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DELTA PROPERTY FUND LIMITED - Acquisition of Letting Enterprises and Properties

Release Date: 31/07/2013 09:20
Code(s): DLT     PDF:  
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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 unitholders are advised that Delta ("the Purchaser"), has entered into an agreement
      with the owners of Phamog Properties Proprietary Limited (“Phamog”) for the purchase of the
      entire issued share capital of Phamog ("the Acquisition"). Phamog is the owner of the following
      property and letting enterprises commonly known as:

            1. "Phamoko Towers", situated at 37 Church Street, Polokwane, Limpopo; and

            2. "Temo Towers", situated at 67 Biccard Street, Polokwane, Limpopo;

                (collectively “the Properties”)

      Pursuant to the Acquisition, the Properties will be transferred to Delta.

      The effective date of the Acquisition will be the date of fulfilment of the conditions precedent as
      set out in paragraph 5 below, which is expected to be on or about 1 September 2013.

2.    Rationale for the Acquisition

      In line with Delta’s strategy, the Acquisition, comprising well-established A grade properties with
      low risk tenants, represents attractive investments that will enhance the overall quality and value
      of Delta’s property portfolio.

3.    Consideration for the Acquisition

      The total purchase consideration for the Acquisition is R377,500,000 (three hundred and
      seventy seven million five hundred thousand Rand) ("the Purchase Price").

      The Purchase Price is based on the following underlying property prices:

            1. Phamoko Towers – R241,750,000 (two hundred and forty one million seven hundred
               and fifty thousand Rand); and

            2. Temo Towers – R135,750,000 (one hundred and thirty five million seven hundred and
               fifty thousand Rand)

      The Purchase Price excludes costs in the amount of R12,148,805 (twelve million one hundred
      and forty eight thousand, eight hundred and five Rand).

      The Purchase Price will be settled in cash upon transfer of the entire share capital of Phamog
      into the name of Delta, and will be financed through a combination of debt financing and
      existing equity.
4.   Conditions precedent

     The Acquisition is subject to, inter alia, the fulfilment or waiver of the following suspensive
     condition:

     4.1        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.

5.   Unaudited pro forma financial effects of the Acquisition

     The unaudited pro forma financial effects of the Acquisition 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 summarised forecast information on the Properties (“the forecasts”) have been prepared on
     the assumption that the Acquisition will be implemented on 1 September 2013 and include
     forecast results for the 6 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 International Financial Reporting Standards.

     Summarised forecast in respect of Phamoko Towers:

                                                                                 Forecast       Forecast
                                                                                 6 months      12 months
                                                                                   ending         ending
                                                                              28 February             28
                                                                                     2014       February
                                                                                     R’000          2015
                                                                                                    R’000
           Rental income                                                         12,511,467     27,265,615
           Straight-line rental income accrual                                    3,335,358      4,503,100
           Total revenue                                                         15,846,825     31,768,715
           Net operating profit before finance charges                           14,195,307     28,309,203
           Net operating profit after finance charges                             4,415,487      8,900,491
           Net profit after tax                                                   2,409,235      3,273,893
           Distributable earnings attributable to linked unitholders              1,069,328      4,353,417
          Contracted revenue is based on existing lease agreements. 100% of the revenue for this
          property is contracted.

          Summarised forecast in respect of Temo Towers:

                                                                                                Forecast           Forecast
                                                                                                6 months          12 months
                                                                                                  ending             ending
                                                                                             28 February                 28
                                                                                                    2014           February
                                                                                                    R’000              2015
                                                                                                                       R’000
              Rental income                                                                      7,805,641         16,659,117
              Straight-line rental income accrual                                                  934,962            597,456
              Total revenue                                                                      8,740,603         17,256,573
              Net operating profit before finance charges                                        7,594,310         14,865,970
              Net operating profit after finance charges                                         2,098,924          3,960,005
              Net profit after tax                                                                 681,553            454,379
              Distributable earnings attributable to linked unitholders                          1,152,322          3,328,923


          Contracted revenue is based on existing lease agreements. 100% of the revenue for this
          property is contracted.

7.        Specific information relating to the Properties

          Details regarding the Properties are set out below:




Properties      Property            Sector          Gross      Single or   Weighted      Annualised        Purchase price           Value(2) (3)
                description/                 lettable area        multi      average       property               R
                                                                                                                                        R
                location                               m2     tenanted     net rental        yield (3)
                                                                            per m² (1)
                                                                                    R

                Erf 60,
Phamoko         Polokwane,     Office
Towers          Limpopo        government          13 058    Single           139.86           9.00%          241,750,000         140,179,493
                Erf 1002,
                Polokwane,     Office
Temo Towers     Limpopo        government           7 668    Single           159.06           9.70%          135,750,000         249,469,312


Total                                                                                                         377,500,000         389,648,805
 

          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
           R377,500,000 (three hundred and seventy seven million five hundred thousand Rand), was
           arrived at by Delta’s management company, MPI Property Asset Management Proprietary
           Limited.
        3. After taking into account commission and other costs of R12,148,805 (twelve million one
           hundred and forty eight thousand, eight hundred and five Rand).
8.   Categorisation

     The Acquisition is a Category 2 transaction in terms of the JSE Limited Listings Requirements.




31 July 2013

Johannesburg


Investment bank and sponsor
Nedbank Capital

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