| Wed 6 Sep 2006, 12:08 | | Fairvest - Acquisition Of 3 Properties By A Subsid |
|
FVT
FVT
Fairvest - Acquisition Of 3 Properties By A Subsidiary, And Renewal Of
Cautionary Announcement
FAIRVEST PROPERTY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration No. 1998/005011/06)
("Fairvest")
Linked unit code: FVT ISIN: ZAE000034658
ACQUISITION OF 3 PROPERTIES BY A SUBSIDIARY, AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
The acquisitions
Fairvest linked unitholders are advised that on 8 August 2006 ("the
acquisition date"), Fairvest Properties (Proprietary) Limited
(registration number 2000/021399/07) ("Fairvest Properties"), a wholly-
owned subsidiary of Fairvest, entered into agreements for the
acquisition of the following properties:
a. from Sante Fe 215 (Pty) Ltd for a consideration of R3,25 million,
a commercial property described as Erf 215 Halfway House Extension 12,
Gauteng ("Acquisition 1");
b. from Sante Fe 216 (Pty) Ltd for a consideration of R3,75 million,
a commercial property described as Erf 216 Halfway House Extension 12,
Gauteng("Acquisition 2"); and
c. from Sante Fe 217 (Pty) Ltd for a consideration of R3,25 million,
a commercial property described as Erf 217 Halfway House Extension 12,
Gauteng("Acquisition 3").
Commissions on the respective purchase prices are payable by the
respective sellers.
The 3 properties are referred to as Units 215, 216 and 217 respectively
of the Palms Office Park situated at Nupen Crescent, Midrand, and
located adjacent to each other.
The property in respect of Acquisition 1 comprises 850 square metres of
lettable office space. The historical weighted average rent per square
metre for a period of 12 months preceding the acquisition date amounted
to R44 per month (excluding value added tax), with a vacancy factor
during that period of 12%.
The property in respect of Acquisition 2 comprises 1 000 square metres
of lettable office space. The historical weighted average rent per
square metre for a period of 12 months preceding the acquisition date
amounted to R43 per per month (excluding value added tax), with a
vacancy factor during that period of 10%.
The property in respect of Acquisition 3 comprises 1 000 square metres
of lettable office space. The historical weighted average rent per
square metre for a period of 12 months preceding the acquisition date
amounted to R40 per month (excluding value added tax), with a vacancy
factor during that period of 6%.
The rationale for the acquisitions is to invest in well-located
properties in growth nodes to improve the quality of assets and the
rental income generation capacity of Fairvest. The aggregate purchase
consideration for the 3 properties will be settled entirely in cash,
against registration of transfer of each property, and the respective
consideration amounts will be funded partly from existing cash
resources (inter alia arising from the proceeds of the disposal of
Ambassador House) and as to approximately 63,4% by way of loans from
the bankers of Fairvest, which loans will be secured by way of mortgage
bonds against the properties concerned.
The acquisition agreements contain in each instance as remaining
suspensive condition, the delivery by Fairvest Properties of guarantees
to the relevant conveyancer.
The relevant acquisition agreements are in all cases subject to
warranties and undertakings by the respective sellers that are normal
for agreements of this nature.
The acquisitions will be effective against registration of transfer of
title in respect of each property into the name of Fairvest Properties.
Sante Fe 215 (Pty) Limited, Sante Fe 216 (Pty) Limited and Sante Fe 217
(Pty) Limited are property investment companies and in each case the
property being disposed of to Fairvest Properties as referred to above
is their respective major asset.
Pro forma financial effects of the acquisitions
Set out below are the unaudited pro forma financial effects of the
acquisitions on the audited results of the Fairvest Group for the 6-
month period ended 31 March 2006. The pro forma financial effects
reflect the impact that the acquisitions might have had on the earnings
per linked unit and the headline earnings per linked unit had the
acquisitions been effected on 1 October 2005, and the effect that the
acquisitions might have had on the net asset value per linked unit and
the net tangible asset value per linked unit had the acquisitions been
effected on 31 March 2006. 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 Change
acquisitions acquisitions
1 and 2
Basic earnings per linked - - -
unit (cents)
Headline earnings per linked -0,32 -0,32 -
unit as required by IFRS
(cents)
Headline earnings per linked -2,38 -2,34 1,68%
unit as revised for fair
value adjustment to
debentures (cents)
Net asset value per linked 67,78 67,82 0,06%
unit and net tangible asset
value per linked unit
(cents)
Number of linked units in 85 795 988 85 795 988
issue on and since
30 September 2005 and
Weighted average number of
linked units
After Change After all Change
acquisition acquisitions
3
Basic earnings per - - - -
linked unit (cents)
Headline earnings per -0,32 - -0,32 -
linked unit as required
by IFRS (cents)
Headline earnings per -2,34 1,68% -2,30 3,36%
linked unit as revised
for fair value
adjustment to debentures
(cents)
Net asset value per 67,82 0,06% 67,85 0,10%
linked unit and net
tangible asset value per
linked unit (cents)
Number of linked units 85 795 988 85 795 988
in issue on and since
30 September 2005 and
Weighted average number
of linked units
Notes:
1. The "Before the acquisitions" column has been extracted from the
unaudited interim results of the Fairvest Group for the 6-month
period ended 31 March 2005.
2. The calculations of earnings per linked unit ("EPLU") and headline
earnings per linked unit ("HEPLU") in the "After Acquisitions 1 and
2", "After Acquisition 3" and "After all acquisitions" columns:
2.1take into consideration the following:
2.1.1 net rental income received per property respectively
of R154 656, R179 022 and R174 936 during the relevant 6-
month period;
2.1.2 bond finance charges calculated at an annual
interest rate of 10,5% for the relevant 6-month period;
2.1.3 a loss of interest on monies on call calculated at
5% per annum on cash holdings of R3,75 million for the
relevant 6-month period;
2.1.4 that, in relation to EPLU, the acquisitions do not
reflect a profit by virtue of the corresponding pro
forma fair value adjustments to debentures and the
resultant provisions for deferred tax;
2.2 are based on 85 795 988 linked units in issue during
the 6-month financial period ended 31 March 2006, assuming
that the acquisitions were effective from 1 October 2005.
3. The calculations of net asset value per linked unit and net
tangible asset value per linked unit in the columns headed
respectively "After Acquisitions 1 and 2", "After Acquisition 3"
and "After all acquisitions":
3.1 take into account the property acquisitions in respect of
Acquisition 1, Acquisition 2 and Acquisition 3, after
effecting fair value adjustments as well as the resultant
deferred tax provisions amounting to approximately R73 000 in
total in respect of the relevant accounting period; and
3.2 are based on 85 794 988 linked units in issue from 1
October 2005, assuming that the 3 properties were acquired on
31 March 2006 for the respective purchase prices stated
above.
The pro forma financial information set out above is the responsibility
of the directors of Fairvest.
Renewal of cautionary announcement
Further to the cautionary announcement dated 4 August 2006, Fairvest
linked unitholders are advised that negotiations are still in progress
which, if successfully concluded, may have a material effect on the
price of Fairvest linked units. Accordingly, Fairvest linked
unitholders are advised to continue exercising caution when dealing in
Fairvest linked units until a full announcement is made.
6 September 2006
Sponsor
Merchant Sponsors (Pty) Limited
Date: 06/09/2006 12:08:48 PM Produced by the JSE SENS Department
