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INGENUITY PROPERTY INVESTMENTS LIMITED - Announcement regarding the disposal of properties and withdrawal of cautionary announcement

Release Date: 20/04/2018 15:00
Code(s): ING     PDF:  
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Announcement regarding the disposal of properties and withdrawal of cautionary announcement

INGENUITY PROPERTY INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2000/018084/06)
ISIN: ZAE000127411 JSE share code: ING
(“Ingenuity” or the “Company”)

ANNOUNCEMENT REGARDING THE DISPOSAL OF PROPERTIES AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT

1. Introduction

    Ingenuity shareholders are advised that the Company has entered into a sale of letting
    enterprises/properties agreement (the “Agreement”) with Sanlam Life Insurance Limited (the
    “Purchaser”), in terms of which Ingenuity will dispose of the following properties:

    •    Aurecon East, situated at 1 Century City Drive, Waterford Precinct, Century City, Cape Town,
         being Erf number 6952, Montague Gardens, Cape Town;

    •    Aurecon West, situated at 5 Century City Drive, Waterford Precinct, Century City, Cape Town,
         being Erf number 7054, Montague Gardens, Cape Town;

    •    The Gateway, being Erf number 6569, Montague Gardens, Cape Town;

    •    Mazars House, situated at Corner Rialto Road and Century City Boulevard, Century City, Cape
         Town, being Section Number 2 in the scheme known as Crystal Towers; and

    •    Virgin Active, situated at Century City Boulevard, Century City, Cape Town, being Erf number
         6563, Montague Gardens, Cape Town,

    (collectively the “Properties”) (the “Disposal”).

    The Disposal will become effective on date of transfer of the Properties into the name of the
    Purchaser which shall be 1 September 2018 or as soon as is reasonable and practicable thereafter,
    provided that the conditions precedent set out in paragraph 5 below have been fulfilled or waived
    (the “Transfer Date”).

2. Rationale for the Disposal

    Ingenuity’s strategy is focused on maximising net asset value and growth to shareholders.
    Periodically Ingenuity reviews its asset allocation and the opportunity to realise value. The sale of
    the Properties will provide Ingenuity with the means to initially materially reduce debt, strengthen
    its balance sheet and provide additional means to unlock some further development initiatives
    that Ingenuity has identified and held in the Company for some time. This will further enhance
    Ingenuity’s focus to create shareholder value through development and trading opportunities.

3. Consideration for the Disposal

    The total consideration for the Disposal is R949.2 million (the “Purchase Consideration”) and will
    be allocated as follows:

    •    Aurecon East – R265 142 022;
    •    Aurecon West – R132 203 771;
    •    The Gateway – R233 839 454;
    •    Mazars House – R195 190 761; and
    •    Virgin Active – R122 823 992.
   
   The Purchase Consideration has been determined on the basis that transfer of the Properties will
   be effected on 1 September 2018. If for any reason whatsoever, transfer of the Properties takes
   place after 1 September 2018, the Purchase Consideration will automatically be increased by an
   amount equal to 7% thereof from 1 September 2018, compounded daily up to and including the
   Transfer Date.

   The Purchase Consideration will be settled in cash and payable on the Transfer Date.

4. Application of sale proceeds

   The Purchase Consideration will be used to reduce borrowings and provide equity through access
   facilities for investment and development opportunities when they arise.

5. Conditions precedent

   The Disposal is subject to the following conditions precedent:

   5.1. Ingenuity procuring that at least 51% of its shareholders provide written irrevocable
        undertakings to vote in favour of the conclusion and implementation of the Agreement
        where such approval is required within 21 days of the date of signature of the Agreement
        (the “Signature Date”);

   5.2. Ingenuity and the current tenant, Virgin Active South Africa Proprietary Limited, concluding
        a renewal of the existing lease agreement in respect of the Virgin Active property on terms
        and conditions agreed with the Purchaser;

   5.3. Competition Authority approval by no later than 90 days after Ingenuity board approval,
        which board approval was granted on 19 April 2018 and which time period may be extended
        by written agreement; and

   5.4. Ingenuity shareholders approving the Disposal as may be required by the JSE Limited (“JSE”)
        Listings Requirements within 120 days from the Signature Date, which time period may be
        extended by written agreement.

6. Property specific information relating to the Properties

                                                     Gross                Weighted
                                                   lettable  Single or    average                      Value of
                                                     area      multi-   gross rental      Purchase       the
    Property      Location                 Sector     m2     tenanted      per m2      Consideration  Properties
                                                                             R              Rm          Rm (1)
    Aurecon East  1 Century City Drive,   Offices    7 124    Single      223 and           265.1       265.1
                  Waterford Precinct,                                   1 057 per
                  Century City, Cape                                          bay
                  Town

    Aurecon West  5 Century City Drive,   Offices    3 307    Single      211 and           132.2       132.2
                  Waterford Precinct,                                   1 097 per
                  Century City, Cape                                          bay
                  Town


    The Gateway   Erf 6569, Montague      Offices    8 355     Multi      213 and           233.9       233.9
                  Gardens, Cape Town                                    1 093 per
                                                                              bay

    Mazars House  Corner Rialto Road and  Offices    6 281    Single      197 and           195.2       195.2
                  Century City                                          1 293 per
                  Boulevard, Century                                          bay
                  City, Cape Town

    Virgin Active Century City Boulevard   Gym       4 053    Single      249 and           122.8       122.8
                  Century City, Cape                                  900 per bay
                  Town

                                                    29 120                                  949.2       949.2

    1    The value of the Properties has been derived by the directors of the Company using the capitalisation
         of rental method. An independent valuation of the Properties will be performed as part of a circular
         referred to in paragraph 8 below.

7. Value of the net assets and profits attributable to the net assets of the Disposal

    The value of the net assets that are the subject of the Disposal is R949.2 million and the net
    property income attributable to the net assets that are the subject of the Disposal are R74.5
    million (net property income is calculated before tax). The resultant effective initial yield is 7.85%.
    The net property income is based on projections provided for the 12 months ended 28 February
    2019.

    The resultant net profit on the Disposal, before costs, amounts to R146.1 million.

8. Categorisation of the Disposal

    The Disposal constitutes a Category 1 transaction in terms of the JSE Listings Requirements.
    Accordingly, a circular containing full details of the Disposal will be distributed to Ingenuity
    shareholders in due course.

9. Withdrawal of cautionary announcement

    Ingenuity shareholders are advised that the cautionary announcement released on 29 March 2018
    has now been withdrawn and that caution is no longer required to be exercised when dealing in
    Ingenuity’s shares.


20 April 2018
Cape Town

Investment bank, Corporate Advisor and Sponsor
Nedbank Corporate and Investment Banking

Legal advisors to Ingenuity
Webber Wentzel

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