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Abridged pre-listing statement-opening of offer to subscribe for shares and listing of Equites as a REIT on the JSE
Equites Property Fund Limited
(formerly VB Transport (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2013/080877/06)
(JSE share code: EQU)
(ISIN: ZAE000188843)
(“Equites” or “the company”)
ABRIDGED PRE-LISTING STATEMENT – OPENING OF OFFER TO INVITED INVESTORS TO SUBSCRIBE FOR SHARES AND LISTING OF EQUITES AS A REIT
ON THE JSE LIMITED
Abridged pre-listing statement relating to:
- a placement (“the private placement”) to raise between R400 million and R650 million by way of an offer for
subscription to invited investors of between 40 000 000 and 65 000 000 private placement shares (“private
placement shares”) in the company at an indicative issue price of R10.00 per private placement share; and
- the subsequent listing of all the shares of the company in the “Industrial and Office REITs” 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, for the purpose of giving information to the public
in relation to Equites and to invited investors in relation to the private placement.
Invited investors will be contacted by and will receive application forms to participate in the private placement
from the bookrunner, Java Capital.
This announcement contains the salient information in respect of Equites, which is more fully described in the pre-
listing statement which will be made available to invited investors from today. For a full appreciation and
understanding of Equites, the private placement and the listing, the pre-listing statement should be read in its entirety.
Terms defined in the pre-listing statement bear the same meaning in this abridged pre-listing statement.
1. Introduction
The JSE has granted Equites a listing of up to 95 565 254 shares in the “Industrial and Office REITs” sector of
the JSE, in terms of the FTSE classification, under the abbreviated name: “Equites”, JSE share code: EQU and
ISIN: ZAE000188843 with effect from the commencement of trade on Wednesday, 18 June 2014, subject to the
company having satisfied the Listings Requirements regarding the spread of public shareholders.
2. Incorporation and nature of business
Equites (previously VB Transport Proprietary Limited) was registered and incorporated as a private company
on 20 May 2013. The company converted to a public company and changed its name to Equites Property Fund
Limited on 15 May 2014.
Equites is a property investment company structured as an internally managed REIT. Its business will focus on
long term investments in the top-end of the industrial property sector. Equites currently owns a portfolio of 8
industrial properties (“existing portfolio”) valued at R731.9 million with a gross lettable area of approximately
82 793m2. Equites has entered into transactions to acquire a further 9 properties (“acquisition portfolio”) in the
industrial and commercial sectors valued at R442.3 million with a gross lettable area of approximately
41 459m2.
Following the listing, Equites intends to grow its portfolio by acquiring completed buildings with existing
quality tenants. In addition, given the development expertise and track record of its executive team, Equites will
undertake greenfields development of land and brownfields development by refurbishment and upgrading of
existing buildings.
3. History
The Equites listing is the result of a decision by three Cape based property groups, being the Cape Town
International Airport based consortium represented by Johnny Cullum, Kevin Dreyer and Alex von Klopmann,
the Swish property group founded by Giancarlo Lanfranchi and Chiluan Holdings founded by Andrea Taverna-
Turisan (collectively, the “vendors”), to align interests, merge their property portfolios and seek a listing on the
JSE as a REIT. All of the vendors bring significant development expertise into the company having developed a
substantial portion of their portfolios in-house.
4. Investment and growth strategy
Equites will specialise in the industrial sector of the property market only. The listing of Equites will offer
investors focussed exposure to the top-end of the industrial property segment. The board’s view is that this
focus, with the board and management skills within Equites and well-aligned to the interests of investors, will
enhance investment returns.
In addition to its current portfolio, the company also has a significant pipeline of new developments, which will
be undertaken internally.
At present all of the company’s properties are located in the Western Cape. The board intends diversifying
geographically into the 3 major metropolitan areas, being the greater Cape Town, Gauteng and the greater
Durban. Equites does not intend to acquire properties in secondary destinations outside these major
metropolitan areas.
Between them, the vendors have sourced a pipeline of A-grade industrial developments which will stand the
company in good stead as its portfolio is bulked up. With its in-house development expertise Equites will be
able to develop internally and also to make acquisitions offering redevelopment and value enhancing
opportunities.
Sound environmental practises form part of the Equites ethos and it is the intention to implement “greening” of
the properties in the Equites portfolio over time, with both the company and its tenants benefitting from the
resultant cost savings. Expert studies indicate that green buildings outperform other buildings where rental
payable, operational costs and capital values are compared.
Assuming completion of the post-listing acquisitions, the listed entity will commence with a property portfolio
value of R1.2 billion. A realistic target should be to grow the fund to R4 billion within five years.
5. Prospects and pipeline
5.1. General
The group’s properties are of high quality with mostly medium to long term strong covenants from
mainly blue chip companies. The portfolio is highly sought after and should continue to deliver stable
and growing rentals.
Equites has acquired the portfolio from the vendors for a consideration which will be predominantly
settled through the issue of Equites shares. The interests of the vendors and the company are well
aligned. After the implementation of the pre-listing acquisitions constituting the existing portfolio, the
private placement, the listing and the post-listing acquisitions constituting the acquisition portfolio, the
vendors will retain beneficial interests in over 50% of the issued shares of Equites.
The board is cognisant of the difficulty a new relatively small REIT will encounter if its growth
strategy is entirely dependent on buying assets on the competitive open market. A key part of its
strategy will therefore be to use its development expertise to unlock value.
The board of Equites is confident that given the quality of assets, the development expertise and the
project pipeline, the company is well placed to meet its growth targets.
5.2. Specific opportunities
The group has entered into an option agreement with Dormell Properties 575 Proprietary Limited in
terms of which it has the right to acquire a further portion of land located at the Cape Town International
Airport precinct. Equites has also entered into a memorandum of understanding with Group 5 to jointly own
and develop A-grade modern distribution warehouses at selected sites in the Western Cape. In addition,
the group is currently in advanced negotiations to acquire the remaining 50% of Dormell Properties 711 Proprietary
Limited with the result that Equites will own 100% of the Execujet Hangar.
6. Restraint of trade and lock-in arrangements
Giancarlo Lanfranchi, John Cullum, Andrea Taverna-Turisan, Kevin Dreyer and Alex von Klopmann have
agreed to restraints of trade in terms of which they are broadly restrained for engaging in activities in
competitive to the business of Equites for a period of 5 years.
They have further agreed not to dispose of any shares received as consideration for assets sold to Equites
constituting the existing and acquisition portfolio whether held directly or indirectly or by persons related to
them, for a period of 24 months after the date of listing, without the prior written consent of Equites.
7. Directors
Names, age and nationality Business address Qualification Capacity
Leon Campher Bridge House B.Econ Chairman and Independent
66 Boundary Terraces (Stellenbosch) non-executive director
South African 1 Mariendahl Lane
Newlands
7700
Giancarlo Lanfranchi 31 Brickfield Road Dip. Arch (CPUT) Deputy chairman, Non-
45 East Parking independent non-executive
South African Level 4 director
Upper Eastside
Woodstock
7925
Andrea Taverna-Turisan 31 Brickfield Road B.Sc (Honours) Chief executive officer
45 East Parking (Mathematics and
Italian Level 4 Management) (Kings
Upper Eastside College, London)
Woodstock
7925
Riaan Gous 31 Brickfield Road B.A (Law) LLB Chief operating officer
48 East Parking (Stellenbosch)
South African Level 4
Upper Eastside
Woodstock
7925
Chrystal Grauso 31 Brickfield Road CA (SA) Executive financial director
35 East Parking
South African Level 4
Upper Eastside
Woodstock
7925
Nazeem Khan 2 Orphan Road B.Sc (Q.S) Independent non-executive
58 Cape Town (University of Natal) director
South African 8000 MAQS
PrQS
A.AArb
Ruth Eleanor Benjamin-Swales Bridge House CA(SA) Independent non-executive
51 Boundary Terraces director
South African 1 Mariendahl Lane
Newlands
7700
Kevin Dreyer 115 Aviation Crescent N/A Non-independent non-
Names, age and nationality Business address Qualification Capacity
52 Airport Industria executive director
South African 7499
Johnny Cullum 3rd Floor B.Eng (Civil) Non-independent non-
52 Execujet Park (Stellenbosch) Pr executive director
South African Airport Industria Eng
7499
8. Material third parties
Currently the property management function is undertaken by Swish Property Administration and Quènet
Corporate Property. It is anticipated that the agreements with Swish Property Administration and Quènet
Corporate Property will be cancelled within the first year of listing and the property management function will
be undertaken by Equites.
9. Summarised forecast information
Set out below are the summarised forecast statements of comprehensive income, based on the assumption that
R600 million is raised pursuant to the private placement and in respect of the following scenarios:
- Equites’ property portfolio comprises the combined portfolio (i.e. the existing portfolio and the acquisition
portfolio) (“Scenario 1”); and
- Equites’ property portfolio comprises only the existing portfolio (i.e. excluding the acquisition portfolio)
(“Scenario 2”).
(collectively (“summarised forecasts”)) for the years ending 28 February 2015 and 29 February 2016
(“forecast periods”).
The summarised forecasts include forecast figures for the duration of the forecast periods.
The summarised forecasts, including the assumptions on which they are based and the financial information
from which they are prepared, are the responsibility of the directors of Equites.
The summarised forecasts have been prepared in compliance with IFRS and in accordance with Equites’
accounting policies.
It is necessary to include Scenario 2 in terms of the Listings Requirements due to the fact that at the last
practical date the acquisition portfolio will not have transferred to Equites. However, it is the view of the board
that, barring unforeseeable circumstances, the acquisition portfolio will transfer within a short time of listing
and that, accordingly, Scenario 2 represents an unlikely outcome.
Scenario 1
Year ending Year ending
28 February 2015 29 February 2016
R’000 R’000
Basic earnings per share (cents) 83.4 96.5
Headline earnings per share (cents) 84.3 96.5
Fully diluted earnings per share (cents) 83.3 96.4
Diluted headline earnings per share (cents) 84.2 96.4
Distribution per share (cents) 84.1 88.1
Weighted average number of shares in issue 89 636 854 109 327 388
Diluted weighted average number of shares in issue 89 687 554 109 504 088
Number of shares in issue at period-end 109 327 388 109 327 388
Scenario 2
Year ending Year ending
28 February 2015 29 February 2016
R’000 R’000
Basic earnings per share (cents) 62.0 68.1
Headline earnings per share (cents) 62.6 68.1
Fully diluted earnings per share (cents) 62.0 67.9
Diluted headline earnings per share (cents) 62.5 67.9
Distribution per share (cents) 66.3 59.6
Weighted average number of shares in issue 89 636 854 109 327 388
Diluted weighted average number of shares in issue 89 687 554 109 504 088
Number of shares in issue at period-end 109 327 388 109 327 388
The figures set out above are extracted from detailed forecasts for the year ending 28 February 2015 and
28 February 2016 and have been reported on by the independent reporting accountant Moore Stephens BKV
Inc. The detailed forecasts, the independent reporting accountant’s report on the detailed forecast and the
assumptions on which the detailed forecasts are based, are set out in the pre-listing statement.
10. Details of the private placement
The company is undertaking a capital raising by way of a private placement to invited investors to subscribe for
between 40 000 000 and 65 000 000 private placement shares at an indicative issue price of R10.00 per share.
Applications must be for a minimum subscription of R1 000 000 per investor acting as principal.
The private placement will not be underwritten.
11. Purposes of the private placement
The main purposes of the private placement and the listing are to:
- provide investors, both institutional and private, with an opportunity to participate over the long-term in the
income streams and future capital growth of the company;
- obtain a spread of investors in order to enhance the liquidity and tradability of the shares;
- raise between R400 million and R650 million to be used as outlined in paragraph 14 below;
- provide the company with access to a central trading facility thereby providing liquidity to shareholders;
- provide the company with a platform to raise funding to pursue growth and investment opportunities in the
future; and
- enhance the public profile and general public awareness of Equites.
The private placement is open to invited investors only.
The following parties may not participate in the private placement:
- any person who may not lawfully participate in the private placement; and/or
- any investor who has not been invited to participate; and/or
- any person acting on behalf of a minor or deceased estate.
The private placement shares will be allotted by the board of Equites in its discretion and subject to the
provisions of the memorandum of incorporation of Equites and will rank pari passu in all respects including
distributions, with all existing issued shares in the company.
There are no convertibility or redemption provisions relating to any Equites shares.
The private placement shares will only be issued in dematerialised form. No certificated private placement
shares will be issued.
No fractions of private placement shares will be offered in terms of the private placement.
12. Salient dates and times
2014
Opening date of the private placement (09:00) Monday, 9 June
Closing date of the private placement (16:00) Tuesday, 10 June
Results of the private placement released on SENS on Wednesday, 11 June
Notification of allotments to successful invited investors Wednesday, 11 June
Results of the private placement published in the press on Thursday, 12 June
Listing of shares and the commencement of trading on the JSE (09:00) on Wednesday, 18 June
Accounts at CSDP or broker updated and debited in respect of dematerialised Wednesday, 18 June
shareholders
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 Invited 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.
3 CSDPs effect payment on a delivery-versus-payment basis.
13. Pre-commitments
The following persons have committed to subscribe for an aggregate of R90 597 960 worth of Equites shares at
the indicative issue price of R10.00 per share.
Name of investor Number of shares
Anke & Sebastian Family Trust (of which Johnny Cullum is a beneficiary) 791 846
Kevin Dreyer 666 951
Von Klopmann Family Trust (of which Alex von Klopmann is a beneficiary) 783 888
African Monarch Investments 710 Proprietary Limited 598 357
Gamlan Investments Proprietary Limited (in which Giancarlo Lanfranchi has a 1 918 612
beneficial interest)
Swish 11 Proprietary Limited (in which Giancarlo Lanfranchi has a beneficial interest) 2 257 682
Chiluan Holding Proprietary Limited (in which Andrea Taverna-Turisan has a beneficial 2 042 460
interest)
Total 9 059 796
14. Application of proceeds
Assuming that R600 million is raised in terms of the private placement at an issue price of R10.00 per private
placement share, it is anticipated that the proceeds will be applied as follows:
- R584.4 million will be used to partly finance the acquisitions and settle interest-bearing debt originating
from the acquisitions; and
- R15.6 million will be used to defray the preliminary and issue expenses dealt with in paragraph 40 of the
pre-listing statement.
15. Conditions to which the private placement and the listing are subject:
- the achievement of a public spread of shareholders acceptable to the JSE, being a minimum of not less than
20% of the issued share capital of the company being held by the public; and
- a minimum amount of R400 000 000 being raised in terms of the private placement.
If the conditions precedent fail, the private placement and any acceptance thereof shall not be of any force or
effect and no person shall have claim whatsoever against Equites or any other person as a result of the failure of
any condition.
16. Availability of the pre-listing statement and the investor presentation
A copy of the document presented to invited investors (“investor presentation”) is available on the company’s
website: www.equites.co.za.
The investor presentation contains no material or significant information over and above that contained in the
pre-listing statement.
Copies of the pre-listing statement may be obtained between 08:30 and 17:00 on business days from Friday,
6 June 2014 to Thursday, 19 June 2014 at the following places:
- Equites Property Fund Limited
31 Brickfield Road, East Parking, Level 4, Upper Eastside, Woodstock, 7925.
- Java Capital (Proprietary) Limited
2 Arnold Road, Rosebank, Johannesburg, 2196.
- Link Market Services South Africa (Proprietary) Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, Johannesburg, 2001.
Corporate advisor, sponsor and bookrunner
Java Capital
Independent transaction sponsor
Deloitte
Independent reporting accountants and auditors
Moore Stephens
Attorneys
DLA Cliffe Decker Hofmeyr
6 June 2014
Date: 06/06/2014 04:12:00 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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