| Fri 26 May 2006, 15:21 | | Fairvest - Announcement Regarding the Disposal of |
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FVT
FVT
Fairvest - Announcement Regarding the Disposal of a Property by a Subsidiary
FAIRVEST PROPERTY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1998/005011/06)
("Fairvest")
Linked unit code: FVT & ISIN: ZAE000034658
ANNOUNCEMENT REGARDING THE DISPOSAL OF A PROPERTY BY A SUBSIDIARY
The disposal
Fairvest linked unitholders are advised that on 19 May 2006, Soundprops 1203
Investments (Proprietary) Limited (registration number 1991/006271/07)
("Soundprops"), a subsidiary of Fairvest, entered into an agreement for the sale
of a property known as Ambassador House ("the property") for a consideration of
R5 800 000. The purchase consideration is exclusive of commission, which is
payable by the purchaser.
The property is situated at Pine Street, Durban, in the central business
district of Durban, adjacent to the beachfront area, and the property
description is Erf 10519, Durban. The property comprises 882 square metres of
lettable retail space and 2 810 square metres of lettable commercial space. The
historical weighted average rent per square metre during the financial year
ended 30 September 2005 amounted to R33.13 and R19.56 per month respectively for
retail and commercial space (excluding value added tax), with vacancy factors
during that period of 11.6% and 36.5% respectively.
The rationale of the disposal is to exploit the current attractive investment
realisation potential which presented itself, without a concomitant necessity to
first refurbish and/or renovate the property. The proceeds of the disposal will
be applied to renovate and refurbish other group properties.
The purchaser is Mr Rakesh Maharaj, acting as a nominee for a company to be
formed for the purpose of the acquisition of the aforesaid property.
The disposal agreement provides that if the sale is conditional on the consent
of any statutory authority or any court of law, then the sale shall be subject
to such consent. No such consent is required and accordingly the disposal is
unconditional.
The disposal is on a voetstoots basis as a going concern, and is furthermore
subject to the terms, conditions and servitudes contained in the relevant title
deed, the applicable township establishment conditions, any zoning conditions
under the relevant town planning scheme and the current tenancies, which are
normal for a sale of this nature.
The disposal will be effective against registration of transfer of title in
respect of the property into the name of the purchaser. The entire purchase
consideration is payable in cash against such registration of transfer. Payment
of the purchase consideration is to be secured by way of an appropriate
guarantee by 19 June 2006 as specified in the relevant agreement of sale.
Soundprops is a property investment company and the property is its sole asset.
Pro forma financial effects of the disposal
Set out below are the unaudited pro forma financial effects of the disposal on
the audited results of the Fairvest Group for the year ended 30 September 2005.
The pro forma financial effects reflect the impact that the disposal might have
had on the earnings per linked unit and the headline earnings per linked unit
had the disposal been effected on 1 October 2004, and the effect that the
disposal might have had on the net asset value per linked unit and the net
tangible asset value per linked unit had the disposal been effected on 30
September 2005. The pro forma financial effects are provided for illustrative
purposes only and, because of their pro forma nature, may not fairly present
Fairvest"s financial position, changes in equity, results of operations or cash
flows.
Before the After the Change
disposal disposal
Basic earnings per linked unit 0.00 0.00 0.0%
(cents)
Headline earnings per linked unit as -4.29 -7.50 -75%
required by GAAP (cents)
Headline earnings per linked unit as 0.90 2.29 154%
revised for fair value adjustment to
debentures (cents)
Net asset value per linked unit and 69.84 75.01 7%
net tangible asset value per linked
unit (cents)
96 450 018 96 450 018 -
Weighted average number of linked
units
Number of linked units in issue on 85 794 988 85 794 988 -
30 September 2005
Notes:
1. The "Before the disposal" column has been extracted from the audited results
of the Fairvest Group for the year ended 30 September 2005.
2. The calculation of earnings per linked unit ("EPLU") and headline earnings
per linked unit ("HEPLU") in the "After the disposal" column takes into
consideration the following:
2.1 the reversal of a net rental loss of R391 979 which was incurred during the
year;
2.2 the reversal of interest on the mortgage bond against the property amounting
to R134 485 during the year;
2.3 after tax interest of R278 091 at an assumed annual interest rate of 5% that
would have been received based on the net purchase consideration proceeds after
providing for capital gains tax of R134 537, settlement of a mortgage bond of R1
372 903 as at 1 October 2004, the reversal of the net attributable rental loss
of R391 979 in the case of EPLU and R191 979 in the case of HEPLU and the
reversal of R134 485 in interest on the mortgage bond against the property;
2.4 in relation to EPLU, the disposal does not reflect a profit by virtue of the
corresponding fair value adjustment to the debentures,
and furthermore, the calculation of EPLU and HEPLU is based on the weighted
average number of 96 450 018 linked units in issue during the year ended 30
September 2005, assuming that the disposal was effective from 1 October 2004, at
a total purchase consideration of R5 800 000.
3. The calculation of net asset value per linked unit and net tangible asset
value per linked unit in the column headed "After the disposal" takes into
account:
3.1 the disposal of the property with a book value of R2 300 000, after
reversing the fair value adjustment of R200 000 during the relevant accounting
period;
3.2 the settlement of the bond against the property amounting to R1 252 611 as
at year-end;
3.3 capital gains tax of R134 537,
and furthermore the calculation of net asset value per linked unit and net
tangible asset value per linked unit is based on 85 794 988 linked units in
issue on 30 September 2005, assuming that the property was sold at 30 September
2005 for a total purchase consideration of R5 800 000.
The pro forma financial information set out above is the responsibility of the
directors of Fairvest.
26 May 2006
Sponsor
Merchant Sponsors (Pty) Limited
Date: 26/05/2006 03:21:30 PM Produced by the JSE SENS Department
