| Fri 9 Sep 2011, 13:17 | | RDF - Redefine Properties Limited - Disposal to a related party and |
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RDF
RDF
RDF - Redefine Properties Limited - Disposal to a related party and
cautionary announcement
Redefine Properties Limited
(Registration No. 1999/018591/06)
Share Code: RDF ISIN Code: ZAE000143178
("Redefine" or "the company")
DISPOSAL TO A RELATED PARTY AND CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Linked unitholders are advised that Redefine has concluded an
agreement with Arrow Creek Investments 227 (Proprietary) Limited
("Arrow Creek") for the disposal to Arrow Creek of a portfolio of
wholly-owned properties ("the property portfolio"), Redefine`s
interest in a number of joint ventures ("the JV`s"), the Upper East
Side Hotel and the shares in and claims against UES Hotel
(Proprietary) Limited (the manager of the Upper East Side Hotel)
(collectively "the transaction"), for an aggregate purchase
consideration of R358 300 001 plus an amount equal to the third party
debt and undertakings owed by the JV`s at the effective date ("the
third party debt").
RATIONALE FOR THE TRANSACTION
The transaction is in line with Redefine`s strategy to restructure its
core property portfolio in order to improve the quality of its
property portfolio by exiting from trading joint ventures and
disposing of smaller, secondary grade properties which will be
replaced with larger, high-grade investment properties.
TERMS OF THE TRANSACTION AND CONDITIONS PRECEDENT
Subject to the fulfilment of the conditions precedent set out below,
including obtaining the consent of Redefine`s partners in the JV`s,
the effective date of the transaction is 31 August 2011.
The purchase consideration will be settled by Arrow Creek as follows:
- a cash payment of R258.3 million;
- the assumption by Arrow Creek of the third party debt; and
- R100 million will remain outstanding as a loan by Redefine to
Arrow Creek ("the vendor loan").
In the long-term the cash proceeds from the transaction will be used
by Redefine to invest in high-grade investment properties. However, in
the short-term the cash proceeds will be used to reduce interest-
bearing borrowings.
The vendor loan is repayable within 24 months from the effective date,
bears interest at the prime rate plus 125 basis points and is secured
by second covering bonds in favour of Redefine over the property
portfolio and personal suretyships from the major shareholders of
Arrow Creek. Should Arrow Creek sell any property within the property
portfolio prior to settlement of the vendor loan, the proceeds of the
sale, after payment of the first covering mortgage bond over that
property (if any), will be applied to reducing the vendor loan.
The transaction is subject to the following conditions precedent:
- Redefine obtaining an opinion from an independent expert which
confirms that the transaction is fair to Redefine linked
unitholders as contemplated in terms of the JSE Listings
Requirements ("the fairness opinion");
- compliance by the parties with the necessary provisions of the
Companies Act 2008, including Redefine obtaining approval from
its linked unitholders for the vendor loan;
- approval of the transaction by the Competition Authorities;
- Arrow Creek furnishing Redefine with acceptable confirmation that
Arrow Creek has secured finance for the cash portion of the
purchase consideration; and
- definitive agreements being concluded in respect of the
transaction, including obtaining appropriate consents from
Redefine`s partners in the JV`s.
PROPERTY INFORMATION
Details of the property portfolio and the Upper East Side Hotel being
sold to Arrow Creek, including property name and address, geographical
location, rentable area, sector, weighted average rental per square
meter, effective date of acquisition, purchase price and the
valuations attributed to the properties as at 28 February 2011 by the
company, are as follows:
Property name and Geographical Rentable area Sector
address location (m2)
Manhattan Plaza, Western Cape 4,886 Office
100 Edward
Street, Bellville
Bloemhof Western Cape 4,233 Office
Building, 112
Edward Street,
Bellville
Sterling Place, Western Cape 4,183 Office
86 Edward
Street, Bellville
Forum Building, Western Cape 668 Retail
82 Edward Street,
Bellville
Omnipark, 102 Western Cape 2,212 Office
Edward Street,
Bellville
Plum Park, 25 Western Cape 1,994 Office
Gabriel Road,
Plumstead
Viking Business Western Cape 9,090 Retail
Park, Cnr Viking
Way and
Showgrounds
Avenue, Epping
Nampak Epping, 7 Western Cape 15,399 Industrial
Hewitt Avenue,
Epping
1 Paarden Eiland, Western Cape 3,206 Industrial
Paarden Eiland
28 Marine Drive, Western Cape 4,455 Industrial
Paarden Eiland
30 Marine Drive, Western Cape 2,730 Industrial
Paarden Eiland
Finsource House, Western Cape 2,971 Office
142 Bree Street,
Cape Town
Upper East Side Western Cape N/A Hotel
Hotel, Brickfield
Road, Woodstock,
Cape Town
Total 56,027
Weighted Effective Purchase Valuation
average date of price as at 28
Property name rental per acquisition (R`000) February
m2 2011
(R) (R`000)
Manhattan Plaza 92.97 01/12/2006 37,225 40,871
Bloemhof Building 75.68 01/12/2006 17,900 20,427
Sterling Place 63.97 01/12/2006 20,100 20,573
Forum Building 40.47 01/12/2006 6,200 4,243
Omnipark 67.28 01/12/2006 14,400 11,563
Plum Park 92.51 01/12/2006 16,700 15,288
Viking Business 53.47 01/12/2006 36,200 33,779
Park
Nampak Epping 23.48 01/12/2006 24,000 39,252
1 Paarden Eiland 29.51 01/08/2008 21,300 13,737
28 Marine Drive 26.86 01/04/2008 36,100 23,597
30 Marine Drive 39.60 01/04/2008 12,400 8,456
Finsource House 54.04 01/12/2006 22,700 50,100
Upper East Side N/A 01/12/2006 127,248* 42,500*
Hotel
Total 392,473 324,386
* The purchase price and valuation amounts represent amounts as at 28
February 2011 at which point Redefine held a 50% interest in the hotel
through a joint venture. After 28 February 2011, Redefine acquired the
remaining 50% interest in the hotel.
THE JV`s
The JV`s that are being sold to Arrow Creek comprise Redefine`s 50%
interest in each of the Oasis Care Centre (partnership), Josdel 137
(Proprietary) Limited (trading as the Oasis Retirement Resort), the
Broadlands Stud Farm Development (partnership) and the Brickfield
Joint Venture (partnership).
CATEGORISATION OF THE TRANSACTION, RELATED PARTY CONSIDERATIONS,
FINANCIAL INFORMATION, FAIRNESS OPINION AND CAUTIONARY
As Michael Naftali Flax, a non-executive director of Redefine, is a
42.5% shareholder in Arrow Creek, the transaction constitutes a small
related party transaction in terms of section 10.7 of the JSE Listings
Requirements. A small related party transaction is not subject to
linked unitholder approval, provided an independent expert has
confirmed that the terms of the transaction are fair as far as linked
unitholders are concerned. Accordingly, a further announcement will be
published on receipt of the fairness opinion. This further
announcement will also include the pro forma financial effects of the
transaction.
Until such time as the further announcement has been published, linked
unitholders are advised to exercise caution when dealing in their
Redefine linked units.
9 September 2011
Corporate advisor and sponsor
Java Capital
Date: 09/09/2011 13:17:48 Produced by the JSE SENS Department.
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