Wrap Text
Acquisition of various properties and private placement
ANNUITY PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 2011/145994/06)
Share code: ANP ISIN: ZAE000165643
(“Annuity” or “the Company”)
ACQUISITION OF VARIOUS PROPERTIES AND PRIVATE PLACEMENT
A. INTRODUCTION
Annuity is pleased to advise holders of Annuity linked units (“Linked unit holders”) that it has agreed terms with
the relevant vendors for the following properties:
- the Clarins SA Portfolio Acquisition;
- the McCarthy/Unitrans Portfolio Acquisition; and
- the Coricraft Distribution Centre
(collectively the “Property Acquisitions”).
The Property Acquisitions are consistent with Annuity’s strategy to build a quality property portfolio that offers
long-term distribution and capital growth underpinned by strong underlying contractual cash flows and also
present an opportunity for Annuity to increase its portfolio weighting within the specialised retail and industrial
sectors.
Details pertaining to the Property Acquisitions are set out in Section B below. The Property Acquisitions are not
inter-conditional on one another. The aggregate purchase consideration for the Property Acquisitions is
approximately R369 million.
B. THE PROPERTY ACQUISITIONS
1. THE CLARINS SA PORTFOLIO ACQUISITION
1.1 THE CLARINS SA PORTFOLIO ACQUISITION
Annuity has agreed the terms, on an exclusive basis, with the relevant vendors to acquire a portfolio of
prime office and industrial properties that are exclusively tenanted by Clarins South Africa Proprietary
Limited (“Clarins SA”). Clarins SA is a subsidiary of the Clarins Group, an international luxury cosmetics
company, headquartered in France, which manufactures prestige skincare, makeup and fragrance
products. A major player in the beauty sector, Clarins has an international presence in all segments of
the cosmetics market with a global network of 20 subsidiaries, over 140 local agents and approximately
6,000 staff worldwide.
The portfolio of properties includes:
- the Clarins head office property situated at 17A Scott Street, Waverley, Johannesburg (the “Scott
Street Property”), together with all leases and assets, forming necessary parts of the letting
enterprise as a going concern (the “Scott Street Letting Enterprise”), (collectively, the “Scott
Street Acquisition”);
- the Clarins industrial property situated at 17 Modulus Road, Ormonde, Johannesburg (the “Modulus
Road Property”), together with all leases and assets, forming necessary parts of the letting
enterprise as a going concern (the “Modulus Road Letting Enterprise”), (collectively, the
“Modulus Road Acquisition”); and
- the Clarins office property, situated at 30 Barnett Street, Gardens, Cape Town (the “Dunkley House
Property”), together with all leases and assets, forming necessary parts of the letting enterprise as a
going concern (the “Dunkley House Letting Enterprise”), (collectively, the “Dunkley House
Acquisition”).
The Clarins SA leases each escalate at a rate of 8.0%, with approximately 3 years and 6 months
remaining on each such lease.
The effective date for the acquisition of each Clarins SA property will be the date of transfer of such
property into the name of Annuity, which is expected to take place on or about 15 September 2013.
1.2 PROPERTY AND OTHER INFORMATION ON THE CLARINS PORTFOLIO ACQUISITION
Modulus Road Dunkley House
Scott Street Property
Property Property
Portion 15 of Erf 13, Erf 85, Theta
Erf 95485, ST
Waverley Township, Extension 6 Township,
Description of the 250/1996, Gardens,
Registration Division Registration Division
property: Local Authority of
I.R. Province of I.Q. Province of
Cape Town
Gauteng Gauteng
Unit 46 SS Dunkley
17A Scott Street 17 Modulus Road,
House, 30 Barnett
Location: Waverley, Ormonde,
Street, Gardens, Cape
Johannesburg Johannesburg
Town
Rand Treasury Rand Treasury Dunkley House
Vendor:
Proprietary Limited Proprietary Limited Proprietary Limited
Single or multi-
Single-tenanted Single-tenanted Single-tenanted
tenanted:
Grade: A Grade Industrial / warehouse B Grade
2
GLA (m ): Office: 1,442m² Industrial: 2,000m² Office: 360m²
Weighted average
gross rental per square Office: R135.49/m² Industrial: R41.69/m² Office: R92.85/m²
metre (R/m²):
Weighted average 3.5 years 3.5 years 3.5 years
lease expiry (by GLA):
Vacancy: 0% 0% 0%
Purchase
R23,238,074 R10,308,854 R3,653,072
consideration:
1.3 CATEGORISATION
As the Clarins Portfolio Acquisition represents less than 5% of Annuity’s market capitalisation in terms of
the Listings Requirements of the JSE (“JSE Listings Requirements”), the disclosure contained in
paragraph 1 of this announcement is voluntary.
2. THE MCCARTHY/UNITRANS PORTFOLIO ACQUISITION
2.1 THE MCCARTHY/UNITRANS PORTFOLIO ACQUISITION
Annuity has agreed the terms, on an exclusive basis, with various vendors to acquire a portfolio of
specialised retail and office properties (“McCarthy/Unitrans Portfolio Acquisition”) situated in a prime
location within the well established Hendrik Potgieter strip in Roodepoort, which is a prominent mixed-
use business node of retail, office and vehicle retail showrooms and within close proximity to the N1
highway and the Clearwater Regional Shopping Centre on the West Rand of Johannesburg.
The specialised retail properties offer a high quality tenant profile with McCarthy Audi (part of the
McCarthy Motor Group, a subsidiary of Bidvest Limited) and Unitrans Nissan (operated by Unitrans, a
subsidiary of KAP International Holdings Limited) occupying approximately 78% of the total specialised
retail GLA. The office property is predominately tenanted by a combination of large, medium and small
corporates and professional firms.
The portfolio of properties includes:
- the McCarthy Audi Centre West Rand property situated at corner of Christiaan De Wet Road and
Rooibok Avenue, Allen’s Nek, Roodepoort (the “McCarthy Audi Property”), together with all leases
and assets, forming necessary parts of the letting enterprise as a going concern (the “McCarthy
Audi Letting Enterprise”), (collectively, the “McCarthy Audi Acquisition”);
- the Unitrans Nissan Roodepoort property situated at corner of Christiaan De Wet Road and Rooibok
Avenue, Allen’s Nek, Roodepoort (the “Unitrans Nissan Property”), together with all leases and
assets, forming necessary parts of the letting enterprise as a going concern (the “Unitrans Nissan
Letting Enterprise”), (collectively, the “Unitrans Nissan Acquisition”); and
- the Warich Close Office Park property situated at corner of Christiaan De Wet Road and Rooibok
Avenue, Allen’s Nek, Roodepoort (the “Warich Office Park Property”), together with all leases and
assets, forming necessary parts of the letting enterprise as a going concern (the “Warich Office
Park Letting Enterprise”), (collectively, the “Warich Office Park Acquisition”).
The effective date for the acquisition of each McCarthy/Unitrans property will be the date of transfer of
such property into the name of Annuity, which is expected to take place on or about 1 October 2013.
2.2 PROPERTY AND OTHER INFORMATION ON THE MCCARTHY/UNITRANS PORTFOLIO
ACQUISITION
McCarthy Audi Unitrans Nissan Warich Office Park
Property Property Property
Erf 682, Allen’s Nek Erf 732, Allen’s Nek Erf 733, Allen’s Nek
Extension 43 Extension 47 Extension 47
Description of the Township, Township, Township,
property: Registration Division Registration Division Registration Division
I.Q. Province of I.Q. Province of I.Q. Province of
Gauteng Gauteng Gauteng
Corner of Christiaan
43 Van Vuuren Street, 39 Van Vuuren Street,
De Wet and Rooibok
Allen’s Nek, Allen’s Nek,
Location: Avenue, Allen’s Nek,
Roodepoort, Roodepoort,
Roodepoort,
Johannesburg Johannesburg
Johannesburg
Time Bandit Wilrock Properties Wilrock Properties
Vendor:
Properties 25 Proprietary Limited Proprietary Limited
Proprietary Limited
Single or multi-
Multi-tenanted Single-tenanted Multi-tenanted
tenanted:
Grade: N/A N/A A Grade
2
GLA (m ): Special retail: 4,309m² Special retail: 4,000m² Office: 3,212m²
Weighted average
Special retail: Special retail:
gross rental per square Office: R89.16/m²
R104.53/m² R112.05/m²
metre (R/m²):
Weighted average
4.4 years 4.6 years 2.6 years
lease expiry (by GLA):
Vacancy: 0% 0% 0%
Purchase
consideration: R67,063,384 R68,091,964 R46,594,651
vendor of the Warich Office Park Property will guarantee the gross income of all the tenants to Annuity’s
satisfaction for a period of 2 years from the date of transfer of the Warich Office Park Property into the
name of Annuity.
2.3 CONDITIONS PRECEDENT TO THE MCCARTHY/UNITRANS PORTFOLIO ACQUISITION
Each of the McCarthy Audi Acquisition, the Unitrans Nissan Acquisition and the Warich Office Park
Acquisition is subject to the fulfillment of, inter alia, the following conditions precedent:
a) the listing of the new Annuity linked units to fund such acquisitions in terms of the JSE Listing
Requirements; and
b) the raising of the necessary debt and equity capital required to fund such acquisitions.
2.4 CATEGORISATION
The Unitrans Nissan Acquisition and the Warich Office Park Acquisition are from the same vendor,
Wilrock Properties Proprietary Limited (“Wilrock”). Wilrock and the vendor for the McCarthy Audi
Acquisition are considered to be associated companies as defined in terms of the JSE Listings
Requirements. Accordingly, the purchase considerations of the McCarthy Audi Acquisition, Unitrans
Nissan Acquisition and the Warich Office Park Acquisition have been aggregated in considering the
categorisation of the McCarthy/Unitrans Portfolio Acquisition.
As a result, the McCarthy/Unitrans Portfolio Acquisition constitutes a category 2 transaction in terms of
the JSE Listings Requirements and accordingly does not require approval by Linked unit holders.
3. THE CORICRAFT DISTRIBUTION CENTRE ACQUISITION
3.1 THE CORICRAFT DISTRIBUTION CENTRE ACQUISITION
Annuity has agreed the terms, on an exclusive basis, with Reflex Property Partners Proprietary Limited to
acquire the Coricraft distribution centre, situated at Friedlander Street, Stormill, Johannesburg (the
“Coricraft Distribution Centre Property”), together with all leases and assets, forming necessary parts
of the letting enterprise as a going concern (the “Coricraft Distribution Centre Letting Enterprise”),
(collectively, the “Coricraft Distribution Centre Acquisition”).
The Coricraft Distribution Centre Property is exclusively tenanted by Coricraft Group Proprietary Limited
(“Coricraft”). Coricraft is a manufacturer and retailer of a wide variety of couches, dining, living and
bedroom furniture. Coricraft is one of South Africa’s fastest growing retailers and is the leading cash
furnishing retailer in South Africa through their 34 stores.
Coricraft is on a 10 year triple net lease which escalates at the higher of 8% or CPI per annum and has 8
years and 1 month remaining on such lease, which terminates on 31 July 2021. Coricraft will sign a new
10 year lease upon transfer of the Coricraft Distribution Centre Property into Annuity’s name.
The effective date of the Coricraft Distribution Centre Acquisition will be the date of transfer of the
Coricraft Distribution Centre Property into the name of Annuity, which is expected to take place on or
about 1 October 2013.
3.2 PROPERTY AND OTHER INFORMATION ON THE CORICRAFT DISTRIBUTION CENTRE
ACQUISITION
Erven 3, 4, 7, 10 - 13, 117 Stormill Township,
Description of the property:
Registration Division I.Q. Province of Gauteng
Location: Friedlander Street, Stormill, Johannesburg
Single or multi-tenanted: Single-tenanted
Grade: Industrial / distribution centre
2
GLA (m ): Industrial: 19,369m²
Weighted average gross rental per square
Industrial: R32.92/m²
metre (R/m²):
Weighted average lease expiry (by GLA): 8.1 years, to be extended to 10 years on transfer
Vacancy: 0%
Purchase consideration: R86,145,390
3.3 CONDITIONS PRECEDENT TO THE CORICRAFT DISTRIBUTION CENTRE ACQUISITION
The Coricraft Distribution Centre Acquisition is subject to the fulfillment of, inter alia, the following
conditions precedent:
a) the delivery of the following documents by the vendor of the Coricraft Distribution Centre to Annuity:
- an approved site development plan in respect of the Coricraft Distribution Centre Property;
- building plans of the Coricraft Distribution Centre Property approved by the City of
Johannesburg Metropolitan Municipality (the “Johannesburg Municipality”); and
- an occupancy certificate issued by the Johannesburg Municipality
b) Competition Authority approval in terms of the Competition Act 89 of 1998.
3.4 CATEGORISATION
The Coricraft Distribution Centre Acquisition constitutes a category 2 transaction in terms of the JSE
Listings Requirements and accordingly does not require approval by Linked unit holders.
4. INDEPENDENT VALUATIONS OF THE PROPERTY ACQUISITIONS
The directors of Annuity (“Annuity Board”) are satisfied that the values of each of the Scott Street Property,
Modulus Road Property, Dunkley House Property, McCarthy Audi Property, Unitrans Nissan Property, Warich
Office Park Property and the Coricraft Distribution Centre Property are in line with the purchase prices being paid
by Annuity. The Annuity Board is not independent and is not registered as professional valuers or as professional
associate valuers in terms of the Property Valuers Profession Act, No 47 of 2000.
5. PROPOSED FUNDING OF THE PROPERTY ACQUISITIONS
The purchase consideration for the Property Acquisitions is payable in cash against transfer of each of the
properties into the name of Annuity. The aggregate purchase consideration for the Property Acquisitions (the
“Aggregate Purchase Consideration”) will be funded through a combination of new and existing debt facilities
and/or the issue of new Annuity linked units via a private placement (“Private Placement”). The related property
acquisition and transaction costs will be funded through new debt facilities. In this context the minimum amount
Annuity will seek to raise via the Private Placement will be approximately R193.6 million.
6. FINANCIAL EFFECTS
The financial effects, including the assumptions on which they are based and the financial information from which
they are prepared, are the responsibility of the Annuity Board and have not been reviewed or reported on by the
reporting accountant in terms of section 8 of the JSE Listing Requirements.
The financial effects presented in the tables below have been prepared in accordance with the Company's
accounting policies and in compliance with IFRS. The financial effects have been prepared on the assumption that
the Aveng Property Acquisition (Linked unit holders are referred to the announcement dated 14 May 2013 for
details relating to the Aveng Property Acquisition) will be implemented (transfer of the properties into Annuity’s
name) on 15 August 2013, the Clarins Portfolio Acquisition will be implemented (transfer of the properties into
Annuity’s name) on 15 September 2013 and the McCarthy/Unitrans Portfolio Acquisition and Coricraft Distribution
Centre Acquisition will be implemented (transfer of the property into Annuity’s name) on 1 October 2013.
Forecast for Forecast for
the twelve the twelve
months months
ending 31 ending 31
March 2014 March 2014
before the after the
Aveng Aveng
Property Adjustment Coricraft Property
Acquisition for actual Aveng Clarins McCarthy/ Distribution Acquisition
and Property linked units Property Portfolio Unitrans Centre and Property
1 2 3 4 5 5
Notes Acquisitions in issue Acquisition Acquisition Acquisition Acquisition Acquisitions
Revenue 191,254,259 4,782,974 2,633,994 12,237,118 5,857,171 216,765,516
Net property income 146,737,703 4,724,562 2,269,959 10,056,736 5,799,182 169,588,142
Net operating profit before interest and
taxation 123,229,031 2,705,055 1,203,181 4,750,005 2,217,689 134,104,961
Number of linked units in issue at end of
period 6 187,158,344 1,974,573 6,121,156 - 20,971,154 9,939,853 226,165,080
Weighted average number of linked units
in issue 6 187,158,344 1,974,573 3,555,302 - 10,456,849 4,956,310 208,101,378
Earnings per linked units (cents) 6, 7 40.79 38.44
Headline earnings per linked unit (cents) 6, 7 49.79 49.64
Distribution per linked unit (cents) 6, 7 45.09 45.09
General assumptions and notes:
1. The forecasts are based on the same material assumptions as are listed in the Circular to Annuity Linked unit holders, dated 25 October 2012;
2. The “Adjustment for actual linked units in issue” column reflects the adjustment for actual linked units in issue;
3. Based on an assumed 50%/50% debt to equity funding ratio for the Aveng Property Acquisition;
4. Based on an assumed 100% debt funding ratio for the Clarins Portfolio Acquisition;
5. Based on an assumed 40%/60% debt to equity funding ratio for the McCarthy/Unitrans Acquisition and the Coricraft Distribution Centre
Acquisition
6. Based on an indicative clean price of R5.20 per linked unit for the Private Placement, which is at a 8.9% discount to the 30 day VWAP of Annuity
prior to the issue date of this announcement; and
7. The debt portion will be funded from new debt facilities at an indicative blended fixed and floating interest rate of 7.28%.
7. UNAUDITED PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma financial effects are the responsibility of the Annuity Board and have been prepared for illustrative purposes only to provide
information relating to how the Aveng Property Acquisition and the Property Acquisitions may have impacted Linked unit holders on the relevant
reporting date and, due to their nature, may not give a fair reflection of Annuity`s financial position after implementation of the Aveng Property
Acquisition and the Property Acquisitions.
The unaudited pro forma financial effects have been prepared in accordance with the JSE Listings Requirements, the Guide on Pro Forma Financial
Information issued by SAICA and the measurement and recognition requirements of IFRS. The accounting policies used to prepare the unaudited pro
forma financial effects are consistent with those applied in the preparation of the financial statements for the year ended 31 March 2013.
The table below sets out the unaudited pro forma financial effects of the Aveng Property Acquisition and the Property Acquisitions on net asset value
("NAV") and tangible net asset value ("TNAV") per linked unit for the year ended 31 March 2013.
Pro forma
Pro forma results after
results as per the Aveng
Annuity’s Property
historical Coricraft Acquisition
financial Aveng Clarins McCarthy/ Distribution and the
information on Property Portfolio Unitrans Centre Property
1 2
31 March 2013 Acquisition Acquisition Acquisition Acquisition Acquisitions
NAV per linked unit (cents) 522.0 -1.44 -1.23 -2.74 -3.23 513.36
TNAV per linked unit (cents) 522.0 -2.18 -0.94 -4.62 -1.40 512.86
Number of linked units in issue at end of 189,132,917 6,121,156 - 20,971,154 9,939,853 226,165,080
period
The pro forma financial effects have been calculated on the basis of the following assumptions:
1. The “Pro forma as per Annuity’s historical financial information on 31 March 2013” column, which is based on the audited financial results for
the year ended 31 March 2013, reflects the NAV and the TNAV value per linked unit as at 31 March 2013.
2. The “Pro forma results after the Aveng Property Acquisition and the Property Acquisitions” column represents NAV and TNAV per linked unit
including the Property Acquisitions. It includes the effect of the acquisition and transfer of the properties to the value of R360.2 million, being
the fair value of the Aveng Property Acquisition and the Property Acquisitions in terms of IFRS 3.
3. It is assumed that the Aveng Property Acquisition and the Property Acquisitions will be funded by the Private Placement and via debt funding
as set out in the notes to paragraph 6 of this announcement.
4. The total estimated once-off transaction costs to be paid amount to R11.8 million. Property acquisition costs have been expensed in terms of
IFRS 3 and transaction costs relating to debt have been capitalised to the financial liability in terms of IFRS.
C. CONCLUSION
The Annuity Board believes that the Property Acquisitions further enhance the quality of Annuity’s underlying
portfolio in a manner that is consistent with Annuity’s investment strategy to build a quality portfolio that offers
long-term distribution and capital growth underpinned by strong lease covenants and above market escalations.
Illovo
29 July 2013
Lead Investment Bank and Transaction Sponsor to Annuity
Investec Bank Limited
Joint Investment Bank to Annuity
Sasfin Capital (A division of Sasfin Bank Limited)
Sponsor to Annuity
Rand Merchant Bank (A division of FirstRand Bank Limited)
Legal advisors to Annuity
Glyn Marais Inc
Date: 29/07/2013 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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