposed unbundling, then Capital will, in
good faith, consult Ascension with a view to reaching an alternative solution.

The cash portion of the selling price will be utilised by Capital to repay interest-bearing borrowings.

DETAILS OF THE DISPOSAL PROPERTIES

Details of the properties comprising the disposal properties, including the property name and address,
geographical location, rentable area, sector, weighted average rental per square metre, purchase price and
valuations attributed to the properties as at 1 November 2012 by Peter Parfitt of Quadrant Properties
(Proprietary) Limited, who is independent and registered as a professional valuer in terms of the Property
Valuers Profession Act, No. 47 of 2000, are as follows:

Property name and address                             Geographical          Rentable area                 Sector
                                                        location                     (m2)
1.   Meyersdal, 65 Phillip Engelbrecht Street,          Gauteng                     4 979                 Office
     Meyersdal
2.   Infinity Office Park Meyersdal, Robin               Gauteng                    13 481                Office
     Close, Meyersdal
3.   238 Roan Crescent, Corporate Park, 238              Gauteng                     9 035                Office
     Roan Crescent, Corporate Park
4.   Grand Central, Cnr Darling and Plein             Western Cape                  33 616     Office and retail
     Streets, Cape Town
5.   Medscheme, 37 Conrad Drive, Constantia              Gauteng                     6 792                Office
     Kloof
6.   Kingfisher Crescent, Meyersdal, Kingfisher          Gauteng                     1 445                Office
     Crescent, Meyersdal

Property name and address                                 Weighted              Sale price     Valuation as at
                                                      average rental                  (R)        1 November
                                                         per square                                      2012
                                                              metre
                                                             (R/m2)
1.   Meyersdal, 65 Phillip Engelbrecht Street,                  93.1           51 880 232           51 880 232
     Meyersdal
2.   Infinity Office Park Meyersdal, Robin                      120.1         203 165 385          203 165 385
     Close, Meyersdal
3.   238 Roan Crescent, Corporate Park, 238                      81.9          90 935 705           90 935 705
     Roan Crescent, Corporate Park
4.   Grand Central, Cnr Darling and Plein                       106.7         492 393 203          492 393 203
     Streets, Cape Town
                                                                                                                3


Property name and address                                 Weighted               Sale price     Valuation as at
                                                      average rental                   (R)        1 November
                                                         per square                                       2012
                                                              metre
                                                             (R/m2)
5.  Medscheme, 37 Conrad Drive, Constantia                     126.1           133 988 353          133 988 353
    Kloof
6. Kingfisher Crescent, Meyersdal, Kingfisher                     96.8          16 833 476           16 833 476
    Crescent, Meyersdal
Total                                                                          989 196 354          989 196 354

CONDITIONS PRECEDENT

Each disposal is subject to the following conditions precedent:

-    Ascension undertaking and completing to its satisfaction a due diligence investigation of the disposal
     properties within a period of 30 days after the date of signature of the disposal agreements, being
     14 September 2012;
-    the vendors approving the disposal of the disposal properties in terms of the disposal agreements to
     Ascension by no later than 7 days after the completion of the due diligence referred to in the paragraph
     above;
-    Ascension procuring written confirmation from a financial institution reasonably acceptable to the
     vendors, that it has been granted loan funding in respect of the cash portion of the consideration payable
     under the disposals on or before 1 October 2012;
-    the Competition Authorities unconditionally approving the implementation of the disposals, evidenced
     by the issue of a merger clearance certificate, on or before 30 November 2012;
-    by no later than 30 November 2012 the linked unitholders of Ascension having passed the resolutions in
     terms of which:
            o the purchase of the disposal properties by Ascension upon the terms set out in the disposal
                agreements are approved; and
            o the issue of consideration units referred to above is approved.

The disposal of the property known as the Grand Central Shopping Centre (“Grand Central”) is subject to
Capital delivering to Ascension written confirmation that the Department of Public Works has not exercised
its “right of first refusal” to purchase Grand Central on or before 9 October 2012 which condition may not
be waived. If this condition is not met, the Grand Central disposal will fall away, but this will not affect the
remaining disposals.

Save for the disposal of Grand Central the disposals are inter-conditional and must all become unconditional
in accordance with their terms on or before 30 November 2012.

Ascension or the vendors may, in writing, extend the date of fulfilment to a future date/s as they may agree,
or, where appropriate, waive any of the abovementioned conditions precedent.

Should approval from the Competition Authorities not be obtained by 30 November 2012, the period for
fulfilment of the relevant condition precedent will automatically be extended by an additional 30 days.

FINANCIAL EFFECTS

The unaudited pro forma financial effects have been prepared for illustrative purposes only, to provide
information on how the disposals may have impacted on the historical financial results of Capital for the six
months ended 30 June 2012. Due to their nature, the unaudited pro forma financial effects may not fairly
present Capital’s financial position, changes in equity, results of operations or cash flows after the disposals.
The unaudited pro forma financial effects are the responsibility of the directors of PFM and have not been
reviewed or reported on by Capital’s auditors.
                                                                                                                 4




The unaudited pro forma financial effects of the disposals on Capital’s basic earnings per unit for the six
months ended 30 June 2012 are set out below. The unaudited pro forma financial effects of the disposals on
Capital’s distribution per unit, headline earnings per unit, net asset value per unit and net tangible asset value
per unit are not significant and have not been disclosed.

                                                    Unadjusted before         Pro forma after
                                                         the disposals           the disposals
                                                               (cents)                 (cents)        % change
Basic earnings per unit                                          47.59                   56.92            19.6
Weighted average number of units in issue               1 606 986 279           1 606 986 279

Notes and assumptions:

-   The amount set out in the “Unadjusted before the disposals” column has been extracted, without
    adjustment, from the condensed consolidated unaudited interim financial report of Capital for the six
    months ended 30 June 2012.
-   The amount set out in the “Pro forma after the disposals” column reflects the impact on the historical
    financial results of Capital for the six months ended 30 June 2012 assuming that the disposals were
    implemented on 1 January 2012.
-   The disposal properties were disposed of to Ascension for an aggregate selling price of R989 196 354
    which was settled by way of a cash payment of R494 598 177 and the balance by way of the issue of
    91 592 255 Ascension A-linked units at an issue price of R4.05 per Ascension A-linked unit and
    61 824 772 Ascension B-linked units at an issue price of R2.00 per Ascension B-linked unit.
-   The cash portion of the disposal consideration is assumed to be used to repay interest-bearing
    borrowings at a rate of 7.0% per annum.
-   The consideration units held by Capital are assumed to generate distributable earnings at a combined
    forward yield of 9.4% per annum.
-   Where applicable, deferred taxation has been assumed at 14%.
-   All adjustments will have a continuing effect.

CATEGORISATION

The disposals constitute a category 2 transaction for Capital in terms of the JSE Listings Requirements.
Accordingly the disposals are not subject to approval by Capital unitholders.

18 September 2012

Sponsor

Date: 18/09/2012 07:05:00 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.

Share This Story