Wrap Text
Abridged Pre-listing Statement
ACCELERATE PROPERTY FUND LIMITED
(formerly Encha Prime Investments Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2005/015057/06)
Share code: APF ISIN: ZAE000185815
(“Accelerate” or “the Company”)
ABRIDGED PRE-LISTING STATEMENT
The pre-listing statement of Accelerate dated 27 November 2013 (“Pre-listing Statement”) is not an
invitation to the public to subscribe for Accelerate shares (“Shares”).
It is issued in compliance with the JSE Listings Requirements (“Listings Requirements”) for the purpose
of giving information to the public regarding the listing of Accelerate (“Listing”) and to provide information
to selected investors (“Qualifying Investors”) with regards to the private placing by way of an offer for
subscription of up to 480 000 000 Shares in the share capital of Accelerate, subject to a minimum
subscription amount of R 2 047 956 000 (“Minimum Subscription Amount”) being achieved (“Private
Placing”).
Accelerate has been granted approval by the JSE to establish a primary listing under the Real Estate
Holdings and Development sector of the JSE under share code APF and ISIN: ZAE000185815.
For a single addressee acting as principal, offers can only be made at an aggregate acquisition cost, of not
less than R1 000 000.
This abridged Pre-listing Statement contains the salient features of the Company, the Private Placing and
the Listing and as such is not intended to be comprehensive. For a full appreciation of the Company, the
Private Placing and the Listing, the Pre-listing Statement should be read in its entirety.
1. INTRODUCTION
The JSE has granted Accelerate a listing of up to 700 000 000 Shares in the “Real Estate – Real Estate
Holdings and Development” sector of the JSE, in terms of the FTSE classification, under the
abbreviated name: “Accelerate”, with effect from the commencement of trade on Thursday, 12
December 2013, subject to the Company having satisfied the Listings Requirements regarding the
spread of public shareholders and 90% (by value) of the land of the property portfolio (“Property
Portfolio”) having been transferred to Accelerate by Listing date.
The financial year end of the Company is 31 March each year.
2. HISTORY, NATURE AND STRUCTURE OF BUSINESS
2.1. History
The Georgiou Group (a group of property owning companies, owned by the Georgiou family,
supplying rental space in South Africa to the retail, commercial, industrial and hospitality sectors)
was founded by Mr. Nicolas Georgiou approximately forty six years ago and, through the
innovation, effective management and vision of the Georgiou family, has expanded into a
successful national property company.
The unprecedented growth of the Georgiou portfolio, facilitated by the Georgiou family’s long
standing relationships with three of the largest five banks in South Africa, led to the creation of a
premier portfolio of properties having a national footprint including various iconic properties in
prominent nodes such as the Fourways/Sandton node, the Charles Crescent/Sandton node, the
Parrow/Bellville node, and the Cape Town Foreshore node, amongst others.
Accelerate was incorporated as a private company under the name Encha Prime Investments
Proprietary Limited in South Africa on 16 May 2005 for the purposes of establishing a listed
property fund. It has been dormant since incorporation and has no trading history.
In late 2012, a strategic decision was taken by Mr. Michael Georgiou to diversify the Georgiou
family’s sources of funding and take advantage of the favourable legal and tax framework provided
to qualifying property entities in terms of the Real Estate Investment Trust (“REIT”) legislation
amidst continued interest from institutional and retail investors to participate in the income and
growth of the Georgiou family’s unique property portfolio and experience by bringing some of the
underlying properties to market through a listing. On 7 February 2013 the Company’s name was
changed to Accelerate Property Fund Limited and the Company was converted from a private to
a public company. In anticipation of the Listing, Accelerate has entered into various agreements
to, inter alia, acquire the Property Portfolio including, the flagship Fourways Precinct properties,
strategic properties in the Charles Crescent/Sandton node and the Cape Town Foreshore node
from the Georgiou Group.
2.2. Nature of business
Accelerate is a property company (which will be classified as a REIT upon Listing), formed for the
purpose of investing in direct real estate, for purposes of income generation and capital growth.
Accelerate’s Property Portfolio comprises of 51 well-established, strategically located and quality
properties across South Africa, including two prominent regional shopping centres and a
guaranteed participation into a super regional shopping centre upon completion of the Fourways
Mall Shopping Centre development (the “Development”). Accelerate’s Property Portfolio has
been independently valued at R5 973 400 000 and comprises a total GLA of 440 520m², split as
follows:
- Retail: 67%;
- Office: 22%;
- Industrial: 7%; and
- Specialised retail (motor dealerships): 4%.
In this context, Accelerate offers investors direct exposure to high quality retail centres and other
prime properties in South Africa. It is the intention of Accelerate to maintain a strong retail bias
within its Property Portfolio.
The asset management function will be housed internally within the Company and will comprise
of an investment committee that will render strategic management services to Accelerate
(“Investment Committee”).
The property management function will be outsourced to two separate entities namely Fourways
Precinct Proprietary Limited (“Fourways Precinct”) (who will manage the Fourways Properties
and has sub-contracted its property management services to JHI Properties Proprietary Limited)
and Accelerate Property Management Company Proprietary Limited (who will manage the
remainder of the Property Portfolio).
3. KEY INVESTMENT HIGHLIGHTS
- Entry price into Accelerate is at a discount to NAV and at an attractive Yield relative to peers and
the listed property sector;
- Property Portfolio within strategically located nodes;
- Well positioned to deliver capital and income growth through strong existing tenant covenants;
- Access to properties which have previously not been available to the South African listed property
sector;
- Investing in a partnership with the renowned Georgiou family, one of the largest private owners of
property in South Africa;
- Exposure to the future development of the Fourways Node (one of the fastest growing and most
densely populated areas in Johannesburg) with close proximity to major schools, hospitals, middle
to upper income residential areas, and other strategic locations such as the Lanseria Airport;
- Guaranteed participation into a Super Regional Shopping Centre upon completion of the
Development;
- Significant pipeline of further enhancing off-market properties and development opportunities;
- Geographic diversification within South Africa with property exposure in the Gauteng, Western
Cape and Kwa-Zulu Natal regions;
- Significant exposure to the highly defensive retail sector;
- High quality tenants with 69% (by GLA) being national tenants; and
- Experienced management team with extensive property related experience.
4. FUTURE PROSPECTS AND STRATEGY
The long term objective of Accelerate is to grow its asset base by investing in well-priced income
producing properties to optimise capital and income returns over time for Accelerate shareholders
(“Shareholders”) whilst maintaining a strong bias towards the defensive retail sector. The Company
may also, from time to time, redevelop properties to enhance value and support longer-term income
and capital growth.
The primary objectives of Accelerate are to:
- provide an income stream through the acquisition and redevelopment of retail, office and industrial
investment properties;
- grow its asset base by investing in fairly valued income producing properties;
- secure a well-diversified Property Portfolio that provides good growth opportunities;
- optimise and secure long-term distribution and capital growth; and
- allow Shareholders to participate in the net income (after providing for related expenditure) by
distributing significantly all the net income to Shareholders.
Post Listing, Accelerate’s immediate strategy to achieve the above objectives is set out below:
- Deliver income and capital growth:
- At the Last Practicable Date the weighted average annual escalations across the Property
Portfolio is 8.35%. Accelerate will seek to maintain the average escalations of its Property
Portfolio at above long term inflation targets;
- Accelerate will pursue opportunities to achieve positive rental reversions and thus reduce the
cost to income ratios within its Property Portfolio; and
- Accelerate will seek to access the debt capital markets to further diversify its sources of
funding.
- Grow its asset base and secure a diversified portfolio with a strong bias toward the defensive
retails sector:
- Accelerate has entered into a pre-emptive rights agreement in terms of which it has been
granted a pre-emptive right to acquire all letting enterprises with a transaction value above
R100 million within the Georgiou Group property portfolio other than Orthotouch and an option
to acquire 50% undivided share in the Loch Logan Waterfront letting enterprise (the largest
shopping centre in central South Africa) from the earlier of two years from Listing or after the
re-development of Loch Logan has been completed, at a price to be agreed at during that
time.
- Fourways Development, Fourways Mall Shopping Centre refurbishment and the upliftment of
certain properties within the Property Portfolio:
- Fourways Precinct will implement the Development to introduce an additional 90,000m² of
retail space to the Fourways Mall Shopping Centre. Following the Development the Fourways
Mall Shopping centre will be a Super Regional Shopping Centre into which Accelerate will
own an undivided share. As part of the Development significant infrastructure and traffic
upgrades to significantly improve access to the Fourways Mall Shopping Centre will be
undertaken at the cost of Fourways Precinct, which will have significant benefits for Fourways
Mall Shopping Centre and surrounding Accelerate properties;
- Fourways Precinct will commence a refurbishment totaling R30 million of the existing
Fourways Mall Shopping Centre (at no cost to Accelerate) within 90 days of the Listing; and
- As part of the Offer Accelerate will raise R65m for the defensive upliftment of certain other
properties within the Property Portfolio. The upliftment projects will commence immediately
after the Listing.
Should the opportunity arise, Accelerate may consider the acquisition of additional immovable
properties or investment in other listed property funds that will contribute favorably over time to the
capital and income returns for Shareholders.
5. RATIONALE FOR LISTING
The main rationale for the Listing of the Company is to:
- provide Qualifying Investors with an opportunity to participate over the long term in the income
streams and future capital growth of Accelerate;
- obtain an increased spread of Shareholders to enhance the liquidity and tradeability of the Shares;
- provide Accelerate with access to a central trading facility thereby providing liquidity to
Shareholders;
- provide Accelerate with access to capital markets and a platform to raise funding to pursue growth
and investment opportunities in the future; and
- enhance the public profile and general awareness of Accelerate.
6. OVERVIEW OF PROPERTY PORTFOLIO
Accelerate has entered into the sale and purchase agreements with the Georgiou Group to acquire the
Property Portfolio for an aggregate purchase consideration of between R5 441 474 071 and R5 592
533 840 (“Purchase Consideration”).
The Property Portfolio, which had an aggregate independent fair value of R5 973 400 000 as at the
date of this announcement, consists of 51 properties with a total GLA of 440 520m². The 10 largest
properties by market value in the Property Portfolio include:
Acquisition
price / m2 Percentage
Independent Acquisiti (excluding of total
valuation on cost GLA bulk, where acquisition
Property Name (Rmil) (Rmil) (m²) applicable) price
Fourways Mall Shopping
Centre* 2,094.8 1,966.6 61,480 32,112 36%
Cedar Square* 759.3 748.3 46,025 13,303 14%
Fourways View* 312.5 277.9 12,962 20,613 5%
The Buzz Shopping Centre 280.9 241.0 14,291 12,641 4%
Fourways Game* 162.7 145.1 8,763 16,447 2%
BMW Fourways Building 162.8 152.3 13,098 7,984 3%
Leaping Frog 148.0 147.1 11,139 13,320 3%
Kyalami Downs S/C 132.0 130.0 14,096 9,222 2%
Cherry Lane 102.0 80.5 11,672 6,920 1%
Oceana House 112.8 112.1 7,226 15,590 2%
Total for 10 largest
Letting Enterprises 4,267.8 4,000.8 200,752 18,668 72%
Total Property Portfolio 5,973.4 5,517.0 440,520 11,957 100%
*Included at the mid range of the acquisition cost for purposes of the analysis above
*The Purchase Consideration range for Fourways Mall Shopping Centre, Cedar Square, Fourways View and Fourways Game is
as follows:
Fourways Mall Shopping Centre: R1 935.18mil – R1 998.0mil
Cedar Square: R732.12mil – R764.5mil
Fourways View: R259.02mil – R296.7mil
Fourways Game: R135.96mil – R154.2mil
The average acquisition cost per square metre (excl. bulk) per sector for the Property Portfolio is as
follows:
- Retail: R14 557/m2
- Office: R6 927/m2
- Industrial: R3 452/m2
- Specialised: R11 899/m2
7. DIRECTORS
The overall direction, supervision and management of Accelerate will be the responsibility of the board
of directors who will be entitled to delegate certain of these functions to the property managers and the
Investment Committee.
The full names, ages, capacities and business addresses of the Directors are set out in the table below:
Full name Age Capacity Business address
Tito Titus Mboweni 54 Non-executive 107 Seven Oaks, 21 Third Street,
Chairman Killarney
Michael Nicolas Georgiou 43 Chief Cedar Square Shopping Centre, 1st
Executive Floor, Corner Willow Avenue and
Officer Cedar Road, Fourways
Andrew Costa 42 Chief Cedar Square Shopping Centre, 1st
Operating Floor, Corner Willow Avenue and
Officer Cedar Road, Fourways
Dimitrios Kyriakides 58 Financial Cedar Square Shopping Centre, 1st
Director Floor, Corner Willow Avenue and
Cedar Road, Fourways
John Ralph Janisch 39 Executive Cedar Square Shopping Centre, 1st
Paterson Director Floor, Corner Willow Avenue and
Cedar Road, Fourways
Dr Gert Christiaan 58 Lead Palazzo Towers East, Montecasino
Cruywagen independent Boulevard, Fourways
non-executive
Director
John Richard Parker Doidge 64 Independent 3rd Floor, 200 on Main, Cnr Main
non-executive and Bowwood Roads, Claremont ,
Director Cape Town
Timothy John Fearnhead 64 Independent 13 Argyle Avenue, Craighall,
non-executive Johannesburg
Director
Kolosa Madikizela 33 Independent Building No 30, Woodlands office
non-executive park, Woodlands Drive, Woodmead
Director
Two additional independent non-executive Directors with significant property related experience will be appointed to
the Board post Listing and will form part of the Investment Committee
8. DETAILS OF PRIVATE PLACING
Offer price range per Share(1) R4.88 – R5.12
Implied income Yield for the rolling 12 months ending 30
November 2014(1) 9.71% - 9.23%
Implied income Yield for the 12 months ending 31 March 2015(1) 10.10% - 9.59%
Number of Shares to be offered(1) 419 513 339 - 400 127 565
Amount to be raised in terms of the Offer R2 047 956 000
(1) The Offer price range is based on an aggregate Purchase Consideration range for the Property Portfolio of between R5 441
474 041 and R5 592 533 840, which range equates to a Distribution Yield for the 12 months ending 30 November 2014 and 31
March 2015 of between 9.71% - 9.23% and 10.10% - 9.59% respectively.
The Private Placing by Accelerate comprises an offer for subscription of 400 127 565 – 419 513 339
Shares, and depending on investor demand this may be increased up to 480 000 000 Shares.
The Private Placing and Listing are conditional on:
- 90% (by value) of the land in respect of the Property Portfolio having been transferred to Accelerate
by the Listing date;
- obtaining the minimum spread of Shareholders required under the Listings Requirements; and
- raising the Minimum Subscription Amount of R2 047 956 000, of which R1 810 008 000 has already
been secured pursuant to irrevocable subscription commitments, and a further R300 000 000 has
been underwritten,
failing which, the Private Placing and any acceptance thereof shall not be of any force or effect and no
person shall have a claim whatsoever against the Company or any other person as a result of the failure
of any condition.
All of the Shares being offered for subscription are of the same class and will rank pari passu in all
respects with all the other issued Shares of Accelerate (excluding the Shares in par 10 above where
the Vendors have renounced distributions payable in respect of the Shares issued to them relating to
the bulk land being acquired by the Company). Accordingly, no Share has any special rights to
dividends, capital or profits of the Company. There will be no other classes of Shares authorised or in
issue by Accelerate at the date of Listing. There are no Shares held in treasury.
Subscription commitments
As at the Last Practicable Date, Accelerate has received written irrevocable subscription commitments
from various Qualifying Investors for an aggregate amount of R1 810 008 000, of which Michael Family
Trust has irrevocably subscribed for R475 000 000.
Underwrite
R300 000 000 of the Offer is being underwritten by Syzigium Trading Products Proprietary Limited
(“Syzigium”), registration number 2000/031567/07, which is a wholly owned subsidiary of First Rand
Limited.
- Fourways Precinct and RMB entered into a number of prior transactions in terms of which
Syzigium’s underwrite is secured by a guarantee from Fourways Precinct.
- No lock-in applies to any Accelerate Shares acquired by Syzigium as a result of the underwrite.
Due to the irrevocable subscription commitments received, and R300 000 000 underwritten by
Syzigium the required Minimum Subscription Amount has been secured. Depending on investor
demand at the Listing price:
i. firstly the Shares which Syzigium has underwritten will be made available in favour of other
Qualifying Investors;
ii. secondly, Michael Family Trust at its discretion may elect to renounce the Shares subject to its
irrevocable subscription commitment in favour of other Qualifying Investors subject to the
Michael Family Trust’s total shareholding in Accelerate not being less than 40% of the total
Shares in issue;
iii. thirdly, the Shares offered for subscription may be increased up to 480 000 000 Shares; and
iv. lastly, should there be sufficient interest from Qualifying Investors, the Directors in consultation
with the Vendors may, at their discretion, allocate additional Shares due to the Vendors to such
Qualifying Investors without increasing the maximum number of Shares to be issued by the
Company, subject to the Vendors’ total shareholding in Accelerate not being less than 40% of
the total Shares in issue.
Major and controlling shareholders
The sole Shareholder as at the Last Practicable Date was Michael Family Trust (who owns 100% of
Fourways Precinct) who will be the controlling shareholder on the date of Listing, owning 316 476 779
– 331 366 244 or 49.6 % - 51.9% of the issued Shares. To the extent that Michael Family Trust
renounces the Shares subject to its irrevocable subscription commitment in favour of other Qualifying
Investors, but subject to Michael Family Trust’s total Shareholding in Accelerate not being less than
40% of the total Shares in issue, Michael Family trust will hold 255,475,516 Shares in Accelerate.
9. SALIENT FINANCIAL INFORMATION
The table below sets out a summary of the forecasts for the Company for the 4 months ending 31
March 2014, the rolling 12 month period ending 30 November 2014 and the year ending 31 March
2015.
FORECAST STATEMENTS OF COMPREHENSIVE INCOME OF ACCELERATE
Forecast for Rolling pro Forecast for
the 4 months forma forecast the year
ending 31 12 month ending 31
March 2014 period ending March 2015
(revenue from 30 November
1 December 2014
2013)
Number of Shares in issue 638,688,811 638,688,811 638,688,811
Basic and diluted earnings per share 36.02 73.76 56.60
Distribution per share 13.92 43.62 45.35
Less Shares ceded to Accelerate* 49,844,500 49,844,500 49,844,500
Number of Shares for distribution 588,844,311 588,844,311 588,844,311
Distribution per remaining Share 15.09 47.32 49.19
Forward yield 9.06% 9.46% 9.84%
*The distribution per share and forward yield have been based off total Shares in issue of 638 688 811 less 49 844 500 Shares
(assuming a listing price of R5.00) that are issued to the Vendors (the Georgiou Group) for the bulk ( R249 222 500 in total)
acquired as part of the Fourways Land. Under the terms of a Forgoing of Distributions agreement, the distribution on such
issued Shares will be ceded to Accelerate for a period equal to the lesser of 5 years from the Date of Transfer or such perio d
until the bulk is developed and income producing.
10. SHARE CAPITAL
The authorised and issued share capital of Accelerate on the date of Listing is anticipated to be as
follows based on the assumption that R2 047 956 000 has been raised at an issue price of R5.00 per
Share:
Authorised
10 000 000 000 ordinary Shares of 100 cent per Share
Issued
Share capital
638 688 811 ordinary Shares of 500 cent each R3 193 444 056
Of the total 638 688 811 Shares, 229 097 591 Shares will issued to the Vendors as part settlement of
the Purchase Consideration, and the remaining 409 591 200 will be raised from the Private Placing.
All of the authorised and issued Shares (including those placed in terms of the Private Placing) are of
the same class and rank pari passu in every respect. Accordingly, no Share has any special rights to
dividends, capital or profits of the Company. All of the Shares are fully paid up and freely transferrable.
11. DIVIDEND AND DISTRIBUTION
The Directors anticipate that the first distribution payable to Shareholders will be the distribution in
respect of the period ending 31 March 2014 which is expected to be paid in June 2014. It is the
Directors' intention to declare a distribution bi-annually, which is expected to be paid on the earlier of
the date on which a distribution in respect of the Shares is payable, and four months after the end of
the Financial Year or half yearly period. Any interest on distributions remaining unclaimed may be
retained by the Company and invested or used as the Directors deem fit for the benefit of the Company
or may be paid into a separate account, and any distributions unclaimed are to be kept in a trust for an
indefinite period subject to the laws of prescription. The Vendors have antecedently renounced the
distributions payable in respect of the Shares issued to them relating to the bulk land being acquired
by the Company under the Fourways Sale Agreements until such time as the bulk is developed and is
income producing.
The Directors confirm that the Company will distribute at least 75% of its total distributable profits as a
distribution to Shareholders by no later than 6 months after the Financial Year end, subject to the
relevant solvency and liquidity test as defined in the Act.
12. SALIENT DATES AND TIMES
Opening date of the Offer (09h00) Wednesday, 27 November 2013
Last date for Qualifying Investors to submit their Application Forms
for purposes of the book-build (12h00)(2) Tuesday, 3 December 2013
Date on which Qualifying Investors will be notified of the number
of Shares which they have been allocated in terms of the Offer Wednesday, 4 December 2013
Offer price and results of Offer announced on SENS Thursday, 5 December 2013
Offer price and results of Offer announced in the press Friday, 6 December 2013
Last date for Qualifying Investors to make payment with respect
to their allocated Shares (12h00) Monday, 9 December 2013
Accelerate Shares listed on the JSE (09h00) Thursday, 12 December 2013
Notes:
(1) All references to dates and times are to local dates and times in South Africa. These dates and times
are subject to amendment. Any such amendment will be released on SENS and published in the press.
(2) Qualifying Investors must advise their CSDP or broker of their acceptance of the Private Placement in
the manner and cut-off time stipulated by their CSDP or broker.
13. COPIES OF THIS PRE-LISTING STATEMENT
Copies of the Pre-listing Statement are available only in English. Copies may be obtained from the
registered offices of Accelerate, the Transfer Secretaries, the Corporate Advisor, Bookrunner and
Sponsor, and the Lead Sponsor from Wednesday, 27 November 2013 to Thursday, 12 December at
the following addresses:
- Accelerate Property Fund Limited, Cedar Square Shopping Centre, 1st Floor, Corner Willow
Avenue and Cedar Road, Fourways, 2055;
- Computershare Investor Services Proprietary Limited, Ground Floor, 70 Marshall Street,
Johannesburg, 2001;
- KPMG Services Proprietary Limited, 85 Empire Road, Parktown, Johannesburg, 2193; and
- Investec Corporate Finance, a division of Investec Bank Limited, 2nd Floor, 100 Grayston Drive,
Sandown, Sandton, 2196.
27 November 2013
Johannesburg
Corporate advisor, bookrunner and sponsor
Investec Bank Limited
Lead sponsor
KPMG Services Proprietary Limited
Attorneys
Glyn Marais Inc
Independent reporting accountants and auditors
Ernst and Young Inc.
Communications advisor
Brunswick South Africa Limited
Date: 27/11/2013 05:00:00 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.
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