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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
Date: 22/08/2018 03:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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