INGENUITY PROPERTY INVESTMENTS LIMITED - Announcement regarding the disposal of Newspaper House

Release Date: 22/08/2018 15:25
Code(s): ING
 
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Announcement regarding the disposal of Newspaper House

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 NEWSPAPER HOUSE

1. Introduction

   Ingenuity shareholders are advised that the Company has entered into an agreement of sale with
   Apollon Property Fund Proprietary Limited (the “Purchaser”), in terms of which Ingenuity will
   dispose of:

   1.1.   the rental enterprise which includes the property known as “Newspaper House”, being Erf
          9420, Cape Town situated at 122 St Georges Street, Cape Town, Western Cape Province
          (the “Property”); and

   1.2.   all the Company’s right, title and interest in and to the agreements of lease entered into
          between Ingenuity and certain lessees in respect of the Property,

   (the “Disposal”).

   The Disposal will become effective on date of transfer of the Property into the name of the
   Purchaser which shall not be before 1 January 2019 or such earlier date as may be agreed in
   writing between Ingenuity and the Purchaser (the “Transfer Date”), provided that the conditions
   precedent set out in paragraph 5 below have been fulfilled or waived and the Guarantee referred
   to in paragraph 3.2 below has been provided.

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 Property will provide Ingenuity with the means to reduce debt, strengthen its balance sheet
   and provide additional means to unlock some further development initiatives that it has identified
   and held for some time. This will further enhance Ingenuity’s focus to create shareholder value
   through development and trading opportunities.

3. Consideration for the Disposal

   3.1.   The total consideration for the Disposal is R218 million (the “Purchase Consideration”),
          which amount shall be payable on the Transfer Date in full.

   3.2.   The Purchase Consideration will be secured by a guarantee/s in favour of Ingenuity (the
          “Guarantee”), which Guarantee will be issued by a financial institution approved by
          Ingenuity and in a form acceptable to Ingenuity by no later than 20 business days from date
          of fulfilment of the conditions precedent set out in paragraph 5 below.

   3.3.   Ingenuity will further provide the Purchaser with a rental guarantee of R3 million.

4. Application of sale proceeds

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

5. Conditions precedent

    The Disposal is subject to the following conditions precedent:

    5.1.      by no later than 20 business days from the signature of the Agreement (“Signature Date”),
              a due diligence investigation (“Due Diligence”) being conducted by the Purchaser and the
              outcome of the Due Diligence being to the Purchaser’s sole and absolute satisfaction in its
              unfettered discretion;

    5.2.      to the extent required, by no later than 90 days from Signature Date, the Competition
              Authorities unconditionally approving in writing the Disposal as required by the
              Competition Act;

    5.3.      by no later than 7 business days from Signature Date, Ingenuity delivering to the Purchaser
              written resolutions of the board of directors of Ingenuity unconditionally approving the
              terms and conditions of the Agreement; and

    5.4.      the Purchaser obtaining approval in principle for mortgage bond finance from a registered
              financial institution within 20 business days from the conclusion of the Due Diligence
              referred to in paragraph 5.1 above.

    The conditions precedent referred to above may be waived by either Ingenuity or the Purchaser
    at their discretion, as the case may be, except for the condition precedent referred to in paragraph
    5.2 above which is of a regulatory nature.

6. Property specific information relating to the Property
                                                          Gross                  Weighted
                                                                  Single or                                  Value of
                                                        lettable                  average        Purchase
    Property         Location                 Sector                 multi-  gross rental                         the
                                                            area                            Consideration
                                                                   tenanted                                  Property
                                                              m2                   per m2              Rm
                                                                                                               Rm (1)
                                                                                        R
    Newspaper        122 St Georges Street  Offices &     13 923      Multi           125             218         207
    House            Cape Town                 retail
                     Western Cape Province

    1      The Property was valued by the directors of the Company as at 28 February 2018 using the
           capitalisation of rental method.

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

    The value of the net asset that is the subject of the Disposal is R207 million as extracted from
    Ingenuity’s unaudited condensed consolidated interim results for the six months ended 28
    February 2018 and the net property income attributable to the net asset that is the subject of the
    Disposal is R17.657 million (net property income is calculated before tax). The resultant effective
    initial yield based on the Purchase Consideration is 8.01%.

    The net property income is based on a projection provided for the 12 months ended 31 August
    2019. The directors of Ingenuity are satisfied with the quality of the unpublished management
    accounts for the 12 months ended 31 August 2019, from which the projection was extracted.
    Shareholders are advised that this information has been sourced from Ingenuity’s unaudited,
    unpublished management accounts.

8.  Categorisation of the Disposal

    The Disposal constitutes a Category 2 transaction in terms of the JSE Limited Listings Requirements
    and no shareholder approval is required.


22 August 2018
Cape Town

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

Legal Advisor
Webber Wentzel

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