Wrap Text
Acquisition of a new property
Fairvest Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/005011/06)
Linked unit code: FVT
ISIN: ZAE000034658
(Approved as a REIT by the JSE)
(“Fairvest” or “the Company”)
ACQUISITION OF A NEW PROPERTY
1. SIBILO ACQUISITION
1.1. Linked unitholders of the Company are hereby advised that
the Company has entered into an agreement (“Sale Agreement”)
with Purple Fountain Prop 132 Proprietary Limited (“Seller”)
to acquire, as a going concern, the rental enterprise
operated by the Seller (“the Rental Enterprise”) in respect
of the property at Erf 7362 situated at the corner of the
R325 and R385, Postmasburg, Northern Cape (“the Property”),
being the shopping centre more commonly known as Sibilo
(“Sibilo Acquisition”).
1.2. The effective date of the Sibilo Acquisition shall be the
date of registration of transfer of ownership of the
Property to Fairvest (“Effective Date”), which is expected
to occur on or about 1 March 2015.
2. RATIONALE FOR THE ACQUISITION
The Sibilo 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
3.1. The purchase consideration for the Sibilo Acquisition is
R95 000 000 (ninety-five million Rand), which includes VAT
at the rate of 0%, payable on the Effective Date against
registration of transfer of ownership of the Property into
the name of Fairvest.
3.2. The Company will fund the purchase consideration through
debt and/or equity funding.
4. THE PROPERTY
Details of the Property are as follows:
Property Geographical Sector Cost/ GLA Cost Average
Name and Location Value (m2) per Gross
Address (R’m) GLA Rental/m2
(R/m2) (R/m2)
Sibilo, Erf Corner of Retail 95.00 8,543 11,120 104.63
7362, corner R325 and
of R325 and R385,
R385, Postmasburg,
Postmasburg, Northern
Northern Cape
Cape
5. PROPERTY SPECIFIC INFORMATION
Details regarding the Sibilo Acquisition, as at the expected
Effective Date, are set out below:
Property Name Purchase Yield Average Lease Vacancy
and Address attributable Escalation Duration % by GLA
to Linked (years)
Unitholders
Sibilo, Erf 9.9% 7.4% 3.7 0%
7362, corner
of R325 and
R385,
Postmasburg,
Northern Cape
Notes:
a) The costs associated with the acquisition of the Property
are estimated at R1,662,500.
b) The cost of the Property is considered to be its 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
6.1. The Sibilo Acquisition is subject to fulfilment of the
following conditions precedent:
6.1.1. that by no later than 15 business days from the date on
which the Seller has provided Fairvest with access to or
copies of the due diligence information requested by
Fairvest, Fairvest has concluded its due diligence
investigation in terms of the Sale Agreement, to its
entire satisfaction and has given written notice thereof
to the Seller, with the date of Fairvest giving the said
written notice to the Seller being hereinafter referred to
as the “Due Diligence Approval Date”;
6.1.2. that within 10 business days from the Due Diligence
Approval Date, the investment committee of Fairvest
approves the purchase of the Rental Enterprise and
Fairvest delivers a copy of such resolution to the Seller;
6.1.3. that within 45 business days from the successful
fulfilment of the condition precedent in paragraph 6.1.4
below, Fairvest confirms in writing to the Seller that
adequate funding has been secured by Fairvest from an
acceptable financial institution to acquire the Rental
Enterprise, on terms satisfactory to Fairvest, and/or
Fairvest has successfully placed linked units to be issued
by it either in terms of a vendor consideration placement
and/or an issue of linked units for cash or a rights
issue, (the “Placement”) for cash with third party/ies
such that Fairvest is satisfied that it can fund, wholly
or partially, as Fairvest may require, the acquisition of
the Rental Enterprise from the proceeds of the Placement
and the financial institution funding referred to above;
6.1.4. that within 5 business days from the Due Diligence
Approval Date, the board of directors of Fairvest approves
the purchase of the Rental Enterprise and Fairvest
delivers a copy of such resolution to the Seller;
6.1.5. that, to the extent necessary, within 20 business days
from the signature date of the Sale Agreement, the
approval of the shareholders of the Seller be obtained in
accordance with the provisions of sections 112 and 115 of
the Companies Act 2008; and
6.1.6. that, should the Sibilo Acquisition be notifiable in terms
of the Competition Act 1998, then by no later than 90 days
from the successful fulfilment of the condition precedent
in paragraph 6.1.3 above, the relevant Competition
Authority unconditionally approves the Sibilo Acquisition
with or without conditions and the Parties confirm their
agreement in writing to any conditions relating to such
approval (if any). The submission to the Competition
Commission shall only be lodged on the successful
fulfilment of the conditions precedent in paragraphs 6.1.3
to 6.1.5 above, should such approval be required. Should
Fairvest elect to submit the transaction for approval by
the Competition Commission prior to the successful
fulfilment of the condition precedent in paragraph 6.1.3,
it shall carry the full cost of such submission.
6.2. Fairvest is entitled to waive the conditions precedent set
out in paragraphs 6.1.1, 6.1.2 and 6.1.3 above. The
remaining conditions precedent may be waived by the parties
jointly, provided that such waiver will not be permitted in
respect of any condition that is by law required to be
fulfilled before the Sibilo Acquisition can be implemented.
7. GUARANTEES
7.1. The Seller guarantees the rental income (“Rental Guarantee”)
to Fairvest in respect of the vacant units at the Property
(“Vacant Units”) during the period of 24 calendar months
from the date of registration of transfer of ownership in
the Property to Fairvest (the “Guarantee Period”).
7.2. The Rental Guarantee provides that, should, in any calendar
month during Guarantee Period, the basic rental (i.e.
excluding recoveries for consumption charges, rates
recoveries and the like), exclusive of VAT, received by
Fairvest in respect of any of the Vacant Units be less than
the amount specified in the Sale Agreement, then the Seller
shall pay to Fairvest an amount by way of rental income
guarantee equal to the shortfall in the month concerned for
the Vacant Unit concerned. The amounts due for each of the
vacant premises shall be calculated using the gross rental
as contained in the Sale Agreement for each store together
with any pro rata recovery of utilities such as rates and
taxes, electricity and water attributable to such vacancy.
7.3. Once a tenant has been secured for a Vacant Unit, the Rental
Guarantee will fall away for that particular unit.
8. WARRANTIES
The Seller has provided warranties to Fairvest that are
standard for a transaction of this nature.
9. FORECAST FINANCIAL INFORMATION OF THE SIBILO ACQUISITION
The forecast financial information relating to the Sibilo
Acquisition for the financial periods ended 30 June 2015 and
30 June 2016 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 4 month the 12 month
period ended period ended
30 June 2015 30 June 2016
Rental income 6,534,848 21,253,318
Straight-line rental accrual 416,039 787,891
Gross revenue 6,950,887 22,041,205
Property expenses (3,438,724) (11,532,032)
Net property income 3,512,163 10,509,173
Asset management fee (161,104) (483,313)
Operating profit 3,351,059 10,025,173
Fair value adjustment to (416,039) (787,891)
debentures
Finance cost (2,780,658) (8,341,974)
Profit before debenture 154,362 895,996
interest
Debenture interest (154,362) (895,996)
Profit before taxation - -
Taxation - -
Total comprehensive income - -
attributable to linked
unitholders
Notes:
a) Rental income 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 Property.
c) The forecast information for the 4 month period ended 30
June 2015 has been calculated from the anticipated
Effective Date of the Sibilo Acquisition, being 1 March
2015
d) Uncontracted revenue constitutes 1.8% of the revenue for
the 4 month period ended 30 June 2015.
e) Uncontracted revenue constitutes 11.4% of the revenue for
the 12 month period ended 30 June 2016.
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 the
Sibilo Acquisition is funded through existing debt
facilities at the average cost of debt of 8.63%.
h) Distributions to linked unitholders occur through the
payment of debenture interest.
10. CATEGORISATION
The Sibilo Acquisition qualifies as a Category 2 acquisition
for the Company in terms of the JSE Listings Requirements.
19 December 2014
Cape Town
Sponsor
PSG Capital
Date: 19/12/2014 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
