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Proposed Acquisition Of An Offshore Light Industrial And Logistics Property Portfolio
ACCELERATE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2005/015057/06)
Share code: APF ISIN: ZAE000185815
(“APF” or the “Company”)
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OR ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF
APPLICABLE LAW OR REGULATION
ANNOUNCEMENT REGARDING THE PROPOSED ACQUISITION BY APF OF AN
OFFSHORE LIGHT INDUSTRIAL AND LOGISTICS PROPERTY PORTFOLIO
1. INTRODUCTION
Shareholders are advised that the Company, through its subsidiary, Accelerate Property
Fund Europe B.V. (“APFE”), has entered into binding transaction agreements to acquire a
portfolio of five single-tenanted, long-lease, light industrial and logistics properties located
in Poland (the “Properties”). The purchase is being effected through the acquisition of 100%
of the issued share capital of three special purpose vehicles (“SPVs”) for an aggregate
purchase consideration of €41.9 million, inclusive of transaction costs (equivalent to
approximately ZAR702.4 million)1 (the “Purchase Consideration”) (the “Transaction”). The
Properties generate net operating income of approximately €2.7 million.
The Properties comprise of industrial and logistics facilities which are either newly
constructed or were recently developed by Panattoni Development Company Inc., an
international real estate developer specialising in industrial real estate in Europe and the
United States of America.
The Transaction is expected to be accretive to APF’s current forward distribution yield
based on the last closing clean price for the Company’s shares.
2. RATIONALE FOR THE TRANSACTION
The Company considers the acquisition of the Properties to be complementary to its
existing investment portfolio in Central and Eastern Europe (“CEE”) and to be in line with
its stated strategy of:
- investing in CEE in euro or euro-linked real estate;
- developing or acquiring real estate that is underpinned by a defined investment
philosophy, being long-term, single-tenanted net leased properties that are strategic
to blue-chip multinational or large regional tenants; and
- focusing on properties located in countries that meet defined minimum investment
criteria and that are considered core markets to such tenants.
Investing in the Properties provides APF shareholders with exposure to:
- long-term euro-denominated income, with a weighted average unexpired lease term
(“WAULT”) of 13.52 years;
- financially strong tenants, backed by parent company guarantees;
- highly predictable euro returns with annual upward only rental growth linked to
European CPI; and
Exchange rate of EURZAR16.75 as at 17 November 2017
- greater geographic, sectoral and tenant diversification relative to APF’s existing
European single tenant, long-term lease portfolio.
Poland is an attractive investment destination for APF due to a range of positive underlying
economic and geographic fundamentals which include:
- rising real GDP growth and real private consumption;
- growing manufacturing and logistics sector benefiting from lower operating costs;
and
- prime location with good infrastructure and access to neighbouring established and
new markets.
As the largest economy in CEE, the country attracts a significant amount of foreign direct
investment and is considered the most liquid and one of the fastest growing economies in the
region.
Michael Georgiou, Chief Executive Officer of the Company, commented:
"We are very excited about this acquisition of five new, high-quality, light industrial and
logistics assets in Poland, the largest economy in Central and Eastern Europe. This
portfolio complements our current bespoke offshore strategy to invest in long-term single-
tenant net leased properties that are strategic to blue-chip multinational or large regional
tenants in this region. The acquisition increases our presence in Europe with assets that
provide long-term Euro denominated income streams backed by high quality tenants”
3. ACCELERATE EUROPE
The Transaction is being concluded through the Company’s subsidiary, APFE, which is
incorporated and domiciled in the Netherlands. APFE continues to be managed by an
experienced local management team with significant local knowledge, experience,
networks, relationships, deal flow and presence in the region.
4. KEY TRANSACTION AND FUNDING TERMS
Subject to the fulfilment of the conditions precedent contemplated in paragraph 5 below,
APFE will acquire the portfolio through the acquisition of three SPVs which in turn will hold
the Properties.
The effective date for the Transaction will be the date on which the last of the conditions
precedent are fulfilled, which is expected to be in or around December 2017 A detailed
presentation can be found on APF’s website www.acceleratepf.co.za
The Purchase Consideration for the three SPVs is subject to an appropriate working capital
adjustment at closing which is expected to be immaterial.
The Purchase Consideration is expected to be fully settled in cash through a combination
of non-recourse euro-denominated debt funding against the portfolio, and equity.
In accordance with paragraph 10.21 to Schedule 10 of the Listings Requirements of the
JSE Limited (“JSE”), APF will ensure that no provisions contained in the Memorandum of
Incorporation’s of either of the SPV’s will frustrate APF in any way from compliance with its
obligations in terms of the JSE Listings Requirements.
5. CONDITIONS PRECEDENT
The closing of the Transaction is subject to customary conditions precedent, but not limited
to the following material conditions:
- all regulatory approvals required for the implementation of the Transaction;
- the transfer of all complete properties to APFE;
- financing being finalised on terms acceptable to APF; and
- other necessary consents and approvals customary for a Transaction of this nature.
The Transaction will not become effective until, and unless, all the closing conditions are
satisfied in accordance with Transaction documents.
6. INFORMATION RELATING TO THE INITIAL PORTFOLIO
The portfolio includes five light industrial and logistics warehouses tenanted by and with
parent guarantees from:
Benteler Automotive Poland Sp. z o. o. / Benteler International Aktiengesellschaft
Schillerstraf1e,
- Kongsberg Automotive Poland Sp. z o. o. / Kongsberg Automotive ASA,
- STS Acoustics Poland Sp. z o. o. / STS Acoustics S.p.A. and
- Sanden Manufacturing Poland Sp. z o. o. / Sanden International Europe Ltd
The Properties have a WAULT of 13.52 years with no asset having a lease of less than 11
years. The Properties are characterised by strong locations with good road access,
exceptional visibility and are situated in established strategic manufacturing nodes within
Poland.
The details of the Properties including location, gross lettable area (“GLA”), weighted
average net rent, net operating income, remaining lease term and independent valuation
per property are as follows:
Weighted Remaining
Property / Tenant Net rent * Independent
Location GLA (m2) average net lease term
(€) valuation (€)
rent per m2 (years)
Benteler Automotive Poland Sp. z o. o. Poland (Wrze?nia) 5,363 52.30 280,479 11.8 3,998,000
STS Acoustics Poland Sp. z o. o. Poland (Mi?dzyrzecz) 8,919 43.06 384,060 11.0 5,024,000
Sanden Manufacturing Poland Sp. z o. o. Poland (Polkowice) 6,527 62.72 409,364 11.1 4,889,000
Kongsberg Automotive Poland Sp. z o. o. Poland (Koluszki) 16,981 46.92 796,821 14.9 12,850,000
Kongsberg Automotive Poland Sp. z o. o. Poland (Brze?? Kujawski) 16,700 52.48 876,350 15.0 14,000,000
Total 54,490 50.41 2,747,074 40,761,000
* Net rent is reported on an IFRS basis in accordance with APF’s accounting policies and has been annualised for FY2018 based on average annual upward only rental
escalations in line with European CPI. All utility charges, insurance and facility management costs are either fully recoverable or borne directly by the tenants. The net rent is
reflective of the net operating profit of the properties. The net rent has not been reviewed or audited by an independent reporting accountant.
The purchase consideration of the portfolio amounts to EUR40,197,012 (ZAR673,299,9442) excluding transaction cost, representing a 3.4%
discount to the independent portfolio valuation (inclusive of a 2% portfolio premium). The purchase consideration may be increased by
EUR500,000 (ZAR8,375,0002) if the new proposed amendments to the Polish taxation legislation is not signed into law by the president by 31
December 2018. The proposed amendments have been approved by the Polish parliament and is awaiting imminent ratification by the
president.
The portfolio is expected to deliver a levered Euro yield of 9.12% and a minimum initial ZAR yield of at least 13% by way of a cross currency
swap of 23% of the gross transaction value.
Exchange rate of EURZAR16.75 as at 17 November 2017
7. WARRANTIES
The sellers have provided warranties and indemnities to APF that are standard for a
transaction of this nature.
8. VALUATION
An independent valuation of the Properties as at 29 September 2017 was undertaken by
CBRE Sp. z o.o., an independent external valuer, prepared in accordance with the Royal
Institution of Chartered Surveyors RICS Valuation – Global Standards 2017. The
independent valuation of the Properties calculated was €40,761,000 excluding any portfolio
premium as applicable.
This independent valuation supported the determination by the board of directors of the
Company (the “Board”) that the Purchase Consideration is the fair market value for the
Property Portfolio. The Board is not independent and its members are not registered as
professional valuers or as professional associate valuers in terms of the Property Valuers
Profession Act, No 47 of 2000.
9. CATEGORISATION OF THE TRANSACTION
The Transaction is classified as a Category 2 transaction for APF in terms of the Listings
Requirements of the JSE.
Johannesburg
20 November 2017
Investment Bank, Corporate Advisor and Transaction Sponsor to APF
The Standard Bank of South Africa Limited
Legal Advisors to APF
Linklaters C. Wi?niewski, Warsaw office of Linklaters LLP
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this announcement may be considered forward-looking. Although APF
believes that the expectations reflected in any such forward-looking statements relating to the
Transaction are reasonable. The information has not been reviewed or reported on by the
reporting accountants and auditors and no assurance can be given by APF that such
expectations will prove to be correct. APF does not undertake any obligation to publicly update
or revise any of the information given in this announcement that may be deemed to be forward-
looking.
DISCLAIMERS
The release, publication or distribution of this announcement in certain jurisdictions may be
restricted by law and therefore persons in such jurisdictions into which this announcement is
released, published or distributed should inform themselves about and observe such
restrictions.
This announcement is not an offer for the sale of securities. The securities discussed herein
have not been and will not be registered under the US Securities Act of 1933 (the “US
Securities Act”), or under any securities laws of any state or other jurisdiction of the United
States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or
delivered, directly or indirectly, within the United States absent an exemption from, or in a
transaction not subject to, the registration requirements of the US Securities Act and in
compliance with any applicable securities laws of any state or other jurisdiction of the United
States. The Company does not intend to register any part of the in the United States.
THIS ANNOUNCEMENT IS NOT TO BE FORWARDED OR DISTRIBUTED TO ANY OTHER
PERSON AND IS NOT TO BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY
FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS ANNOUNCEMENT IN
WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE
MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS
OF OTHER JURISDICTIONS. YOU MAY NOT RELY ON THE INFORMATION HEREIN.
No representation or warranty, express or implied, is made by Standard Bank as to the
accuracy, completeness or verification of the information set forth in this Announcement, and
nothing contained in this Announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the future. Standard Bank assumes
no responsibility for its accuracy, completeness or verification and, accordingly, disclaim, to
the fullest extent permitted by applicable law, any and all liability which they might otherwise
be found to have in respect of this Announcement or any such statement.
Date: 20/11/2017 10:11:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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