| Fri 13 Apr 2012, 14:05 | | FVT - Fairvest - Acquisition of Various Properties |
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FVT
FVT
FVT - Fairvest - Acquisition of Various Properties, Cautionary Announcement and
Disposal of a Property
Fairvest Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/005011/06)
Linked unit code: FVT ISIN: ZAE000034658
("Fairvest" or "the Company")
ACQUISITION OF VARIOUS PROPERTIES, CAUTIONARY ANNOUNCEMENT AND DISPOSAL OF A
PROPERTY
A) PROPERTY ACQUISITIONS AND CAUTIONARY ANNOUNCEMENT
1. THE ACQUISITIONS
Linked unitholders of the Company are hereby advised that the Company has
entered into various acquisition agreements ("the Agreements") to acquire
properties as detailed below ("the Acquisitions").
a) The SA Corporate Real Estate Property Portfolio -
The Company has entered into agreements with SA Retail Properties
(Proprietary) Limited and SA Corporate Real Estate Fund (a Collective
Investment Scheme in Property established in terms of the Collective
Investment Schemes Control Act, No 45 of 2002) ("SA Corporate Real Estate
Fund")(collectively "SA Corporate Real Estate") on 12 April 2012 to acquire
a portfolio of retail and office properties, including the letting
enterprises to be conducted in respect of such properties ("the SA
Corporate Real Estate Property Portfolio") as detailed in paragraph 4.1(a)
below ("the SA Corporate Real Estate Property Portfolio Acquisition").
The effective date of the SA Corporate Real Estate Property Portfolio
Acquisition shall be the date of transfer of the SA Corporate Real Estate
Property Portfolio into the name of the Company, which subject to
fulfilment of the conditions precedent as detailed in paragraph 5(a) below,
is expected on or about 1 October 2012.
b) The Martycel Property -
The Company has entered into an agreement with Martycel Prop CC
("Martycel") on 12 April 2012 to acquire a retail and office property,
including the letting enterprise to be conducted in respect of such
property ("the Martycel Property") as detailed in paragraph 4.1(b) below
("the Martycel Property Acquisition").
The effective date of the Martycel Property Acquisition shall be the date
of transfer of the Martycel Property into the name of the Company, which
subject to fulfilment of the conditions precedent as detailed in paragraph
5(b) below, is expected on or about 1 October 2012.
c) The Lodestone Property -
The Company has entered into a binding offer letter with Lodestone
Investments (Proprietary) Limited ("Lodestone") on 10 April 2012 to acquire
a retail property, including the letting enterprise to be conducted in
respect of such property ("the Lodestone Property") as detailed in
paragraph 4.1(c) below ("the Lodestone Property Acquisition"). The final
agreement with Lodestone Investments (Proprietary) Limited is in the
process of being finalised and linked unitholders will be advised in due
course, should there be any amendments to the terms and conditions of the
final agreement from those disclosed in this announcement.
The effective date of the Lodestone Property Acquisition shall be the date
of transfer of the Lodestone Property into the name of the Company, which
subject to fulfilment of the conditions precedent as detailed in paragraph
5(b) below, is expected on or about 1 October 2012.
2. RATIONALE FOR THE ACQUISITIONS
The Acquisitions are consistent with the Company`s growth strategy whereby
the Company will focus on acquiring retail assets in non-metropolitan areas
and lower LSM sectors.
3. PURCHASE CONSIDERATIONS
The Company intends to fund the purchase considerations for the
Acquisitions through a combination of debt financing and new equity raised
from new and/or existing linked unitholders in terms of a vendor
consideration placement and/or an issue of Fairvest linked units for cash
("the Placement").
a) The SA Corporate Real Estate Property Portfolio -
The purchase consideration for the SA Corporate Real Estate Property
Portfolio Acquisition is R383 000 000 (three hundred and eighty three
million rand), payable in cash against transfer of each of the properties
comprising the SA Corporate Real Estate Property Portfolio into the name of
the Company.
Should the transfer of the SA Corporate Real Estate Property Portfolio into
the name of the Company not have occurred within 180 days of the signature
date of the relevant agreement, unless the delay has been caused by SA
Corporate Real Estate, the purchase consideration payable to SA Corporate
Real Estate will escalate at 8% per annum, compounded monthly.
b) The Martycel Property -
The purchase consideration for the Martycel Property Acquisition is R93 500
000 (ninety three million five hundred thousand rand), payable in cash
against transfer of the Martycel Property into the name of the Company,
subject to the satisfactory completion of a due diligence investigation.
c) The Lodestone Property -
The purchase consideration for the Lodestone Property Acquisition is R73
000 000 (seventy three million rand), payable in cash against transfer of
the Lodestone Property into the name of the Company.
4. DETAILS OF THE ACQUIRED PROPERTIES
4.1 Details of the properties which are to be acquired in terms of the
Agreements detailed in paragraph 1 above are as follows ("the Acquired
Properties"):
a) The SA Corporate Real Estate Property Portfolio -
Property Geographical Sector Purcha GLA Purchas Average
Name and Location se (m2) e Gross
Address Consid Conside Rental
eratio ration per m2
n per GLA (R/m2)
(R`m) (R/m2)
210 Church Kwazulu- Retail 23.00 1 897 12 127 116.63
Street, Natal
Pietermaritz
burg - Mr
Price
Weekend
212 Church Kwazulu- Retail 30.00 1 963 15 283 131.19
Street, Natal
Pietermaritz
burg -
Truworths
425 West Kwazulu- Retail 54.50 9 559 5 701 46.46
Street, Natal
Durban - The
Hub
Main Street, Kwazulu- Retail 10.60 2 992 3 543 34.90
Gingindlovu Natal
Corner Eagle Kwazulu- Retail 15.00 4 452 3 369 39.65
Avenue & Natal
Falcon
Street,
Mkuze -
Mkuze Corner
Tokai Western Cape Retail 84.90 7 617 11 146 108.02
Junction,
Tokai
Omniplace, Western Cape Office 20.00 2 714 7 369 86.27
Bellville
St Georges Western Cape Retail 44.00 11 172 3 938 64.28
Square,
George
Clubview Gauteng Retail 35.00 5 830 6 003 63.67
Corner,
Zwartkop
The Ridge, Gauteng Retail 35.00 4 770 7 338 97.45
Honeydew
Ridge
Pick n Pay, Mpumalanga Retail 31.00 7 698 4 027 57.71
Middelburg
Total 383.00 60 663 6 314 70.21
b) The Martycel Property -
Property Geographical Sector Purcha GLA Purchas Average
Name and Location se (m2) e Gross
Address Consid Conside Rental
eratio ration per m2
n per GLA (R/m2)
(R`m) (R/m2)
Station Gauteng Retail 93.50 22 026 4 245 45.46
Square, and
Akasia Office
Pretoria
c) The Lodestone Property -
Property Geographical Sector Purcha GLA Purchas Average
Name and Location se (m2) e Gross
Address Consid Conside Rental
eratio ration per m2
n per GLA (R/m2)
(R`m) (R/m2)
Kingsburgh Kwazulu- Retail 73.00 9 796 7 452 76.09
Shopping Natal
Centre,
Amanzimtoti
4.2 A sector analysis of the Acquired Properties is as follows:
Sector Purcha GLA Purchas Average Historic Vacancy %
se (m2) e Gross Purchase by GLA
Consid Conside Rental Yield
eratio ration per m2
n per GLA (R/m2)
R`m (R/m2)
Retail 457.54 72 819 6 283 68.97 10.30% 10.30%
Office 91.96 19 666 4 676 50.00 12.15% 3.96%
Total 549.50 92 485 5 941 64.94 10.61% 8.95%
Notes:
i. Average Gross Rental per m2 excludes recoveries.
ii Linked unitholders will be advised in due course of the average
escalation per sector, average lease duration per sector, the tenant
profile and the costs associated with the transfers of the Acquired
Properties.
iii The purchase consideration (including any price escalation, where
applicable) of each property, as at each acquisition date, is
considered to be its fair market value, as determined by the directors
of the Company. The directors of the Company are not independent and
are not registered as professional valuers or as professional
associate valuers in terms of the Property Valuers Profession Act, No
47 of 2000.
5. CONDITIONS PRECEDENT
The SA Corporate Real Estate Property Portfolio Acquisition, the Martycel
Property Acquisition and the Lodestone Property Acquisition are not inter-
conditional.
a) The SA Corporate Real Estate Property Portfolio -
The SA Corporate Real Estate Property Portfolio Acquisition is subject to
fulfilment of various conditions precedent, including the following:
i) Obtaining approval from the Competition Authorities approval for the
SA Corporate Real Estate Property Portfolio Acquisition, in terms of
the Competition Act No 89 of 2008, within 90 days of completion of all
other conditions precedent;
ii) The satisfactory completion of a due diligence investigation, to be
performed by the Company on each property and letting enterprise
within the SA Corporate Real Estate Property Portfolio, within 45 days
of signature of the agreement;
iii) The Company obtaining the appropriate funding commitments from debt
funders and/or Fairvest successfully placing sufficient Fairvest
linked units in terms of the Placement in order to fund the purchase
consideration payable, within 90 days of completion of the due
diligence investigation;
iv) SA Corporate Real Estate confirming in writing that any pre-emptive
rights contained in leases has been waived or consent obtained from
any tenant, if applicable, within 21 days of signature of the
agreement;
v) The board of directors of SA Corporate Real Estate Fund Managers
Limited or any delegated authority providing written approval to the
SA Corporate Real Estate Property Portfolio Acquisition, within 14
days of signature of the agreement;
vi) The trustee of SA Corporate Real Estate Fund providing written
approval for the SA Corporate Real Estate Property Portfolio
Acquisition, within 7 days after the approval by SA Corporate Real
Estate Fund Managers Limited; and
vii) The board of directors of Fairvest providing written approval of the
SA Corporate Real Estate Property Portfolio Acquisition within 7 days
of completion of the due diligence investigation.
b) The Martycel Property and the Lodestone Property -
The Martycel Property Acquisition and the Lodestone Property
Acquisition are subject to fulfilment of various conditions precedent,
including the following:
i) The satisfactory completion of due diligence investigations, to
be performed by the Company on the Martycel Property and on the
Lodestone Property;
ii) Fairvest obtaining all relevant approvals and completing all
relevant processes required by the JSE Listings Requirements in
respect of the Lodestone Property Acquisition, including the
approval of the Lodestone Property Acquisition by linked
unitholders of Fairvest in a general meeting;
iii) The approval of the board of directors of Martycel for the
Martycel Property Acquisition and the approval of the board of
directors of Lodestone for the Lodestone Property Acquisition;
iv) Fairvest obtaining sufficient funding commitments from debt
funders and/or Fairvest successfully placing sufficient Fairvest
linked units in terms of the Placement in order to fund the
purchase considerations payable to each seller in respect of each
acquisition; and
v) To the extent necessary, obtaining approval from the Competition
Authorities, in terms of the Competition Act No 89 of 2008.
6. WARRANTIES
The Agreements provide for warranties and indemnities that are standard for
transactions of this nature.
7. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITIONS
The pro forma financial effects in relation to the Acquisitions are still
in process of being finalised and will be published in due course.
8. FORECAST FINANCIAL INFORMATION OF THE ACQUISITIONS
The forecast financial information in relation to the Acquisitions are
still in process of being finalised and will be published in due course.
9. CATEGORISATION AND FURTHER DOCUMENTATION
The Acquisitions constitute a Category 1 acquisition in terms of the JSE
Listings Requirements and as such will require linked unitholder approval.
Accordingly, a circular, incorporating revised listing particulars,
detailing the terms of the Acquisitions and a notice convening a general
meeting will be posted to linked unitholders in due course.
10 CAUTIONARY ANNOUNCEMENT
Linked unitholders are referred to the cautionary announcement dated 3
April 2012 and are hereby advised to continue exercising caution when
dealing in the Company`s securities until a further announcement containing
the pro forma financial effects and the forecast financial information in
relation to the Acquisitions is made.
B) CATEGORY 2 PROPERTY DISPOSAL
1. THE DISPOSAL
Linked unitholders are hereby advised that the Company has entered into a
binding offer letter with Capital Property Fund (a portfolio in the Capital
Property Trust Scheme, a Collective Investment Scheme in Property
established in terms of the Collective Investment Schemes Control Act, No
45 of 2002) on 12 April 2012 in regards to the disposal of an office
property ("the Disposal Property") as detailed in paragraph 4 below ("the
Capital Property Fund Disposal"). The final agreement with Capital Property
Fund is in the process of being finalised and linked unitholders will be
advised in due course, should there be any amendments to the terms and
conditions of the final agreement from those disclosed in this
announcement.
The effective date of the Capital Property Fund Disposal shall be the date
of transfer of the Disposal Property into the name of Capital Property
Fund.
2. RATIONALE FOR THE CAPITAL PROPERTY FUND DISPOSAL
The Capital Property Fund Disposal is consistent with the Company`s growth
strategy whereby the Company will focus on retail assets in non-
metropolitan areas and lower LSM sectors. The Company considers the
Disposal Property to be a non-core asset and will therefore be disposed of.
3. DISPOSAL CONSIDERATION
The disposal consideration for the Capital Property Fund Disposal is R6 500
000 (six million five hundred thousand rand), payable in cash against
transfer of the Disposal Property into the name of Capital Property Fund.
The sale proceeds will be applied primarily on capital commitments of the
Company and to further organic growth within Fairvest.
4. DETAILS OF THE DISPOSAL PROPERTY
The details of the Disposal Property which is to be disposed in terms of
the agreement detailed in paragraph 1 above is as follows:
Property Geographical Sector Selling GLA Selling Average
Name and Location Price (m2) Price Gross
Address (R`m) per GLA Rental
(R/m2) per m2
(R/m2)
Jozen Gauteng Office 6.5 760 8 553 68.93
Place,
Bryanston
Johannesb
urg
Note:
i) The selling price of the Disposal Property is considered to be its
fair market value, as at the disposal date, as determined by the
directors of the Company. The directors of the Company are not
independent and are not registered as professional valuers or as
professional associate valuers in terms of the Property Valuers
Profession Act, No 47 of 2000.
5. CONDITIONS PRECEDENT AND WARRANTIES
The Capital Property Fund Disposal is not subject to any conditions
precedent and will be completed upon transfer of the Disposal Property into
the name of Capital Property Fund.
The agreement provides for warranties and indemnities that are standard for
transactions of this nature
6. PRO FORMA FINANCIAL EFFECTS OF THE CAPITAL PROPERTY FUND DISPOSAL
The pro forma financial effects of the Capital Property Fund Disposal are
not significant and have therefore not been presented.
7. CATEGORISATION
The Capital Property Fund Disposal constitutes a Category 2 transaction in
terms of the JSE Listings Requirements.
13 April 2012
Cape Town
Sponsor and Corporate Advisor: PSG Capital
Transaction Advisor and Bookrunner: Java Capital
Date: 13/04/2012 13:03:01 Produced by the JSE SENS Department.
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