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Announcement regarding the acquisition of letting enterprises and properties
Delta Property Fund Limited
(formerly Tuffsan 89 Investment Holdings Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
Share code: DLT ISIN: ZAE000172052
("Delta")
ANNOUNCEMENT REGARDING THE ACQUISITION OF LETTING ENTERPRISES AND
PROPERTIES
1. Introduction
Delta linked unit holders are advised that Delta ("the Purchaser"), has entered into various
agreements for the acquisition of five properties ("the Properties") as detailed below ("the
Acquisitions"):
1. an agreement with PRB Properties Proprietary Limited for the purchase of the property
and letting enterprise commonly known as "Damelin House", situated at 325 Anton
Lembede Street, Durban, KwaZulu Natal for a purchase price of R49 823 600;
2. an agreement with TiradeProps 115 Proprietary Limited for the purchase of the property
and letting enterprise commonly known as "SARS Randburg", situated at the corner of
Hill and Kent Street, Randburg, Gauteng for a purchase price of R93 000 000;
3. an agreement with Strategic Property Partnership for the purchase of the property and
letting enterprise commonly known as the "CMH Building", situated at 196-206 Pixley ka
Seme Street and 119-123 Monty Naicker Street, Durban, KwaZulu Natal for a purchase
price of R53 684 200;
4. an agreement with MYK Family Trust for the purchase of the property and letting
enterprise commonly known as "Samora House", situated at 2 Samora Machel Street
and Margaret Mncadi Avenue, Durban, KwaZulu Natal for a purchase price of R62 971
428; and
5. an agreement with Vukile Property Fund Limited for the purchase of the property and
letting enterprise commonly known as the "Embassy Building", situated at the corner of
Anton Lembede and Samora Machel Streets, Durban, KwaZulu Natal for a purchase
price of R238 000 000.
The effective date of the Acquisitions will be the date of fulfilment of the conditions precedent as
set out in paragraph 5 below, which are expected to be on or about 1 May 2013.
2. Rationale for the Acquisitions
In line with Delta’s strategy of actively pursuing investment opportunities that will enhance the
overall quality and value of its portfolio, the Acquisitions represent attractive investments and
extend Delta’s diversification to SARS, non-government and industrial tenants. The Acquisitions
have potential strategic opportunities to enhance the yield going forward.
3. Consideration for the Acquisitions
The total purchase consideration for the Acquisitions is R500 100 331 (five hundred million one
hundred thousand and three hundred and thirty one Rand) which includes costs in the amount
of R2 621 103 (two million six hundred and twenty one thousand, one hundred and three Rand)
in respect of the Acquisitions ("the Purchase Price"), in addition the Purchaser will be liable for
the transfer duty.
The Purchase Price will be settled in cash upon registration of transfer of the Properties into the
name of Delta, and will be financed through a combination of debt financing and new equity
raised from new and/or existing linked unitholders. The new equity will form part of the
fundraising referred to in the announcement released on SENS on 07 February 2013.
4. Conditions precedent
The Acquisitions are subject to, inter alia, the fulfilment or waiver of the following suspensive
conditions:
4.1 The completion by Delta of a due diligence investigation of the Properties, to the
extent required;
4.2 The boards of directors and shareholders of the Vendors approving the Acquisitions,
to the extent required;
4.3 The counter-parties to the lease agreements in respect of the Properties consenting in
writing to the assignment of all of the respective vendors’ rights and obligations under
the leases to Delta;
4.4 Competition Commission approval (to the extent required);
4.5 Delta providing written confirmation of a letter of finance and or confirmation that it has
arranged for sufficient equity on such terms and conditions as are acceptable to the respective
vendors; and
4.6 Approval of the Acquisitions by Delta’s board of directors.
5. Unaudited pro forma financial effects of the Acquisitions
The unaudited pro forma financial effects of the Acquisitions on net asset value and net tangible
asset value per unit have not been disclosed as they are not significant.
6. Forecast information on the Properties
The forecasts have been prepared on the assumption that the Acquisitions will be implemented
on 1 May 2013 and include forecast results for the 10 months ending 28 February 2014 and the
year ending 28 February 2015.
The forecasts, including the assumptions on which they are based and the financial information
from which they are prepared, are the responsibility of the board of directors of Delta. The
forecasts have not been reviewed or reported on by the independent reporting accountants.
The forecasts presented in the tables below have been prepared in accordance with Delta’s
accounting policies and in compliance with IFRS.
Summarised forecast in respect of Damelin House:
Forecast Forecast
10 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 4,385 5,710
Straight-line rental income accrual 936 719
Total revenue 5,322 6,429
Net operating profit 3,002 3,591
Net profit after tax 689 539
Distributable earnings attributable to linked unitholders 2,045 2,843
Contracted revenue is based on existing lease agreements. 100% of the revenue for this
property is contracted.
Summarised forecast in respect of the SARS Randburg Building:
Forecast Forecast
10 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 8,737 11,133
Straight-line rental income accrual - -
Total revenue 8,737 11,133
Net operating profit 4,392 5,798
Net profit after tax 32 42
Distributable earnings attributable to linked unitholders 4,349 5,740
Contracted revenue is based on existing lease agreements. Uncontracted revenue in respect of
this portfolio amounts to 10% and 100% for the years ending 28 February 2014 and 2015,
respectively.
Summarised forecast in respect of the CMH Building:
Forecast Forecast
10 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 4,781 6,099
Straight-line rental income accrual 638 468
Total revenue 5,419 6,567
Net operating profit 2,801 3,351
Net profit after tax 475 358
Distributable earnings attributable to linked unitholders 2,141 2,854
Contracted revenue is based on existing lease agreements. 100% of the revenue for this
property is contracted.
Summarised forecast in respect of the Samora House:
Forecast Forecast
10 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 6,896 8,882
Straight-line rental income accrual 288 (261)
Total revenue 7,184 8,621
Net operating profit 3,760 4,391
Net profit after tax 232 (155)
Distributable earnings attributable to linked unitholders 3,437 4,606
Contracted revenue is based on existing lease agreements. 100% of the revenue for this
portfolio is contracted.
Summarised forecast in respect of the Embassy Building:
Forecast Forecast
10 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 30,753 41,448
Straight-line rental income accrual 279 (94)
Total revenue 31,032 41,353
Net operating profit 10,570 15,438
Net profit after tax 275 44
Distributable earnings attributable to linked unitholders 10,189 15,377
Contracted revenue is based on existing lease agreements. Uncontracted revenue in respect of
this property amounts to 24% and 83% for the years ending 28 February 2014 and 2015,
respectively.
7. Specific information relating to the Properties
Details regarding the Properties are set out below:
Properties Property Sector Gross Single or Weighted Annualised Purchase Value(2) (3)
description/ lettable multi average property price R
R
location area tenanted gross yield
m2 rental per
m² (1)
R
Damelin Durban,
House KwaZulu Natal Office 3,933 Single 103.25 9.50% 50,061,363 50,061,363
SARS Johannesburg,
Randburg Gauteng Office 8,496 Single 103.60 9.70% 93,552,767 93,552,767
CMH Durban,
Durban KwaZulu Natal Industrial 10,974 Single 38.73 9.50% 53,935,982 53,935,982
Samora Durban, Office
House KwaZulu Natal (Government) 6,920 Single 100.32 9.10% 63,411,832 63,411,832
Embassy Durban, Office
Building KwaZulu Natal (Government) 32,369 Multi 73.04 8.90% 239,138,387 239,138,387
Total 500,100,331 500,100,331
Notes:
1. Based on net rental income for the 12 month period from the anticipated date of transfer, assuming the Properties
are fully let.
2. No independent valuation has been carried out and the value of the Properties of R500 100 331 was arrived at by the
management company, MPI Property Asset Management Proprietary Limited.
3. After taking into account transfer fees, commission and other costs of R2 621 103.
4. The annualised property yield on the Embassy Building of 8.90% has assumed zero rental on the current vacant
space which amounts to 21% of the total GLA.
8. Categorisation
The Acquisitions are regarded as a Category 2 transaction in terms of the JSE Limited Listings
Requirements.
19 February 2013
Johannesburg
Investment bank and sponsor
Nedbank Capital
Date: 19/02/2013 04:45:00 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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