FAIRVEST PROPERTY HOLDINGS LIMITED - Disposal of Tokai Junction

Disposal of Tokai Junction

FAIRVEST PROPERTY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/005011/06)
Share code: FVT, ISIN: ZAE000203808
(Approved as a REIT by the JSE)
(“Fairvest” or “the Company”)


DISPOSAL OF TOKAI JUNCTION


1.   INTRODUCTION

     Shareholders are advised that on 3 April 2020, the Company entered into an agreement
     (“Disposal Agreement”) with FPG Holdings Proprietary Limited (“Purchaser”), in terms
     of which the Company will dispose of the shopping centre rental enterprise operated by
     Fairvest, commonly known as Tokai Junction (“Rental Enterprise”), including the
     property on which the Rental Enterprise is being conducted on situated at Erf 10800,
     Constantia, Cape Town (“Property”) to the Purchaser, as a going concern, for a disposal
     consideration of R190 000 000 (“Disposal”).

     The effective date of the Disposal shall be the date of registration of transfer of ownership
     of the Property into the name of the Purchaser at the applicable Deeds Office
     (“Transfer Date”), which is expected to occur during July 2020.

2.   RATIONALE FOR THE DISPOSAL

     The Disposal is consistent with the Company’s stated strategy of focusing on value
     extraction and practising disciplined, conservative financial management while
     maintaining a focus on retail assets with a weighting in favour of non-metropolitan areas
     and lower living standards measure (LSM) sectors.

3.   DISPOSAL CONSIDERATION

     The disposal consideration for the Rental Enterprise of R190 000 000 (including value
     added tax at a rate of 0%) (“Disposal Consideration”) is payable in cash on the Transfer
     Date, subject to monthly escalation of 0.58% should registration of transfer of the Property
     occur after 1 August 2020.

4.   APPLICATION OF THE DISPOSAL CONSIDERATION

     The Disposal Consideration will be utilised to reduce the Company’s debt.

5.   CONDITIONS PRECEDENT

     The Disposal is subject to the fulfilment of the following outstanding conditions precedent
     (“Conditions Precedent”) that:

     -   within a period of 20 business days following 1 May 2020, the Purchaser undertakes
         a due diligence investigation and is satisfied with the outcome thereof; and

     -   if applicable, within a period of 90 days following the date on which the above
         Condition Precedent is fulfilled, the Disposal is unconditionally approved by the
         relevant competition authorities or, is approved upon such terms and conditions as
         are reasonably acceptable to the Purchaser.

     The date by which the Conditions Precedent must be fulfilled may be extended by the
     parties by written agreement.

     The Condition Precedent relating to the due diligence has been inserted for the benefit of
     the Purchaser which will be entitled to waive fulfilment of the said Condition Precedent.
     The Condition Precedent relating to competition approval may not be waived.

6.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE DISPOSAL AGREEMENT

     The Disposal Agreement contains representations and warranties by the Company in
     favour of the Purchaser which are standard for a transaction of this nature.

7.   THE PROPERTY

     Details of the Property are as follows:

      Property          Geographical      Sector            Gross             Weighted
      Name and          Location                            Lettable Area     Average
      Address                                               (m2)              Gross Rental /
                                                                              m2
      Tokai Junction    Tokai, Western    Retail            7 698             R183.47
                        Cape

     Details regarding the Property, as at the anticipated Transfer Date, are set out below:

      Disposal Yield         Weighted Average      Weighted Average      Vacancy % by
      Attributable to        Escalation            Lease Duration        Gross Lettable
      Shareholders                                 (years)               Area

      8.59%                  7.0%                  6.1                   4.8%


     Notes:

     a. Fairvest’s costs associated with the Disposal are estimated at R720 000.
     b. The Disposal Consideration payable in respect of the Rental Enterprise (which
        includes 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.

8.   FINANCIAL INFORMATION

     The net asset value attributed to Rental Enterprise as at 31 December 2019, being the
     date of the last unaudited interim financial results of the Company, was R176 300 000.

     The audited profits after tax attributable to the Rental Enterprise for the most recent
     financial year ended 30 June 2019, was R14 217 426, based on the audited annual
     financial statements of the Company for that year, which were prepared in terms of IFRS.

9.   CLASSIFICATION OF THE DISPOSAL

     The Disposal constitutes a category 2 transaction in terms of the JSE Limited Listings
     Requirements.


6 April 2020
Cape Town

Transaction advisor
Java Capital

Sponsor
PSG Capital

Date: 06-04-2020 04:35:00
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