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INVESTEC PROPERTY FUND LIMITED - Small Related Party Transaction Disposal of Properties

Release Date: 21/01/2022 13:44
Code(s): IPF     PDF:  
Wrap Text
Small Related Party Transaction – Disposal of Properties

INVESTEC PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Reg. No: 2008/011366/06)
Approved as a REIT by the JSE
Share Code: IPF
ISIN: ZAE000180915
("Investec Property Fund" or "the Fund")


SMALL RELATED PARTY TRANSACTION – DISPOSAL OF PROPERTIES



1. Introduction

    Shareholders are advised that Investec Property Fund has entered into an agreement with M and F Giuricich
    Developments Proprietary Limited, or nominee to be appointed by them (“Purchaser”), for the disposal of
    three retail warehouses (“Properties”), all predominantly tenanted by Builders Warehouse, for an aggregate
    consideration of R271,000,000 (collectively, “BW Disposal”). The selling price represents a disposal yield of
    7.9% and is materially in line with carrying value.

2. Rationale

    Although the Properties are underpinned by long-term leases having recently been regeared, the Properties
    are situated in locations that are non-core to the Fund and do not align with the Fund’s long-term retail
    strategy.

    Thus, the Fund has elected to dispose of them in line with its capital recycling strategy. Management
    believes the proceeds can be recycled into alternative opportunities that will be accretive to total shareholder
    returns. In the short term, the sale proceeds will be utilised to pay down debt on a marginally earnings
    accretive basis to the Fund and will further reduce the Fund’s LTV to 37.9%.

3. Capital recycling

    As announced in IPF’s H1 FY22 interim results, the Fund has identified a R1bn disposal pipeline of assets.
    To date, R392m of properties have been sold and are awaiting transfer, including the BW Disposal. A further
    R192m of assets are under advanced negotiations, and the balance is being actively marketed.

4. Terms of the BW Disposal

    The disposal of each property will be effective from the date of registration of transfer of the respective
    property into the name of the Purchaser. The consideration for each property will be payable in cash on
    transfer date.

    The BW Disposal is subject to standard conditions precedent which comprise due diligence, confirmation of
    funding and the Competition Authorities’ approval. The agreement includes warranties, undertakings and
    indemnities which are normal for a disposal of this nature.

5. Property specific information

    The property specific information required in terms of the JSE Listings Requirements in relation to the
    Properties is set out below.

                                                 Bloemfontein           Polokwane property     Witbank property
                                                 property
     Erf description:                            Remainder of Portion   Remaining Extent of    Portion 1 of Erf 16
                                                 349 of the Farm        Erf 6471 Pietersburg   President Park
                                                 Bloemfontein Number    Extension 27           (Emalahleni)
                                                 654                    Township               Extension 5 Township
     Title deed:                                 T17132/2012            T973520/2012           T40/2013
     Location:                                   349 Curie Avenue,      161 Crescent Drive,    Mandela Street,
                                                 Bloemfontein, Free     Polokwane, Limpopo     Witbank, Mpumalanga
                                                 State
     Sector:                                     Retail                 Retail                 Retail
     Rentable area:                              9,298m2                8,829m2                5,512m2
     Gross rental per m2:                        R91/m2                 R99/m2                 R96/m2
     Selling price:                              R99,000,000            R107,000,000           R65,000,000
     Independent valuation as at 1-Jan-22(1):    R100,250,000          R109,250,000            R65,300,000
     NPI for the 12 months ended 31-Mar-22(2):   R7.9m                 R8.0m                   R5.1m

    Notes:

    1.   The valuation of the property was carried out by Mills Fitchet Magnus Penny (Pty) Limited
         (“Independent Valuer”), an independent valuer registered as a professional valuer in terms of the
         Property Valuers Profession Act No. 47 of 2000. The independent valuation is marginally higher than the
         consideration receivable in respect of each property, as the valuation represents an open market value
         whilst the selling price is a negotiated value between the parties.

    2.   The income attributable to each property represents the forecast net operating income of the property
         for the 12 months ending 31 March 2022. This incorporates deductions for the amortisation of tenant
         installation costs and letting commissions.

6. Small related party transaction

    The BW Disposal constitutes a small related party transaction in terms of the JSE Listings Requirements as
    a director of the Purchaser is related to Luigi Giuricich, a former non-executive director of Investec Property
    Fund (resigned on 2 August 2021).

    Given the values of the Properties arrived at by the Independent Valuer are in line with their selling prices
    (prior to adjusting for any letting commissions), the directors of the Fund are of the opinion that the BW
    Disposal is fair to IPF shareholders. The BW Disposal is accordingly not subject to shareholder approval.

    The JSE Limited has been provided with a summary of the sworn valuations of the Properties by the
    Independent Valuer. The full valuation reports are available for inspection at the registered office of the Fund
    during normal business hours for a period of 28 days from the date of this announcement.


Johannesburg
21 January 2022

Financial Advisor and Sponsor
Investec Bank Limited

Legal advisor
Fluxmans Inc.

Date: 21-01-2022 01:44:00
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