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Acquisition of a new property portfolio
Fairvest Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/005011/06)
Share code: FVT
ISIN: ZAE000203808
(“Fairvest” or “the Company”)
(Approved as a REIT by the JSE)
ACQUISITION OF A NEW PROPERTY PORTFOLIO
1. ACQUISITION AGREEMENT CONCLUDED
1.1 Shareholders of the Company are hereby advised that the
Company has entered into an agreement (“Acquisition
Agreement”) with K&R Investments Proprietary Limited,
Ana Brothers Properties CC, Draw-Up Properties 1011 CC
and Bold Moves 220 Proprietary Limited (collectively,
“the Sellers”) to acquire, as a going concern, the
retail enterprises conducted by the Sellers at, and the
properties comprising, Erven 645 and 665, Yeoville,
Gauteng (“the First Property”), Erven 716, 717 and 718,
Yeoville, Gauteng (“the Second Property”), Erven 1300,
652, 653 and 654, Yeoville, Gauteng (“the Third
Property”) and Erf 1224, Yeoville, Gauteng (“the Fourth
Property”).
1.2 The First Property, Second Property, Third Property and
Fourth Property are hereafter collectively referred to
as “the Properties”, while the acquisition of the
Properties is referred to as “the Acquisition”.
1.3 The effective date of the Acquisition shall be the date
of registration of transfer of the Properties into the
name of Fairvest at the relevant Deeds Office and is
anticipated to occur on or about 1 October 2015
(“Transfer Date”).
2. RATIONALE FOR THE ACQUISITION
The Acquisition is consistent with the Company’s growth
strategy whereby the Company will focus on acquiring retail
assets with a weighting in favour of non-metropolitan areas
and lower LSM sectors.
3. PURCHASE CONSIDERATION
The Acquisition Agreement provides for a purchase
consideration of R56 000 000 (fifty-six million Rand)
(“Purchase Consideration”), which includes VAT at the rate of
0%, payable in cash on the Transfer Date.
The Purchase Consideration will be allocated in total to the
Properties, including the retail enterprises conducted by the
Sellers at the Properties.
The Company will fund the Purchase Consideration through debt
and/or equity funding.
4. THE PROPERTIES
Details of the Properties are as follows:
Property Name Geographical Sector GLA Weighted
and Address Location (m2) Average
Gross
Rental/m2
(R/m2)
Erven 645 and Raleigh Street, Retail 930 109.77
665, Yeoville,
Yeoville, Gauteng
Gauteng
Erven 716, Raleigh Street, Retail 1,981 100.42
717 and 718, Yeoville,
Yeoville, Gauteng
Gauteng
Erven 1300, Raleigh Street, Retail 1,178.7 133.29
652, 653 and Yeoville,
654, Gauteng
Yeoville,
Gauteng
Erf 1224, Raleigh Street, Retail 4,461 33.54
Yeoville, Yeoville,
Gauteng Gauteng
5. PROPERTY SPECIFIC INFORMATION
Details regarding the Acquisition, as at the expected Transfer
Date, are set out below:
Property Weighted Lease Vacancy %
Name and Average Duration by GLA
Address Escalation (years)
Erven 645 9.52% 2.88 0%
and 665,
Yeoville,
Gauteng
Erven 716, 8.62% 5.85 0%
717 and 718,
Yeoville,
Gauteng
Erven 1300, 7.20% 2.06 0%
652, 653 and
654,
Yeoville,
Gauteng
Erf 1224, 8.76% 8.76 4.39%
Yeoville,
Gauteng
Notes:
a) The costs associated with the Acquisition are estimated at
R980 000.
b) The Purchase Consideration payable in respect of the
Properties is considered to be their 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.
6. CONDITIONS PRECEDENT
The Acquisition is subject to the following conditions
precedent, namely:
6.1. the completion by Fairvest of a comprehensive due
diligence investigation, to its entire satisfaction, and
confirmation thereof by Fairvest to the Sellers in
writing, by no later than 15 business days from the date
on which the Sellers have provided the Company with
access to or copies of the information requested by the
Company to complete the due diligence investigation,
(with the date of fulfilment of this condition precedent
being hereafter referred to as the “Due Diligence
Approval Date”;
6.2. by no later than the Due Diligence Approval Date, the
conclusion of a lease agreement between Supabets and the
Company, based on the Company’s standard lease
agreement, on such terms and conditions acceptable to
both the Sellers and the Company;
6.3. by no later than the Due Diligence Approval Date, the
conclusion of a lease agreement between Supasave and the
Company, based on the Company’s standard lease
agreement, on such terms and conditions acceptable to
both the Sellers and the Company;
6.4. by no later than 10 (ten) business days from the Due
Diligence Approval Date, Fairvest shall furnish the
Sellers with a copy of a resolution by Fairvest’s
investment committee, approving the Acquisition;
6.5. within 30 (thirty) business days from the date of
fulfilment of the condition precedent set out in
paragraph 6.4 above, the Company shall furnish the
Sellers with written confirmation that the Company has
secured adequate funding from an acceptable financial
institution to settle the Purchase Consideration payable
in terms of the Acquisition Agreement, on terms that are
satisfactory to the Company, and/or that the Company has
successfully placed shares with third party/ies, to be
issued by the Company, either in terms of a vendor
consideration placement and/or an issue of shares for
cash such that the Company is satisfied that it can
fund, wholly or partially, as the Company may require,
the Purchase Consideration payable in terms of the
Acquisition Agreement.
6.6 within 15 (fifteen) business days from the Due Diligence
Approval Date, Fairvest shall furnish the Sellers with a
copy of a resolution passed by the board of directors of
Fairvest approving the Acquisition;
6.7 to the extent necessary, within 20 (twenty) business
days from the signature date of the Acquisition
Agreement, the approval of the shareholders of the
Sellers in accordance with the provisions of sections
112 and 115 of the Companies Act, No.71 of 2008, be
obtained; and
6.8 by no later than 90 (ninety) days from the signature
date of the Acquisition Agreement, the Company shall
obtain all relevant approvals and complete all relevant
processes required in terms of the JSE Listings
Requirements.
Fairvest is entitled to waive fulfilment of the conditions
precedent set out in paragraphs 6.1, 6.4, 6.5 and 6.6 above
and the parties may by agreement waive fulfilment of the
remaining conditions precedent.
7 WARRANTIES
The Sellers have provided warranties to the Company that are
standard for a transaction of this nature. Save for such
warranties, the Properties are sold voetstoots.
8 FORECAST FINANCIAL INFORMATION OF THE ACQUISITION
The forecast financial information relating to the Acquisition
for the financial periods ended 30 June 2016 and 30 June 2017
are set out below. The forecast financial information has not
been reviewed or reported on by a reporting accountant in
terms of section 8 of the JSE Listings Requirements and is the
responsibility of the Company’s directors.
Forecast for Forecast for
the 9 month the 12 month
period ended period ended
30 June 2016 30 June 2017
Revenue 8,047,909 11,506,906
Straight-line rental accrual 1,243,020 1,288,342
Gross revenue 9,290,929 12,795,248
Property expenses (3,458,842) (5,037,647)
Net property income 5,832,087 7,757,601
Asset management fee (213,675) (284,900)
Operating profit 5,618,412 7,472,701
Finance cost - -
Profit before taxation 5,618,412 7,472,701
Taxation - -
Total comprehensive income 5,618,412 7,472,701
attributable to shareholders
Notes:
a) Revenue includes gross rentals and other recoveries, but
excludes any adjustment applicable to the straight-lining
of leases.
b) Property expenses include all utility and council charges
applicable to the Properties.
c) The forecast information for the 9 month period ended 30
June 2016 has been calculated from the anticipated
Transfer Date, being on or about 1 October 2015.
d) Uncontracted revenue constitutes 2.20% of the revenue for
the 9 month period ended 30 June 2016.
e) Uncontracted revenue constitutes 19.74% of the revenue for
the 12 month period ended 30 June 2017.
f) Leases expiring during the forecast period have been
assumed to renew at the future value of current market
related rates.
g) This forecast has been prepared on the assumption that
100% of the Purchase Consideration is funded through new
equity. The Company could elect to partially or fully
utilise its existing and/or new debt facilities.
9 CATEGORISATION
The Acquisition qualifies as a Category 2 acquisition for the
Company in terms of the JSE Listings Requirements.
30 July 2015
Cape Town
Sponsor
PSG Capital Proprietary Limited
Date: 30/07/2015 05:18:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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