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ACSION LIMITED - Abridged Pre-listing Statement of Acsion Limited

Release Date: 25/11/2014 09:27
Code(s): ACS     PDF:  
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Abridged Pre-listing Statement of Acsion Limited

ACSION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2014/182931/06)
Share code: ACS ISIN: ZAE000198289
(“Acsion” or “the Company”)

NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES OF AMERICA, CANADA, JAPAN OR AUSTRALIA OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL
TO DO SO

ABRIDGED PRE-LISTING STATEMENT

This Abridged Pre-listing Statement relates to the listing of the Shares of Acsion on the “Real Estate – Real Estate
Holding and Development” sector of the main board of the securities exchange operated by the JSE with effect from the
commencement of business on Tuesday, 9 December 2014 and a private placement by way of an offer for subscription of
up to 19 801 980 no par value ordinary shares in Acsion (“Shares”) for an aggregate maximum subscription price of R200
000 000. Additional information regarding the Listing and the Private Placing and the definitions of the capitalized terms
used in this Abridged Pre-listing Statement is contained in the full Pre-listing Statement issued by Acsion on Tuesday, 25
November 2014 (“the Pre-listing Statement”).

This Abridged Pre-listing Statement does not constitute an offer to the public for the sale of or subscription for, or the
solicitation of an offer to buy or subscribe for shares in the Company, but is issued in compliance with the JSE Listing
Requirements for the purpose of providing information to the public with regards to Acsion and to provide information to
Qualifying Investors with regards to, the Listing and the Private Placing.

The JSE has granted Acsion a listing of up to 414 761 956 Shares in the “Real Estate – Real Estate Holding and
Development” sector of the JSE, under the abbreviated name “Acsion”, share code “ACS” and ISIN ZAE000198289. The
Listing is subject to Acsion confirming to the JSE that the Restructure Transaction has been implemented, which is
expected to occur shortly before the Listing date.

This Abridged Pre-listing Statement highlights selected information from the Pre-listing Statement. It is not complete and
does not contain all of the information that readers of the Abridged Pre-listing Statement and/or the Pre-listing Statement
should consider before investing in or subscribing for Shares. Investors should read the Pre-listing Statement carefully in
its entirety.


1. HISTORY, NATURE AND STRUCTURE OF BUSINESS

2.1. History and nature of the business

Acsion is a specialist property developer and owner, with a full development team and a significant development focus,
founded by Mr. Kiriakos Anastasiadis approximately seventeen years ago. Through ingenuity, vision, value engineering
and effective management, the Group has expanded into a successful property developer, property manager and
investment property holding Group.

Acsion aims to deliver long term NAV growth for its shareholders. Its unique ability to drive long term capital growth is
illustrated by the superior capital returns achieved by the Group over its seventeen year history. This strategy is
underpinned by the identification of land opportunities for development, and the subsequent development, tenanting, and
ownership of its entire Developed Investment Properties, independently valued at R3 246 300 000. The extraordinary
growth of the Developed Investment Properties portfolio is a direct result of the deep and unparalleled understanding of
the fully resourced internal team with in depth knowledge of all aspects of property development across the property
development lifecycle. This intricate knowledge includes the identification and securing of large development
opportunities, design, project management, capital raising, value engineering, leasing, asset management and property
management of developed assets across the Group’s management team and personnel.

The Group’s strength lies in its ability to leverage off in-house planning, development, project and construction
management, cost management, value engineering and an internal leasing function, to maximise cost efficiencies and
maintain a hands on approach to the complete development and property management process. These functions are
often outsourced by other property developers.

As a specialist property developer, manager and owner, Acsion offers its shareholders access to superior annual net
asset value growth through its highly experienced management team via:
i.   the ownership and development of commercially viable property projects in a cost efficient manner, with a target
     first year development yield of 15% - 20%;
ii.  leasing as well as property and asset management of developed properties for rental income;
iii. the sourcing, assessment and, if commercially viable, acquisition and ownership of strategic land opportunities for
     further development;
iv.  the further development of Developed Investment Properties; and
v.   to a lesser extent, the acquisition of existing yield producing property assets.

In some cases, and in order to maximise value for Acsion and its shareholders, some property developments are
undertaken for sale.

Through its development activities, Acsion is able to unlock development profits and thereafter generate annuity income
and further capital growth for its shareholders through the active and continued management of its Developed Investment
Properties portfolio for rental income.

Acsion has achieved and aims to continue to achieve superior returns by focusing on sustainable long term capital (NAV)
growth through the ongoing reinvestment of capital profits into viable property life cycle opportunities (property
development, tenanting, property and asset management). The generation of capital profits and NAV uplift underpins
Acsion’s business strategy and differentiates Acsion from other JSE listed property entities or REITs which focus on the
distribution of net rental income to shareholders. The Company will accordingly not seek REIT status on Listing, as the
REIT regulatory regime is intended for companies focused on income distribution, rather than capital growth.

In line with its business strategy, as outlined above, Acsion does not intend to pay a dividend until its directors are of the
opinion that there are insufficient development opportunities in which to reinvest the profits generated by the Group’s
activities. At such time, Acsion may consider various options in order to ensure that value is returned to its shareholders in
the most efficient manner.

Accordingly, Qualifying Investors will gain access to the following distinct value streams generated by the Group:

i.            the existing, internally developed Developed Investment Properties;
ii.           development profits to be realised through the Current Development Assets;
iii.          access to potential Further Development Opportunities and future development profits; and
iv.           internal property and asset management services.


Developed Investment Properties

Acsion’s existing Developed Investment Properties comprise six well-established, strategically located properties across
South Africa, including two prominent Regional Shopping Centres. All properties held by Acsion have been internally
developed. Developments comprise greenfield developments of land or brownfield developments through upgrades,
additions, refurbishments, or other improvements to existing buildings. The existing Developed Investment Properties
have been independently valued at R3 246 300 000 and comprise a total GLA of 188 416m², split as follows:
•          retail:                                  97%
•          light industrial / commercial:            3%

Acsion’s existing Developed Investment Properties provide stable income and balance sheet strength for the Group to
leverage in order to obtain funding to pursue high-growth development opportunities, both for the Current Development
Assets, and Further Development Opportunities, and maintain adequate and responsible gearing ratios and capital
buffers.

Current Development Assets

The Current Development Assets comprise seven secured development opportunities, which are anticipated to comprise
119 416m² of GLA once completed. It is envisioned that the completion of the Current Development Assets will not only
add scale to Acsion’s Developed Investment Properties portfolio, but also provide sectorial diversification (into residential
and student accommodation), and geographic diversification, within South Africa.

Development activities have already begun on a portion of the Current Development Assets, and the full development
profits arising from the Current Development Assets are anticipated to be realised within three years after Listing.

Further Development Opportunities
Acsion is a highly successful property developer which has developed all of the existing Developed Investment Properties
in-house and is also developing all of the Current Development Assets in-house. Upon Listing, it will be a fully integrated
property development company with a significant development focus. Acsion shareholders are positioned to access and
participate in the opportunities and deal flow generated by this dynamic developer, which are expected to deliver capital
growth as well as sectorally and geographically diversify and bolster the size and quality of Acsion’s existing Developed
Investment Properties and Current Development Asset portfolio.

Acsion is continuously evaluating a diverse array of new development opportunities and is in advanced discussions in
respect of certain development projects to deliver further development profits and NAV uplift for shareholders. Details in
relation to most of these projects are not contained in this Abridged Pre-listing Statement or the Pre-listing Statement and
will be communicated to shareholders in due course once such projects are more certain to proceed.


2. KEY INVESTMENT HIGHLIGHTS

•           access to dynamic developer, and ability to participate in development profits;
•           fully resourced internal team with an in depth knowledge of all aspects of property development across its
            lifestyle;
•           well positioned to deliver capital and income growth through strong existing tenant covenants;
•           significant pipeline of secured NAV enhancing development opportunities;
•           significant exposure of the Development Investment Properties to the highly defensive retail sector;
•           high quality tenants with 89% by GLA being national tenants;
•           experienced management team with extensive property related experience;
•           established in-house property and asset management team;
•           low gearing of approximately 7% against Developed Investment Properties portfolio provides scope for
            sustained internally funded growth;
•           attractive weighted average lease expiry by GLA of 4.4 years across the portfolio.


3. FUTURE PROSPECTS AND STRATEGY

The long term strategy of Acsion is to drive NAV (capital) and income growth for its shareholders, by identifying and
investing in value creating development opportunities, and subsequently leasing and managing such properties over the
property life cycle, or where a value creation opportunity exists, selling the development opportunities or the developed
properties.

Acsion is well positioned to meet these objectives given the quality of the completed Developed Investment Properties
and Current Development Assets, the extensive experience of the internal property development, asset management and
property management teams, as well as strong, longstanding relationships with major national retailers, banks and
franchises, municipalities and land owners. Access to the Further Development Opportunities will also contribute to
Acsion’s income and capital growth in the future which opportunities, given its track record, are anticipated to continue to
deliver further capital growth to shareholders. At any one time, Acsion is reviewing an average of between 20 – 30
development opportunities at various stages of maturity.

As part of its strategy to bolster the defensive quality of its portfolio, Acsion has implemented measures to diversify into
the residential and commercial property sectors through proposed developments located in Walkraal in Limpopo province
(residential) as well as Hyde Park (upmarket residential) and Benmore (upmarket student accommodation and mixed-use)
in Sandton, Gauteng. Geographic diversification will be achieved outside of South Africa in partnership with experienced
and reputable local partners to pursue property development opportunities in Southern Africa (such as a retail
development in Maputo, Mozambique) as well as, through its network and founders’ heritage, explore South-Eastern
European development opportunities, which will also offer a Rand currency hedge to Acsion shareholders.

Through a listing on the JSE, Acsion is looking to establish a platform to accelerate the implementation of its Current
Development Assets and its ability to exploit Further Development Opportunities, focusing on the delivery of NAV uplift to
its shareholders. The Listing should also enable Acsion to access capital efficiently, and expand its investor base.
Post Listing, Acsion’s immediate strategy to achieve the above objectives is set out below:

      i.   the roll out and unlocking of the Current Development Assets over a three year period from Listing;
     ii.   sourcing and securing new developments that form part of the Further Development Opportunities; and
    iii.   delivering rental income and capital growth through continued ownership and management of existing Developed
           Investment Properties, and associated contractual rental escalations.
 It is envisaged that the strategy will provide Qualifying Investors with NAV uplift that is largely uncorrelated to traditional
 JSE REITs.

 In this context, Acsion offers Qualifying Investors direct exposure to a highly successful property developer, existing high
 quality retail centres with strong and stable income streams, and other attractively priced property development
 opportunities in both metropolitan and high growth areas of South Africa and Southern Africa and, potentially, South-
 Eastern Europe.


 4. RATIONALE FOR THE PRIVATE PLACING AND THE LISTING

   The main rationale for the Private Placing and the Listing is to:

     •   provide Qualifying Investors with access to Acsion’s existing Developed Investment Properties and the unique
         opportunity to participate over the long term in NAV uplift and capital growth of the Developed Investment
         Properties through the redevelopment and future expansion of property GLA by utilising current and unutilised
         bulk attached to the Developed Investment Properties;
     •   raise a portion of the capital required to progress the development of the Current Development Assets. The R200
         000 000 to be raised in terms of the Offer, along with additional borrowings against the Developed Investment
         Properties, will be used to finance the development and construction of the Current Development Assets and,
         when secured, Further Development Opportunities;
     •   accelerate Acsion’s ability to secure Further Development Opportunities;
     •   obtain an increased spread of shareholders to enhance the liquidity and tradability of the Shares;
     •   provide Acsion with access to a central trading facility thereby providing liquidity to Acsion shareholders;
     •   provide Acsion with access to capital markets and a platform to raise funding to pursue growth and investment
         opportunities in the future;
     •   access capital market funding in order to increase capacity and ability to pursue further development projects in
         an accelerated manner; and
     •   enhance the public profile and general awareness of Acsion.


 5. OVERVIEW OF INVESTMENT PROPERTIES

 5.1 DEVELOPED INVESTMENT PROPERTIES

 The Developed Investment Properties consists of six properties with a total GLA of 188 416m²:

                                                                                                       
                                                                                           Value / m²
                                                            Independent                     (excluding     Percentage of total
                                                                valuation        GLA      bulk, where        portfolio by value
Property Name                                                       (Rmil)        (m²)     applicable)                       (%)

Mall@Carnival                                                       1 525      72 338          21 082                       47.0

Mall@Reds                                                              820     53 423          15 349                       25.3

Mall@Emba                                                              419     24 477          17 118                       12.9

Mall@Lebo                                                              314     23 664          13 269                         9.7

Moreleta Square                                                        136      8 507          15 987                         4.2

Simarlo Rainbow                                                         32      6 007            5 327                        0.9
Total Developed Investment Properties                                 3 246   188 416           17 228                      100.0



 5.2 CURRENT DEVELOPMENT ASSETS

 The Current Development Assets comprise seven secured development opportunities, which are anticipated to comprise
 119 416m² of GLA once completed. It is envisioned that the completion of the Current Development Assets will not only
 add scale to Acsion’s Developed Investment Property portfolio, but also provide sectorial diversification (into residential
 and student accommodation), and geographic diversification, within South Africa.

 Development activities have already begun on a portion of the Current Development Assets, and the full development
 profits arising from the Current Development Assets are anticipated to be realised within three years after Listing and
 comprise the following developments:

 Developed for ownership
                      
     •   the 17 840m² Mall@Carnival phase III expansion in Brakpan Gauteng;
     •   approximately 1 hectare piece of land in Benmore, Sandton for student accommodation & mixed use residential
                                
         for which up to 70 000m² of development rights have been applied for;
                                       
     •   the Mall@Moutsiya, a 13 544m² greenfields retail development in Walkraal, Limpopo;
                                                  
     •   phase 1 of the Mall@Ruimte, a 16 925m² greenfields retail development in Monavoni, Gauteng;
                                                        
     •   phase 1 of the Commercial@Ruimte, a 15 000m² greenfields big box retail and specialised retail development in
         Monavoni, Gauteng;

 Developed or held for sale

     •   the Residential@Moutsiya, a low cost housing development held for sale in Walkraal, Limpopo; and
     •   the Hyde Park Terrace, 12 residential units and 27 residential land opportunities held for sale in Hyde Park,
         Gauteng.
     •

 6. DIRECTORS

  The overall direction, supervision and management of Acsion will be the responsibility of the board of directors.

  The full names, ages, capacities and business addresses of the Directors are set out in the table below:


Full name                           Age        Capacity                     Business address

David Green                          52        Independent non-             The Courtyard
                                               executive Chairman           Oxford Manor
                                                                            196 Oxford Road
                                                                            Illovo
                                                                            Johannesburg
                                                                            2196

Kiriakos Anastasiadis                61        Chief Executive Officer      Centre Management
                                               (Executive Director)         Mall@Reds Shopping Centre
                                                                            Cnr Hendrik Verwoerd & Rooihuiskraal Drive
                                                                            Rooihuiskraal Ext 15
                                                                            Centurion
                                                                            0149
Pieter Scholtz                       38        Chief Financial Officer      Centre Management
                                               (Executive Director)         Mall@Reds Shopping Centre
                                                                            Cnr Hendrik Verwoerd & Rooihuiskraal Drive
                                                                            Rooihuiskraal Ext 15
                                                                            Centurion
                                                                            0149
Phetole David Sekete                  60       Independent non-              555 Sakoane Street
                                               executive Director            Spruitview
                                                                             Germiston
                                                                             1932
Thabani Jali                          55       Independent non-              57 Grosvenor Road
                                               executive Director            Bryanston
                                                                             Sandton
                                                                             2021
Sonja Griesel                         53       Independent non-              2 Veldtuin Place
                                               executive Director            Morningside
                                                                             Sandton
                                                                             2057




 7. DETAILS OF PRIVATE PLACING


       Offer price range per Share                                                                           R10.10 – R10.80

       Number of Shares to be offered                                                                18 518 519 – 19 801 980

       Amount to be raised in terms of the Offer                                                                R200 000 000

        The    Private   Placing will be by way of an offer for subscription of up to
        19 801 980 Shares. The Private Placing is open only to Qualifying Investors.
        Should there be sufficient interest from Qualifying Investors, the Directors may, in consultation with the current
        (pre-Offer) shareholders of Acsion, at their discretion, undertake a Secondary Placement.
        The Offer and Listing are subject to Acsion confirming to the JSE that the Restructure Transaction has been
        implemented, which is expected to occur shortly before the Listing date. If Acsion does not confirm this, the
        Private Placing and any acceptance thereof, and the Listing shall not be of any force or effect and no person shall
        have any claim whatsoever against the Company or any other person as a result thereof.
        The Private Placing is for a Maximum Subscription Amount of R200 000 000.
        Subject to JSE approval, Acsion reserves the right at any time during the Private Placing and at its sole and
        absolute discretion to amend, deviate from or modify the Private Placing in the manner it thinks fit or to postpone,
        discontinue or terminate the Private Placing and the Listing or in the event of a Material Adverse Change, to
        postpone, discontinue or terminate the Private Placing and the Listing.

        All Shares are of the same class and will rank pari passu in all respects.
        It is estimated that the price for the Shares offered in the Private Placing will be between R10.10 and R10.80 per
        Share. The Private Placing price may however be outside of this price range. The Private Placing price will be
        payable in full in Rand without deduction or set-off.



 8. MAJOR AND CONTROLLING SHAREHOLDERS

 On incorporation of Acsion, the founding shareholder of the Company was Ioleni Trust which owned one issued Share.
 As at the Listing date, Kiriakos Anastasiadis, through Ioleni Trust and in his personal capacity, will directly and indirectly
 hold 297 834 823 Shares, and will be the controlling shareholder on the date of Listing, owning 72.0% of the issued
 Shares after the implementation of the Restructure Transaction, the issue of Staff Shares and the completion of the Offer,
 assuming that 18 518 519 Shares will be issued in terms of the Offer and that none of the existing shareholders take up
 any Offer Shares, or participate in the Secondary Placement.

 10. SALIENT FINANCIAL INFORMATION

 The table below sets out a summary of the forecasts for the Company for the 4 months ending 28 February 2015, and the
 period ended 29 February 2016.
REVIEWED FORECAST STATEMENTS OF COMPREHENSIVE INCOME OF ACSION

                                                       4 months ending          12 months ending


                                                             28-Feb-15                 29-Feb-16
                                                              (Rand)                    (Rand)
 Revenue                                                   144,368,299               448,165,290
 Rendering of services                                          32,000                     83,200
 Rental Income                                             106,269,100               334,630,195
 Interest received (trading)                                   214,127                    478,485
 Lease accrual                                               3,611,829                 2,173,138
 Utility recoveries                                         34,241,243               110,800,272



 Other income                                                1,952,252                 6,095,408
 Non-contractual rental income                                 963,683                 2,925,988
 Recoveries                                                    698,541                 2,167,818
 Other income                                                  245,228                    520,953
 Interest received                                              44,800                    480,649


 Expenses                                                  (66,113,965)            (191,973,302)
 Depreciation                                               (9,613,004)             (28,839,011)
 Rates and taxes                                            (9,994,713)             (32,083,553)
 Electricity                                               (21,433,029)             (70,910,233)
 Other                                                     (25,073,219)             (60,140,505)


 Operating profit                                           80,206,586               262,287,396
 Fair value adjustments                                               -              139,700,000
 Finance costs                                              (7,047,626)             (65,127,450)
 Profit before taxation                                     73,158,960               336,859,946
 Taxation (including deferred taxation)                    (27,966,279)             (77,683,004)
 Profit for the year                                        45,192,681               259,176,942




10. SHARE CAPITAL

The authorised and issued Shares on the date of Listing are anticipated to be as follows based on the assumption that, in
addition to the 394,959,976 Shares to be issued on or before Listing, 18 518 519 Shares will be issued in terms of the
Private Placing at an issue price of R10.80 per Share:


         Number of authorised Shares

         10 000 000 000 ordinary no par value Shares
         Number of issued shares

         413 478 495 ordinary no par value Shares


All of the authorised and issued Shares (including those placed in terms of the Offer) 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

Acsion was formed for the purpose of developing and investing in direct real estate, for the purposes of unlocking
development profits, as well as income generation and capital growth. The Group’s strategy of undertaking developments
as a means of realising sustainable long-term capital growth differentiates it from other JSE listed property entities that
focus on the distribution of rental income to shareholders. The Company will accordingly not seek REIT status on Listing,
as the REIT regulatory regime is intended for companies focused on income distribution, rather than capital growth.
As such, the Company does not intend to pay a dividend until the Board is of the opinion that there are insufficient
development opportunities in which to reinvest the profits generated by the Group’s activities. At such time, Acsion may
consider various options in order to ensure that value is returned to its shareholders in the most efficient manner.



12. SALIENT DATES AND TIMES

Opening date of the Private Placing (09h00)                                  Thursday, 20 November 2014

Last date for Qualifying Investors to submit their Application
Forms to Investec in order to be considered for the book build
and qualify for participation in the Private Placing (17h00)                    Friday, 28 November 2014

Date on which Qualifying Investors will be notified of the number
of Shares which they have been allocated in terms of the Private
Placing (12h00)                                                                 Monday, 1 December 2014

Last date for Qualifying Investors to make payment with respect
to their allocated Shares (12h00)                                              Monday, 8 December 2014

Allocated Shares issued to Qualifying Investors                                Tuesday, 9 December 2014

Shares listed on the JSE (09h00)                                               Tuesday,9 December 2014
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 Placing in
 the manner and cut-off time stipulated by their CSDP or broker.



13. COPIES OF THE PRE-LISTING STATEMENT



The Pre-listing Statement is available in English only. Copies of the Pre-listing Statement may be obtained during normal
business hours from Tuesday, 25 November 2014 from:

            •   Acsion Limited, Centre Management, Mall@Reds Shopping Centre, Cnr Hendrik Verwoerd &
                Rooihuiskraal Drive, Rooihuiskraal Ext 15, Centurion, South Africa
            •   Computershare Investor Services Proprietary Limited, Ground Floor, 70 Marshall Street, Johannesburg,
                2001;
            •   Investec Corporate Finance, a division of Investec Bank Limited, 2nd Floor, 100 Grayston Drive, Sandown,
                Sandton, 2196; and                                                                                 
           •    Acsion’s website www.acsionsa.co.za.



25 November 2014
Johannesburg

Corporate advisor, bookrunner and sponsor
Investec Bank Limited

Attorneys
Read Hope Phillips Thomas & Cadman Inc.

Independent reporting accountants and auditors
Ernst and Young Inc.


Independent Valuer
Peter Parfitt, Quadrant Properties Proprietary Limited

Communications Advisor
Instinctif Partners

Transfer Secretaries
Computershare Investor Services Proprietary Limited

Date: 25/11/2014 09:27:00 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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