Update on the acquisition of three shopping centres
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE share code: VKE NSX share code: VKN
Debt company code: VKEI
(Granted REIT status with the JSE)
("Vukile" or "the company")
UPDATE ON THE ACQUISITION OF THREE SHOPPING CENTRES
Shareholders are referred to the announcement released on SENS on Monday, 13 May 2019 relating to
the conclusion of an agreement ("the agreement") between Rebosis Property Fund Limited ("Rebosis")
and Vukile in respect of the proposed transaction for the acquisition by Vukile of the rental enterprise
comprising three shopping centres known as Mdantsane City Shopping Centre, Bloed Street Mall and
Sunnypark Shopping Centre from Rebosis ("the transaction").
Following negotiations pursuant to the due diligence investigation undertaken by Vukile, Vukile and
Rebosis have agreed that Vukile will not proceed with the acquisition of Bloed Street Mall and
Sunnypark Shopping Centre and that Vukile will only purchase the Mdantsane City Shopping Centre
for a purchase consideration of R512.222 million being an implied 9.00% acquisition yield.
Consequently, Rebosis and Vukile have agreed in principle to amend the terms of the transaction as
further detailed below. It is envisaged that the formal agreement recording the amended transaction
terms will be executed within the next week.
2. Salient terms of the transaction
Vukile will acquire the rental enterprise comprising Mdantsane City Shopping Centre ("Mdantsane
City" or "rental enterprise") from Rebosis for a consideration of R512.222 million ("the base price")
(the "proposed amended transaction").
The rental enterprise includes the immoveable property, land and buildings together with all movable
assets, fixed assets, assets installed therein used in connection with the operations including Rebosis’
rights and obligations in terms of all lease agreements and other contracts used in the operation of the
2.1. Transfer date
Vukile will acquire the rental enterprise, with effect from the date of registration of transfer of
ownership of the immoveable property into its name (the "transfer date"), which is anticipated
to be on 15 October 2019. Ownership, risk and benefit in the rental enterprise will vest in Vukile
as from the transfer date.
2.2. Purchase consideration
2.2.1. The total consideration payable by Vukile to Rebosis will be the base price plus any
payment in respect of any development of the undeveloped bulk at Mdantsane City
referred to in paragraph 2.3 below ("Mdantsane bulk") (the "purchase
consideration"). Accordingly, the maximum purchase consideration that may be
payable in respect of the proposed amended transaction (assuming no escalation of the
base price as contemplated in paragraph 2.2.2 below) will be R557.222 million, subject
to a downward adjustment to be agreed between Rebosis and Vukile in respect of any
capital expenditure to be undertaken by Vukile after the transfer date if and to the extent
that Rebosis has not by the transfer date undertaken the agreed capital expenditure in
relation to Mdantsane City.
2.2.2. If Mdantsane City is not transferred into Vukile's name on or before
15 September 2019, the base price will be escalated by 6.00% per annum, calculated
and expressed as an effective daily rate, from 15 September 2019 until the transfer date.
2.2.3. The base price will be settled in cash and will be discharged on the transfer date.
2.2.4. The proposed amended transaction will no longer be conditional on Vukile undertaking
any form of vendor consideration placement.
2.3. Mdantsane bulk
2.3.1. If Vukile, within 24 months of the transfer date, commences construction of an
extension in respect of the 15 000m2 Mdantsane bulk, then subject to the development
delivering at least a 10.5% development yield in the first year to Vukile, Vukile will
pay to Rebosis an amount attributable to the Mdantsane bulk used in the extension.
2.3.2. Any amount payable in respect of the Mdantsane bulk (capped at R3 000.00 per m2 and
R45 million in aggregate) is to be determined by an independent quantity surveyor,
Norval Wenzel Steinberg ("NWS"), from a development feasibility to be prepared by
NWS. If the development yield as determined by NWS is lower than 10.5% in the first
year, then the cost attributable to the Mdantsane bulk to be used in the extension will be
reduced by such an amount in order for Vukile to achieve a development yield of 10.5%.
The payment of any amount payable in terms of this paragraph will be paid to Rebosis,
within 30 days of the practical completion of the development.
2.4. General terms
2.4.1. Rebosis will remain liable for all liabilities associated with the rental enterprise up to
the transfer date and has provided Vukile with appropriate indemnities in this regard.
2.4.2. Employees of Rebosis directly involved in the management and operation of Mdantsane
City will transfer together with the rental enterprise. It is anticipated that these
employees will be accommodated within Vukile's existing outsourced property
2.4.3. The agreement provides for undertakings, warranties and indemnities which are normal
for transactions of this nature.
2.5. Conditions precedent
The proposed amended transaction will be conditional on the fulfilment or waiver, as the case
may be, of the conditions precedent which are summarised below, by no later than
30 September 2019:
2.5.1. the securing, to the extent necessary, of any necessary regulatory approvals required to
implement the proposed amended transaction including, in particular, any required
Competition Authority approval;
2.5.2. the securing by Rebosis of any necessary consents, approvals and/or waivers of any
third party pre-emptive rights in order for Rebosis to effect transfer of Mdantsane City
to Vukile; and
2.5.3. any necessary shareholder approvals required by Rebosis for it to dispose of the rental
3. Categorisation of the proposed amended transaction
The proposed amended transaction would not be categorisable from a Vukile perspective and no
shareholder approval is required by Vukile for its implementation.
It is anticipated that the formal agreement to effect the proposed amended transaction will be concluded
within a week. Shareholders will be informed once the formal agreement has been concluded.
23 July 2019
Corporate advisor and JSE NSX sponsor Attorneys and Competition law
sponsor IJG Securities (Pty) Ltd advisors
Java Capital Cliffe Dekker Hofmeyr
Date: 23/07/2019 04:50:00
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