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SFA
SFA
SFA - Shops - Announcement regarding the acquisition and withdrawal of
cautionary announcement
Shops for Africa Limited
Incorporated in the Republic of South Africa
Registration number 2000/018084/06
Share code: SFA & ISIN: ZAE000031241
("Shops" or "the Company")
ANNOUNCEMENT REGARDING THE ACQUISITION OF A PORTFOLIO OF 10 PROPERTIES ("THE
ACQUISITIONS") BY SHOPS, THE ISSUE OF SHOPS SHARES FOR CASH AND THE PROPOSED
CHANGE OF NAME, (COLLECTIVELY "THE TRANSACTIONS") AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
Introduction
Further to the cautionary announcements dated 6 June 2007 and 19 July 2007,
Shops shareholders are advised that, in line with the current strategy, the
Company has entered into agreements with various vendors to acquire a portfolio
of 10 properties ("the properties").
Further to this, it is proposed that Shops shares be issued for cash to Messrs.
A Maresky, M Wagenheim, M Kaplan and Trematon Capital Investments Limited
("Trematon") (collectively "the Promoters") and that the Company`s name be
changed to SA REIT LIMITED.
Details of the Transactions are set out below:
1. Details of the Acquisitions
Details of the properties acquired in terms of the Acquisitions are set out
below:
Investment Properties
NUMBER OF VALUATION BY
SHOPS SHARES VALUER (2)
PROPERTY LOCATION PURCHASE PRICE TO BE ISSUED
NAME FOR THE
ACQUISITIONS
(1)
1 Master Tyre Erf 30 R68 000 000 136 000 000 R20 600 000
Building Martin (3) (incl. bulk
Hammerschlag value)
Way, Cape
Town
2 African Erf 145 R44 000 000
Wholesalers Martin
Building Hammerschlag
Way, Cape
Town
3 Reeds Erf 250 R82 000 000 164 000 000 R94 000 000
Building Oswald Pirow (incl. bulk
Street, value)
Cape Town
4 22 Long Erf 9444 R82 000 000 164 000 000 R87 000 000
Street situated (incl. bulk
Long Street, value)
Cape Town
5 Midas - Erf 32942 R36 000 000 72 000 000 R10 500 000
Goodwood situated (4)
Voortrekker
Rd,
Goodwood,
Cape Town
6 Midas - Port Erf 3441 R4 800 000
Elizabeth and Sections
7 & 8
situated
Todd Street,
Port
Elizabeth
7 Natural Erf 17639 R21 200 000
Stone situated,
Warehouse- Cumberland
Paarden and Industry
Eiland Roads,
Paarden
Eiland
Cape Town
Sub total R268 000 000 536 000 000 282 100 000
Development Properties
NUMBER OF VALUATION BY
SHOPS SHARES VALUER (2)
TO BE ISSUED
PROPERTY LOCATION PURCHASE FOR THE
NAME PRICE (1) ACQUISITIONS
(1)
8 33 Waterkant Erf 1760,
1763, 1764 & R10 000 000 0 (5) R10 000 000
1765
situated
Waterkant
Street, Cape
Town
9 Curry Erf 1492,
Building 1497 & 1498 R27 750 000 0 (5) R27 750 000
situated Cnr
Bree, Long
and Mechau
Streets,
Cape Town
10 CMH Building Erf 1491 &
1496 R65 000 000 10 000 000 R57 100 000
situated Cnr
Bree, Long
and Hans
Strijdom
Avenue, Cape
Town
Sub total R102 750 000 10 000 000 R94 850 000
Portfolio R370 750 000 546 000 000 376 950 000
Total
Notes:
(1) The total purchase price payable in respect of the Acquisitions of R
370 750 000 will be settled through the issue of 546 000 000 Shops
shares at an average issue price of 50 cents per Shops share equating
to R273 000 000, with the balance of the purchase price of R97 750 000
to be settled in cash being funded from borrowings by Shops.
(2) The properties were valued by a Professional Valuer, M.R.B. Gibbons
(Nat. Dip. Prop. Val. MIV (SA)) of Mills Fitchet Magnus Penny (Pty)
Ltd.
(3) The combined purchase price for Master Tyre and African Wholesalers.
(4) The combined purchase price for Midas Goodwood, Midas Port Elizabeth
and Natural Stone Warehouse.
(5) No shares will be issued for properties 8 and 9 as those will be
settled in cash.
Details of the vendors and the agreements entered into with the vendors
regarding the Acquisitions are set out below:
Investment Properties
PROPERTY NAME OF PHYSICAL EFFECTIVE DATE DATE OF SALE
NAME VENDOR ADDRESS OF OF ACQUISITION AGREEMENT
VENDOR
1 Master Tyre Fulmar 27th Floor, 1 September 13 August
Building Property 1 Thibault 2007 2007
Investments Square, Cape
CC Town
2 African Fulmar 27th Floor, 1 September 13 August
Wholesalers Property 1 Thibault 2007 2007
Building Investments Square, Cape
CC Town
3 Reeds Port Fairy 27th Floor, 1 September 13 August
Building Property 1 Thibault 2007 2007
Investments Square, Cape
(Proprietary) Town
Limited
4 22 Long Du Toit 6th Floor, 1 September 21 June
Street Investment BDO Spencer 2007 2007, with
Trust House, 119 its 2
Hertzog addenda on 4
Boulevard, July 2007
Foreshore, and 15
Cape Town August 2007,
respectively
5 Natural Schlep 1st Floor, 1 September 20 July 2007
Stone Property The 2007
Warehouse Investments Spearhead,
Paarden (Proprietary) 42 Hans
Eiland Limited Strijdom
50% Owned by Avenue,
A Groll`s Foreshore,
family Cape Town
investment
trust
6 Midas Schlep 1st Floor, 1 September 20 July 2007
Goodwood Property The 2007
Investments Spearhead,
(Proprietary) 42 Hans
Limited Strijdom
Avenue,
Foreshore,
Cape Town
7 Midas Port Schlep 1st Floor, 1 September 20 July 2007
Elizabeth Property The 2007
Investments Spearhead,
(Proprietary) 42 Hans
Limited Strijdom
Avenue,
Foreshore,
Cape Town
Development Properties
8 Curry John Elgin 57 Date of 15 June 2007
Building Curry Kommandeur transfer, with its
Dockloop Street, expected to be addendum on
(Proprietary Welgemoed, 1 October 2007 13 July 2007
Limited) Bellville
Makfar
Investments
(Proprietary)
Limited)
9 33 Waterkant Lilane 14th Floor, Date of 31 July 2007
Property 1 Thibault transfer,
Investments Square, Cape expected to be
CC Town 1 October 2007
10 CMH Building The Hugo 11 Avenue Date of 31 July 2007
Property Bordeaux, transfer,
Trust Constantia, expected to be
7800 1 October 2007
Details of the rentable area by sector, the gross lettable area ("GLA") and
weighted average rental, per m2, per property, are set out below:
Investment Properties
PROPERTY NAME RENTABLE GLA m2 WEIGHTED
AREA BY AVERAGE
SECTOR m2 RENTAL PER
m2
1 Master Tyre Retail - 975.80 R56.05
Building 975.80
2 African Offices - 7532.00 R46.90
Wholesalers 4764
Building Retail -
2768
3 Reeds Building Retail - 8950.00 R44.45
6650
Offices -
2300
4 22 Long Street Offices - 9733.79 R67.19
8786.51
Retail -
947.28
5 Midas - Goodwood Retail - 4834.00 R18.39
4834
6 Midas - Port Retail - 3452.00 R15.75
Elizabeth 3121
Offices -
331
7 Natural Stone Industrial - 4430.00 R40.33
Warehouse- Paarden 3319
Eiland Retail -
1111
Development Properties
PROPERTY NAME SECTOR SITE AREA m2
8 33 Waterkant
Commercial 374
9 Curry Building
Commercial 1162
10 CMH Building
Commercial 1813
Note: There is no available bulk relating to the development properties.
1.1 Rationale for the Acquisitions
The Acquisitions have been made in line with Shops` strategy to create a leading
South African property investment and development company that delivers capital
returns that exceed market averages.
1.2 Conditions precedent relating to the Acquisitions
The majority of the Acquisitions are subject to the following remaining
conditions precedent at the last practicable date:
- approval of the Acquisitions in general meeting; and
- the lifting of the suspension of the trading of the Shops shares on the JSE
Limited ("JSE").
Issue of Shops shares for cash to the Promoters ("issue of Shops shares")
In order to compensate the Promoters, for the services provided and work done by
them in compiling the portfolio through the Acquisitions, it is proposed that a
total of 24 000 000 Shops shares be issued to the Promoters at 50 cents per
Shops share.
As A Maresky is the Chief Executive Officer, M Wagenheim is the Financial
Director and Company Secretary, M Kaplan is a Non-executive Director and
Chairman of the Company and Trematon is a major shareholder of the Company, the
issue of Shops shares to the Promoters is regarded as a related party
transaction in terms of the JSE Listings Requirements. Accordingly, the Shops
board of directors appointed KPMG Services (Proprietary) Limited ("KPMG") to
provide a fair and reasonable opinion in this regard. KPMG have reviewed the
terms and conditions of the issue of Shops shares and are of the opinion that
the terms and conditions are fair and reasonable. KPMG have expressed this
opinion in writing and it is set out in the circular to Shops shareholders,
details of which are set out in paragraph 9 below.
The proposed issue of Shops shares is subject to Shops shareholder approval in
general meeting, further details of which are set out in paragraph 9 below.
3. The proposed Change of Name
It is proposed that the Company`s name be changed to SA REIT LIMITED ("SA
REIT"), in order to reflect the Company`s strategy and future nature of
business.
The proposed Change of Name is subject to Shops shareholder approval in general
meeting, further details of which are set out in paragraph 9 below.
4. Forecast information relating to the Acquisitions
The forecast financial information relating to the Acquisitions for the 12
months ending 31 August 2008 and 31 August 2009 is set out below. The forecast
financial information has been reviewed and reported on by the independent
reporting accountants in terms of section 8 of the Listings Requirements. The
independent reporting accountants` report and assumptions relating to the
forecast information have been included in the circular referred to in paragraph
9 below:
Forecast 12 Forecast 12
months ending 31 months ending
August 2008 31 August 2009
Gross rental revenue (R`000) 27 539 29 485
Net rental income less expenses 23 691 25 339
before finance costs (R`000)
Earnings per Shops share (cents) 2.40 2.70
Net profit after tax (R`000) 14 263 17 364
Headline earnings per Shops share 2.40 2.70
(cents)
Weighted average number of Shops 595 426 227 643 000 000
shares in issue
Notes:
1. Uncontracted rental revenue for the 12 months to 31 August 2008 is
8.2% and for the 12 months to 31 August 2009 is 49.6% of forecast
gross rental revenue.
2. Leases expiring during the periods have been forecast on a lease by
lease basis with particular regard as to the likelihood of existing
tenants renewing their leases. Where appropriate, a vacancy provision
has been allowed, based on the lettability of the particular premises.
Revenues forecast for the period after the expiry of the leases has
been included in uncontracted revenue and have been based on current
market-related rentals.
5. Unaudited pro forma financial effects of the Acquisitions and issue of
Shops shares
Based on the published audited balance sheet of Shops at 28 February 2007, as
restated (details of which are set out in paragraph 10 below), the unaudited pro
forma financial effects of the Acquisitions and issue of Shops shares on Net
Asset Value ("NAV") per Shops share and Net Tangible Asset Value ("NTAV") per
Shops share are set out below. This unaudited pro forma financial information
has been prepared for illustrative purposes only and because of its nature may
not give a fair presentation of Shops` financial position or of the effect and
impact of the Acquisitions and issue of Shops shares on Shops. The preparation
of the pro forma financial information is the responsibility of the Shops
directors.
Before the After the Percentage
Acquisitions Acquisitions change
and issue of and issue of
Shops shares Shops shares
(3) (4)
NAV per Shops share (in 40.03 47.99 19.9%
cents)
NTAV per Shops share (in 40.03 47.99 19.9%
cents)
Shops shares in issue for 72 114 720 643 000 000
calculating NAV and NTAV
Notes:
3. Based on the published audited balance sheet of Shops as at 28
February 2007.
4. Based on the assumption that the Acquisitions and issue of Shops
shares took place on 28 February 2007.
6. Directors of Shops
Messrs A Maresky and M Wagenheim were appointed to the Board on 16 March 2007
and 1 June 2007, respectively. Further to this, Messrs J Bielich, LH Cohen, A
Varachhia, RS Schur and DB Fabian will be appointed to the Board effective from
the general meeting. The name, age, qualification, nationality, business address
and function of each of the directors are set out below:
Name, age, Business address Function
qualification and
nationality
Arnold Aaron Maresky Suite 102, 1st Floor Chief Executive
(40) INTABA Building Officer
B.Com, PGDA, CA(SA) 25 Protea Road
South African Claremont 7700
Mark Wagenheim (51) Suite 102, 1st Floor Financial
B.Com, B.Com (Hons) INTABA Building director and
CA(SA) 25 Protea Road Company Secretary
South African Claremont 7700
John Bielich (50) Suite 102, 1st Floor Executive
B Eng (Civil), B Eng INTABA Building director
Hons (Project 25 Protea Road
Management), MBA Claremont 7700
South African
Monty Kaplan (76) 1st Floor, The Chairman, Non-
CA(SA) Spearhead executive
South African 42 Hans Strijdom Avenue director
Foreshore, Cape Town (Independent)
8001
Allan Groll (52) 1st Floor, The Non-executive
South African Spearhead director
42 Hans Strijdom Avenue (Independent)
Foreshore, Cape Town
8001
Arnold Jack Shapiro 1st Floor, The Non-executive
(45) Spearhead director
B. Bus. Sci 42 Hans Strijdom (Independent)
South African Avenue, Foreshore, Cape
Town, 8001
Leon Howard Cohen (52) Suite G18, Colosseum, Non-executive
National Diploma: Century Way, Century director
Construction City, Cape Town, 7441 (Independent)
Supervisors
South African
Abubaker Varachhia 25 Hope Street, Cape Non-executive
(49) Town, 8001 director
Registered Quantity (Independent)
Surveyor B.Sc
South African
Raymond Selwyn Schur 34 Somerset Road, Green Chairman of Audit
(69) Point, Cape Town, 8001 Committee
CA(SA) Non-executive
South African director
(Independent)
Dennis Barry Fabian North Wharf, Lower Bree Non-executive
(58) Street, Cape Town, 8001 director
Pr. Arch , B. Arch (Independent)
(UCT) , MIArch , CIA
South African
7. Forecast information relating to SA REIT
The summarised forecast financial information relating SA REIT (on the
assumption that the Transactions have taken place) for the 12 months ending 31
August 2008 and 31 August 2009 is set out below. The forecast financial
information has been reviewed and reported on by the independent reporting
accountants KPMG Inc. in terms of section 8 of the JSE Listings Requirements.
The independent reporting accountants` report and assumptions relating to the
forecast information have been included in the Revised Listing Particulars
referred to in paragraph 9 below.
Forecast 12 Forecast 12
months ending months ending
31 August 31 August
2008 2009
Earnings per Shops share (cents) 2.19 2.44
Headline earnings per Shops share 2.19 2.44
(cents)
Weighted average number of Shops 595 426 227 643 000 000
shares in issue
8. Salient dates and times of the Transactions
2007
Circular posted to Shops shareholders Wednesday, 5 September
on
Forms of proxy to be received by 10:00 Wednesday, 26 September
on
General meeting to be held at 10:00 on Thursday, 27 September
Results of the general meeting released Thursday, 27 September
on the Securities Exchange News Service
("SENS") on
Results of the general meeting Friday, 28 September
published in the press on
Expected lifting of the suspension of Monday, 1 October
trading of Shops shares on the JSE
further to the transfer of the
properties, at the commencement of
trading on the JSE on or about
Last day to trade Shops shares on the Friday, 19 October
JSE under the old name "Shops for
Africa Limited"
Change of Name effective from the close Friday, 19 October
of business on
Trade under the new name "SA REIT" Monday, 21 October
under the JSE code SAR with the new
ISIN ZAE000104196 from commencement of
trading on
Record date Friday, 26 October
New share certificates reflecting the Monday, 29 October
change of name posted by registered
post to certificated Shops shareholders
who have surrendered their documents of
title on or before 12:00 on the record
date (see note 2) on or about
Dematerialised Shops shareholders` safe Monday, 29 October
custody accounts updated with new name
by their CSDP or broker
Notes:
1. These dates and times are subject to amendment. Any such amendment
will be released on SENS and will be published in the South African
press.
2. Shops shareholders will not be able to dematerialise or rematerialise
Shops shares after Friday, 19 October 2007, and may only dematerialise
their new SA REIT shares from Monday, 29 October 2007.
3. Shops shareholders who surrender their existing documents of title
after the record date, being Friday, 26 October 2007, will have their
new share certificates mailed within five business days of receipt
thereof by the transfer secretaries, by registered post in South
Africa, at the risk of the Shops shareholder concerned.
9. Circular to Shops shareholders
A circular incorporating Revised Listing Particulars (due to the fact that the
Acquisitions constitute a reverse take-over in terms of the JSE Listings
Requirements because more than 100% of the Shops shares currently in issue, will
be issued pursuant to the Acquisitions), providing information on the
Transactions, incorporating a notice of general meeting, a form of proxy and a
form of surrender ("the circular") will be posted to Shops shareholders on
Wednesday, 5 September 2007.
10. Restatement of the interim results for the six months ended 28 February
2007 ("interim results")
Further to the publication of the Shops audited interim results on 3 May 2007 an
audit has been undertaken. In completing the audit of the interim results,
certain balance sheet items were reclassified, details of which are set out
below. These reclassifications arose as a result of the special resolution
passed by shareholders on 12 March 2004 where it was resolved that Shops would
distribute its share capital and share premium, in the amount of R721 147 and
R559 313 respectively. As this special resolution was never registered and
therefore never became effective, these distributions are now deemed to have
been dividends paid for purposes of the restated balance sheet.
The restated "equity and liabilities" section of the balance sheet is set out
below while full details of the restated audited interim results for the six
months ended 28 February 2007 and sixteen months results to 31 August 2006 is
set out in the circular.
Equity and liabilities 28 February 31 August
2007 2006
R`000 R`000
Capital and reserves
Share capital 721 721
Share premium 559 559
Retained earnings 15 507 14 443
Fair value reserves 12 077 8 287
28 864 24 010
Non-current liability 2 048 1 406
Deferred tax liability 2 048 1 406
Current liabilities 1 411 1 172
Interest payable on debentures 11 11
Accounts payable 131 169
Taxation payable 1 269 992
Total equity and liabilities 32 323 26 588
11. Withdrawal of cautionary announcements
Shops shareholders are referred to the cautionary announcements dated 6 June
2007 and 19 July 2007 and are advised that caution need no longer be exercised
when dealing in Shops shares.
5 September 2007
Cape Town
Investment bank and sponsor Independent reporting accountants
Nedbank Capital KPMG
Attorneys Property valuer
Edward Nathan Sonnenbergs Mills Fitchet
Date: 05/09/2007 15:23:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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