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Update to the financial effects regarding the acquisition by SA Corporate of AFHCO
SA Corporate Real Estate Fund
A Collective Investment Scheme in Property registered in terms of the Collective
Investment Schemes Control Act, No. 45 of 2002 ("the Act") and managed by SA Corporate
Real Estate Fund Managers Limited (Registration number 1994/009895/06)("the Manager")
Share Code: SAC ISIN Code: ZAE000083614
(“SA Corporate” or "the Fund")
Registered as a REIT with effect from 1 January 2014
UPDATE TO THE FINANCIAL EFFECTS REGARDING THE ACQUISITION BY SA CORPORATE OF AFHCO
HOLDINGS PROPRIETARY LIMITED (“AFHCO”)
SA Corporate unitholders (“Unitholders”) are referred to the announcement dated 22 April 2014 and specifically
paragraph 5 “Financial Effects”, wherein SA Corporate announced the conclusion of a conditional agreement to
purchase the entire issued share capital of Afhco (“Proposed Transaction”). Unitholders are advised that the
financial effects have been amended and replaced with the financial effects below.
FINANCIAL EFFECTS
The forecasts have been prepared on the assumption that the Proposed Transaction will be implemented with
effect from 1 June 2014 and include forecast results of the Afhco Property Portfolio for the 7 months ending 31
December 2014 and the 12 month period ending 31 December 2015.
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. 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 the Fund’s accounting policies
and in compliance with IFRS.
Forecast 7 months ending Forecast 12 months ending
31 December 2014 31 December 2015
R'000 R'000
1
Revenue 67,105 142,018
2
Total property expenses -22,484 -47,317
Net operating income before finance charges 44,620 94,701
3
Finance charges -36,224 -72,057
Net profit attributable to Unitholders 8,396 22,644
Distributable income per SA Corporate
4
participatory interest (“PI”) (cents) 0.42 1.13
Notes:
1. Revenue for the reporting periods disclosed is based on existing income generating properties and assuming all
residential units (except for Atkinson House and Platinum Place) are let. Uncontracted revenue accounts for
approximately 4% of total revenue (if one excludes Atkinson House and Platinum Place, which are currently under
development).
- For Atkinson House and Platinum Place, SA Corporate will receive all income and pay all expenses including
finance charges 9 months after the effective date (i.e. 1 March 2015 for purposes of these financial effects).
Forecast revenue for Atkinson House and Platinum Place for 12 months ending 31 December 2015 is R26.9
million
- Escalations embedded in total revenue are approximately 10% across residential and 9% for parking and retail
income. Escalations occur in January each year for residential and vary month to month for retail and parking.
- The annualised 31 December 2014 revenue figure is not reflective of these escalations as the revenue for the
forecast 7 months ending 31 December 2014 is an apportioned 7 months of the forecast period (1 June 2014 –
31 May 2015).
2. Total property expenses include a vacancy and bad debts provision of 5% and total property expenses are
escalated at 8%.
3. Of the total debt of R870 million plus a R15.5 million provision for transaction costs, R159.8 million relating to the
French development finance institution (“AFD debt”) will be assumed by SA Corporate at a weighted average cost
of 6.9%. The balance of R725.8 million will be financed through SA Corporate debt facilities.
- The finance charges for the period ending 31 December 2014 are based on a weighted average cost of debt of
8.63% and apportioned for 7 months of the year. Total debt outstanding for December 2014 is R719.6 million
(total debt of R870 million plus R15.5 million for transaction costs less the AFD debt of R159.8 million less
70% of the deferred consideration for Atkinson House and Platinum Place (“Deferred Consideration”) of R8.9
million).
- The weighted average cost of debt for the period ending 31 December 2015 is 8.4%, which is based on
weighted average debt outstanding of R858 million. The bridge facilities utilised in 2014 (weighted average
cost of 8.63%) expire and are assumed in 2015 to be refinanced with term debt (weighted average cost of
9.0%). In addition, 9 months after the effective date SA Corporate assumes the AFD debt of R159.8 million
and settles 70% of the Deferred Consideration through debt facilities.
- A minimum of 80% of the value of the debt facilities will be hedged at the effective date of the Proposed
Transaction.
4. Based on the weighted average number of PIs in issue post the Proposed Transaction.
- Current PIs in issue: 1,980 million
- New PIs issued in 2014: 21.2 million at a clean price of R3.80 per PI
- Total weighted average number of PIs in issue for the year ending 31 December 2014: 1,992.5 million
- New PIs issued in 2015: 708k at a clean price of R3.80 per PI (based on 30% of the Deferred Consideration)
- Total weighted average number of PIs in issue for the year ending 31 December 2015: 2,002 million
FURTHER ANNOUNCEMENT
A further announcement will be made by SA Corporate upon the conclusion of the Minority Agreement and
fulfillment of the remaining conditions precedent to the Proposed Transaction.
Johannesburg
29 April 2014
Investment Bank and Financial Advisor
Investec Bank Limited
Legal Advisors
Webber Wentzel
Sponsor
Nedbank Capital
Date: 29/04/2014 02:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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