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Acquisition by Growthpoint of the entire issued share capital of Abseq Properties
Growthpoint Properties Limited
REIT status approved
(Incorporated in the Republic of South Africa)
(Registration Number 1987/004988/06)
Share code: IPF ISIN ZAE000179420
(“Growthpoint”)
ACQUISITION BY GROWTHPOINT OF THE ENTIRE ISSUED SHARE CAPITAL OF ABSEQ
PROPERTIES
1. INTRODUCTION
Growthpoint is pleased to announce that:
1.1. it has concluded a sale of shares and claims agreement with Equity Estates Proprietary Limited
(“Equity Estates”) for the acquisition of the entire issued share capital of Abseq Properties
Proprietary Limited (“Abseq Properties”) (“the Sale Shares”); and
1.2. as part of the acquisition, and in order to retain the skills and expertise of the Equity Estates
property management team responsible for the Abseq Properties portfolio, Growthpoint has
entered into an agreement to acquire the property administration business of Abseq Properties
from Equity Estates,
collectively (“the Transaction”)
2. BACKGROUND OF ABSEQ PROPERTIES
Established in 1982, Abseq Properties originated out of RMS Syfrets Property Development
Company (later African Life Properties). Under the management of Equity Estates, Abseq
Properties today comprises a sizable, high quality office portfolio located in the northern suburbs of
Johannesburg and Woodmead. Abseq Properties is owned by Absa Bank Limited (“Absa”) and
Equity Estates. The existing asset and property management agreements between Abseq
Properties and Equity Estates and Abseq Properties and Absa will be terminated on the acquisition
of the Sale Shares by Growthpoint.
3. THE TRANSACTION
3.1 The Transaction
Abseq Properties is the owner of 17 underlying properties representing a total pro rata GLA of
2
79,971m , the vast majority of which are A-grade offices.
The value ascribed to the property portfolio of Abseq Properties for the purpose of the Transaction
is R1,327,779,061 (“Property Value”). The consideration payable for the Sale Shares will be
determined after deducting third party debt owing by Abseq Properties (“External Debt”) from the
Property Value (“Equity Value”) and will be settled by the issue of Growthpoint shares at R25.00
per share. After the acquisition of the Sale Shares, Growthpoint will apply existing internal cash
resources and/or new borrowings to settle the External Debt.
The Equity Value will be adjusted by a net asset value adjustment at the effective date, the amount
of which adjustment will be determined with reference to the net working capital of Abseq
Properties as at the end of the month preceding the month in which the effective date falls (“the Net
Asset Value Adjustment”).
The purchase consideration for the Equity Value as set out below is based on the estimated
amount of the External Debt and the Net Asset Value Adjustment as at the signature date and will
be finalised on the effective date. Any movement in the amounts of the External Debt and the Net
Asset Value Adjustment as estimated at the signature date and as finalised at the effective date will
adjust the Equity Value and accordingly the number of new Growthpoint shares issued at R25.00
per share.
Property portfolio 1,327,779,061
External Debt at signature date (938,352,095)
Net Asset Value Adjustment 8,897,667
Equity Value 397,934,633
Number of Growthpoint shares to be issued 15,916,985
Share issue price 25.00
The properties being acquired in terms of the Transaction are being acquired at an average forward
yield of 8.74%. A detailed listing of the properties is set out in the table in paragraph 3.3 below.
3.2 Salient terms of the Transaction
3.2.1 Effective Date
The Transaction is anticipated to be implemented with effect from the first day of the
month following the month in which the last of the suspensive conditions are fulfilled,
which is expected to be during the first quarter of 2014.
3.2.2 Rental guarantees
As part of the Transaction, Equity Estates will provide rental guarantees in respect
of vacancies for Country Club Estate, Equity House, Peter Place Office Park, 21
West Street and Woodmead Estate, for a period of three years from the effective
date. The aggregate value of the rental guarantees, excluding allowances for tenant
installations and commissions, equals R12,274,174 for the first year from the
effective date, escalating at a rate of 8% per year for the remaining two years of the
rental guarantee period. Additionally, the rental guarantees also provide for letting
commissions based on the net rental payable and tenant installation costs.
3.3 The Property Portfolio
Details of the underlying property assets of Abseq Properties which comprise the Transaction are
as follows:
Rentable
1 %
Property name Form of acquisition Location area (pro- Purchase price
owned
rata)
British Consulate Direct property Dunkeld West 100 1,048 19,133,584
Country Club Estate Direct property Woodmead 100 25,724 475,232,410
Equity House Direct property Dunkeld West 100 1,588 24,656,505
Illovo Corner Direct property Illovo 100 9,832 211,415,433
19 Impala Road Direct property Chislehurston 100 2,749 40,618,208
22 Impala Road Direct property Chislehurston 100 1,079 16,576,788
23 Impala Road Direct property Chislehurston 100 1,723 31,005,342
29 Impala Road Direct property Chislehurston 100 1,352 8,380,536
Peter Place Office Park Direct property Bryanston 100 8,259 113,694,229
1 River Road Shares in associate Houghton 50 676 12,945,421
Riviera Road Office Park Shares in associate Houghton 50 2,298 37,192,757
10 Riviera Road Shares in associate Houghton 50 618 9,864,034
19 West Street Shares in associate Houghton 50 685 2,216,774
21 West Street Direct property Houghton 100 1,307 18,933,580
29 West Street Direct property Houghton 100 1,399 14,239,784
31 West Street Direct property Houghton 100 1,171 18,040,425
Woodmead Estate Direct property Woodmead 100 18,463 273,633,249
79,971 1,327,779,061
Notes:
1. Abseq Properties holds all of the underlying property assets directly with the exception of 1 River Road, Riviera Office
Park, 10 Riviera Road and 19 West Street which properties are held in joint ventures companies with the remaining 50%
share in the joint venture companies owned by property holding companies within the Tiber Group of companies.
2. RATIONALE FOR THE TRANSACTION
Growthpoint’s strategy is to acquire quality property assets across the retail, office and industrial
sectors which offer Growthpoint shareholders sustainable growth in distributable income as well as
long term capital growth. Growthpoint believes that the Transaction presents an opportunity to
acquire, on a yield enhancing basis, a sizable portfolio of quality office properties in locations which
are potentially strategic and complement Growthpoint’s existing portfolio, specifically increasing
Growthpoint’s exposure to the Woodmead office node, which represents 55% of the total pro-rata
GLA of the Abseq Properties portfolio. The Transaction also provides Growthpoint with the
continuity of the property management staff of Equity Estates.
3. SUSPENSIVE CONDITIONS
The Transaction remains subject to, inter alia, the fulfillment of the following suspensive conditions:
4.1 The completion of a tax due diligence investigation to the satisfaction of Growthpoint;
4.2 The Transaction being approved by the Competition Authorities; and
4.3 The Takeover Panel exempting the Transaction from the Takeover Regulations.
4. FINANCIAL EFFECTS
The Transaction is expected to be accretive to Growthpoint’s distributions per share for the financial
year ending June 2014 as well as subsequent years.
5. CATEGORISATION OF THE TRANSACTION
As the Transaction is less than 5% of Growthpoint’s market capitalisation, the disclosure contained
in this announcement is voluntary.
Johannesburg
2 October 2013
Investment Bank and Sponsor
Investec Bank
Attorneys to Growthpoint
Glyn Marais
Attorneys to Equity Estates
Werksmans
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