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Financial effects relating to acquisition from Capital Property Fund and withdrawal of cautionary
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”)
FINANCIAL EFFECTS RELATING TO THE PROPOSED ACQUISITION OF A PORTFOLIO OF
PROPERTIES FROM CAPITAL PROPERTY FUND AND WITHDRAWAL OF CAUTIONARY
INTRODUCTION
Linked unitholders are referred to the announcement released on SENS on 18 September 2012 in which it was
announced that Ascension had concluded agreements with Capital Property Fund (“Capital”) and various subsidiaries
of Capital (collectively, “the vendors”) to acquire a portfolio of property letting enterprises (“the acquisition
properties”) for an aggregate purchase price of R989 196 354 (before the escalation adjustment referred to below)
(each an “acquisition” and together “the acquisitions”).
As further advised on 18 September 2012, the purchase price for the acquisition properties will be settled in part by
way of a cash payment of R494 598 177 and the balance by way of an issue of A-linked units and B-linked units
(“consideration units”) in the following proportions:
- R370 948 633 will be settled through the issue of 91 592 255 A-linked units to the vendors at an issue price of
R4.05 per A-linked unit; and
- R123 649 544 will be settled through the issue of 61 824 772 B-linked units to the vendors at an issue price of
R2.00 per B-linked unit.
The cash payment is to be secured by an unconditional and irrevocable bank guarantee from Ascension to each of the
vendors. Appropriate debt funding is being arranged by way of a facility from The Standard Bank of South Africa
Limited.
The purpose of this announcement is to present the financial effects of the acquisitions, including the effects of the
consideration units and debt funding.
FORECAST FINANCIAL INFORMATION
Set out below are the summarised forecast statements of comprehensive income (“the summarised forecasts”) of the
acquisition properties for the seven months ending 30 June 2013 and the year ending 30 June 2014 (“the forecast
periods”). The summarised forecasts have been prepared on the assumption that the acquisitions will be implemented
on 1 December 2012 and on the basis that the summarised forecasts include forecast results for the forecast periods.
The summarised 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 summarised forecasts have not been
reviewed or reported on by the independent reporting accountants.
The full forecasts and the explanatory notes thereto will be provided in the circular to be issued to Ascension linked
unitholders in regard to the acquisitions.
The summarised forecasts presented in the tables below have been prepared in accordance with the company’s
accounting policies and in compliance with IFRS.
Summarised forecasts in respect of the acquisition properties:
Forecast for the Forecast for the
seven months year ending
ending 30 June 2014
30 June 2013
Contractual rentals and tenant recoveries 70 816 217 131 390 952
Straight-line of lease income adjustment 6 183 494 4 642 405
Rental revenue 76 999 710 136 033 357
Net property and related income 57 901 786 98 844 101
Operating profit* 56 288 803 93 794 610
Net loss after tax*^ (12 824 266) (180 340)
Distributable earnings 28 403 685 51 949 421
* Includes the effects of straight-lining of lease income and asset management fees.
^ Includes the effects of finance costs, downward fair value adjustments and debenture interest.
The summarised forecasts incorporate the following material assumptions in respect of revenue and expenses that can
be influenced by the directors:
1. The forecasts are based on an analysis of historical information and information provided by the property
manager and the independent valuer.
2. The properties underlying the forecasts comprise only the acquisition properties.
3. Contracted revenue is based on existing lease agreements including stipulated increases, all of which are valid
and enforceable.
4. Uncontracted revenue comprises 10.1% and 19.8% of gross revenue for the seven months ending 30 June 2013
and the year ending 30 June 2014 respectively.
5. Current vacant space has been forecast on a property-by-property basis and has been assumed to remain vacant
unless it is deemed probable that such space will be let, in which case rental is forecast at prevailing market rates.
6. Leases expiring during the forecast periods have been forecast on a lease-by-lease basis, and have been assumed
to renew at current market rates unless the lessee has indicated its intention to terminate the lease.
7. Property operating expenditure has been forecast on a line-by-line basis for each property based on
management’s review of historical expenditure, where available, and discussion with the property manager.
8. Fair value adjustments to investment properties have been provided for in respect of the seven months ending
30 June 2013, as further detailed in note 9 below. No fair value adjustments have been provided in respect of the
year ending 30 June 2014.
9. All the acquisition properties are assumed to be acquired with effect from 1 December 2012 for an aggregate
purchase consideration of R1,004.8 million (comprising the purchase consideration for the acquisition properties
of R989.2 million and capitalised acquisition costs of R15.6 million). The properties were valued at
R989.2 million by the independent property valuer, Quadrant Properties (Proprietary) Limited. This results in a
downwards revaluation adjustment of R12.7 million after deducting deferred tax of R2.9 million.
10. R500.9 million (comprising the cash portion of the purchase consideration for the acquisition properties of
R494.6 million and capitalised acquisition costs of R6.3 million) of the aggregate purchase consideration is
assumed to be funded through interest-bearing borrowings which will be advanced by The Standard Bank of
South Africa Limited. These interest-bearing borrowing are assumed to incur interest at an effective melded fixed
and variable rate of 7.41% p.a.
11. R494.6 million of the aggregate purchase consideration will be settled through the issue of 91 592 255 A-linked
units at an issue price of R4.05 per A-linked unit and 61 824 772 B-linked units at an issue price of R2.00 per
B-linked unit to the vendors.
12. The balance of the aggregate purchase consideration of R9.3 million is assumed to be funded through the issue of
new A- and B-linked units as described in note 13 below.
13. Acquisitions costs are assumed to be approximately R15.6 million and are assumed to be capitalised in full. It has
been assumed that R6.3 million of the acquisition costs will be settled in cash (funded by interest-bearing
borrowings), with the balance of R9.3 million being settled through the issue of 1.7 million A-linked units at
R4.05 per A-linked unit and 1.2 million B-linked units at R2.00 per B-linked unit to Java Capital (Proprietary)
Limited.
14. In terms of the acquisition agreements, if the transfer date for the acquisition properties is after 1 December 2012,
then interest will be payable on the cash portion of the purchase 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. All acquisition properties are assumed to transfer on 1 December 2012 and accordingly no
interest is assumed to be payable.
The summarised forecasts incorporate the following material assumptions in respect of revenue and expenses that
cannot be influenced by the directors:
15. The effective date of transfer of the acquisition properties is 1 December 2012.
16. In terms of the asset management agreement with the manager, Ascension shall pay the manager:
a. a monthly fee equivalent to 1/12th of 0.25% of the aggregate of the market capitalisation and the borrowings
of Ascension till 30 June 2013; and
b. a monthly fee equivalent to 1/12th of 0.45% of the aggregate of the market capitalisation and the borrowings
of Ascension till 30 June 2014.
17. Ascension will pay the property manager for all property management services a monthly fee equivalent to 2.5%
of gross monthly income collected (including VAT).
18. There will be no unforeseen economic factors that will affect the lessees’ abilities to meet their commitments in
terms of existing lease agreements.
19. Debenture interest will be paid to A- and B-linked unitholders in accordance with the provisions of the debenture
trust deed.
UNAUDITED PRO FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects on Ascension’s financial position as at 30 June 2012
after adjusting for the following:
- the issue of A-linked units in terms of a general issue of linked units for cash (“issue for cash”);
- the disposals of CAS House and Maitland Property (full details of which are set out in the pre-listing statement
issued by Ascension on 31 May 2012);
- the acquisitions of PROROM, 90 Market Street, 92 Market Street, 540 Pretorius Street and VWL (“IPO
acquisitions”) (full details of which are set out in the pre-listing statement issued by Ascension on 31 May
2012);
- the acquisition of 14 Long Street (“14 Long Street acquisition”) (full details of which are set out in the SENS
announcement issued by Ascension on 21 June 2012);
- the acquisition of 373 Pretorius Street (“373 Pretorius Street acquisition”) (full details of which are set out in
the SENS announcement issued by Ascension on 29 June 2012);
- the development of 45 Castle Street (“development”) (full details of which are set out in the pre-listing
statement issued by Ascension on 31 May 2012); and
- the acquisitions ,
(collectively, “the adjustments”), on the assumption that the adjustments took place on 30 June 2012 and on the
basis set out in the notes below.
These financial effects are the responsibility of the directors of Ascension and have been prepared for illustrative
purposes only, to illustrate the effects on Ascension’s financial position following the adjustments.
The unaudited pro forma statement of financial position of Ascension as at 30 June 2012 and the explanatory notes
thereto will be provided in the circular to Ascension linked unitholders.
Due to the nature of the unaudited pro forma financial effects they may not fairly present Ascension’s financial
position subsequent to the adjustments. The unaudited pro forma financial effects have not been reviewed or reported
on by the independent reporting accountants.
The unaudited pro forma financial effects have been prepared in accordance with IFRS, The Guide on Pro forma
consolidated Financial Information issued by SAICA and the accounting policies of Ascension that were used in the
preparation of the reviewed results for the six months ended 30 June 2012.
As forecast financial information for the acquisitions has been prepared and presented above, financial effects in
respect of an unaudited pro forma statement of comprehensive income have not been presented.
After the issue
for cash,
disposals, IPO
acquisitions,
14 Long Street
acquisition, 373
Pretorius Street
acquisition and After the
Before development Change adjustments Change
Note 1 Note 2 (%) Note 3 (%)
Net asset value and net
tangible asset value per
linked unit (cents):
A-linked unit 396.6 396.6 - 396.6 -
B-linked unit 125.3 138.9 10.9 149.1 7.3
Net asset value and net
tangible asset value per
linked unit excluding
deferred tax (cents):
A-linked unit 396.6 396.6 - 396.6 -
B-linked unit 137.1 153.9 12.3 160.3 4.2
Actual number of linked
units in issue (‘000):
A-linked units 66 500 74 695 12.3 168 008 124.9
B-linked units 265 387 265 387 - 328 373 23.7
Notes and assumptions:
1. The figures set out in the “Before” column above have been extracted, without adjustment, from the reviewed
results of the company for the six months ended 30 June 2012.
2. The figures set out in the “After the issue for cash, disposals, IPO acquisitions, 14 Long Street acquisition, 373
Pretorius Street acquisition and development” column incorporate adjustments in respect of the following:
a. The issue of 551 045 A-linked units at an issue price of R4.00 per A-linked unit (in terms of a general
issue of linked units for cash), raising proceeds of R2.2 million.
b. The disposals of CAS House and Maitland Property for R5 million and R3 million respectively, full
details of which are set out in the pre-listing statement issued by Ascension on 31 May 2012.
c. The IPO acquisitions for R231.5 million (inclusive of capitalised acquisition costs). The properties are
revalued to R239.4 million resulting in an upward revaluation adjustment of R6.4 million after
deducting deferred tax of R1.5 million. The IPO acquisitions are funded by a combination of cash of
R196.0 million and interest-bearing debt of R35.5 million. Debt raising costs of R178 000 are
assumed to be funded from the debt facility.
d. The 14 Long Street acquisition for R67.7 million (inclusive of capitalised acquisition costs). The
property is revalued to R88.0 million resulting in an upward revaluation adjustment of R16.5 million
after deducting deferred tax of R3.8 million. The 14 Long Street acquisition was funded by raising
R67.7 million in additional interest-bearing debt. Debt raising costs of R338 000 was funded from the
debt facility.
e. The 373 Pretorius Street acquisition for R156.5 million (inclusive of capitalised acquisition costs).
The property was revalued to R159.5 million resulting in an upward revaluation adjustment of
R2.4 million after deducting deferred tax of R0.5 million. The 373 Pretorius Street acquisition is
funded by the combination of raising R126.5 million in additional interest-bearing debt and issuing
A-linked units in an amount of R30 million (3.85 million A-linked units are issued at R3.90 per
A-linked unit and 3.80 million A-linked units are issued at R3.95 per A-linked unit). Debt raising
costs of R633 000 are assumed to be funded from the debt facility.
f. The completion of the development of 45 on Castle at a total cost of R91.5 million (inclusive of initial
acquisition costs, capitalised borrowing costs and development costs). The property is revalued to
R109.8 million resulting in an upwards revaluation adjustment of R11.0 million after deducting
deferred tax of R2.5 million.
3. The figures set out in the “After the adjustments” column incorporate adjustments in respect of the following:
a. All the acquisition properties are assumed to be acquired for an aggregate purchase consideration of
R1,004.8 million (comprising the purchase consideration for the acquisition properties of R989.2 million
and capitalised acquisition costs of R15.6 million). The properties were valued at R989.2 million by the
independent valuer resulting in a downward revaluation adjustment of R12.7 million after deducting
deferred tax of R2.9 million.
b. R500.9 million of the aggregate purchase consideration (comprising the cash portion of the purchase
consideration for the acquisition properties of R494.6 million and capitalised acquisition costs of
R6.3 million) is assumed to be funded through interest-bearing borrowings which will be advanced by The
Standard Bank of South Africa Limited. These interest-bearing borrowing are assumed to incur interest at
an effective melded fixed and variable rate of 7.41% p.a.
c. R494.6 million of the aggregate purchase consideration will be settled through the issue of 91 592 255
A-linked units at an issue price of R4.05 per A-linked unit and 61 824 772 B-linked units at an issue price
of R2.00 per B-linked unit to the vendors.
d. The balance of the aggregate purchase consideration of R9.3 million is assumed to be funded through the
issue of new A- and B-linked units as described in note 3e below.
e. Acquisitions costs are assumed to be approximately R15.6 million and are assumed to be capitalised in full.
It has been assumed that R6.3 million of the acquisition costs will be settled in cash (funded by interest-
bearing borrowings), with the balance of R9.3 million being settled through the issue of 1.7 million A-
linked units at R4.05 per A-linked unit and 1.2 million B-linked units at R2.00 per B-linked unit to Java
Capital (Proprietary) Limited.
IMPACT OF THE ACQUISITIONS ON AN ASCENSION A- AND B-LINKED UNIT
The acquisitions 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.
Based on the assumptions set out above in respect of the summarised forecasts for the acquisitions, the acquisitions are
expected to have a neutral to slightly enhancing impact on the forecast distributions per B-linked unit of 18.71 cents
for the year ending 30 June 2013 and 21.29 cents for the year ending 30 June 2014, as presented in the announcement
released on SENS on 29 June 2012.
The aforegoing forecast statements and the forecasts underlying such statements are the responsibility of the directors
of Ascension and have not been reviewed or reported on by the independent reporting accountants.
WITHDRAWAL OF CAUTIONARY
Ascension linked unitholders are referred to the cautionary announcement dated 18 September 2012 and are advised
that following the release of the financial effects of the acquisitions, caution is no longer required to be exercised by
linked unitholders when dealing in their linked units.
2 October 2012
Corporate advisor and sponsor
Java Capital
Date: 02/10/2012 09:01:00 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
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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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