SAFARI INVESTMENTS (RSA) LIMITED - Related Party Acquisition

Related Party Acquisition

SAFARI INVESTMENTS RSA LIMITED
Approved as a REIT by the JSE Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/015002/06)
Share code: SAR ISIN: ZAE000188280
(“Safari” or “the Company”)

RELATED PARTY ACQUISITION

1.   INTRODUCTION

     Shareholders are advised that on 1 March 2019, the Company, entered into an agreement
     (“Agreement”) with Cosmos Management CC (“Seller”), in terms of which the Company
     will purchase the rights and obligations under the Portfolio Management Agreement
     (“Management Agreement”) from the Seller for a purchase consideration of R 10 300
     000 (ten million three hundred thousand rand) (“Purchase Consideration”) for the
     remainder of the Management Agreement term (“Acquisition”).

2.   RATIONALE FOR THE ACQUISITION

     Safari’s board has decided to internalise its property management and leasing function.
     This internalisation will eliminate the related party component with regards to the property
     management and leasing services previously delivered through the Seller and Safari
     Retail (Pty) Ltd respectively and will furthermore result in a significant cost saving over
     the long term for the Company.

3.   PURCHASE CONSIDERATION

     The Purchase Consideration which will be settled in cash was derived by calculating the
     net present value of the forecasted net profit from the remainder of the Management
     Agreement. There is no compensation applicable to the leasing services as this was done
     on a month-to-month basis and the Company will forthwith attend to leasing of its property
     portfolio inhouse.

4.   CONDITIONS PRECEDENT

     The Acquisition is not subject to the fulfilment of any conditions precedent.

5.   EFFECTIVE DATE OF THE ACQUISITION

     Delivery and payment in respect of the Management Agreement took place on 1 March
     2019.

     The effective date of the Acquisition was 1 March 2019.

6.   FINANCIAL INFORMATION

     The Acquisition will not result in Safari acquiring any assets.

     Safari paid the Seller a management fee of R6 854 889.68 for the year ended 31 March
     2018. As a result of the Acquisition Safari will no longer pay the Seller an annual
     management fee, however Safari will incur additional salary and other costs (rental etc.).
     Cosmos’ salary cost for its 2018 financial year was R4 009 234.41. Shareholders are
     advised that due to the acquisition of Thornhill Shopping Centre and the finalisation of the
     Nkomo Village Shopping Centre development during the 2019 financial year, the
     anticipated saving would significantly increase as a result of the additional management
     fees that would have been payable on these two centres for the 2021 financial year.

7.   CLASSIFICATION OF THE ACQUISITION

     In terms of the JSE Limited Listings Requirements, the Seller is a “related party” of the
     Company by virtue of the fact that the Seller is controlled by a Director of Safari.

     Accordingly, the Acquisition will constitute a small related party transaction, which
     requires the appointment of an independent expert to compile a fairness opinion on the
     Acquisition in terms of paragraph 10.7(b) of the JSE Limited Listings Requirements to
     confirm that the Acquisition is fair as to shareholders of the Company.

     The directors of the Company have appointed PSG Capital (“Independent Expert”) as
     the independent expert to compile a fairness opinion on the Acquisition in terms of
     paragraph 10.7 of the JSE Limited Listings Requirements. The Independent Expert has
     considered the terms and conditions of the Acquisition and is of the opinion that the terms
     and conditions of the Acquisition are fair to the shareholders of the Company.

Pretoria
4 March 2019

Sponsor
PSG Capital

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