27th May 2008 11:23
RNS Number : 2869V
South African Property Opps PLC
27 May 2008
27 May 2008
SOUTH AFRICAN PROPERTY OPPORTUNITIES PLC
("SAPRO" or the "Company")
SAPRO announces the Sandton Development, the Brakpan Development
and update on Imbonini Phase II Development
SAPRO today announces that it has:
- exchanged contracts for the acquisition of a 0.777 hectare strategic development site (the “Site”) in the heart of the Sandton CBD, northern Johannesburg, Gauteng (the “Sandton Development”)
- exchanged contracts for the acquisition of an investment comprising a 6.65 hectare prominent retail development site in Brakpan, Johannesburg (the “Brakpan Development”)
- agreed to take early transfer of the 77.5 hectare industrial Imbonini Phase II development (“Imbonini Phase II”) site.
As a result of these developments, total equity committed to our investment projects now stands at R975.6 million (£67.4 million). Of this, R513.2 million (£35.8 million) has been committed to acquiring SAPRO's share of the physical properties in the portfolio with the balance of R462.4 million (£31.6 million) invested or to be invested by way of mezzanine finance. Of this mezzanine finance, R109.7 million (£7.7 million) has already been deployed and the balance of R352.6 million (£23.9 million) will be invested alongside the debt finance that will be being secured to finance the development phase of each project once relevant permissions have been obtained.
Brian Myerson, a director of SAPRO, commented: "The Sandton deal is a major coup for SAPRO. Our site in Sandton, Johannesburg's - and therefore South Africa's - premier business centre offers excellent investment prospects. Subject to planning we intend to build up to 12,500 sqm of hotel space and up to 37,500 sqm of offices in the heart of this prime area of Johannesburg next to a major transport hub. Brakpan gives us further good spread into the commercial development sector and is also a well sited retail opportunity. These investments also form a milestone for SAPRO, as they mean the Company is now fully invested, well ahead of the time scales set out in connection with the May 2007 placing."
Sandton Development
The Sandton Development site is an existing sectional title residential estate consisting of 20 units, situated on a main arterial road in the centre of Sandton. The site is extremely well located, being approximately 250 metres from the Sandton Gautrain Station, the rapid-rail network currently being developed from Johannesburg to Pretoria and the OR Tambo International Airport.
Sandton Development investment highlights:
- The Sandton Development will be 79 per cent owned by SAPRO. The remaining 21 per cent will be held equally by Group 5, a well known listed property developer / contractor, and Barrow Construction (“Barrow”), one of the oldest privately owned building contractors in South Africa
- A 14 storey building will be developed on the site, comprising up to 12,500 sqm of hotel space and a sectional title office development of up to 37,500 sqm. The building of the hotel will be subject to achieving a pre-letting or pre-sale of the hotel to a suitable operator.
- SAPRO will fund the full land acquisition costs of R114 million (£7.6 million) and will provide its share of an additional R274.3 million (£18.3 million) of working capital to the joint venture, pro rata to its equity interest in the Company. This will take the total investment from the Company to R330.7 million (£22.1 million). Group 5 and Barrow will fund their respective share of the working capital investment
- Group 5 and Barrow have a 60 day option to acquire a further 9 per cent of the equity in the development at SAPRO’s entry price. Should this option be exercised, SAPRO will reduce its equity commitment to 70 per cent
- The total investment in the development is estimated to be R970.6 million (£64.7 million), consisting of land acquisition costs of R114 million (£7.6 million) and estimated development costs of circa R856.7 million (£57.1 million). Up to R582.4 million (£38.8 million) of bank financing will be required for the construction phase
- Depending on the planning consent process, construction should commence by the 3rd quarter of 2009 with completion expected within three years.
The Brakpan Development
The Brakpan Development comprises 6.65 hectares of currently undeveloped vacant land. It is expected to yield an estimated 25,500 sqm of gross lettable area after rights have been granted. It is situated directly opposite the Carnival City Mall and close to the Carnival City Casino in Brakpan (which is approximately 25km east of the Johannesburg CBD).
Brakpan Development investment highlights:
- SAPRO will have a 50 per cent. interest in the development vehicle, partnering with a local property developer
- The site is opposite a newly developed regional shopping mall, and is close to a major commuting route into Johannesburg from Brakpan and Springs, providing excellent access
- The joint venture will apply for rights to build a retail development. It is expected that building will commence in 2010 and that the build-out period will be 3 years
- SAPRO will fund the site acquisition pro rata to its equity share and will provide up to R13.0 million (£0.9 million) of working capital to the joint venture. This will take the total investment from the Company to R28.5 million (£1.9 million)
- The development is expected to represent a total investment by the joint venture of R293.1 million (£19.5 million), consisting of site acquisition costs of R30.6 million (£2.0 million) and a potential development cost of circa R262.5 million (£17.5 million). The joint venture will seek bank financing of up to R246.5 million (£16.4 million) for the building-out cost of the development.
Imbonini Phase II Development
The second phase of the Company's Imbonini development comprises a 77.5 hectare industrial development in Ballito, north of Durban, situated directly north east of and adjoining the Company's current Imbonini Phase I development.
Imbonini Phase II was announced on 18 September 2007, with SAPRO acquiring a 50 per cent stake in the Phase II development company from the founding shareholders, who are the Company's partners in both phases of the development.
Given its knowledge of the area from the development of Imbonini Phase I, the Company now expects that planning consent for Phase II should be granted in the fourth quarter of 2008 and the development company has taken the opportunity to take early transfer of the Phase II site prior to the granting of planning consent in return for a reduction in the land acquisition price of R10 million (£0.7 million) (from R62 million to R52 million).
The Company estimates that on the granting of planning consent, the site, which is currently undeveloped vacant land, is expected to yield an estimated 430,000 sqm of gross developable land, an increase of 13% (49,411 sqm) on the Company's original estimate.
Further enquiries:
Principle Capital
on behalf of SAPRO Anne Dalen +44 207 240 3222
Landsbanki Securities Paul Fincham +44 207 426 9000
Bell Pottinger Olly Scott +44 207 861 3232
Note to Editors:
- South African Property Opportunities plc (“SAPRO”) is a company investing in the South African property market. Its shares were admitted to AIM in October 2006 raising an initial £30.0 million (before placing expenses). In May 2007 a further £34.2 million (before placing expenses) was raised from new and existing investors.
- SAPRO was established to invest in the South African property market with a view to generating attractive returns, principally through capital growth. It is targeting opportunities arising from the increasing wealth that has been generated from greater urbanisation and economic growth in South Africa coupled with the rapid emergence of a cross cultural middle class. SAPRO is currently focused on investments in brownfield and greenfield development opportunities.
- The Investment Manager is Proteus Property Partners Limited and the Investment Adviser is Proteus Property Advisors (Pty) Limited. The Investment Manager and Investment Adviser are responsible for identifying new investment opportunities.
- The Investment Manager and Investment Adviser are 60% owned subsidiaries of Principle Capital Holdings S.A. (AIM: PCX.L).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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