Wrap Text
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 the following agreements for the acquisition of 9 properties
from various vendors as detailed below:
- the industrial property located at 9 Quality Street, Isando (“Martin & Martin”) from
Investec Property Limited for a purchase consideration of R88,500,000;
- the office property located at 1617 Allan Cormack Street, Pretoria (“Bigen Africa”) from
Investec Property Limited for a purchase consideration of R125,100,000; and
- a selection of 6 big box retail properties located in various strong retail nodes across
South Africa (“Retail Properties”), from Investec Property Limited for an aggregate
purchase consideration of R207,400,000; and
(collectively, “the Related Party Acquisitions”)
- the retail property located on Sulani Drive, Khayelitsha (“Khayelitsha”) immediately
adjacent to Nonkqubela Mall (an existing property owned by the Fund), from Quickstep
307 Proprietary Limited for a purchase consideration of R31,900,000.
(collectively with the Related Party Acquisitions, “the Acquisitions”)
The aggregate purchase consideration of R452,900,000 for the Acquisitions will be funded
with debt and paid to the respective vendors upon registration of transfer of each property into
the name of the Fund. In keeping with the Fund’s stated policy on interest rate hedging, a
minimum of 75% of total borrowing costs will be hedged.
The effective transaction date of the acquisition of the Retail Properties and the Bigen Africa
property will be 1 October 2013, with the remaining Acquisitions becoming effective on the
respective dates of transfer of each property into the name of the Fund.
2. Rationale for the Proposed Acquisitions
The 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. These properties offer a healthy underlying
tenant base, each tenanted by quality 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
2
The Martin & Martin property comprises a heavy manufacturing facility (13,496m ) with
2
6,476m of auxiliary buildings and office space. The property is situated in Isando, a strong
industrial node close to the airport. It is let to a single user, Martin & Martin (Pty) Limited, a pet
food manufacturer and distributor in South Africa and the South African subsidiary of a leading
international pet food and product manufacturer, Bob Martin UK Limited. The lease is
structured as a triple net lease, and the tenant has leased the property for a 10 year period,
with a 10 year renewal option. The tenant has a call option to purchase the property at a pre-
determined capitalisation rate of 8%, which option cannot be exercised during the first 24
months of the lease period.
The Bigen Africa property is an A-grade office building situated in the Innovation Hub precinct,
a 30-hectare science and technology park, located on the eastern side of Pretoria with good
highway access. The property is let to a single tenant, Bigen Africa Group Holdings
Proprietary Limited, a leading engineering company with 16 offices across South Africa and 8
offices throughout Africa. The lease is structured as a triple net lease with a 10 year term.
The Retail Properties comprise 6 stand-alone, big box-type retail properties that are fully let
through 11 leases with quality tenants, including Masscash, Cashbuild, Boxer, Fruit & Veg
City, Liquor City and a large national independent group, Devland Cash and Carry. The largest
properties, in terms of rental income contribution, are located in the East Rand Mall node
(Boksburg) and Silverlakes (Pretoria East) respectively contributing 37% and 35% to the
portfolio’s rental income. The lease periods of the leases range from 4-9 years, with leases
structured as triple net leases.
The Khayelitsha property is a small retail facility, situated in Khayelitsha and located just off
2
Bonga Drive (M45), one of the arterial roads into Khayelitsha. The building comprises 2,911m
of retail supermarket space and small factory shops. The property is 100% tenanted, with
National Pride (a Pick ‘n Pay franchise) as the anchor tenant contributing 50% of the income.
The balance of tenants are a mix of traders including fast food outlets, dry cleaners, fashion,
cosmetics, electronics and furniture traders. It is anticipated that the facility will require minor
cosmetic enhancements valued at approximately R0.6m.
4. Valuation of the Related Party Acquisitions
An independent valuation of each of the Related Party Acquisitions 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 Martin & Martin, Bigen Africa and the Retail Properties are R85,000,000,
R122,000,000 and R200,435,000 respectively, which independent valuations are not
materially different from the acquisition cost of the properties.
5. Conditions precedent
The Acquisitions are subject to conditions that are standard for transactions of this nature.
6. Financial effects
The acquisitions of the abovementioned properties individually will not have a material effect in
the first year as none of the acquisitions 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. Specific information relating to the Acquisitions
2
Property Sector GLA(m ) Weighted Purchase Independent Escalation
average Price (R) valuation (R)
rental /
2
m
2
(R/m )
Martin & Martin Industrial 19,972 31.9 88,500,000 85,000,000 7.5%
Bigen Africa Office 5,545 129.0 125,100,000 122,000,000 8.0%
1
Retail Properties Retail 38,475 37.9 207,400,000 200,435,000 8.5%
1
Khayelitsha Retail 2,911 93.3 31,900,000 n/a 8.0%
1
Weighted average escalation based on weighting by GLA
8. Small related party transactions
Each of the Related Party Acquisitions 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.
Johannesburg
29 August 2013
Investment Bank and Sponsor
Investec Corporate Finance
Date: 29/08/2013 01:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
