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Announcement regarding the acquisition of properties and withdrawal of cautionary announcement
INGENUITY PROPERTY INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/018084/06)
ISIN: ZAE000127411 JSE share code: ING
(“Ingenuity” or “the Company”)
ANNOUNCEMENT REGARDING THE ACQUISITION OF PROPERTIES AND WITHDRAWAL OF
CAUTIONARY ANNOUNCEMENT
1. Introduction
Ingenuity shareholders are advised that the Company has entered into an agreement (“the
Agreement”) for the acquisitions of rental enterprises (“the Acquisitions”), including their related
immovable properties (“the Properties”), from various sellers (“the Sellers”) as detailed below:
1.1 the acquisition of 100% of the property known as “Aurecon Building” situated at 1
Century City Drive, Waterford Precinct, Century City, Cape Town held 65% by the
trustees for the time being of the Century City Property Investment Trust (“CCPIT”) and
35% by Victus Capital Proprietary Limited;
1.2 the acquisition of 100% of the property known as “Estuaries No 1” situated at Oxbow
Crescent, Century City, Cape Town held 100% by CCPIT;
1.3 the acquisition of 100% of the property known as “Gateway” situated at corner
Boulevard & Century Way, Century City, Cape Town held 80% by CCPIT and 20% by
Century Property Investments Proprietary Limited (“CPI”);
1.4 the acquisition of 100% of the property known as “Intaba” situated at Unit F102, Intaba,
25 Protea Road, Claremont, Cape Town held 100% by CCPIT;
1.5 the acquisition of 100% of the property known as “Mazars House” situated at corner
Rialto Road & Century City Boulevard, Century City, Cape Town held 45% by CCPIT
and 55% by the trustees for the time being of the Crystal Towers Investment Trust;
1.6 the acquisition of a 50% undivided share of the property known as “Tokai on Main Office
Park” situated at Main Road, Tokai, Cape Town held 100% by the trustees for the time
being of Tokai Main Investment Trust (“Tokai Main”);
1.7 the acquisition of a 50% undivided share of the property known as “Tokai on Main
Retail” situated at Main Road, Tokai, Cape Town held 100% by the trustees for the time
being of Tokai Village Investment Trust (“Tokai Village”);
1.8 the acquisition of 100% of the property known as “Virgin” situated at Century Boulevard,
Century City, Cape Town held 100% by CCPIT; and
1.9 the acquisition of any claims on loan account in favour of CCPIT against Insight Property
Developers (Palmyra Road) Proprietary Limited (“Insight”) and the acquisition of 67
ordinary shares in Insight, constituting 67% of the entire issued share capital of Insight,
and held by CCPIT (collectively “the Sale Equity”). Insight holds a long term lease
agreement (45 years) with the Passenger Rail Agency of South Africa for the property
known as Palmyra Junction situated at Erf 172014 (a portion of Erf 172013), Cape
Town.
2. Rationale for the Acquisitions
The Properties have been acquired in line with the Company’s strategy to build a quality
portfolio of assets focused in the Western Cape.
3. Effective date of the Acquisitions
Subject to the fulfilment (or waiver in certain instances) of the conditions precedent set out in
paragraph 5 below, the Acquisitions will become effective on transfer which is anticipated to be
on or about 1 September 2013 (“the Transfer Date”).
4. Consideration for the Acquisitions
The total consideration for the Acquisitions is R866 177 000 million (eight hundred and sixty six
million one hundred and seventy seven thousand rand) (“the Purchase Consideration”), and
shall increase by 7.5% (seven point five percent) per annum, calculated monthly, in the event
that transfer is delayed beyond the Transfer Date. The Purchase Consideration will be
discharged by Ingenuity as follows:
4.1 by means of a cash payment equal to the mortgage finance obtained and accepted by
Ingenuity;
4.2 the balance of the Purchase Consideration by means of Ingenuity issuing renounceable
letters of allotment to the Sellers for Ingenuity shares (“the Consideration Shares”) at a
price of R0.85 per Consideration Share, provided that:
4.2.1 CCPIT shall not be entitled to renounce its rights in respect of 200 000 000 (two
hundred million) Consideration Shares and shall be obliged to take transfer of
such Consideration Shares into its own name; and
4.2.2 the remaining Sellers (other than CCPIT) shall be entitled, but not obliged, at
their election to take transfer of up to a maximum of 50 000 000 (fifty million)
Consideration Shares. Should the Sellers (other than CCPIT) elect not to take
transfer of some or all of the Consideration Shares, then such non-electing
Sellers shall be obliged to renounce their rights to the Consideration Shares
(“the vendor placement”).
The Purchase Consideration is payable on the Transfer Date.
The Agreement also provides for a Purchase Consideration adjustment in the event that the due
diligence investigation reveals any variances to the capitalisation rates projected for the
Properties. This may result in the Purchase Consideration being adjusted either upwards or
downwards in terms of a predetermined formula as contained in the Agreement.
5. Conditions precedent
The Acquisitions are subject to fulfilment or waiver of the following conditions precedent:
5.1 the board of directors of Ingenuity approving the Acquisitions;
5.2 Ingenuity being satisfied with the results of a due diligence investigation;
5.3 Ingenuity obtaining mortgage finance acceptable to discharge that portion of the
Purchase Consideration which will not be funded by the issue of the Consideration
Shares;
5.4 the Competition Authorities approving the Acquisitions;
5.5 the Company obtaining any regulatory consents to the extent required;
5.6 the Company’s shareholders approving the Acquisitions as required in terms of the JSE
Limited (“JSE”) Listings Requirements;
5.7 a new lease agreement being concluded with the current tenant in respect of Estuaries
No 1;
5.8 Ingenuity, the Neville Thornton Family Trust and Insight concluding a shareholders’
agreement in respect of Insight;
5.9 Ingenuity and Tokai Main concluding a co-ownership agreement which shall govern the
terms and conditions upon which they will co-own Tokai on Main Office Park; and
5.10 Ingenuity and Tokai Village concluding a co-ownership agreement which shall govern
the terms and conditions upon which they will co-own Tokai on Main Retail.
6. Property specific information relating to the Properties
Total Weighted Annualised
Gross
Parking Single or average net property Purchase Value of the
lettable
Property Sector bays Multi- rental per yield Consideration Properties
area
tenanted m2 % R’000 Rm (1)
m2
R
Aurecon Building, Erf
Offices/
6952, Montague Gardens, 7 451 230 Single 137 7.5 191 503 191 503
Retail
Cape Town
Estuaries No 1, Erf 6497,
Montague Gardens, Cape Offices 3 962 161 Single 116 7.5 92 074 92 074
Town
Gateway, Erf 6569,
Offices/
Motague Gardens, Cape 8 734 153 Multi 132 7.5 205 828 205 828
Retail
Town
Intaba, SS Intaba
Scheme Number
Offices 230 8 Single 174 8.5 5 555 5 555
300/2007 on Erf 118982,
Cape Town
Mazars House, SS
Crystal Towers Scheme Offices 7 035 248 Single 114 7.5 167 792 167 792
Number 182, Cape Town
Tokai on Main Office
Park, Erf 11518, Offices 2 242 57 Multi 53 7.5 11 501 11 501
Constantia, Cape Town
Tokai on Main Retail, Erf 7.5
12770, Constantia, Cape Retail 6 581 - Multi 81 42 445 42 445
Town
Virgin, Erf 6563,
Montague Gardens, Cape Gym 4 053 278 Single 159 7.5 106 167 106 167
Town
Retail/
Palmyra Junction 2 750 Multi 156 43 312 43 312
Offices - 8.0
Total 43 038 1 135 866 177 866 177
1. The Properties have been valued by the directors of the Company using the capitalisation of rental method. The
Properties will be valued by an independent valuer as part of the due diligence process.
7. Unaudited pro forma financial effects ("Financial Effects") of the Acquisitions
Based on Ingenuity's audited consolidated results for the year ended 31 August 2012
("Results"), the Financial Effects of the Acquisitions on Ingenuity's earnings per share (EPS”),
headline earnings per share (“HEPS”), net asset value per share (“NAV”) and net tangible asset
value per share (“NTAV”) are set out below. The Financial Effects are prepared for illustrative
purposes only, and because of their nature, may not give a fair presentation of Ingenuity's
financial position or the effect and impact of the Acquisitions. The Financial Effects are the
responsibility of Ingenuity's board and have not been reviewed or reported on by Ingenuity’s
auditors.
Before the After the Change
Acquisitions(1) Acquisitions(2) %
EPS (cents)(3) 9.0 7.6 (15.56)
HEPS (cents)(4) 1.6 3.4 112.50
NAV (cents)(5) 75.0 80.0 6.67
NTAV (cents)(5) 75.0 80.0 6.67
Total shares in issue(6) 738 550 000 1 248 065 882 68.99
Shares and weighted shares in issue net of 645 573 057 1 179 132 655 82.65
treasury shares(6)
Notes:
1. Based on Ingenuity’s Results.
2. In calculating the Financial Effects, it was assumed that the Acquisitions were implemented on 1 September
2011 for statement of comprehensive income purposes and on 31 August 2012 for statement of financial position
purposes.
3. EPS is based on net income of the Acquisitions of R62.2 million and increased finance charges of R32.5 million
on new borrowings. The resultant decrease in EPS is due to the increased number of shares in issue. Net
income of the portfolio exceeds any straight line adjustment from the property known as “Estuaries No 1” as a
condition of the acquisition is a renewal of the lease agreement with the tenant. No consideration is given to cost
savings that may be achieved as a result of the Acquisitions.
4. HEPS increases by 112,50% which excludes all fair value adjustments.
5. The increase in NAV and NTAV is due to the market price of 85 cents per share used for the vendor placement.
The price is 13% above the last reported NAV and NTAV.
6. Based on the assumption that a maximum number of 509 515 882 shares will be issued in terms of the vendor
placement.
8. Related party transaction
As Ingenuity is transacting with entities in which a director of Ingenuity has certain minority
interests, the Acquisitions are considered a “related party” transaction in terms of the JSE
Listings Requirements. The Company is in the process of appointing an independent expert and
the fairness opinion will be included in the circular to be sent to shareholders as referred to in
paragraph 9 below.
9. Categorisation of the Acquisitions
The Acquisitions are categorised as a Category 1 transaction in terms of the JSE Listings
Requirements and a circular containing details of the Acquisitions, revised listing particulars, the
fairness opinion referred to in paragraph 8 above and a notice of general meeting will be posted
to shareholders in due course.
10. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcement dated 27 February 2013 and are
advised that as the details of the Acquisitions have now been disclosed, caution is no longer
required to be exercised by shareholders when dealing in the Company’s securities.
8 April 2013
Cape Town
Investment bank and Sponsor
Nedbank Capital
Legal advisor
Edward Nathan Sonnenbergs Inc.
Date: 08/04/2013 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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