| Wed 18 Oct 2006, 12:23 | | Fairvest - Proposed disposals of properties by sub |
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FVT
FVT
Fairvest - Proposed disposals of properties by subsidiaries of Fairvest
Fairvest Property Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1998/005011/06)
("Fairvest")
Linked unit code: FVT ISIN: ZAE000034658
PROPOSED DISPOSAL OF PROPERTIES BY SUBSIDIARIES
1. The proposed disposals
Fairvest linked unitholders are advised that a circular will be
dispatched to linked unitholders on 19 October 2006 containing details of
proposals in terms of which linked unitholders will be approached for
authority in general meeting to sell 3 properties by way of public
auction. In terms of the proposals Fairvest Properties (Proprietary)
Limited (registration number 2000/021399/07) ("Fairprop"), a wholly-owned
subsidiary of Fairvest, and its subsidiaries 577 Point Road Share Block
Investments Limited (registration number 1992/001025/06) ("Psb"), Romwood
Share Block Investments Limited (registration number 1963/003764/06)
("Rsb") and Kempton City Props One Share Block (Proprietary) Limited
(registration number 1993/000963/07) ("Ksb") intend to sell the
properties registered in the names of Psb, Rsb and Ksb respectively.
The properties in question are:
- in relation to Rsb, the property described as various sectional
title units in terms of sectional title scheme No 215/1994 in
respect of Erf 11443, Durban, Registration Division F.T., Province
of KwaZulu-Natal, measuring 6 943 square metres in extent, situated
at 91 Somtseu Road, Durban and known as the Mangrove Beach Centre
("the MBC property");
- in relation to Ksb, the property described as Portion 327 of the
Farm Zuurfontein No. 33, Registration Division I.R., Gauteng
Province, situated along Pretoria Road, Kempton Park, measuring
3,977 hectares in extent, and comprising 40 855 square metres of
retail and office space, 6 000 square metres of parking and a total
of 177 residential flats and known as Kempton City Shopping Centre
("the KCSC property");
- the property described as various sectional title units in terms of
sectional title scheme No 283/1993 in respect of Erven 10460, 10464
and 10465, Portion 2 of Erf 10462, remainder of Erf 10462, Portion 6
of Erf 10461 and Portion 7 of Erf 10461, Durban, Registration
Division F.T., Province of KwaZulu-Natal, situated at the corner of
West Street and Point Road, Durban, and known as Nedbank Circle
("the NC property").
The properties in question are all investment properties, generating rental
income for Fairvest Properties, which is entitled to the beneficial use and
enjoyment of the areas owned by the respective share block subsidiaries in
terms of the applicable use agreements.
The rationale for the proposed sales is as follows:
- the properties are located in areas which do not allow attractive
market-related rental rates;
- the properties require modernization and refurbishment which will
require significant funding; and
- the current vacancy levels (summarized elsewhere below) are high.
The authority sought from linked unitholders will be to sell the above
properties:
- to any purchaser, save for any person who will be a related party as
contemplated in section 10 of the Listings Requirements of JSE
Limited;
- by way of public auction or private treaty;
- at prices not less than their current valuations as at 1 September
2006 by Mr Bradley Richard Ryle of Galleon Valuation Services
(Proprietary) Limited, the external valuer of Fairvest, which are
R13,3 million for the MBC property, R27 million for the KCSC
property and R18,5 million for the NC property;
- for disposal considerations payable in cash against registration of
transfer;
- effective against registration of transfer; and
- within the 6-month period ending 31 March 2007.
Authority will also be sought from linked unitholders in terms of section 228
of the Companies Act in the event that the aggregate prices achieved on
auction may constitute the greater part of the assets of the group and,
similarly, a meeting of debenture holders will be convened in order to comply
with the provisions of the Debenture Trust Deed.
Relevant property detail is provided in the table below:
MBC property NC property KCSC property
Rentable area: mSquared mSquared mSquared
- retail 3 008 3 972 29 485
- commercial 2 332 4 984 1 418
- residential 3 634 11 295
Total 5 340 12 590 42 198
Weighted average R/mSquared R/mSquared R/mSquared
rental:
24,76 (5,08) 2,56
Vacancy profile by % % %
rentable area:
- retail 12,07 33,92 51,86
- commercial 11,79 70,95 47,46
- residential not part of hotel -
applicable pool
The disposal proceeds will be applied to settle the relevant long-term loan
commitments in respect of the properties in question and the balance will be
applied towards investments in properties with appropriate yields and which
the directors regard as having better long-term investment profiles.
2. Pro forma financial effects of the proposed disposals
Set out below are the unaudited pro forma financial effects of the
disposals on the audited results of the Fairvest Group for the 6-month
interim period ended 31 March 2006. The pro forma financial effects
reflect the impact that the proposed disposals might have had on the
earnings per linked unit and the headline loss per linked unit had the
disposals been effected on 1 October 2005, and the effect that the
disposals might have had on the net asset value and the net tangible
asset value per linked unit had the disposals 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 After Change
the the KCSC
disposal property
s disposal
Basic earnings per linked unit - - -
(cents)
Headline loss per linked unit as (0,32) (0,32) -
required by GAAP (cents)
Headline loss per linked unit as (2,38) (1,99) 16,39%
revised for fair value adjustment to
debentures (cents)
Net asset value and net tangible 67,78 67,54 (3,54%
asset value per linked unit (cents) )
Number of linked units in issue on 85 795 85 795 -
31 March 2006 and weighted average 988 988
number of linked units
After Change
the MBC
property
disposal
Basic earnings per linked unit - -
(cents)
Headline loss per linked unit as (3,23) (909,38%)
required by GAAP (cents)
Headline loss per linked unit as (2,99) (25,63%)
revised for fair value adjustment to
debentures (cents)
Net asset value and net tangible 70,21 3,58%
asset value per linked unit (cents)
Number of linked units in issue on 85 795 -
31 March 2006 and weighted average 988
number of linked units
After Change
the NC
property
disposal
Basic earnings per linked unit - -
(cents)
Headline loss per linked unit as (2,66) (731,25%)
required by GAAP (cents)
Headline loss per linked unit as (1,51) 36,55%
revised for fair value adjustment to
debentures (cents)
Net asset value and net tangible 69,66 2,77%
asset value per linked unit (cents)
Number of linked units in issue on 85 795 -
31 March 2006 and weighted average 988
number of linked units
After all Change
proposed
disposals
Basic earnings per linked unit - -
(cents)
Headline loss per linked unit as (5,57) (1 640,62%)
required by GAAP (cents)
Headline loss per linked unit as (1,73) 27,31%
revised for fair value adjustment to
debentures (cents)
Net asset value and net tangible 71,86 6,02%
asset value per linked unit (cents)
Number of linked units in issue on 85 795 988 -
31 March 2006 and weighted average
number of linked units
Notes:
1. The "Before" column has been extracted from the unaudited results of
Fairvest for the 6-month period ended 31 March 2006.
2. The calculation of earnings per linked unit and headline loss per
linked unit in the "After the KCSC property disposal", "After the
MBC property disposal", "After the NC property disposal" and "After
all proposed disposals" columns, assumes that the proposed disposals
were effected on 1 October 2005, are based on the weighted average
number of linked units, and takes into account the effect of the
following:
2.1 receipt of the minimum disposal considerations of R27 million,
R13,3 million and R18,5 million respectively;
2.2 settlement of the mortgage bonds against the relevant
properties, and reversal of interest payments and bond
redemption payments;
2.3 elimination of trading;
2.4 estimated capital gains tax of R494 405 in respect of the NC
property;
2.5 transaction costs; and
2.6 incorporation of after tax interest received calculated at an
assumed interest rate of 5% per annum on net cash receipts
arising from the proposed disposals respectively.
3. In relation to the row heading "Earnings per linked unit", the disposals
do not reflect a change due to the corresponding fair value adjustments
to the debentures.
4. The calculation of net asset value and net tangible asset value in the
"After the KCSC property disposal", "After the MBC property disposal",
"After the NC property disposal" and "After all proposed disposals"
columns, assumes that the proposed disposals were effected on 31 March
2006, are based on the number of linked units in issue on 31 March 2006
and takes into account the receipt of the minimum disposal proceeds,
transaction costs, estimated capital gains tax of R494 405 in respect of
the NC property and settlement of the mortgage bond balances as at 31
March 2006 of the properties sold.
5. The information utilised in the adjustments to calculate the pro forma
financial effects were extracted and derived from the management accounts
of Fairvest and its subsidiaries.
The pro forma financial information set out above is the responsibility of the
directors of Fairvest.
18 October 2006
Sponsor
Merchant Sponsors (Pty) Limited
Reporting accountants and auditors
Horwath Leveton Boner
Date: 18/10/2006 12:23:09 PM Produced by the JSE SENS Department
