FAIRVEST LIMITED - Proposed disposal of entire issued share capital of Indluplace Properties Limited

Proposed disposal of entire issued share capital of Indluplace Properties Limited

Fairvest Limited
(Incorporated in the Republic of South Africa)
JSE share code: FTA ISIN: ZAE000304788
JSE share code: FTB ISIN: ZAE000304796
LEI: 378900E93AFC4D1CAD45
(Granted REIT status with the JSE)
(“Fairvest”)


PROPOSED DISPOSAL OF ENTIRE ISSUED SHARE CAPITAL OF INDLUPLACE PROPERTIES LIMITED


1. INTRODUCTION

   Shareholders are referred to the joint firm intention announcement published on 14 March 2023 (“FIA”)
   by SA Corporate Real Estate Limited (“SA Corporate”) and Indluplace Properties Limited
   (“Indluplace”) (together, the “Parties”) wherein SA Corporate and Indluplace shareholders were advised
   that the Parties had entered into a scheme implementation agreement in terms of which SA Corporate had
   expressed its firm intention to make an offer to acquire the entire issued share capital of Indluplace
   (excluding treasury shares) for a cash consideration of R3.40 per Indluplace share (the “Proposed
   Transaction”) by way of a scheme of arrangement (the “Scheme”) in terms of section 114(1)(c) of the
   Companies Act, No. 71 of 2008 (the “Companies Act”), to be proposed by Indluplace to its shareholders
   and to which SA Corporate will be a party.

   On 14 March 2023, Fairvest provided an irrevocable undertaking to SA Corporate in terms of which
   Fairvest undertakes to vote the 191 581 362 Indluplace shares which they own in favour of the resolutions
   to be proposed to implement the Scheme. On implementation of the Scheme, Fairvest will sell all its shares
   in Indluplace to SA Corporate (the “Proposed Disposal”).

2. RATIONALE

   Indluplace is a JSE-listed subsidiary of Fairvest which owns a residential property portfolio comprising
   9 189 residential units (including student accommodation) and 15 549m² of associated retail space. The
   portfolio of 124 buildings, currently valued at R3.3 billion, is situated mainly in Gauteng, with further
   limited exposure in Mpumalanga and the Free State.

   Fairvest’s investment in Indluplace is not strategic and implementation of the Proposed Disposal would
   be a step towards refocussing the Fairvest portfolio towards lower LSM and convenience retail.

   On implementation of the Proposed Disposal, which is subject to the Scheme being implemented, the
   proceeds to Fairvest will amount to R651 376 631 (at R3.40 per share in Indluplace), which Fairvest
   intends to apply to reducing its unhedged debt (which would result in an approximately 500 bps reduction
   in Fairvest’s loan-to-value ratio).

   Fairvest does not expect the Proposed Disposal to have any impact on Fairvest’s distribution per share
   guidance for the 2023 financial year.

3. TERMS OF THE PROPOSED DISPOSAL

   Pursuant to the irrevocable undertaking, Fairvest has undertaken to:

   -    vote in favour of the resolutions required to implement the Scheme;

   -    not take any action which may be prejudicial to the Proposed Transaction or the passing of the
        resolutions required to implement the Scheme;

   -    not create or grant any encumbrance, charge, lien, security interest, option, right of pre-emption or
        other interest over all or any of the Indluplace shares owned by Fairvest which imposes any restriction
        on the right to exercise the voting rights attached to the Indluplace shares (other than pursuant to the
        irrevocable undertaking);

   -    not to sell, transfer or otherwise dispose of the Indluplace shares owned by Fairvest, unless the
        transferee in respect of such transfer has furnished SA Corporate with a written irrevocable undertaking
        on equivalent terms and conditions to those reflected in the Fairvest irrevocable undertaking;

   -    not to requisition any general meeting or join the requisition of any general meeting of Indluplace
        shareholders or vote in respect of the Indluplace shares owned by Fairvest in favour of any Indluplace
        shareholder resolution which may be proposed in order to effect any transaction or corporate action
        which would frustrate, delay or impede the Proposed Transaction; and

   If, at any time before the resolutions required to implement the Scheme have been voted on by Indluplace
   shareholders, a bona fide third party has announced a firm intention to make an offer, which was not
   solicitated by Indluplace or Fairvest, in respect of a transaction which if implemented would be a
   commercial substitute for the Proposed Transaction and under which shareholders of Indluplace would
   realise a cash consideration in respect of their shares which is at least 10% more than the cash consideration
   that they would realise under the Proposed Transaction, (the “Superior Offer”), then Fairvest shall be
   entitled to withdraw the undertakings given pursuant to the irrevocable undertaking on written notice given
   to SA Corporate.

   The irrevocable undertaking will remain in effect until the earlier of (i) the implementation of the Proposed
   Transaction; (ii) SA Corporate announcing that the Proposed Transaction will not proceed; (iii) the
   undertakings having been withdrawn should a Superior Offer be received; and (iv) 30 September 2023.

4. FINANCIAL INFORMATION

   The following profitability metrics are attributable to Indluplace, as extracted from Indluplace’s annual
   financial statements for the year ended 30 September 2022:

                                                                                                        Cents
      Distributable income per Indluplace share                                                         37.60
      Distribution per Indluplace share*                                                                31.96
      Net asset value per Indluplace share                                                             660.61
      Earnings per share                                                                                 3.56
      Headline earnings per share                                                                       47.85
      *Based on a pay-out ratio of 85%

5. CATEGORISATION

   Implementation of the Proposed Disposal would constitute a category 2 disposal in terms of the JSE
   Listings Requirements. Accordingly, no Fairvest shareholder approval will be required in respect of the
   Proposed Disposal.

15 March 2023

Corporate advisor and sponsor
Java Capital

Date: 15-03-2023 10:01:00
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