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Proposed acquisition of three prime shopping centres in Germany and cautionary announcement
REDEFINE PROPERTIES INTERNATIONAL LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2010/009284/06)
JSE share code: RIN ISIN: ZAE000149282
(“RIN”)
PROPOSED ACQUISITION OF THREE PRIME SHOPPING CENTRES IN GERMANY AND CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Linked unitholders are referred to the announcement which was released by Redefine International P.L.C.
("Redefine International"), the London Stock Exchange-listed subsidiary of RIN, on the Regulatory News Service
("RNS") of the London Stock Exchange today (a copy of which is being released simultaneously with this
announcement) regarding the exchange of contracts to acquire the entities (the “Target Entities”) which own three
shopping centres (the “Properties”) in Germany from various funds managed by CMC Capital Limited (“CMC
Capital”) valued at EUR189 million (the “Transaction”) and reflecting a blended net initial yield of 5.5%.
Completion of the Transaction is subject to certain conditions, as disclosed below, which Redefine International
expects to be fulfilled by 30 August 2013.
The Transaction is a category 2 acquisition in terms of the JSE Listings Requirements and accordingly the purpose
of this announcement is to provide further details of the Transaction in terms of the JSE Listings Requirements.
2. RATIONALE
This Transaction, once completed, will substantially expand Redefine International’s portfolio of European assets
to approximately GBP360 million or 30% of Redefine International’s total portfolio by value (February 2013: 197.9
million or 19%), and which is focused on income producing assets in Germany and Switzerland.
The Properties, located in the core German investment markets of Berlin, Hamburg and Ingolstadt, are all situated
within established prime retail destinations. The Transaction is expected to produce an initial yield on equity in
excess of 12.0% with strong rental growth potential as well as opportunities to add income and value through asset
management opportunities.
3. DETAILS OF THE PROPERTIES
3.1. Schloss-Strassen Shopping Centre, Berlin
The Schloss Shopping Centre (the “Berlin property”) is a recently developed shopping centre opened in
2007, and is valued under the Transaction at EUR93.0 million. The centre is located in a prime retail
location in South West Berlin with strong transport links including direct access to the Walter-Schreiber-
Platz U-Bahn (underground) station and provides approximately 19,000 square metres of retail space over
six storeys, including 365 parking spaces on the upper floors. The weighted average net rental per square
metre of the Berlin property is currently EUR263 per square metre. The building is 99% occupied (by
gross lettable area) and key tenants include Primark (of which it is one of the retailer’s best performing
stores), REWE, dm, Toys R Us, Fitness First and Cyperport.
As part of the Transaction, Redefine International will assume EUR72.0 million of existing bank debt
secured against the Berlin property from HSH Nordbank with a total interest cost of 2.94%. The facility
matures on 30 August 2017.
3.2. Bahnhof Altona Shopping Centre, Hamburg
The Bahnhof Altona Shopping Centre (the “Hamburg property”), a former Kaufhof department store
which was converted to its existing form in 2005, is valued under the Transaction at EUR72.5 million. The
centre is situated in one of the strongest retail locations in Hamburg and is integrated with the Altona long
distance overland and S-Bahn train stations, providing approximately 15,500 square metres of retail space
over three storeys. The asset also has an adjacent car park offering 500 spaces. A number of asset
management opportunities are at advanced stages of negotiation and offer opportunities to add both
significant value and income over the next two to four years. The weighted average net rental per square
metre of the Hamburg property is EUR282 per square metre. The building is currently 100% occupied and
key tenants include Lidl, Media Markt, McDonalds, Le Crobag and Rossman.
As part of the Transaction, Redefine International will assume EUR56.0 million of existing bank debt
secured against the asset from HSH Nordbank with a total interest cost of 3.68%. The facility matures on 28
February 2020.
3.3. City Arkaden Shopping Mall, Ingolstadt
The City Arkaden Shopping Mall, Ingolstadt (the “Inglostadt property”), which was formerly used as a
department store, is valued under Transaction at EUR23.5 million. The centre enjoys a prominent location
on Ludwigstrasse, one of the prime retail streets in Ingolstadt, and provides approximately 10,400 square
metres of retail space over five storeys. The weighted average net rental per square metre of the Inglostadt
property is currently EUR142 per square metre. The building is 87% occupied (by gross lettable area), with
key tenants including H&M and Thalia.
As part of the Transaction, Redefine International will assume EUR13.4 million of existing bank debt
secured against the property from Hypothekenbank with a total annual interest cost of 1.15% above three
month Euribor. The facility matures on 1 June 2016.
4. TERMS AND CONDITIONS PRECEDENT
The aggregate purchase consideration payable in respect of the shares in and claims on loan account against
Grundstucksgesellschaft EKZ SSC-Berlin GmbH & Co. (the “Berlin Target”), SMK Erste Investitions GmbH (the
“Ingolstadt Target”) and CMC Shopping Center Altona GmbH (the “Hamburg Target”) of EUR47.1 million,
will comprise a fixed cash payment of EUR5.4 million with CMC Capital having the option to elect to receive the
remaining consideration either entirely in cash, at a discount of approximately 4.0% to the equity value of the
Target Entities, or partly in cash and up to approximately EUR34.3 million by the issue of up to 74.9 million new
ordinary shares in Redefine International at an effective issue price of 40.0 pence per share (the “Consideration
Shares”). The Transaction is expected to complete by 30 August 2013 with CMC Capital making its election to
receive any Consideration Shares in respect of the Target Entities prior to this. Approximately EUR20.6 million of
the purchase consideration for the equity in respect of the Berlin Target will be deferred to 6 December 2013.
Any Consideration Shares issued in respect of the Hamburg and Ingolstadt Targets will be subject to lock-in
arrangements for between four and six months. The cash portion of the purchase consideration can be funded
utilising Redefine International’s existing resources.
As part of the Transaction, Redefine International will assume existing bank debt facilities totalling EUR141.4
million provided by HSH Nordbank and Hypothekenbank which are fully drawn. The existing bank loans have a
weighted average maturity of 4.9 years and a weighted average interest cost of 3.12% per annum. The gross rental
income of the three Properties is currently approximately EUR10.9 million per annum with a weighted average
lease length of 5.4 years.
The agreement governing the acquisition of the shares in and claims on loan account against the Berlin Target, the
Hamburg Target and the Inglostadt Target, provide for warranties and indemnities that are standard for transactions
of this nature.
The Transaction remains subject to the fulfilment or waiver by Redefine International of the following conditions:
- the notarisation of the local transfer agreement;
- the transformation of the Inglostadt and Berlin Targets from their current form into private companies with
limited liability under German law;
- the Inglostadt Target approving the Transaction;
- the shareholders of the Hamburg Target approving the Transaction;
- the signing of an assignment agreement relating to shares in the Berlin Target between the sellers of the Berlin
Target and Tenkhoff Schloss-Strassen-Center Beteiligungs GmbH & Co KG;
- the removal of the cash sweep arrangements which apply to the Berlin Target to the satisfaction of Redefine
International;
- the lodging of applications with the land registers in respect of the Properties; and
- the Consideration Shares to be issued by Redefine International being admitted to listing and trading on the
London Stock Exchange.
5. VALUATION
As at 12 August 2013, the board of Redefine International has valued the Berlin property at EUR93.0 million, the
Hamburg property at EUR72.5 million and the Inglostadt property at EUR23.5 million. The directors of Redefine
International are not independent and are not registered as professional valuers or as professional associate valuers
in terms of the Property Valuers Profession Act, No 47 of 2000.
6. FINANCIAL EFFECTS AND CAUTIONARY ANNOUNCEMENT
Linked unitholders are advised that the financial effects of the Transaction will be announced in due course.
Accordingly, linked unitholders are advised to exercise caution when dealing in RIN’s securities until a further
announcement is made.
14 August 2013
Sponsor to Redefine Properties International Limited
Java Capital
Date: 14/08/2013 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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