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Announcement regarding the Acquisition of Letting Enterprises and Properties
INVESTEC PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 2008/011366/06)
Share code: IPF ISIN: ZAE000155099
(“Investec Property Fund” or “the Fund”)
ANNOUNCEMENT REGARDING THE ACQUISITION OF LETTING ENTERPRISES AND PROPERTIES
1. Introduction
Investec Property Fund linked unitholders (“Unitholders”) are hereby advised that Investec
Property Fund has entered into agreements for the acquisition of two properties from
subsidiaries of Investec Property Limited, a related party to the Fund, as detailed below:
- the property located at 5 Bond Street, Midrand (“5 Bond Street”) from Midrand Town
Council Proprietary Limited for a purchase consideration of R118,360,306; and
- the property and letting enterprise commonly known as the “SA Ladder Building”,
situated at 32 Potgieter Street, Alrode from Investec Property Pty Limited for a purchase
consideration of R75,000,000.
(the “Related Party Acquisitions”)
The Fund has also entered into various agreements for the acquisition of a further three
properties (collectively, “the Properties”) as detailed below:
- the property and letting enterprise commonly known as “BMW Auto Alpina”, situated on
the corner of North Road and Ponds Road, Bardene, Boksburg North, Gauteng from
Namaqualand Diamond Fund Trust Eiendomme (Pty) Limited for a purchase
consideration of R63,437,500;
- the “Minolta Highveld” property situated at 14A Esdoring Nook, Techno Park, Highveld,
Pretoria, from Erf 6 Highveld Technopark Investments (Pty) Limited, and the “Minolta
Bellville” property situated at 4 Mike Pienaar Boulevard, Bellville, Cape Town, from
Midqueen Investments (Pty) Limited for a combined purchase consideration of
R60,800,000. The acquisition of the Minolta Highveld and Minolta Bellville properties
(“Minolta Properties”) is an indivisible transaction.
(collectively with the Related Party Acquisitions, the “Proposed Acquisitions”)
The aggregate purchase consideration of R317,597,806 for the above acquisitions will be
funded with existing cash and paid to the respective vendors upon registration of transfer of
each property into the name of the Fund.
The effective date of each of the Proposed Acquisitions, save for 5 Bond Street, will be the
respective dates of transfer of each property into the name of the Fund. The effective date of
acquisition of 5 Bond Street is 1 May 2013.
2. Rationale for the Proposed Acquisitions
The Proposed Acquisitions are consistent with the Fund’s objective to build a quality portfolio
of properties with strong contractual cash flows in order to achieve value enhancement and
sustainable growth in distributions to Unitholders. The Properties offer a healthy underlying
tenant base, each tenanted by high-quality, national and international tenants with long lease
expiry profiles. The Properties collectively extend the Fund’s diversification into the retail,
industrial and office sectors and the directors believe the Properties offer good value and will
improve the earnings and growth prospects of the Fund.
The independent valuation of the Related Party Acquisitions set out in paragraph 4 below
supports this view.
3. Description of the Properties
5 Bond Street is a newly developed A-grade office building, currently under construction. The
property is situated in a strong commercial node of Midrand and is conveniently located
directly opposite the Gautrain station. The building has a GLA of 5,870m2 comprising open
plan office floor area with 284 parking bays. The property is let to a single tenant, Investec
Bank Limited, on a 10-year triple net lease.
The SA Ladder Building is an industrial property offering 25,000m2 of factory and warehousing
space, ancillary office space and yard area. It is well located in the strong industrial node of
Alrode with easy highway access. The property is let to a long-standing tenant, SA Ladder, on
a 12 year lease and is utilised for manufacturing and distribution.
. The property is let to a single user, Namaqualand Diamond BMW Auto Alpina is a 7,526m2 motor
dealership offering showroom space, ancillary office space and a service centre. The
property is well located on the major artery of North Rand Road in Boksburg’s retail and motor
city node and is easily accessible by highwayFund Trust Eiendomme Proprietary Limited
trading as Alpina BMW (BMW South Africa) and the premises are utilised for the sale of motor
vehicles and servicing centre.
The Minolta Properties are business premises comprising offices,warehousing and
workshops. The Minolta Highveld building (situated in Highveld Technopark Centurion)
comprises 2,955m2 of GLA, while the Minolta Belville property comprises 2,166m2 of GLA. The
properties are let to a single tenant, Minolco Proprietary Limited trading as Minolta South
Africa, a wholly owned subsidiary of the Bidvest Group. The leases on both properties are
triple net leases offering above-inflation escalations.
4. Valuation of the Related Party Acquisitions
An independent valuation of 5 Bond Street and the SA Ladder Building has been performed by
Mills Fitchet Magnus Penny (Pty) Limited (“Independent Valuer”), who is an independent
registered valuer as defined in section 13 of the JSE Listings Requirements.
The valuations of 5 Bond Street and the SA Ladder Building are R119,000,000 and
R75,400,000 respectively, which independent valuations are both higher than the purchase
considerations of the properties.
5. Conditions precedent
Each of the Proposed Acquisitions is now unconditional, save for that of 5 Bond Street which
remains subject to the fulfillment of the condition that the Fund notify the vendor in writing that
it is satisfied with the results of its due diligence investigation of the property.
6. Financial effects
The Proposed Acquisitions will not have a material effect in the first year as it does not
contribute more than 3% to the pro forma distribution per linked unit, pro forma earnings per
linked unit, pro forma headline earnings per linked unit, pro forma net asset value per linked
unit or pro forma tangible net asset value per linked unit of the Fund.
7. Forecast financial information of the Related Party Acquisitions
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
Investec Property Fund. The forecasts have not been reviewed or reported on by the
independent reporting accountants.
5 Bond SA Ladder
Street Building
Forecast for Forecast for
the 12 the 12
months months
ended 30 ended 31
April 2014 March 2014
R R
Gross revenue 10,096,020 8,526,654
Gross expenditure (1) (173,931) (878,432)
Net property income 9,922,089 7,648,221
Notes:
1. Property expenditure includes all consumption expenditure as well as property management fees
8. Specific information relating to the Properties
Property Sector GLA(m2) Weighted Purchase Independent Escalation Yield
average Price (R) valuation (R)
rental /
m2
(R/m2 )
5 Bond Street Office 5,870 118.0 118,360,306 119,000,000 8% 8.4%
SA Ladder Industrial 25,000 25.4 75,000,000 75,400,000 8% 10.2%
Building
BMW Auto Retail / 7,526 66.9 63,437,500 n/a 8% 9.5%
Alpina Motor
dealership
Minolta Mixed use 5,121 87.9 60,800,000 n/a 7.3% 8.76%
Properties office /
warehouse
All properties are single-tenanted
9. Small related party transaction
The acquisition of 5 Bond Street and the SA Ladder Building constitute small related party
transactions in terms of the JSE Listings Requirements, as Investec Property Limited, a
wholly-owned subsidiary of Investec Limited, holds 100% of each of the respective vendor’s
issued share capital and is the management company of the Fund.
The JSE Limited has been provided with a summary of the sworn valuation of each property
by the Independent Valuer. The full valuation report is available for inspection at the registered
office of the Fund during normal business hours until 3 May 2013.
Johannesburg
19 March 2013
Investment Bank and Sponsor:
Investec Corporate Finance
Date: 19/03/2013 11:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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