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TRADEHOLD LIMITED - Acquisition of Offshore Property Portfolio

Release Date: 01/03/2021 11:00
Code(s): TDH     PDF:  
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Acquisition of Offshore Property Portfolio

Tradehold Limited
(Registration number: 1970/009054/06)
Incorporated in the Republic of South Africa
JSE Share code: TDH ISIN: ZAE000152658
("Tradehold" or "the Company")



1.1     Shareholders are advised that on 26 February 2021, Collins Property Projects Proprietary Limited
        (“CPP”) (a 74.3% subsidiary of Tradehold), concluded an agreement with Supernova Baumärkte
        Holding GmbH & Co KG and Supernova Baumärkte Holding GmbH (collectively, “the Vendors”)
        to acquire the entire share capital of 6 (six) Austrian-registered companies, namely BM 620 LIN D
        GmbH, BM 549 SAL M GmbH, BM 521 RIE GmbH, BM 778 SAL L GmbH, BM 791 ZWE GmbH
        and BM 547 WEL GmbH (collectively, “the Target Companies”), which collectively hold the
        leasehold rights to 6 retail warehouse properties in Austria (“the Portfolio”) tenanted by OBI GmbH
        & Co. Deutschland KG (“OBI”) (“the Acquisition”). The Portfolio has a net operating income
        forward yield on Acquisition Consideration (as defined below) of 7% and expected cash-on-cash
        yield (pre-loan amortisation, after interest and additional capex provisions) of 12%. These forecasts
        have not been audited or reviewed by the Company’s auditors.

1.2     OBI is a German multinational home improvement supplies retailing company. It is the largest DIY
        retailer in Central and Eastern Europe, operating approximately 668 stores, with gross sales of
        around EUR7,7 billion in 2018.

1.3     The Acquisition is consistent with CPP’s investment strategy of acquiring high quality, single-tenant
        leased commercial properties with long dated leases. From a strategic viewpoint, the Acquisition
        will provide foreign currency earnings with CPI indexation from a developed market and exposure
        to a large German multinational company. The diversification is expected to benefit CPP by
        providing more stable earnings and reduced business risk.

1.4     The Acquisition will be effected through two wholly-owned Austrian subsidiaries of CPP, namely
        Collins AUS Holdings GmbH and Collins AUS Investments GmbH, which will acquire 85% and 15%
        respectively of the shares in the Target Companies.


2.1    CPP owns and manages a portfolio of approximately 125 properties in South Africa.

2.2    The intention is to list CPP on the JSE Limited (“JSE”) (or on another recognised securities
       exchange) as a REIT when market conditions are conducive.

2.3    The primary reason for CPP investing abroad is to achieve currency and market diversification.
       CPP is currently exclusively invested in properties situated in South Africa and wishes to invest into
       established markets with steadier growth prospects and less volatility in order to provide domestic
        investors an opportunity to spread risks and exposure to international markets. Diversifying
        geographically will provide domestic investors in CPP with exposure to a European economy and


3.1     The consideration in respect of the Acquisition is EUR16,6 million, to be settled as follows:
        - a cash payment to be made by CPP on the effective date (as described in paragraph 5 below)
          of EUR12,2 million; and
        - a vendor loan of EUR4,4 million. The vendor loan is repayable over 5 years and bears interest
          at 2.50% per annum.

3.2     The Vendors have guaranteed the forecast rental income of the Portfolio for a period of six (6)
        months from the effective date of the transaction.


The Acquisition is subject to the conclusion of the transaction documents.


The effective date of the Acquisition will be on completion of the transaction, which will take place on
fulfilment of the condition precedent. The effective date of the Acquisition is 26 February 2021.


The Vendors have provided CPP with warranties and indemnities standard for a transaction of this nature.


The details of the Target Companies are as follows:

 Target Company            Geographical               Purchase          Gross           Weighted
                           Location in Austria          Price        Leasable Area    Average Gross
                                                                      (GLA) (m2)      Rental/m2 /pm
 BM 620 LIN D GmbH         Linz                       13 043 569             12 10         8,36

 BM 521 RIE GmbH           Ried                       7 830 073              6 505          8,95

 BM 778 SAL L GmbH         Salzburg, Lengfelden       3 041 616              3 608          6,76

 BM 549 SAL M GmbH         Salzburg, Maxglan          3 801 722              12 368         5,21

 BM 547 WEL GmbH           Wels                       1 955 177              11 929         6,40

 BM 791 ZWE GmbH           Zwettl                     3 567 843              4 520          7,86

The aggregate GLA of the portfolio is 51 050m².


The financial information set out below 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 Tradehold’s directors:

The Portfolio generates net operating income of EUR2,3 million and is being acquired at a discount of 5%
to the funding bank’s current valuation.

The leases between OBI and the Target Companies (“the OBI Leases”) are indefinite and include a waiver
of ordinary termination by the landlord until 31 December 2045. OBI may not terminate the leases before
31 October 2030 and only after every 5 years thereafter until 31 October 2045.

The OBI Leases provide for a base rental which escalates in line with the Austrian CPI. At the end of each
lease year, the rental is adjusted to 8% of turnover with a determined cap and a floor.

The value of the net assets that are the subject of the transaction as at 31 December 2020 being the date
of the unaudited management accounts was EUR17,306,910.

The profits before taxes attributable to the net assets that are the subject of the transaction for the period
ending 31 December 2020 was EUR1,168,974. This amount reflects the existing bank financing terms and
is after payment by the Target Companies of intercompany management fees.

The forecast profit after interest before taxes attributable to the net assets that are the subject of the
transaction for the period ending 31 December 2021 is EUR1,502,000 based on the refinancing terms
offered to the Target Companies to be implemented following completion of the Acquisition. This forecast
has not been audited or reviewed by the Company’s auditors.


The Acquisition is classified as a category 2 transaction in terms of the JSE Listings Requirements and,
accordingly, is not subject to approval by Tradehold shareholders.

Cape Town
1 March 2021

JSE Sponsor to Tradehold

Questco Corporate Advisory Proprietary Limited

Date: 01-03-2021 11:00:00
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