| Wed 6 Mar 2013, 16:15 | | FAIRVEST PROPERTY HOLDINGS LIMITED - Acquisition of new property - Sebokeng Plaza Acquisition |
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FVT 201303060049A
Acquisition of new property - Sebokeng Plaza Acquisition
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 NEW PROPERTY
1. THE SEBOKENG PLAZA ACQUISITION
1.1. Linked unitholders of the Company are hereby advised that
the Company has entered into an agreement (“the Agreement”)
with Fortress Income 3 Proprietary Limited (“Seller”) and
The Axis Fund Proprietary Limited (“Axis Fund”), in terms of
which the Company and Axis Fund (collectively, “Purchasers”)
are each to acquire a 50% undivided share in the property
known as Sebokeng Plaza, as more fully detailed in paragraph
5 below, (“Sebokeng Plaza Property”) and the associated
rental enterprise conducted in respect of the Sebokeng Plaza
Property as a going concern (“Sebokeng Plaza Acquisition”),
with the aforementioned 50% undivided share of each of the
Company and Axis Fund being referred to hereafter as,
respectively, the “Fairvest Undivided Share” and the “Axis
Undivided Share” (collectively, the “Undivided Shares”).
1.2. The effective date of the Sebokeng Plaza Acquisition will be
the date of registration at the Deeds Office of transfer of
ownership of the Undivided Shares in and to the Sebokeng
Plaza Property into the name of the Purchasers (“Date of
Transfer”), which is expected to occur on or about 1 May
2013.
2. RATIONALE FOR THE ACQUISITION
The Sebokeng Plaza Acquisition is 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.
3. PURCHASE CONSIDERATION
3.1. The total purchase consideration for the Sebokeng Plaza
Acquisition is R68 000 000 (sixty eight million rand) (“Full
Purchase Consideration”), which includes VAT at the rate of
0%.
3.2. The purchase consideration relating to the Fairvest
Undivided Share of the Sebokeng Plaza Acquisition is
R34 000 000 (thirty four million rand) (“Fairvest Purchase
Consideration Share”), which includes VAT at the rate of 0%,
and which is payable in cash by Fairvest on the Date of
Transfer.
3.3. If transfer of the Sebokeng Plaza Property occurs after 1
May 2013 for any reason whatsoever, the Purchasers shall pay
interest to the Seller on the Full Purchase Consideration
(excluding VAT), calculated at the rate of 0.83% per month
from 1 May 2013 to the Date of Transfer, both days
inclusive.
3.4. The Company will fund the Fairvest Purchase Consideration
Share through debt and/or equity funding.
4. SHOPRITE EXPANSION
4.1. Shoprite leases a portion of the Sebokeng Plaza Property
(“Shoprite Premises”). Prior to the signature date of the
Agreement, the Seller entered into certain building
contracts in respect of the relocation and installation of
certain tenants and certain construction works relating to
the expansion of the Shoprite Premises.
4.2. The Purchasers shall be liable for any and all costs and
disbursements (including VAT) in respect of the above
construction works from the date of commencement of the said
construction works up to and including the date of final
completion and handover to Shoprite. In this regard, the
Purchasers undertake to reimburse the Seller for any and all
costs and disbursements (including VAT) incurred by it from
the date of commencement of the construction works up to and
including the Date of Transfer, payable in cash prior to the
registration of the transfer of the Undivided Shares in and
to the Sebokeng Plaza Property into the name of the
Purchasers.
4.3. The 50% portion of the Shoprite Expansion costs for which
the Company will be liable, is currently anticipated as
R3 256 000, excluding VAT.
5. THE SEBOKENG PLAZA PROPERTY
Details of the Sebokeng Plaza Property are as follows:
Average
Cost gross
Cost/ per rental per
Value GLA GLA m2
Property Name Geographical
and Address Location Sector (R’m) (m2) (R/m2) (R/m2)
Sebokeng Plaza, Moshweshwe Retail 68 11,426 5,951 76.4
Portion 3, 4 and Street,
7 (which is all Sebokeng
a portion of South,
portion 1) of Gauteng
Erf 65558,
Sebokeng Unit 10
Extension 1
Township,
Gauteng
Note:
a) The above table reflects the applicable information for
the entire Sebokeng Plaza Property, as well as the Full
Purchase Consideration. However, please note that, as
indicated previously, the Company will be acquiring a 50%
undivided share in the Sebokeng Plaza Property and that
the Fairvest Purchase Consideration Share due by the
Company in respect of the Fairvest Undivided Share is
R34 000 000.
6. PROPERTY SPECIFIC INFORMATION
Details regarding the Sebokeng Plaza Acquisition, as at the
expected effective date, are set out below:
Purchase Yield
attributable
to Linked Average Lease
Unitholders Escalation Duration
Vacancy
Property Name (%) (%) (years) % by GLA
Sebokeng Plaza 11.1% 7.9% 3.5 4.6%
Notes:
a) The purchase yield attributable to linked unitholders
assumes that the Fairvest Purchase Consideration Share is
funded through equity and includes the Company’s 50% share
of the costs associated with the Shoprite Expansion
(currently anticipated as R3 256 000, excluding VAT).
b) The costs associated with the acquisition of the Fairvest
Undivided Share are estimated at R1.45 million.
c) The cost of the property 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.
7. CONDITIONS PRECEDENT
The Sebokeng Plaza Acquisition is subject to the condition
precedent that the board of directors of the Company approve
the Sebokeng Plaza Acquisition by no later than Friday, 15
March 2013.
8. WARRANTIES
The Seller has provided limited warranties to the Purchasers
in the Agreement.
9. PRO FORMA FINANCIAL EFFECTS OF THE SEBOKENG PLAZA ACQUISITION
The pro forma financial effects of the Sebokeng Plaza
Acquisition on net asset value and net tangible asset value
per linked unit are not significant and have therefore not
been disclosed.
10. FORECAST FINANCIAL INFORMATION OF THE SEBOKENG PLAZA ACQUISITION
The forecast financial information relating to the Sebokeng
Plaza Acquisition for the financial periods ended 30 June 2013
and 30 June 2014 are set out below. The forecast financial
information has not been reviewed or reported on by a
reporting accountant in terms of section 8 of the Listings
Requirements of the JSE Limited and is the responsibility of
the Company’s directors.
Forecast for the 2 Forecast for the 12
month period ended month period ended
30 June 2013 30 June 2014
(R) (R)
Revenue 1,620,982 10,039,651
Operating costs (259,964) (1,645,925)
Net operating
income 1,361,018 8,393,726
Debenture interest (1,361,018) (8,393,726)
Total
comprehensive
income
attributable to
linked unitholders - -
Notes:
a) For the avoidance of doubt, the forecast financial
information provided above relates to the acquisition of
the Fairvest Undivided Share (50% undivided share) in
terms of the Sebokeng Plaza Acquisition.
b) Contractual revenue includes gross rentals and other
recoveries but excludes any adjustment applicable to the
straight lining of leases.
c) Operating costs include all utility and council charges
applicable to the Sebokeng Plaza Property.
d) The forecast information for the 2 month period ended 30
June 2013 has been calculated from the anticipated
effective date of the Sebokeng Plaza Acquisition, being 1
May 2013.
e) Un-contracted revenue constitutes 18.0% of the revenue for
the 2 month period ended 30 June 2013.
f) Un-contracted revenue constitutes 21.4% of the revenue for
the 12 month period ended 30 June 2014.
g) Current vacant space has been has been assumed to remain
vacant unless it is deemed probable that such space will
be let, in which case the rental is forecast at prevailing
rates.
h) Leases expiring during the forecast period have been
assumed to renew at current market rates, unless the
lessee has indicated its intention to terminate the lease.
i) It is assumed that 100% of net operating income is
distributed to linked unit holders, as interest, in
accordance with the debenture trust deed of the Company.
11. CATEGORISATION
The Sebokeng Plaza Acquisition is a Category 2 acquisition in
terms of the listings requirements of the JSE Limited.
6 March 2013
Cape Town
Sponsor
PSG Capital
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