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Abridged pre-listing statement and supplementary circular relating to the listing of Freedom on the JSE Limited
FREEDOM PROPERTY FUND
(Incorporated in the Republic of South Africa)
(Registration number 2012/129186/06)
Share code: FDP ISIN: ZAE000185260
("Freedom" or "the Company" or "the Group")
This abridged pre-listing statement relates to the listing of all of the
shares of the Company in the "Real Estate – Real Estate Holdings
and Development" sector of the JSE ("Listing").
This abridged pre-listing statement is not an invitation to
the public to subscribe for shares in the Company, but is
issued in compliance with the JSE Listings Requirements
("the Listings Requirements") and the Companies Act,
2008 ("the Companies Act"), for the purpose of providing
information to the public relating to Freedom.
This announcement contains the salient information in respect
of Freedom, which is more fully described in the pre-listing
statement dated and issued on Thursday, 5 June 2014 and the
supplementary circular dated and issued on Thursday, 5 June
2014. For a full appreciation and understanding of Freedom and
the Listing, the pre-listing statement should be read in its entirety,
together with the supplementary circular.
Abridged pre-listing statement and supplementary circular relating to the listing of Freedom on the JSE Limited ("JSE")
1. INTRODUCTION TO FREEDOM
Freedom was established and incorporated on 19 July 2012 as a public company with the
specific objective of Listing on the JSE with a diverse portfolio of assets across the commercial,
industrial and residential sectors of the property industry.
On Tuesday, 4 March 2014, the JSE approved the Listing of 1 027 029 031 shares of Freedom
in the "Real Estate – Real Estate Holdings and Development" sector of the JSE, in terms of
the FTSE classification, under the abbreviated name: "Freedom", JSE share code: FDP and ISIN:
ZAE000185260 with effect from the commencement of trade on Thursday, 12 June 2014,
subject to all properties acquired by the Company being transferred at the Deeds Office. All
properties acquired, as reflected in the pre-listing statement, have subsequently been transferred
and registered in the name of Freedom.
The financial year-end of the Company is 28 February each year and the supplementary circular
dated Thursday, 5 June 2014 contains supplementary information which should be read in
conjunction with the pre-listing statement, including the:
- audited financial statements of Freedom for the year ended 28 February 2014;
- pro forma statement of financial position of the Group for the year ended 28 February 2014; and
- the forecast financial information of Freedom for the years ending 28 February 2015 and
29 February 2016.
In terms of the Listing, Freedom will list on the Main Board of the JSE with:
- an anticipated market capitalisation of R1 027 029 031, representing 1 027 029 031 Freedom
shares at R1.00 each. The issued Freedom shares comprise of shares issued to vendors for the
acquisitions, shares issued to promoters for their contribution to the formation of Freedom, as
well as shares issued in settlement of certain acquisition and listing expenses; and
- a Freedom property portfolio value of R1 561 500 000 determined by the independent property
valuer.
2. PROSPECTS AND STRATEGIC OBJECTIVES
Freedom began implementing its strategy of providing a platform for property owners to unlock
the value in their development projects, by providing a vehicle through which they can secure
the necessary development funding, which has become increasingly challenging to secure in the
current economic environment.
On the Listing date, Freedom's gearing will be less than 3%, with Freedom's net asset value
("NAV") per share being approximately 35% greater than the issue price of a Freedom share on
Listing. Management believes this will provide a significant base for the Company to raise new
funding for the Freedom projects in a phased approach in line with a clearly-defined strategy.
The prospects of each of the Freedom projects are detailed in the pre-listing statement.
In unlocking sustainable value and growth prospects for shareholders, Freedom's strategic
objectives can be summarised as follows:
- To capitalise on the largely ungeared value in the Freedom property portfolio by securing
reasonably priced debt funding which will be utilised to develop a substantial portfolio of income
generating assets.
- To provide shareholders with an opportunity to participate in significant capital growth
opportunities as opposed to investing in the Real Estate Investment Trust ("REIT"), property
loan stock and property unit trust markets, which tend to focus on investment assets which
provide a regular income distribution to shareholders and investors. The newly adopted REIT
regulatory regime is intended for property entities focused on income distribution rather than
capital growth.
- Harnessing the extensive experience of Freedom's management team, as well as having
access to the skills, expertise and market knowledge of selected vendors who have obtained a
shareholding in Freedom pursuant to the acquisition agreements and who accordingly have a
vested interest in developing the Freedom projects.
- To provide shareholders the prospect of participating in a diverse portfolio of assets, with a
strong weighting in residential properties, which are forecast to generate significant rental
incomes as access for investors to the residential property industry in South Africa is limited.
- To participate in the prospects of the market recognising the discount that the listing share price
represents to the Freedom NAV per share on Listing.
3. FREEDOM PROPERTY PORTFOLIO OVERVIEW
The Freedom Property Portfolio consists of four categories of properties being Currently Yielding
Properties, Commercial Development Properties, Residential Rental Properties and Residential
Sale Properties.
Freedom Property Portfolio
Commercial
Currently Yielding Development Residential Rental Residential Sale
Properties Properties Properties Properties
- Wespark Palms - Steelpoort - Wespark Palms - Miami Village
- Steelpoort Industrial Park - La Hoff Mews - Langebaan Beach
Industrial Park - Stellenbosch - Emfuleni Estate
- Stellenbosch Industrial - Portolan Place
Industria - Propmed - Miami Village
- Tubatse Industrial - Montana
Park Residential
- Sweet Waters - Tweefontein
Industrial Park Residential
- Tubatse Residential
- Tubatse Homes
- Gevonden
- Elm Drive
3.1 Currently Yielding Properties. These comprise of three yielding Freedom projects,
with total acquisition and capitalised costs relating to the acquisitions of R150 482 394.
Freedom has a strong project management team that will optimise the profitability of these
yielding properties and will provide a foundation for the commercial properties yet to be
developed. The yielding properties, being Wespark Palms, Stellenbosch Industrial and
Steelpoort Industrial are expected to generate gross annual income of close to R20 million
for the year ending February 2015 and approximately R28 million for the year ending
28 February 2019. The Currently Yielding Properties are:
- Wespark Palms - Wespark Palms is situated in the heart of Kroonstad in the Free
State Province, close to major hospitals and the Department of Correctional Service.
This local economy is mainly driven by the public sector. Wespark Palms is a residential
development comprising of apartments, 16 of which have already been built, together
with three of 11 garages. A further 51 apartments and 8 garages are to be built (see
Residential Rental Properties).
- Steelpoort Industrial Park - Steelpoort Industrial Park is situated in Steelpoort, Limpopo
Province and the development comprises of an industrial park which is occupied by
tenants delivering goods and services to the surrounding mining sector. The Steelpoort
Industrial Park project consists of 20 273m(2) of existing industrial warehouses and the
opportunity to develop a further 28 000m(2) on 18.8 hectares of land.
- Stellenbosch Industrial - The Stellenbosch Industrial property on George Blake Street
comprises an existing warehouse in the sought after Plankenburg Industrial area, near the
centre of Stellenbosch, in the Western Cape Province. The property is in close proximity
to the CBD and easily accessible from the R44. The property is zoned "light industrial"
in terms of the Stellenbosch Town Planning Scheme. The existing building comprises of
8 287m(2) of warehousing and is fully tenanted. The remaining land is being held for future
development and there is potential for a further 5 215m(2), which will be developed based
on the requirements of tenants which will be secured in future.
3.2 Commercial Development Properties. These comprise of five Freedom projects,
with total acquisition and capitalised costs relating to the acquisitions of R86 453 889.
The strategy is to develop these properties into income-generating assets and grow the
portfolio of yielding properties in the Freedom property portfolio significantly. It is anticipated
that these properties will begin generating revenues for Freedom during the 2016 financial
year and make a collective annual contribution to Freedom's gross income of over R73
million for the year ending 28 February 2019.
The Commercial Development Properties are:
- Steelpoort Industrial Park - As set out in 3.1 above, Steelpoort Industrial Park will be
further developed with a gross lettable area ("GLA") of 28 000m(2).
- Stellenbosch Industrial - As set out in 3.1 above, Stellenbosch Industrial will be further
developed with a GLA of 5 215m(2).
- Propmed - Propmed is a commercial building providing office space in Kimberley.
The plan is to erect internal walls providing smaller office units for rental purposes. The
office component of the complex will consist of seven offices, a pharmacy, a rehabilitation
area, a reception area and eighteen parking bays. Propmed will provide a total GLA of
1 324m(2).
- Tubatse Industrial Park - Tubatse Industrial Park provides Freedom the opportunity to
develop a total GLA of 36 666m(2) of commercial/industrial facilities on 19.17 hectares of
land in Burgersfort.
- Sweet Water Industrial Park - The Sweet Waters Industrial and Commercial
Development is situated next to the N3 highway, on the P817 road, close to Heidelberg,
Gauteng Province. The soon to be "Tambo Springs Inland Port" development is located
opposite Sweet Waters and for that reason it falls well within Government's key logistical
and Industrial hub in Ekurhuleni Local Municipality. The project once completed will
provide a total GLA of 51 492m(2).
3.3 Residential Rental Properties. These comprise of eleven of the Freedom projects,
with total acquisition and capitalised costs relating to the acquisitions of R558 643 195.
The properties will be developed by Freedom and managed as residential rental stock.
This portfolio provides investors and shareholders of Freedom a unique opportunity to
participate in income-generated from the residential market. It is anticipated that this
portfolio will contribute gross annual income of approximately R54 million for the year
ending 28 February 2019. The Residential Rental Properties are:
– Wespark Palms – As set out in 3.1, a further 51 apartments and 8 garages are to be
built and held by Freedom as Residential Rental Properties.
– La Hoff Mews – The project is situated in Klerksdorp, North-West Province and is well
located with close proximity to business centres, public institution and social amenities.
La Hoff Mews is a residential development comprising of 100 units to be developed
and will provide a total GLA of 9 120m(2) to the residential property market. In terms of
Freedom's strategy, the development of La Hoff Mews will commence in 2015.
– Emfuleni Estate – The project, situated in Klerksdorp, North-West Province and presents
a unique security estate in the affordable housing market, comprising of 499 units, 10 of
which have been built. The project will provide a total GLA of 36,427m(2). In terms of
Freedom's strategy, the development of Emfuleni Estate will commence in 2014.
– Portolan Place – The project is well positioned and provides secure lifestyle for residents
of Gonubie, Eastern Cape Province. Portolan Place provides 300 opportunities for the
development of flats, 173 entry-level full title stands and 32 more expensive full title
stands. It caters for high and middle income and meets the demand for secure living
in Gonubie. The project will provide a total GLA of 47 589m(2). In terms of Freedom's
strategy, the development of Portolan Place will commence in 2017.
– Miami Village – The Miami Village project is situated adjacent to Shelley Point in the
St Helena Bay area in the Western Cape Province. This portion of the Miami Village project
(see Residential Sale Properties in 3.4 below) is being developed to be held by Freedom
as Residential Rental Properties. The project is made up of 14 full title opportunities on
500m(2) stands, serviced and ready for development. The project will provide a total GLA
of 1 512m(2).
– Montana Residential – The project is situated in Northern Tshwane, in the Greater
Tshwane Municipality, Gauteng Province, and is earmarked for a residential development
with 90 medium cost units. The project will provide a total GLA of 4 048.8m(2). In terms of
Freedom's strategy, the development of Montana Residential will commence in 2015.
– Tweefontein Residential Estate – The project is situated in Steelpoort, Limpopo
Province. The proposed development is a high-density residential development of
approximately 5 000 plots for the affordable market, providing the opportunity to develop
400 full title units and 4 600 sectional title units on 290 hectares of land. The project will
provide a total GLA of 163 000m(2). In terms of Freedom's strategy, the development of
Tweefontein Residential Estate will commence in 2016.
– Tubatse Residential Estate – Tubatse Residential Estate is located in Burgersfort,
Limpopo Province, and constitutes an integrated macro development, which is a logical
extension of the current town of Burgersfort. The project provides the opportunity to
develop 3 737 residential units, comprising 1 942 full title units and 1 795 sectional
title units. The project will once completed provide a total GLA of 500 809.2m(2) to the
residential property market. In terms of Freedom's strategy, the development of Tubatse
Residential Estate will commence in 2016.
– Tubatse Homes – The project comprises of the development of 117 full title residential
units at an average size of 185m(2) on 8.34 hectares of land. The project will provide a total
GLA of 21 645m(2). In terms of Freedom's strategy, the development of Tubatse Homes
will commence in 2014.
– Gevonden – The project is situated on the outskirts of Stellenbosch, in the Western
Cape Province. The project makes provision for 42 dwellings, comprising of 27 Flats and
15 Townhouses. The project will provide a total GLA of 4 650m(2). In terms of Freedom's
strategy, the development of Gevonden Estate will commence after Listing.
– Elm Drive – Elm Drive is an existing residential dwelling situated on Elm Drive, Sandton,
Gauteng Province. Elm Drive is located close to major businesses and head offices in
Sandton. The development of Elm Drive project will provide a GLA of 2 379m(2) of office
space.
3.4 Residential Sale Properties. These comprise of two Freedom projects, a portion of
which is to be sold, with total acquisition and capitalised costs relating to the acquisitions
of R97 474 437. Gross annual income from the sale of these properties is expected to
be approximately R170 million over a 5 year period ending 28 February 2019, which will
assist with the funding requirements of the other Freedom projects. The Residential Sale
Properties are:
– Miami Village – This portion of the Miami Village project (see 3.3 above for portion
relating Residential Rental Properties) is made up of 261 opportunities, consisting of 164
full title serviced stands and 97 sectional, bulk serviced stands. The 164 full title units are
serviced and ready to be marketed. The 97 sectional title stands have services available
and are planned for the retirement market.
– Langebaan Beach – The project is a mixed land use development located in Langebaan,
Western Cape Province, comprising of 312 022m(2) of zoned residential land, 426 982m(2)
of un-zoned residential land, 8 063 m2 of land zoned for commercial use and 21 688m(2)
for institutional use. The Langebaan Beach project has been acquired by Freedom for
development and sale of serviced erven. In terms of Freedom's strategy, the development
of Langebaan Beach will commence in 2014.
4. FINANCIAL INFORMATION
The financial information should be read in conjunction with the forecast information and pro forma
statement of financial information disclosed in the pre-listing statement and the supplementary
circular.
4.1 Summarised forecast information
Set out below is the abridged forecast financial information of Freedom for the year ending
Forecast Forecast
for the for the
year ending year ending
28 February 29 February
2015 2016
Headline earnings R10 647 781 R17 269 396
Shares in issue and to be issued 1 027 029 031 1 027 029 031
Weighted average number of shares in issue 947 783 602 1 027 029 031
Earnings per share (in cents) 13.65 1.68
Headline earnings per share (in cents) 1.12 1.68
Diluted earnings per share (in cents) 13.65 1.68
Diluted headline earnings per share (in cents) 1.12 1.68
Distribution per share (in cents) – –
Notes to the forecast financial information are disclosed in the pre-listing statement and
supplementary circular. This information has been presented for illustrative purposes only
and because of its nature may not fairly reflect the financial position and results of Freedom.
The forecast financial information is the responsibility of the directors.
4.2 Pro Forma statement of financial position
Set out below is an extract of the pro forma statement of financial position as at 28 February
2014 as if the acquisitions had taken place at 28 February 2014.
Freedom Portfolio Pro Forma
Audited Purchase After
R R R
ASSETS
Non-current assets – 1 423 500 000 1 423 500 000
Investment property – 1 423 500 000 1 423 500 000
Current assets 566 632 118 765 554 119 332 186
Inventories – 97 474 436 97 474 436
Trade and other receivables 551 180 21 236 978 21 788 158
Cash and cash equivalents 15 452 54 140 69 592
Total assets 566 632 1 542 265 554 1 542 832 186
EQUITY AND LIABILITIES
Equity (4 643 133) 1 386 251 721 1 381 608 588
Stated capital 15 000 876 253 097 876 268 097
Retained income (17 553 133) 509 998 624 492 445 491
Share-based payment reserve 12 895 000 – 12 895 000
Liabilities
Non-current liabilities 1 780 150 292 219 150 293 999
Shareholders' loans 1 780 (1 780) –
Commercial term loan – 22 000 000 22 000 000
Development bond – 4 987 421 4 987 421
Deferred tax – 123 306 578 123 306 578
Current liabilities 5 207 985 5 721 614 10 929 599
Trade and other payables 5 207 985 5 706 284 10 914 269
Bank – 15 330 15 330
Total equity and liabilities 566 632 1 542 265 554 1 542 832 186
Total shares in issue 1 027 029 031
NAV per share (cents) 134.52
Detailed notes to the pro forma statement of financial position are contained in the pre-
listing statement and supplementary circular.
5. PURPOSE OF THE LISTING
The purpose of the Listing is to:
- provide shareholders access to a market on which Freedom shares can be traded;
- enhance investor, potential clients and general public awareness of Freedom;
- assist the Group with attracting and retaining skilled staff through a meaningful general option
scheme for employees; and
- enhance Freedom's ability to raise both debt and equity finance in order for it to develop the
Freedom projects and take advantage of any acquisition and growth opportunities which may
arise in the future.
6. SALIENT DATES AND TIMES
2014
Abridged pre-listing statement and supplementary circular released on Thursday, 5 June
SENS on
Abridged pre-listing statement and supplementary circular published in
the South African press on Thursday, 5 June
Date of issue of pre-listing statement Thursday, 5 June
Date of issue of the supplementary circular Thursday, 5 June
Listing date (09:00) on Thursday, 12 June
Notes:
1. All dates and times shown in this pre-listing statement are South African dates and times.
2. The abovementioned dates and times are subject to amendment. Any such amendment will be announced
on SENS and published in the South African press.
7. DIRECTORS
The full names, ages, qualifications, business addresses and functions of the directors, who are
all South Africa citizens, are set out below:
Name Business address Function
Patrick Ernest Burton (61) 1 Becker Road, Philippi Independent
BCom (Hons), PG Dip Tax Cape Town, 7785 Non-Executive
Chairman
Nagendra Tyrone Govender (43) 6 Villa La Vita, 58 Chester Road Chief Executive
BCom Bryanston, 2195 Officer
Richard Denis Eaton (63) 5th Floor, MSC House Chief Financial
CA(SA) 1 Mediterranean Street Officer
Foreshore, Cape Town
Sean Barry Rule (35) 75 Pretoria Avenue, Athol Non-Executive
B.Bus.Sci Sandton, 2196 Director
William Henry Rule (64) 3 Edgemere Close, Elfindale Non-Executive
Cape Town, 7945 Director
Boetie Moses Molefi (55) Ground Floor, Harrow Court III Independent
Isle of Houghton, Non-Executive
Cnr Boundary and Director
Carse 'O Gawrie
Parktown, 2193
Wayne Brian Stocks (37) 6 Selbourne Road, Claremont Independent
CA(SA) Cape Town, 7708 Non-Executive
Director
8. AVAILABILITY OF THE PRE-LISTING-STATEMENT AND
SUPPLEMENTARY CIRCULAR
The pre-listing statement and supplementary circular are available in English only. Copies of the
pre-listing statement and supplementary circular may be obtained between 08:30 and 17:00 on
business days from Thursday, 5 June 2014 until Thursday, 12 June 2014 at the following
addresses:
PSG Capital Proprietary Freedom registered Computershare Investor
Limited address Services Proprietary Limited
1st Floor, Ou Kollege Suite 5, Harbour View Ground Floor
Building, 35 Kerk Street Harbour Road 70 Marshall Street
Stellenbosch, 7600 Port Alfred Johannesburg, 2001
The pre-listing statement and supplementary circular are available on the Company's website:
www.freedompropertyfund.co.za.
9. RELEASE OF YEAR-END RESULTS
The supplementary circular includes Freedom's summarised audited financial results for the year
ended 28 February 2014, together with the financial forecasts of Freedom for the years ending 28
February 2015 and 29 February 2016 issued today, being Thursday, 5 June 2014.
Thursday, 5 June 2014
Sponsor
PSG CAPITAL
Independent reporting accountants and auditors
RSM
Audit Tax Advisory
Attorneys
BG
Bowman Gilfillan
Corporate advisor
BASE CAPITAL
Date: 05/06/2014 07:05:00 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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