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Acquisition of the entire Tiber Group portfolio of properties and management business and withdrawal of cautionary
Growthpoint Properties Limited Tiber Property Group (Proprietary) Limited
REIT status approved (Incorporated in the Republic of South Africa)
Incorporated in the Republic of South Africa) (Registration Number 1999/025600/07)
(Registration Number 1987/004988/06) (“TPG”)
Share code: GRT ISIN ZAE000179420
(“Growthpoint”) Tiber Developments (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1994/009349/07)
(“Tiber Developments”)
Morningside Extension 137 (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1994/003904/07)
Lot 3 of 143 Atholl (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1998/007575/07)
Turbine Square Two (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration Number 2003/017105/07)
(“Turbine Square”)
(collectively the “Tiber Group”)
JOINT ANNOUNCEMENT OF THE ACQUISITION BY GROWTHPOINT OF THE ENTIRE TIBER
GROUP PORTFOLIO OF PROPERTIES AND MANAGEMENT BUSINESS FOR R6.6 BILLION AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Growthpoint and the Tiber Group are pleased to announce that they have concluded inter-
conditional agreements for an indivisible transaction which will see Growthpoint acquire -
- the entire issued share capital of TPG;
- certain immovable properties and letting enterprise businesses;
- shares in, and claims against, certain joint venture companies and share block companies;
- a property asset which is currently under development; and
- undeveloped bulk associated with certain immovable properties
(collectively the “Sale Assets”)
from the Tiber Group (the “Property Transaction”).
The Tiber Group consists of TPG, Tiber Developments, Morningside Extension 137 (Proprietary)
Limited, Lot 3 of 143 Atholl (Proprietary) Limited and Turbine Square Two (Proprietary) Limited.
As part of the indivisible transaction, Growthpoint has also, through its wholly owned subsidiary
Growthpoint Management Services (Proprietary) Limited (“GMS”), entered into -
- an agreement with the executive management team of Tiber Projects (Proprietary) Limited
(“Tiber Projects”), comprising Stephen Scott, Germano Cardoso and Artur Carrazedo, (the
“Executive Management”) to procure certain services for a period of three years; and
- an agreement to acquire the asset and property management business of Tiber Projects
(the “Manco Transaction”),
in order to retain the core competencies, skills and long standing tenant relationships of the
Executive Management and the Tiber Projects’ employees. The Manco Transaction will
result in the effective internalisation of the management of the Tiber Group into Growthpoint.
As a further part of the indivisible transaction, Growthpoint has entered into an agreement with a
wholly owned subsidiary of Tiber Bonvec Construction (Proprietary) Limited (“TBC”) to develop the
undeveloped bulk and explore other development opportunities in order to secure TBC’s
development expertise in relation to the future development and redevelopment of the Sale Assets
(the “Development Agreement”).
The Property Transaction, the agreement with the Executive Management, the Manco Transaction
and the Development Agreement are collectively referred to as the “Proposed Tiber Transaction”.
2. BACKGROUND TO THE TIBER GROUP
Established in 1951, the Tiber Group has grown into one of the most successful privately owned,
property development and construction groups in South Africa.
The late Francesco Rivera is credited as being the visionary who steered the development of the
Tiber property portfolio in conjunction with TBC, the construction company associated with the Tiber
Group. The Tiber Group, in collaboration with TBC, has established a reputation for the delivery of
high quality services across all aspects of building construction and property development,
investment and management.
The property portfolio owned by the Tiber Group, which is predominantly comprised of P and A-
grade office properties located in the northern suburbs of Johannesburg, has grown to a value in
excess of R6 billion.
The Proposed Tiber Transaction affords Growthpoint not only the opportunity to acquire one of the
most exclusive property portfolios in South Africa, but also to secure the collective expertise that
has been built up over more than half a century.
3. TERMS OF THE PROPOSED TIBER TRANSACTION
3.1 The Property Transaction
The Sale Assets are comprised of:
- 308,163m2 of commercial property space, the vast majority of which is comprised of P and A-grade
offices located in premier locations throughout the northern suburbs of Johannesburg;
- 48,048m2 of undeveloped bulk, which bulk is directly attached to the properties being
acquired; and
- a 50% interest in a development project of 19,200m2 (the “Annex”) which will, upon
completion of its construction, form part of the Alice Lane precinct of properties.
The aggregate value of the Sale Assets being acquired as part of the Property Transaction is
R6,186,143,924 (the “Aggregate Value”). The purchase consideration, being the Aggregate Value
net of existing debt of R1,561,347,369 (which will either be assumed as part of the Property
Transaction or re-financed from Growthpoint’s existing debt facilities), will be funded by Growthpoint
as follows:
- R2,346,598,332 through the issue of 86,911,050 new Growthpoint shares at an issue price
of R27.00 per Growthpoint share; and
- R2,278,198,223 from Growthpoint’s existing cash resources funded from the capital raise
undertaken in May 2013.
The Property Transaction, on the income producing properties only, equates to a property yield of
7.41% after taking into account property asset management fees. With the inclusion of the
undeveloped bulk to the income producing properties, the combined property yield reduces to
7.33%. These property yields are calculated on income projected to be earned for the 12 months to
June 2014.
The Annex, being the development property which will be acquired by Growthpoint at cost, is
anticipated to yield a 12 month forward yield of 8.40% upon its expected completion in July 2014.
A detailed listing of the Sale Assets is set out in the table in paragraph 3.5 below.
3.2 The Manco Transaction
The Manco Transaction is comprised of the following indivisible transactions:
- the acquisition by GMS of the asset management and property management business of
Tiber Projects as a going concern. Tiber Projects employs 55 staff who are responsible for
rendering management services to the Tiber Group, pursuant to existing service level
agreements (“SLA’s”);
- a termination payment to Tiber Projects for the amendment of the SLA’s to provide for the
termination of the existing property and asset management services, which will be
performed directly by GMS following implementation of the Property Transaction; and
- the subscription for shares in a newly formed management company, jointly owned by the
Executive Management and GMS (“Down House Investments”). The purpose of Down
House Investments is to retain the Executive Management’s capabilities for a period of 3
years from the effective date to ensure, among other things, the seamless integration of the
Sale Assets into the Growthpoint property portfolio.
The aggregate purchase consideration for the Manco Transaction is R349,853,520 which will be
funded by Growthpoint as follows:
- R177,982,162 from Growthpoint’s existing debt facilities; and
- R171,871,358 through the issue of 6,365,606 new Growthpoint shares at an issue price of
R27.00 per Growthpoint share.
The acquisition yield of the Manco Transaction is 11.11%, which results in a combined yield of the
Property Transaction and Manco Transaction of 7.61% on the income producing properties only,
and 7.53% if the undeveloped bulk is included.
3.3 The Development Agreement
Growthpoint has entered into the Development Agreement with a wholly owned subsidiary of TBC,
in order to retain the development expertise of the Tiber Group to develop the bulk included in the
Sale Assets, and explore other development opportunities. In terms of the Development
Agreement, TBC’s subsidiary will have the first right of refusal to make proposals to Growthpoint for
the development of the undeveloped bulk and the redevelopment of the immovable properties
being acquired as part of the Property Transaction. It is the intention that through Down House
Investments and the Development Agreement, a new pipeline of developments and
redevelopments of existing properties will be created which will enhance Growthpoint’s existing
income producing property portfolio.
3.4 Salient terms of the Proposed Tiber Transaction
3.4.1 Effective Date
The Proposed Tiber Transaction will be implemented with effect from 1 February
2014, provided that Sale Assets representing at least 75% of the Aggregate Value
shall have been transferred to Growthpoint. If Sale Assets representing at least 75%
of the Aggregate Value have not been transferred by such date, then the effective
date shall be the first day of the month following the month in which Sale Assets
representing 75% or more of the Aggregate Value is transferred to Growthpoint.
3.4.2 Pre-emptive Rights
The following properties are subject to pre-emptive rights which are triggered as a
result of the Property Transaction and may still be exercised.
- Masstores (100% interest); and
- The White House (100% interest)
collectively (the “Pre-Emptive Properties”).
To the extent that any pre-emptive right in relation to a Pre-Emptive Property is
exercised, the Aggregate Value will be reduced by the value of the relevant Pre-
Emptive Property as set out in the table in paragraph 3.5.
3.4.3 Head Lease
The Property Transaction provides for a head lease agreement in respect of
vacancies for Inanda Greens Building 10 for a term of three years from the effective
date as the building is expected to be unlet at such time.
The head lease agreement is secured by a bank guarantee for its full three year
term.
3.5 The Property Portfolio
Details of the Sale Assets, including the property name, location, rentable area of the property, the weighted average rental per square metre for the rentable area and the Aggregate
Value attributable to each of the properties, are as follows:
Tiber Property Group1
Weighted
average rental
Form of acquisition in Percent Rentable area per square Aggregate Value
Property name TPG Location ownership (pro-rata) metre3 per property2
Joint ventures share block
Inyanda 2 Interest in share block Parktown 50 5,193 156 113,780,053
12 Alice Lane Interest in share block Sandton 50 8,772 158 199,521,775
The Towers Interest in share block Sandton 50 12,622 257 480,795,607
The Annex Interest in share block Sandton 50 9,613 191 181,038,882
36,200 Sub-total 975,136,318
Directly owned
50 Wierda Road Direct property Wierda Valley 100 2,362 129 22,252,099
7 Wessels Direct property Rivonia 100 2,230 136 35,166,807
Anslow Park
Direct property Bryanston 100 11,986 242 429,185,664
(Nestle)
Barclays Illovo
(incl. bulk of Direct property Illovo 100 5,094 198 127,291,943
2,000m2)
Eastgate 20 Direct property Sandown 100 4,556 176 97,511,747
Erf 65 Bryanston Direct property Bryanston 100 5,807 202 136,871,008
Freestone Park Direct property Sandown 100 5,554 157 86,746,289
Hunts End Direct property Wierda Valley 100 10,132 105 95,616,784
Oxford Corner Direct property Rosebank 100 8,782 242 237,305,334
Sandown erf 161
162 (incl. bulk of Direct property Sandown 100 2,613 138 41,943,283
1,200m2)
Sandown erf 169 Direct property Sandown 100 2,062 139 34,979,877
Sandown Mews Direct property Sandton 100 18,841 161 309,731,443
Sandton Place
Direct property Wierda Valley 100 3,780 105 29,471,311
Blocks A & B
Strathavon 11
(incl. bulk of Direct property Sandown 100 9,146 171 172,332,445
3,500m2)
Wierda Court Direct property Wierda Valley 100 2,229 164 36,642,307
95,174 Sub-total 1,893,048,341
Subsidiaries (wholly owned)
138 West Street Shares in subsidiary Sandton 100 10,081 212 240,738,600
Rivonia Crossing
Shares in subsidiary Rivonia 100 34,650 72 183,296,764
1 and 2
44,731 Sub-total 424,035,364
Associates
Wierda Gables
(incl. bulk of Shares in associate Wierda Valley 50 1,095 70 3,757,423
3,583m2)
Inanda Greens
Shares in associate Wierda Valley 50 20,827 173 441,298,179
Blgs 1 - 10
Kilkishen Rivera
Shares in associate Killarney 50 3,690 152 67,115,140
Road Blgs 1 - 44
Tata Phase 1& 2
Shares in associate Illovo 50 2,376 220 64,422,417
(Ferguson Road)
Inyanda 1 3 4 Shares in associate Parktown 50 11,604 156 265,431,917
39,592 Sub-total 842,025,076
Total property portfolio 215,697 4,134,245,099
Undeveloped bulk
Anslow Park Bulk Direct property Bryanston 100 8,900 n/a 17,800,000
Inanda Greens
Shares in associate Wierda Valley 50 3,000 n/a 9,000,000
bulk
Westbrooke bulk Direct property Sandton 100 n/a n/a 2,100,000
11,900 Sub-total 28,900,000
Total Tiber Property Group 227,597 4,163,145,099
Tiber Developments
Weighted
average rental
Form of acquisition in Percent Rentable area per square Aggregate Value
Property name Tiber Developments Location ownership (pro-rata) metre3 per property2
Joint ventures share block
Pinmill Farm Interest in share block Sandown 50 11,456 140 195,889,824
11,456 Sub-total 195,889,824
Subsidiaries (wholly owned)
132 Jan Smuts
Direct property Rosebank 100 9,410 114 100,788,323
Avenue
Masstores Direct property Sunninghill 100 16,158 156 360,022,967
The White House Direct property Sunninghill 100 1,749 167 31,404,147
Grayston
Direct property Sandton 100 4,258 187 83,737,894
Shopping Centre
Grayston Place Direct property Sandton 100 4,976 185 108,975,221
Eton Road Direct property Sandhurst 100 1,327 203 26,608,919
37,878 Sub-total 711,537,472
Associates
Inanda Greens
Shares in associate Wierda Valley 50 20,827 173 441,298,179
Blgs 1 - 10
Wierda Gables
(incl. bulk of Shares in associate Wierda Valley 50 1,095 70 3,757,423
3,583m2)
19 West Street4 Shares in associate Houghton 50 685 153 10,468,997
22,607 Sub-total 455,524,599
Total property portfolio 71,941 1,362,951,895
Undeveloped bulk
Masstores bulk Direct property Sunninghill 100 19,282 n/a 23,138,400
Inanda Greens
Shares in associate Wierda Valley 50 3,000 n/a 9,000,000
bulk
Sunninghill bulk Direct property Sunninghill 100 n/a n/a 3,500,000
22,282 Sub-total 35,638,400
Total Tiber Developments 94,223 1,398,590,294
Morningside Extension 137 (Proprietary) Limited
Weighted
average rental
Form of acquisition in Percent Rentable area per square Aggregate Value
Property name Morningside 1331 Location ownership (pro-rata) metre3 per property2
Morningside 1331 Direct property Morningside 100 3,492 118 54,323,855
Lot 3 of 143 Atholl (Proprietary) Limited
Weighted
average rental
Form of acquisition in Percent Rentable area per square Aggregate Value
Property name 100 West Street Location ownership (pro-rata) metre3 per property2
100 West Street Direct property Sandton 100 3,850 174 81,108,847
Turbine Square Two (Proprietary) Limited
Weighted
average rental
Form of acquisition in Percent Rentable area per square Aggregate Value
Property name Turbine Square Location ownership (pro-rata) metre3 per property2
Turbine Square
Direct property Newtown 100 22,796 150 488,975,829
and Hall
Property Transaction Total 351,958 R6,186,143,924
Notes:
1 Growthpoint will acquire directly all of the issued share capital in TPG. As a result, TPG will become a wholly owned
subsidiary of Growthpoint upon implementation of the Property Transaction.
2 The Aggregate Value is the gross value attributable to the property assets, the properties held indirectly in companies
and joint ventures, and the properties in share block companies, prior to any set off for debt assumed by Growthpoint.
3 The weighted average rental per square metre includes rent, operating costs, rates and parking but excludes utility
recoveries.
4 Equity Estates (Proprietary) Limited, from which Growthpoint acquired the entire issued share capital of Abseq
Properties (Proprietary) Limited, is the other 50% shareholder of the 19 West Street and Kilkishen Rivera Road
properties.
4. RATIONALE FOR THE PROPOSED TIBER TRANSACTION
The Property Transaction affords the respective shareholders of the Tiber Group the opportunity to
realise the value of the Sale Assets whilst ensuring that the Tiber Group’s reputation for outstanding
property development, investment and management continues into the future.
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 Property Transaction presents an
opportunity to acquire arguably one of the finest office property portfolios in South Africa in terms of
location and scale supported by long weighted average lease expiries and a quality underlying
tenant base.
The Manco Transaction should enable the seamless integration of the Sale Assets into the
Growthpoint property portfolio and will ensure that Growthpoint will retain the expertise and know-
how of the Tiber Group employees in relation to the continued operation of the Sale Assets and the
future development of the undeveloped bulk.
In addition, through the Development Agreement, the property development and construction
expertise of TBC and the Executive Management will be made available to Growthpoint to provide
a pipeline of new development and redevelopment opportunities.
5. SUSPENSIVE CONDITIONS
The Proposed Tiber Transaction remains subject to the fulfillment of the following conditions:
5.1 the approval by the relevant regulatory authorities including, to the extent necessary, the
Competition Authorities; and
5.2 the adoption of certain resolutions by the respective sellers.
6. FINANCIAL EFFECTS
The Proposed Tiber Transaction has no significant effect on the pro forma distribution per share,
pro forma earnings per share, pro-forma headline earnings per share, pro forma net asset value per
share or pro forma tangible net asset value per share of Growthpoint.
The Proposed Tiber Transaction is expected to be accretive to Growthpoint’s distributions per share
for the financial year ending June 2014 as well as subsequent years.
7. CATEGORISATION OF THE PROPOSED TIBER TRANSACTION
In terms of the Listings Requirements of the JSE Limited, the Proposed Tiber Transaction is a
category 2 transaction for Growthpoint and as such Growthpoint shareholder approval is not
required for the implementation of the Proposed Tiber Transaction.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
As a result of this announcement, Growthpoint shareholders are no longer advised to exercise
caution when dealing in Growthpoint shares.
Johannesburg
18 November 2013
ADVISERS TO GROWTHPOINT ADVISERS TO THE TIBER GROUP
Investment Bank and Sponsor to Growthpoint Attorneys to the Tiber Group
Investec Bank Limited Roodt Incorporated
Attorneys and Tax Advisers to Growthpoint Independent Adviser to the Tiber Group
Glyn Marais Incorporated Messrs Johan Goosen
Financial Adviser to the Tiber Group
Grant Thornton Advisory Services (Proprietary) Limited
Tax Advisers to Growthpoint Tax Advisers to the Tiber Group
Ernst & Young Services (Proprietary) Limited Werksmans Incorporated
Conveyancers to the Tiber Group
Messrs Tonkin Clacey
INDEPENDENT ADVISERS TO THE TIBER
GROUP SHAREHOLDERS
Independent Attorneys to the Tiber Group
shareholders
Bowman Gilfillan Incorporated
Independent Financial Advisers to the Tiber
Group shareholders
PricewaterhouseCoopers Corporate Finance
(Proprietary) Limited
Date: 18/11/2013 12:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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