Largest ever real estate IPO

Posted On Monday, 23 April 2012 02:00 Published by eProp Commercial Property News
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Billed as the largest Real Estate 'private' IPO on the JSE, Hermans & Roman Properties Limited (“HRP”) is expected to list its linked units on the securities exchange operated by the JSE Limited (the “JSE”) on 11 May 2012

Leslie HermansRenamed from Business Venture Investments No 1554 Proprietary Limited, the company intends to list its linked units in the “Real Estate Holdings and Development” sector of the Main Board of the JSE under the JSE code “HRP”.  See http://www.eprop.co.za/news/article.aspx?idArticle=14893

The Listing is expected to be implemented, together with a capital raising by the Company, through a private placement offered to qualifying investors only (the “Offering”) and there will not be an offer to the general public. The Pre-listing statement providing full details of the Offering has been published today.
 
HRP will offer approximately 203,929,395 linked units at an issue price of R10.00 per linked unit in order to raise gross proceeds of approximately R2.039 billion, representing the largest ever real estate initial public offering (“IPO”) on the JSE. The Company has received a binding commitment from the PIC in the amount of R262.4 million to subscribe for and purchase 12.5% of the total issued Linked Units.

The Company will use the net proceeds of the Offering to, inter alia, discharge a portion of the purchase consideration for the Portfolio. The remainder of the purchase price for the Portfolio will be financed by bank debt, resulting in a loan-to-value ratio of approximately 49.4%.  Going forward, the directors of the Company intend to employ leverage through debt financing to enhance unitholder returns with a target overall level of portfolio gearing of approximately 40% to 45% loan-to-value.

The asset and property management business of HRPS (the “Management Business”) has been acquired for an initial payment in linked units of R45 million payable two days prior to Listing and three further payments in linked units of R25 million each payable on each of 1 August 2013, 2014 and 2015l 2015.  The value of the Management Business will be determined by the auditors at the end of the fourth full financial year of the Company post-Listing by capitalising the average Management Business net operating income at a yield of 12.5% and depending on the result of the valuation,  the Company may be required to make an additional payment of up to R95 million, which will be settled in linked units. The Management Business has been independently valued by BDO Corporate Finance (Proprietary) Limited at a range of R187.5 million to R215.5 million as at the Listing date.

The Property Loan Stock company (HRP) has an experienced board of five non-executive directors, chaired by Tim Cumming (the previous chairman of Old Mutual Properties), of which four directors, including the Chairman, are independent.  The three executive directors are , CEO, Johan Mostert, CFO and Kevin Roman, Executive Director.



Last modified on Thursday, 07 November 2013 16:01

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