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Update In Relation To The Acquisition Of 2 Long Street Cape Town And Withdrawal Of Cautionary Announcement
Spear REIT Limited
(previously known as Arrow 2 Investments Proprietary Limited)
Incorporated in the Republic of South Africa
(Registration number: 2015/407237/06)
Share code: SEA
ISIN: ZAE000228995
(“Spear” or “the Company”)
UPDATE IN RELATION TO THE ACQUISITION OF 2 LONG STREET CAPE TOWN AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the announcement released by the
Company on the Stock Exchange News Service of the JSE Limited
(“SENS”) on 3 March 2017, in terms of which the Company advised
shareholders that it had, through its subsidiary, Spear One
Proprietary Limited, entered into an agreement (“Sale of Letting
Business Agreement”) with Capital Propfund 1 Proprietary Limited
(“Seller”) to acquire, as a going concern, the letting enterprise
operated by the Seller on the property on Erf 9363 Cape Town,
City of Cape Town, Western Cape, situated at 2 Long Street, Cape
Town, Western Cape (“Property”) (“Acquisition”).
As previously advised, Spear will hold a 70% interest in Spear
One, with the balance being held by acquisition partners. The
30% interest that will be held by the acquisition partners will
be funded by Spear at the prime interest rate plus 2% and will
be secured by the acquisition partner’s interest in Spear One.
2. ADDENDUM TO THE SALE OF LETTING BUSINESS AGREEMENT
Shareholders are hereby advised that the Company entered into
an addendum to the Sale of Letting Business Agreement and that
the terms of the Acquisition have been amended as follows:
• the purchase consideration for the Acquisition has been
reduced to R389 000 000; and
• the Seller has provided an additional rental guarantee in
respect of 87 parking bays on the Property that are unlet,
limited to R1 000 (excluding VAT) per parking bay, per
month, for a maximum period of 18 months from the Effective
Date.
3. FORECAST FINANCIAL INFORMATION IN RESPECT OF THE ACQUISITION
The forecast financial information relating to the Acquisition
for the financial periods ended 28 February 2018 and
28 February 2019 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 8 month the 12 month
period ended period ended
28 February 28 February
2018 2019
Rental income 35 832 236 54 166 100
Straight-line rental accrual (191 043) (13 366)
Gross income 35 641 193 54 152 734
Property expenses (10 625 390) (16 744 666)
Net property income 25 015 803 37 408 068
Administration expenses (482 433) (923 316)
Operating profit 24 533 370 36 484 752
Finance cost (13 104 291) (19 683 400)
Finance income 4 370 255 6 564 375
Profit before taxation 15 799 334 23 365 727
Taxation - -
Profit after tax 15 799 334 23 365 727
Adjusted for:
Straight-line rental accrual 191 043 13 366
Total comprehensive income 15 990 378 23 379 093
Total comprehensive income
attributable to:
Distributable profit 12 504 341 18 334 677
Non-controlling interest 3 486 037 5 044 415
Total comprehensive income 15 990 378 23 379 093
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 8 month period ended
28 February 2018 has been calculated from the anticipated
Effective Date, being on or about 1 July 2017.
d) The forecast distribution excludes straight-line rental
accrual.
e) Contracted revenue constitutes 68% of the revenue for the 8
month period ended 28 February 2018 and 43% of the revenue
for the 12 month period ended 28 February 2019.
f) Near-contracted revenue constitutes 32% of the revenue for
the 8 month period ended 28 February 2018 and 57% of the
revenue for the 12 month period ended 28 February 2019.
g) Uncontracted revenue constitutes 0% of the revenue for the
8 month period ended 28 February 2018 and 0% of the revenue
for the 12 month period ended 28 February 2019.
h) Leases expiring during the forecast period have been assumed
to renew at the future value of current market related rates.
4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that, as the forecast financial
information relating to the Acquisition have now been published,
caution is no longer required to be exercised by shareholders
when dealing in the Company’s securities.
20 March 2017
Cape Town
Sponsor
PSG Capital
Date: 20/03/2017 02:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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