| Tue 17 Jul 2012, 12:30 | | FAIRVEST PROPERTY HOLDINGS LIMITED - UPDATE ON SA CORPORATE REAL ESTATE PROPERTY PORTFOLIO ACQUISITION NEW ACQUISITION AND RENEWAL OF CAUTIONARY |
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FVT
UPDATE ON SA CORPORATE REAL ESTATE PROPERTY PORTFOLIO ACQUISITION, NEW ACQUISITION AND RENEWAL OF CAUTIONARY
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?)
UPDATE ON SA CORPORATE REAL ESTATE PROPERTY PORTFOLIO ACQUISITION, NEW
ACQUISITION AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. UPDATE ON THE SA CORPORATE REAL ESTATE PROPERTY PORTFOLIO ACQUISITION
Linked unitholders are referred to the announcements dated 13 April
2012 (?Original Announcement?) and 30 May 2012 (?Update
Announcement?), whereby linked unitholders of the Company were
advised that the Company had 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?)
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 Acquisition?).
Following further negotiations between the parties, linked
unitholders are hereby advised that certain of the terms relating to
the SA Corporate Real Estate Property Portfolio Acquisition have been
amended in terms of amendment agreements dated 28 June 2012 and 13
July 2012 (?Amendment Agreements?). In terms of the Amendment
Agreements ?
a) the purchase considerations for the properties described in the
Original Announcement as ?the Ridge, Honeydew Ridge?, ?210
Church Street, Pietermaritzburg ? Mr Price Weekend? and
?Clubview Corner, Zwartkop? have been amended; and
b) the parties have agreed that Fairvest will not acquire the
properties described in the Original Announcement as ?Main
Street, Gingindlovu? and ?Pick n Pay, Middelburg? (?Put Option
Properties?), in terms of the SA Corporate Real Estate Property
Portfolio Acquisition, but will grant a put option to SA
Corporate Real Estate to put the aforementioned properties to
Fairvest (?Put Option Acquisition?).
The full details relating to the SA Corporate Real Estate property
portfolio, as amended (?the SA Corporate Real Estate Property
Portfolio?), that will be acquired in terms of the SA Corporate Real
Estate Property Portfolio Acquisition, and the Put Option properties
that may be acquired in terms of the Put Option Acquisition, are set
out below.
2. NEW ACQUISITION - THE ISOLENU PROPERTY PORTFOLIO
In addition, linked unitholders are hereby advised that the Company
has entered into agreements with Richacres Investments Five
(Proprietary) Limited, Castleridge Property Holdings (Proprietary)
Limited and Colossus Developments (Proprietary) Limited (collectively
?Isolenu?) on 13 July 2012 to acquire a portfolio of retail
properties, including the letting enterprises to be conducted in
respect of such properties (?the Isolenu Property Portfolio?) as
detailed below (?the Isolenu Property Portfolio Acquisition?).
The effective date of the Isolenu Property Portfolio Acquisition
shall be the date of transfer of the Isolenu Property Portfolio into
the name of the Company, which subject to fulfilment of the
conditions precedent detailed below, is expected to be on or about 1
December 2012.
3. RATIONALE FOR THE ACQUISITIONS
The SA Corporate Real Estate Property Portfolio Acquisition, the Put
Option Acquisition and the Isolenu Property Portfolio Acquisition are
consistent with the Company?s growth strategy whereby the Company
will focus on acquiring retail assets with a weighting in favour of
non-metropolitan areas and lower LSM sectors.
4. PURCHASE CONSIDERATIONS
The Company intends to fund the purchase considerations for the SA
Corporate Real Estate Property Portfolio Acquisition, the Put Option
Acquisition and the Isolenu Property Portfolio Acquisition 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 Acquisition ?
The estimated aggregate purchase consideration for the SA Corporate
Real Estate Property Portfolio Acquisition is R328 800 000 (three
hundred and twenty eight million eight hundred thousand 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.
b) The Put Option Acquisition ?
The consideration for the Main Street, Gingindlovu property will
be the higher of R5 000 000 (five million Rand) or the projected
net operating income of the property for the 12 month period
commencing from the date that the put option is exercised
capitalised at the rate of 11.5% and shall be payable in cash
against transfer of the property into the name of the Company.
The consideration for the Pick n Pay, Middelburg property will be
the projected net operating income of the property for the 12
month period commencing from the date that the put option is
exercised capitalised at the rate of 10% and shall be payable in
cash against transfer of the property into the name of the Company.
c) The Isolenu Property Portfolio Acquisition ?
The aggregate purchase consideration for the Isolenu Property
Portfolio Acquisition is R67 433 400 (sixty seven million four
hundred and thirty three thousand four hundred rand), payable in
cash against transfer of each of the properties comprising the
Isolenu Property Portfolio into the name of the Company.
5. DETAILS OF THE PROPERTIES
a) The SA Corporate Real Estate Property Portfolio Acquisition ?
Details of the properties which are to be acquired in terms of the
SA Corporate Real Estate Property Acquisition are as follows ?
Property Geographical Sector Estima GLA Estimat Average
Name and Location te (m2) e Gross
Address purcha purchas Rental
se e per m2
consid conside (R/m2)
eratio ration
n per GLA
(R?m) (R/m2)
210 Church Kwazulu- Retail 19.70 1 897 10 387 102.00
Street, Natal (1)
Pietermaritz
burg ? Mr
Price
Weekend
212 Church Kwazulu- Retail 30.00 1 963 15 283 139.83
Street, Natal
Pietermaritz
burg -
Truworths
425 West Kwazulu- Retail 54.50 9 559 5 701 48.54
Street, Natal
Durban ? The
Hub
Corner Eagle Kwazulu- Retail 15.00 3 388 4 427 55.30
Avenue & Natal
Falcon
Street,
Mkuze -
Mkuze Corner
Tokai Western Cape Retail 84.90 7 618 11 145 102.41
Junction,
Tokai
Omniplace, Western Cape Office 20.00 2 714 7 370 75.50
Bellville
St Georges Western Cape Retail 44.00 11 289 3 898 61.62
Square,
George
Clubview Gauteng Retail 30.70 5 761 5 329 65.60
Corner, (1)
Zwartkop
The Ridge, Gauteng Retail 30.00 4 689 6 397 106.72
Honeydew
Ridge
Total 328.80 48 877 6 727 75.37
Notes:
1. The net operating income of the properties for the 12 month
period ended 30 September 2012 capitalised at the rate of 9.75%
for 210 Church Street and 10% for Clubview Corner respectively.
The purchase consideration will be determined based on the
quantum of the final leases concluded. The purchase
consideration will further be adjusted in the event that
transfer is delayed beyond 1 December 2012 by a factor of 0.67%
per month.
b) The Put Option Acquisition ?
Details of the properties that may be acquired in terms of the Put
Option Agreement are as follows ?
Property Geographical Sector Estima GLA Estimat Average
Name and Location te (m2) e Gross
Address purcha purchas Rental
se e per m2
Consid conside (R/m2)
eratio ration
n per GLA
(R?m) (R/m2)
Main Street, Kwazulu- Retail 6.70 2 992 2 240 25.00
Gingindlovu Natal (1)
Pick n Pay, Mpumalanga Retail 31.80 7 698 4 131 51.80
Middelburg (2)
Total 38.50 10 690 3 602 43.31
Notes:
1. Higher of R5 000 000 (five million Rand) or the projected net
operating income of the property for the 12 month period
commencing from the date that the put option is exercised,
capitalised at the rate of 11.5%;
2. The projected net operating income of the property for the 12
month period commencing from the date that the put option is
exercised, capitalised at the rate of 10%.
c) The Isolenu Property Portfolio Acquisition ?
Details of the properties which are to be acquired in terms of the
Isolenu Property Acquisition are as follows -
Property Geographical Sector Purcha GLA Purchas Average
Name and Location se (m2) e Gross
Address Consid Conside Rental
eratio ration per m2
n per (R/m2)
(R?m) GLA
(R/m2)
Pick n Pay, Gauteng Retail 12.93 2 626 4 925 54.22
Vereeniging
Pick n Pay, Gauteng Retail 15.78 2 695 5 856 56.10
Orange Farm
Pick n Pay, Gauteng Retail 13.87 2 238 6 196 60.18
Zamdela
Pick n Pay, Gauteng Retail 9.51 1 548 6 143 57.34
Stretford
Pick n Pay, Gauteng Retail 6.91 1 065 6 492 59.55
Sharpville
Pick n Pay, Western Cape Retail 8.43 1 189 7 088 66.97
Nyanga
Total 67.43 11 361 5 936 58.10
d) Sector analysis ?
A sector analysis of the properties which are or may be acquired in
terms of the SA Corporate Real Estate Property Acquisition, the Put
Option Acquisition and the Isolenu Property Acquisition (including
the Option Properties) are 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 414.73 68 215 6 080 67.31 10.39 9.21
Office 20.00 2 714 7 370 75.50 9.57 21.90
Total 434.73 70 929 6 129 67.58 10.35 9.70
Notes:
1. Average Gross Rental per m2 excludes recoveries.
2. 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 properties.
3. 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.
6. CONDITIONS PRECEDENT
The SA Corporate Real Estate Property Portfolio Acquisition, the Put
Option Acquisition and the Isolenu Property Portfolio Acquisition are
not inter-conditional.
a) The SA Corporate Real Estate Property Portfolio Acquisition -
The SA Corporate Real Estate Property Portfolio Acquisition is still
subject to fulfilment of various conditions precedent, including the
following:
i) Obtaining approval from the Competition Authorities for the SA
Corporate Real Estate Property Portfolio Acquisition, in terms
of the Competition Act No 89 of 2008, within 90 days of 13 July
2012;
ii) 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, by the later of within 90
days of 13 July 2012 or within 30 days of obtaining approval
from the Competition Authorities; and
iii) In respect of 210 Church Street, the seller, by no later than 31
August 2012, signing and accepting an offer to lease the
premises concerned with Mr Price, and in respect of Clubview
Corner, the seller, by no later than 31 August 2012, signing and
accepting an offer to lease the premises concerned with Spar.
b) The Put Option Acquisition -
The Put Option Acquisition is subject to fulfilment of various
conditions precedent, including the following:
i) Obtaining approval from the Competition Authorities for the Put
Option Acquisition, in terms of the Competition Act No 89 of
2008, within 90 days of completion of 13 July 2012;
ii) Exercise of the put options by SA Corporate Real Estate on or
before 31 March 2013; and
iii) In respect of Pick n Pay, Middelburg, the seller refurbishing
the property at its own cost.
c) The Isolenu Property Portfolio Acquisition ?
The Isolenu Property Portfolio Acquisition is subject to fulfilment
of various conditions precedent, including the following:
i) The satisfactory completion of due diligence investigations, to
be performed by the Company within 20 Business Days of the
receipt of all the information requested from the seller;
ii) The approval of the board of directors of Richacres Investments
Five (Proprietary) Limited, Castleridge Property Holdings
(Proprietary) Limited and Colossus Developments (Proprietary)
Limited for the Isolenu Property Portfolio Acquisition within 20
Business Days of the signature of the agreements;
iii) The approval of the board of directors of Fairvest for the
Isolenu Property Portfolio Acquisition within 10 Business Days
of the completion of the due diligence investigation; and
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, within 90 Business Days of 13
July 2012.
7. WARRANTIES
The agreements relating to the SA Corporate Real Estate Property
Portfolio Acquisition, the Put Option Acquisition and the Isolenu
Property Portfolio Acquisition provide for warranties and indemnities
that are standard for transactions of this nature.
8. PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects in relation to the SA Corporate Real
Estate Property Portfolio Acquisition, the Put Option Acquisition and
the Isolenu Property Portfolio Acquisition are still in the process
of being finalised and will be published in due course.
9. FORECAST FINANCIAL INFORMATION
The forecast financial information in relation to the SA Corporate
Real Estate Property Portfolio Acquisition, the Put Option
Acquisition and the Isolenu Property Portfolio Acquisition is still
in the process of being finalised and will be published in due
course.
10. CATEGORISATION AND FURTHER DOCUMENTATION
The SA Corporate Real Estate Property Portfolio Acquisition, the Put
Option Acquisition and the Isolenu Property Portfolio Acquisition
constitute Category 1 acquisitions 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 SA Corporate Real Estate Property
Portfolio Acquisition, the Put Option Acquisition and the Isolenu
Property Portfolio Acquisition and a notice convening a general
meeting will be posted to linked unitholders in due course.
11. RENEWAL OF CAUTIONARY ANNOUNCEMENT
Linked unitholders are referred to the renewal of cautionary
announcement dated 13 July 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 SA Corporate
Real Estate Property Portfolio Acquisition, the Put Option
Acquisition and the Isolenu Property Portfolio Acquisition is made.
17 July 2012
Cape Town
Sponsor and Corporate Advisor: PSG Capital
Transaction Advisor and Bookrunner: Java Capital
Date: 17/07/2012 12:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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