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REBOSIS PROPERTY FUND LIMITED - Supplementary announcement on proposed disposal of 3 retail properties and withdrawal of notice of general meeting

Release Date: 23/07/2019 16:50
Code(s): REB REA REBC15     PDF:  
 
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Supplementary announcement on proposed disposal of 3 retail properties and withdrawal of notice of general meeting

REBOSIS PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2010/003468/06)
JSE share codes:  REA   ISIN: ZAE000240552
                  REB   ISIN: ZAE000201687
Alpha code: REBI
(Approved as a REIT by the JSE)
("Rebosis" or "the company")


SUPPLEMENTARY ANNOUNCEMENT ON THE PROPOSED DISPOSAL OF THREE RETAIL PROPERTIES AND WITHDRAWAL OF NOTICE OF GENERAL MEETING


1. Introduction

   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 and Vukile Property Fund Limited ("Vukile") in
   respect of the proposed transaction for the disposal by Rebosis of the rental enterprise comprising three shopping
   centres known as Mdantsane City Shopping Centre, Bloed Street Mall and Sunnypark Shopping Centre to Vukile
   ("the transaction") and the announcement released on SENS on Thursday 27 June 2019 wherein shareholders
   were advised that a circular ("the circular") pertaining to the transaction had been distributed to shareholders
   which included a notice of general meeting of shareholders to be held at 10:00 on Thursday 25 July 2019 for the
   purpose of considering the resolutions required to be approved in order to authorise and implement the transaction
   ("the general meeting").

   Following negotiations pursuant to the due diligence investigation undertaken by Vukile, Rebosis and Vukile have
   agreed that Vukile will only acquire the Mdantsane City Shopping Centre and that Rebosis will not dispose of
   Bloed Street Mall and Sunnypark Shopping Centre to Vukile. 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.

   Mdantsane City Shopping centre represents the newest asset of the three centres. The more mature assets have
   been retained as Rebosis believes that better value can be derived from these assets. Rebosis has received and is
   considering other offers in regard to, inter alia, Bloed Street Mall and Sunnypark Shopping centre.

   The Rebosis strategy of disposing at the right levels is supported by its shareholders and funders who want to see a
   responsible disposal programme that lowers LTV but preserves shareholder value.

2. Salient terms of the transaction

   Rebosis will dispose of the rental enterprise comprising Mdantsane City Shopping Centre ("Mdantsane City" or
   "rental enterprise") to Vukile 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 rental enterprise.

   The proposed amended transaction is in line with the company's intention to reduce its loan to value ratio as
   outlined in the road-map included in the results announcement released by the company on SENS on 12
   November 2018 and the pre-close presentation presented to Rebosis shareholders on 27 February 2019.

2.1.   Transfer date

       Rebosis will dispose of the rental enterprise, with effect from the date of registration of transfer of
       ownership of the immoveable property into Vukile's 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.

2.3.   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 management arrangements.

       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, prior to 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
                enterprise.

 3. Property specific information

    Details of Mdantsane City including the geographical location, sector, occupied GLA, weighted average rental per
    square metre, the net operating profit and the valuation, are set out in the table below. The financial information in
    this announcement has been extracted from the financial statements of Rebosis for the six month period ended
    28 February 2019 which was prepared in terms of International Financial Reporting Standards. The financial
    information in this announcement is the responsibility of the directors of Rebosis and has not been reported on or
    reviewed by a reporting accountant.

                                                                   Weighted
                                                                    average
                                                                 rental per       Net operating
      Name and geographical                       Occupied               m2              profit           Valuation^
      location                       Sector       GLA (m2)           (R/m2)                 (R)                  (R)

      Mdantsane City, Eastern        Retail         34 935           117.26          21 154 320          531 100 000
      Cape
     
      ^Mdantsane City was valued as at 1 September 2019 by Mills Fitchet Magnus Penny, who are external
      independent valuers registered as professional valuers or as professional associate valuers in terms of the
      Property Valuers Profession Act, No.47 of 2000.

 4. Withdrawal of notice of general meeting, categorisation and intention to reconvene general meeting

    In order to ensure that shareholders are in possession of the relevant information when considering and voting on
    the requisite resolution relating to the proposed amended transaction, the notice of the general meeting is hereby
    withdrawn (and the general meeting is therefore cancelled).

    In terms of the JSE Listings Requirements, the proposed amended transaction is classified as a Category 1
    transaction for Rebosis, which accordingly requires approval by Rebosis shareholders. A supplementary circular
    detailing the terms of the proposed amended transaction and a new notice of a general meeting to approve the
    proposed amended transaction will be issued to Rebosis shareholders in due course.

    All voting instructions, proxy forms and election forms already submitted to brokers, central securities depositary
    participants or the company in respect of the general meeting, will be of no force or effect and will be disregarded.
    New forms will be provided in due course when a new notice of general meeting is issued.

 23 July 2019


Transaction Sponsor
Java sponsor


Equity and Debt Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited


Legal Advisor
Cliffe Dekker Hofmeyr

Date: 23/07/2019 04:50:00
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