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Announcement regarding the acquisition of various 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" or “the Company”)
REIT status approved
ANNOUNCEMENT REGARDING THE ACQUISITION OF VARIOUS LETTING ENTERPRISES AND PROPERTIES
1. Introduction
Holders of Delta linked units (“Delta Linked Unitholders”) are advised that Delta has
concluded agreements for the acquisition of the following letting enterprises and
properties (“the Properties”) from the vendors listed below:
Purchase Consideration
Portfolio Property Name Vendor Name R'000 (excl. transaction
costs)
“Capital Portfolio” 15 Simba Road iFour Properties S.A. Proprietary Limited 33,030
Leeuwkop Capital Property Trust 184,020
5 Simba Road Realty Dynamix 73 Proprietary Limited 82,950
“Rob Alexander
Sleepy Hollow Ziningi Properties Proprietary Limited 110,000
Portfolio”
Rymer Trading CC and Square Peg
Capital Towers 124,000
Properties Prop
Mayors Walk 174 Mayors Walk CC 53,225
“Trifecta Portfolio” Erf 29755 Kimberley Trifecta Holdings Proprietary Limited 47,700
Erf 2380 Kimberley Albasync Proprietary Limited 53,800
Erf 184 Nelspruit - Bell Karimu 2005 Investments Proprietary
“Karimu Portfolio” 6,150
Street 7 Limited (“Karimu”)
Erf 76 Nelspruit - 30
Karimu 40,255
Louis Trichardt Street
Erf 171 and Erf 113
Nelspruit - 21 Bell Karimu 28,720
Street
Erf 1327 Nelspruit - 08
Karimu 19,635
Spruit Street
Erf 5 & 6 Vintonia - 15 -
Karimu 16,985
17 Cruse Circle
Erf 29 & 30 Vintonia Ext
Karimu 13,325
2 - 4- 6 Davie Street
Erf 115 Nelspruit - 11
Karimu 19,970
Louis Trichardt Street
Erf 4294 & Erf 248
Nelspruit - 4 Ehmke
Karimu 86,755
Street and 9 Ferreira
Street
Erf 1770 West Acres -
Karimu 16,640
16 Old Pretoria Road
Erf 240 Nelspruit - 1
Karimu 14,600
Ferreira Street
Erf 241 Nelspruit - 3
Karimu 39,520
Ferreira Street
Erf 175 Witrivier - 19
Karimu 12,745
Danie Joubert Street
Total Purchase Consideration 1,004,025
(collectively the “Acquisitions”).
The effective dates of the Acquisitions shall be 01 January 2014 for the Karimu
Portfolio and 01 December 2013 for the Capital Portfolio, Rob Alexander Portfolio and
Trifecta Portfolio (“the Effective Date”). The Effective Date will be subject to the
fulfilment of the conditions precedent as detailed in paragraph 4 below.
2. Rationale for the Acquisitions
The Acquisitions are in line with Delta’s strategy of actively pursuing investment
opportunities that will enhance the overall quality and value of its portfolio.
The Acquisitions represent an attractive investment to Delta Linked Unitholders as it
introduces well-established properties with low risk tenants. Based on GLA, 86% of
the Acquisitions represent single tenanted properties. Furthermore, the Karimu
Portfolio provides an opportunity to further diversify Delta’s geographic spread into
Mpumalanga and offers redevelopment opportunities which may lead to further value
extraction for Delta Linked Unitholders. The property manager who will be responsible
for the Karimu Portfolio has significant representation in Mpumalanga. Through the
acquisition of the Capital Portfolio, the Rob Alexander Portfolio and the Trifecta
Portfolio, Delta is bulking up in regions in which it has existing asset management and
property management representation.
3. Consideration for the Acquisitions
The aggregate purchase consideration for the Acquisitions is R1 004 025 000 (one
billion four million and twenty five thousand Rand) (the “Purchase Consideration”).
The Purchase Consideration excludes ancillary costs related to the Acquisitions in the
amount of R8 390 663 (eight million three hundred and ninety thousand six hundred
and sixty three Rand) (“the Acquisition Costs”).
Where rentals were considered to be above market, specifically on the Karimu
Portfolio, a top slice approach was applied on the valuations.
All capital expenditure requirements identified through the due diligence process have
been negotiated into the purchase price.
The Purchase Consideration will be settled through a combination of debt funding and
the issue of additional Delta linked units.
Details of each Property, including inter alia the location, sector, weighted average
rental per square meter, the purchase prices as well as the valuations attributed to the
Properties, are set out below.
Weighted
Single Annualise Acquisitio
Purchas
GLA or multi average d cap rate n costs Value
Properties Location Sector (2) e price
m2 tenanted rental capitalised R’000 (3)(4)
(1) R'000
per sqm % R'000
R
Capital
Portfolio
Sunninghi
15 Simba ll,
Road Gauteng Office other 1,920 Single 115.13 33,030 202 33,232
Sunninghi
ll,
Leeuwkop Gauteng Office other 11,747 Single 98.56 184,020 716 184,736
Sunninghi
5 Simba ll,
Road Gauteng Office other 5,375 Single 103.61 82,950 372 83,322
Sub total 19,042 101.66 8.55% 300,000 1,290 301,290
Rob
Alexander
Portfolio
Pietermar
itzburg,
Sleepy Kwa-Zulu
Hollow Natal Office other 6,360 Multi 95.57 110,000 985 110,985
Pietermar
itzburg,
Capital Kwa-Zulu Office
Towers Natal government 13,846 Single 88.80 124,000 753 124,753
Pietermar
itzburg,
Mayors Kwa-Zulu Office
Walk Natal government 5,507 Multi 103.87 53,225 406 53,631
Sub total 25,713 93.70 9.95% 287,225 2,144 289,369
Trifecta
Portfolio
Kimberley
Erf 29755 , Northern Office
Kimberley Cape government 4,700 Single 91.36 47,700 277 47,977
Kimberley
Erf 2380 , Northern Office
Kimberley Cape government 5,800 Single 93.66 53,800 298 54,098
Sub total 10,500 92.63 10.50% 101,500 575 102,075
Karimu
Portfolio
Erf 184
Nelspruit - Nelspruit, Office
Bell Street 7 Limpopo government 738 Single 82.86 6,150 111 6,261
Erf 76
Nelspruit -
30 Louis
Trichardt Nelspruit, Office
Street Limpopo government 2,910 Single 128.80 40,255 227 40,482
Erf 171 and
Erf 113
Nelspruit -
21 Bell Nelspruit, Office
Street Limpopo government 3,000 Single 91.03 28,720 188 28,908
Erf 1327
Nelspruit -
08 Spruit Nelspruit, Office
Street Limpopo government 2,174 Single 79.99 19,635 157 19,792
Erf 5 & 6
Vintonia -
15 - 17 Nelspruit, Office
Cruse Circle Limpopo government 2,430 Single 12.39 16,985 148 17,133
Erf 29 & 30
Vintonia Ext
2 - 4- 6 Nelspruit, Office
Davie Street Limpopo government 841 Single 24.71 13,325 135 13,460
Erf 115
Nelspruit -
11 Louis
Trichardt Nelspruit, Office
Street Limpopo government 3,102 Single 68.47 19,970 158 20,128
Erf 4294 &
Erf 248 Nelspruit, Office
Nelspruit - 4 Limpopo government 4,637 Single 152.21 86,755 385 87,140
Ehmke
Street and 9
Ferreira
Street
Erf 1770
West Acres
- 16 Old
Pretoria Nelspruit, Office
Road Limpopo government 2,504 Single 15.74 16,640 147 16,787
Erf 240
Nelspruit - 1
Ferreira Nelspruit,
Street Limpopo Office other 956 Single 129.24 14,600 140 14,740
Erf 241
Nelspruit - 3
Ferreira Nelspruit,
Street Limpopo Office other 2,224 Single 142.61 39,520 224 39,744
Erf 175
Witrivier -
19 Danie White
Joubert River, Office
Street Limpopo government 1,125 Single 88.38 12,745 133 12,878
Sub total 26,641 91.27 9.52% 315,300 2,153 317,453
Totals
1
81,896 94.46 9.49% 004,025 6,162 1,010,187
Notes:
1. Based on the net rental income, excluding parking, storage and/or recoveries, for the 12 month period
from the anticipated date of transfer, assuming the property is fully let.
2. Annualised cap rate is based on property income and variable property expenses (which include property
management fees but exclude asset management fees and finance charges) over the purchase price.
3. No independent valuation has been performed on the Acquisitions. The value attributed to the Acquisitions
of R 1 010 186 899 (one billion ten million one hundred and eighty six thousand eight hundred and ninety
nine Rand) (“the Portfolio Value”) was derived at by Delta’s asset management company, MPI Property
Asset Management Proprietary Limited.
4. The Portfolio Value was derived after taking into account costs related to the Acquisitions to the amount of
R6 161 899 (six million one hundred and sixty one thousand eight hundred and ninety nine Rand), which
has been capitalised to the Acquisitions.
4. Conditions precedent
The Acquisitions are subject to, inter alia, the fulfilment or waiver of the following
suspensive conditions:
4.1 the satisfactory outcome of a due diligence exercise to be performed by
Delta on the Acquisitions, to the extent required;
4.2 approval by the boards of directors and shareholders, respectively, of the
vendors of the Acquisitions (“the Vendors”), to the extent required;
4.3 written consent by the counter-parties to the lease agreements, relating to
the Acquisitions, consenting to the assignment of all of the respective
Vendors’ rights and obligations in terms of the leases to Delta;
4.4 approval by the Competition Commission, to the extent required; and
4.5 written confirmation from Delta confirming that Delta has the required
funding available and/or confirmation that Delta 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 Acquisitions
The unaudited pro forma financial effects of the Acquisitions on the net asset value
and net tangible asset value per Delta linked unit have not been disclosed as they are
not significant.
6. Forecast information on the Properties (“Forecasts”)
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.
The Forecasts for the Capital Portfolio, Rob Alexander Portfolio and Trifecta Portfolio
have been prepared from the Effective Date and include forecast results for the 3
month period ending 28 February 2014 and the year ending 28 February 2015. The
Forecasts for the Karimu Portfolio have been prepared from the Effective Date and
include forecast results for the 2 month period ending 28 February 2014 and the year
ending 28 February 2015.
Summarised Forecast in respect of the Capital Portfolio:
Forecast Forecast
3 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 7,604 32,337
Straight line rental income accrual 718 1,276
Total revenue 8,322 33,613
Net operating profit before finance charges 6,232 26,384
Net operating profit after finance charges 3,888 17,010
Net profit after tax 540 1,032
Distributable earnings attributable to linked unitholders 3,138 15,576
Notes:
1. Contracted revenue is based on existing lease agreements. Uncontracted revenue in respect of this
portfolio amounts to 0% for both the years ending 28 February 2014 and 2015.
2. Net operating profit after finance charges includes asset management fees, property management
fees and transaction costs.
3. Distributable income excludes any antecedent interest from the issue of new linked units.
Summarised Forecast in respect of the Rob Alexander Portfolio:
Forecast Forecast
3 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 8,145 34,136
Straight line rental income accrual 529 1,279
Total revenue 8,674 35,415
Net operating profit before finance charges 6,879 29,415
Net operating profit after finance charges 4,261 18,946
Net profit after tax 408 1,048
Distributable earnings attributable to linked unitholders 3,695 17,490
Notes:
1. Contracted revenue is based on existing lease agreements. Uncontracted revenue in respect of this
portfolio amounts to 22% and 30% for the years ending 28 February 2014 and 2015, respectively.
2. Net operating profit after finance charges includes asset management fees, property management
fees and transaction costs.
3. Distributable income excludes any antecedent interest from the issue of new linked units.
Summarised Forecast in respect of the Trifecta Portfolio:
Forecast Forecast
3 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 3,088 12,912
Straight line rental income accrual 670 2,121
Total revenue 3,758 15,033
Net operating profit before finance charges 2,971 12,619
Net operating profit after finance charges 2,168 9,409
Net profit after tax 493 1,580
Distributable earnings attributable to linked unitholders 1,483 7,215
Notes:
1. Contracted revenue is based on existing lease agreements. Uncontracted revenue in respect of this
portfolio amounts to 17% and 15% for the years ending 28 February 2014 and 2015, respectively.
2. Net operating profit after finance charges includes asset management fees, property management
fees and transaction costs.
3. Distributable income excludes any antecedent interest from the issue of new linked units.
Summarised Forecast in respect of the Karimu Portfolio:
6
Forecast Forecast
2 months 12 months
ending ending
28 February 28
2014 February
R’000 2015
R’000
Rental income 5,671 35,610
Straight line rental income accrual 17 46
Total revenue 5,688 35,656
Net operating profit before finance charges 4,416 30,416
Net operating profit after finance charges 2,952 21,635
Net profit after tax 33 189
Distributable earnings attributable to linked unitholders 2,906 21,373
Notes:
1. Contracted revenue is based on existing lease agreements. Uncontracted revenue in respect of this
portfolio amounts to 93% and 94% for the years ending 28 February 2014 and 2015 respectively.
2. Net operating profit after finance charges includes asset management fees, property management
fees and transaction costs.
3. Distributable income excludes any antecedent interest from the issue of new linked units.
7. Categorisation
The Acquisitions are categorised as Category 2 transactions in terms of the JSE
Limited Listings Requirements and accordingly do not require approval by Delta
Linked Unitholders.
08 November 2013
Johannesburg
Investment bank and sponsor
Nedbank Capital
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