| Tue 13 Mar 2018, 9:00 | | SPEAR REIT LIMITED - Disposal of 142 Bree Street Property |
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SEA 201803130011A
Disposal of 142 Bree Street Property
SPEAR REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2015/407237/06)
Share Code: SEA
ISIN: ZAE000228995
Approved as a REIT by the JSE
(“Spear” or “the Company”)
DISPOSAL OF 142 BREE STREET PROPERTY
1. INTRODUCTION
Shareholders are hereby advised that the Company, through its
wholly-owned subsidiary, Spear Holdco Proprietary Limited
(“Seller”), concluded a sale agreement (“the Agreement”) with
Arctigen Proprietary Limited (“Purchaser”), on or about 12 March
2018. In terms of the Agreement, the Purchaser will acquire the
vacant property situated on Erf 142181, Cape Town, more commonly
known as 142 Bree Street (“the Property”) (“the Disposal”).
2. RATIONALE FOR THE DISPOSAL
The management of Spear have elected to dispose of this asset
given that the Purchase Consideration was at a substantial premium
to the book-value of the Property. This Disposal will provide
Spear with the ability to prudently recycle the capital received
to fund further strategic and yield accretive acquisitions.
3. PURCHASE CONSIDERATION
3.1. In terms of the Agreement, the purchase price for the Property
is R150 000 000 (exclusive of VAT) (“Purchase Consideration”).
3.2. The Purchase Consideration will be settled on the date of
transfer of the Property into the name of the Purchaser,
(“Transfer Date”), following the fulfilment or, where
applicable, waiver of the condition precedent as set out in
paragraph 4 below (“Condition Precedent”).
3.3. In terms of the Agreement, the Purchase Consideration will be
settled as follows:
3.3.1. a deposit in an amount of R10 000 000 is payable on signature
of the Agreement;
3.3.2. the balance the Purchase Consideration in an amount of
R140 000 000 (“Balance”) is payable in cash against
registration of transfer of the Property into the name of the
Purchaser; and
3.3.3. the VAT on the Purchase Consideration in an amount of
R22 500 000 is payable approximately 45 days prior to the
registration of transfer of the Property.
3.4. In respect of the Balance, the Purchaser has furnished the
Seller with an acceptable guarantee.
4. CONDITIONS PRECEDENT
The Disposal is subject to the fulfilment or, where applicable,
waiver of the Condition Precedent that by no later than 1 June
2018, to the extent that such approval may be required, the
Disposal be approved unconditionally by the competition
authorities in terms of the Competition Act, No. 89 of 1998 or,
in the event of a conditional approval, on terms acceptable to
the parties to the Disposal.
5. EFFECTIVE DATE
The Disposal will become effective on the Transfer Date.
6. WARRANTIES AND OTHER TERMS
6.1. The Agreement contains representations and warranties by the
Seller in favour of the Purchaser which are standard for a
transaction of this nature.
6.2. Subject to such warranties, the Property is sold “voetstoots”.
6.3. The Property is sold subject to all conditions of title,
restrictions and servitudes registered against the title deed
of the Property.
7. APPLICATION OF THE PURCHASE CONSIDERATION
The Purchase Consideration proceeds and cash realised will be
used to fund new acquisitions and if applicable reduce portfolio
gearing.
8. THE PROPERTY
Details of the Property are as follows:
Property Name Geographical Sector Gross Weighted
and Address Location Lettable Area Average
(m2) Gross
Rental/m2
142 Bree City of Cape Commercial 2 805 N/A
Street, Cape Town
Town
9. FINANCIAL INFORMATION IN RELATION TO THE PROPERTY
9.1. In terms of the latest published interim report of Spear for
the six months ended 31 August 2017, the value of the net assets
being disposed of (the Property) amounts to R 73 915 130, while
the distributable profit after tax of the Property amounts to
R 681 726 for the same period.
9.2. No independent valuation has been carried out and the directors
of Spear are of the view that the Purchase Consideration payable
in respect of the Property is considered to be its fair market
value. The directors of Spear 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.
9.3. The financial information contained in this announcement has
not been reviewed or reported on by Spear’s auditors.
10. CATEGORISATION
The Disposal constitutes a Category 2 transaction in terms of the
JSE Listings Requirements.
Cape Town
13 March 2018
PSG Capital Proprietary Limited
Transaction Advisor and Sponsor
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