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SYC - Acquisition of a 50% individed share in Greenacres Shopping Centre, Port Elizabeth
Sycom Property Fund
A Collective Investment Scheme in property registered in terms of the
Collective Investment Schemes Control Act, No. 45 of 2002 and managed by
Sycom Property Fund Managers Limited (“Sycom Property Fund Managers”)
(Registration number 1986/002756/06)
JSE Share code: SYC
ISIN: ZAE000019303
(“Sycom” or “the Fund”)
(Granted REIT status by the JSE, effective 1 April 2013)
ANNOUNCEMENT REGARDING THE ACQUISITION OF A 50% UNDIVIDED SHARE IN
GREENACRES SHOPPING CENTRE, PORT ELIZABETH
1. Introduction
Sycom unitholders are advised that FirstRand Bank Limited, acting as trustee for the Fund, has
entered into an agreement with Liberty Group Limited (“Liberty” or “the Seller”) to acquire a 50%
undivided share in the property in Port Elizabeth on which Greenacres Shopping Centre (“the
Property” and “Greenacres” respectively) is located from the Seller (“the Acquisition”). Acucap
Properties Limited (“Acucap”), which performs Sycom’s asset management functions and which
owns 33.5% of Sycom has entered into an agreement with Liberty to acquire the other undivided
50% share in the Property.
The Acquisition will be effective upon the date of transfer of the Property, the expected transfer
date being 1 January 2014 (“the Transfer Date”).
2. Rationale for the Acquisition
Given the objective of growing the size of the portfolio with individually large, low risk
acquisitions, particularly in the retail segment, the acquisition of 50% of Greenacres supports
Sycom’s strategy of seeking opportunities that will enhance shareholder value and contribute to
sustainable income growth. Acucap is a 27.5% co-owner of the adjoining retail centre known as
The Bridge at Greenacres (”The Bridge”), Acucap already has a meaningful investment in this
node, and an intimate understanding of its performance.
Greenacres and The Bridge together comprise an 88,000m² combined regional shopping mall
which is one of the major retail offerings in the Eastern Cape. Situated at the corner of Cape
Road and Langenhoven Drive, Greenacres is ideally positioned at the intersection of Port
Elizabeth’s two primary arterial roads to draw from the city’s major residential areas. There is a
complete representation of the major South African national tenants across all retail segments,
making Greenacres the mall of choice for approximately one million shoppers per month.
With high foot counts and trading densities, there is strong interest from many of the national
tenants at Greenacres to expand their trading platforms. Greenacres has unutilised bulk
available for expansion, and with an experienced retail team managing the asset, Sycom is
confident that it will be able to fulfil the expansion needs of Greenacres’ national tenant base,
within the context of a general modernisation and upgrade of the mall.
Acucap’s co-ownership of The Bridge not only gives it an intimate understanding of the retail
dynamics of this important node, but also creates the opportunity for value adding operational
and redevelopment activities between Greenacres and The Bridge, to the advantage of tenants,
owners and shoppers.
3. Consideration for the Acquisition
The purchase consideration for the Acquisition is R508 million ("the Purchase Price"), payable in
cash on the Transfer Date.
4. Conditions precedent
The Acquisition is subject to:
4.1 Competition Authorities approval; and
4.2 obtaining of any other regulatory approvals, to the extent required.
5. Pro forma financial effects of the Acquisition
The Acquisition has no material impact on either the earnings, distribution or net asset value per
Sycom unit as a result of the Acquisition and, as such, no pro forma financial effects are
required to be disclosed.
6. Forecast information on the Property
The summarised forecast financial information relating to the Property for the 3 months ending
31 March 2014 and for the twelve months ending 31 March 2015, which is the responsibility of
Sycom Property Fund Managers’ directors, is set out below. The forecast financial information
has not been reviewed and reported on by the Fund’s auditors.
Forecast Forecast
3 months ending 12 months ending
31 March 2014 31 March 2015
R’000 R’000
Gross rentals 10 636 43 559
Contracted revenue 8 371 24 589
Uncontracted revenue 2 265 18 970
Net rental income before interest 9 842 40 312
Net rental income after interest and taxation 1 396 3 365
Distributable income 1 396 3 365
Notes:
1. The forecast information for the 3 months ending 31 March 2014 has been calculated from the
expected date of transfer.
2. The forecast has been prepared in compliance with the Fund’s IFRS accounting policies.
3. Uncontracted revenue represents 21.3% of gross rental for the period ended 31 March 2014
and 43.55% for the year ended 31 March 2015.
4. The assumptions for uncontracted revenue are that rentals on new leases and / or renewals
will be at market related rates
7. Specific information relating to the Property
Details regarding the Property are set out below:
Property Erf 3238 Mount Road, Port Elizabeth
Location Ring Road, Greenacres, Port Elizabeth
Sector Retail
GLA (m2) 40 767 square meters
Single or multi tenanted multi
Weighted average rental per m2 R174.94
Vacancy by rentable area (m2) 0 (2)
Annualised property yield (%) 7.8%
Purchase price R508,000,000
Value (1) R517,500,000
Notes:
1. The value of 50% of the Property of R517.5m as at 31 December 2013 was arrived at by the
independent external property valuer, HHMP Property Developers (Proprietary) Limited
(trading as Quadrant), registered with the South African Institute of Valuers.
2. Represents 100% of the Property area.
8. Categorisation
In terms of section 9 the Listings Requirements of the JSE Limited, the Acquisition is
categorised as a category 2 transaction.
21 October 2013
Cape Town
Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking division)
Vani Chetty
Competition Law Advisor
Date: 21/10/2013 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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