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Related party category 1 acquisition, reverse takeover, specific issue for cash, withdrawal of cautionary
CASTLEVIEW PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2017/290413/06)
JSE share code: CVW
ISIN: ZAE000251633
(Approved as a REIT by the JSE)
("Castleview" or the "company")
ANNOUNCEMENT REGARDING:
- A RELATED PARTY, CATEGORY 1 ACQUISITION OF DIRECT AND INDIRECT PROPERTY
ASSETS WHICH CONSTITUTES A REVERSE TAKEOVER OF CASTLEVIEW;
- A SPECIFIC ISSUE OF SHARES FOR CASH; AND
- WITHDRAWAL OF CAUTIONARY
1. Introduction
Shareholders are referred to the cautionary announcement released on 22 June 2022 advising that Castleview was
in advanced negotiations regarding the acquisition of a portfolio of direct and indirect property assets from a
related party.
Shareholders are now advised that Castleview has entered into the following acquisition agreements (the
"acquisition agreements"), in terms of which it will acquire:
- the Willowbridge retail properties from the Willowbridge vendors;
- the K346 development properties, all held in K346 and situated in the City of Cape Town and its
surrounding suburbs, from U Big;
- the iRes residential properties, all held in iRes and situated in the City of Cape Town and its surrounding
suburbs, from IGFH;
- the entire issued share capital of, and claims against, Tensai Property Services Limited ("TPS"), including
its 46.07% interest in EPP Community Properties JV B.V. ("EPP Community Properties") (the "EPPCP
investment") and, indirectly, its 25.7% interest in Collins Property Projects Proprietary Limited ("CPP")
(the "CPP investment") held through its wholly-owned subsidiary, U Reit Collins Proprietary Limited
("U Reit Collins") from U Big; and
- more than 50% of the issued shares in Emira Property Fund Limited ("Emira") through the acquisition of
(i) IG EMI Holdings Proprietary Limited ("IG EMI"); and (ii) the 14 275 529 Emira shares held by
K2019451018 (South Africa) Proprietary Limited ("K018 Emira shares") (collectively, the "Emira
investment").
The acquisition of the assets detailed above is collectively referred to hereinunder as the "acquisitions."
Shareholders are referred to paragraph 12 of this announcement for full details of the direct property assets and
their vendors.
The Willowbridge retail properties, the K346 development properties, the iRes residential properties, the EPPCP
investment, CPP investment and the Emira investment are all being acquired from subsidiaries of I Group
Investments Proprietary Limited ("I Group").
I Group is an innovative property and development company based in Cape Town, whose strategy is to establish
a diversified property portfolio by investing in South African and selected international real estate focused, firstly,
on net asset value growth, and, secondly, on the maintenance of a sustainable yield. I Group's investments
comprise of commercial properties, held either directly or indirectly through listed and non-listed property
companies, and residential properties, including residential developments.
In addition to the acquisitions, Castleview has entered into share subscription agreements (the "share
subscription agreements") with Womens Soccer League Proprietary Limited ("Womens Soccer League") and
Streepperdjie Proprietary Limited ("Streepperdjie"), respectively, in terms of which Womens Soccer League
will subscribe for approximately 34 908 876 Castleview shares and Streepperdjie will subscribe for
approximately 17 000 000 Castleview shares in terms of a specific authority to issue shares for cash (the "share
subscription").
The acquisitions and the share subscription are collectively referred to hereinunder as the "transaction."
2. Rationale for the transaction
Castleview is a property holding and investment company that listed as a retail REIT on the Alt X of the JSE on
20 December 2017. The company's strategy has been to accumulate a diversified portfolio of retail properties in
South Africa, providing exposure to consumers from a cross-section of income categories and it is currently
invested in two well-located South African shopping centres, the first, a small regional shopping centre in
Gqeberha (previously known as Port Elizabeth), the second, a convenience centre in Goodwood, Cape Town.
Castleview's investment mandate is to deliver healthy total returns to its shareholders via a robust income stream
and capital growth of its assets.
The transaction will result in the company acquiring a diversified, well-located and quality portfolio of direct and
indirect assets across all property sectors and will reposition the company as a mid-tier REIT with a net asset
value of c.R5.5 billion.
3. Terms of the acquisitions
Castleview will acquire the Willowbridge retail properties, the K346 development properties, the iRes residential
properties, the EPPCP investment, the CPP investment and the Emira investment, valued at an aggregate amount
of c.R5 billion, with effect from the date on which the last of the conditions precedent is fulfilled or waived, as
the case may be, or such later date as agreed between the parties (the "effective date") through six separate
acquisitions in exchange for the issue by the company of new Castleview shares (the "consideration shares").
The aggregate number of consideration shares to be issued pursuant to the implementation of the acquisitions
shall be calculated on a NAV for NAV basis with reference to the NAV of the acquisition assets concerned and
the NAV of Castleview, each determined on the basis of the pro forma consolidated balance sheet of the
acquisition asset concerned (save that in respect of iRes, it shall be determined with reference to the pro forma
balance sheet of iRes) and the pro forma consolidated balance sheet of Castleview on 31 August 2022, in terms
of the following formula:
NCS = [(NAVco x PCoS) / NAVP)] × TnPS
where:
NCS stands for the number of consideration shares, which shall be rounded up or down (as the case may
be) to the nearest integer;
NAVco stands for the NAV of the acquisition asset;
PCoS stands for the percentage that the sale shares comprise of the total issued shares of the relevant
acquisition asset as at 31 August 2022;
NAVP stands for the NAV of Castleview. For the avoidance of doubt, it is recorded that the calculation of
the NAV of Castleview shall be determined before the implementation of the acquisition agreements,
and shall therefore not have regard to the changes to NAV pursuant to the implementation of those
agreements; and
TnPS stands for 41 042 547, being the total number of Castleview shares in issue as at 31 August 2022
(before having regard to the acquisitions), excluding treasury shares (if applicable).
The estimated number of consideration shares to be issued for each acquisition is set out below:
- Castleview will acquire the entire issued share capital of Interurban Willowbridge Proprietary Limited
("Interurban Willowbridge"), and consequently the Willowbridge retail properties, valued at an
aggregate amount of approximately R535.7 million, from the Willowbridge vendors in exchange for the
issue of consideration shares as determined according to the formula set out above, expected to be
89 726 018 Castleview shares at an indicative issue price of R5.97 per share;
- Castleview will acquire the entire issued share capital of K346 and indirectly the K346 development
properties from U Big, collectively valued at an aggregate amount of approximately R221.6 million, in
exchange for the issue of consideration shares as determined according to the formula set out above,
expected to be 37 125 672 Castleview shares at an indicative issue price of R5.97 per share;
- Castleview will acquire an 85% interest in the share capital and related shareholder loans of iRes and
indirectly the iRes residential properties, including the 50% held in its subsidiary, Resi Developments
Proprietary Limited ("Resi Developments"), from IGFH valued at an aggregate amount of approximately
R197.7 million in exchange for the issue of consideration shares as determined according to the formula
set out above, expected to be 33 107 790 Castleview shares at an indicative issue price of R5.97 per share;
- Castleview will acquire the entire issued share capital of and claims against TPS and, accordingly the
EPPCP investment and the CPP investment from U Big, valued collectively at an aggregate amount of
approximately R2 008.3 million in exchange for the issue of consideration shares as determined according
to the formula set out above, expected to be 336 393 812 Castleview shares at an indicative issue price of
R5.97 per share;
- Castleview will acquire the K018 Emira shares at an indicative issue price of R5.97 per share; and
- Castleview will acquire the entire issued share capital of IG EMI and, accordingly, its wholly-owned
subsidiaries, U Reit Holdings Proprietary Limited ("U Reit") and Maitlantic Investments Proprietary
Limited ("Maitlantic Investments"), which together own c.47.3% of the Emira shares in issue, from
IGFH, Maitlantic 10 Proprietary Limited and K2017034069 (South Africa) Proprietary Limited. The Emira
investment is valued at an aggregate amount of approximately R2 011.4 million and will be acquired in
exchange for the issue of consideration shares as determined according to the formula set out above,
expected to be 336 918 080 Castleview shares at an indicative issue price of R5.97 per share.
With respect to the loan claims against iRes being acquired in exchange for consideration shares, the number of
consideration shares to be issued shall be calculated with reference to the face value of the loan claims concerned
and the NAV of Castleview, determined on the basis of the pro forma consolidated balance sheet of Castleview
as at 31 August 2022, in terms of the following formula:
NCS = (FVSCco / NAVP) × TnPS
where:
FVSCco stands for the face value of the loan claims as at 31 August 2022,
and the remaining inputs are as defined above.
All acquisition assets detailed above will become subsidiaries of Castleview post the acquisitions.
4. Conditions precedent to the acquisitions
The acquisitions are subject to the fulfilment or waiver, as the case may be, of the following conditions precedent:
4.1. the shareholders of Castleview approving all resolutions required to authorise the conclusion and
implementation of the acquisition agreements in terms of the JSE Listings Requirements;
4.2. the boards of directors and shareholders of each of the counterparties to the acquisition agreements
approving the conclusion and implementation of the acquisition agreements in terms of the relevant
parties' memoranda of incorporation and the Companies Act, 71 of 2008 (the "Companies Act"), as
amended;
4.3. to the extent required, any financial institution(s) whose consent is required for the implementation of the
acquisition agreements consent(s) in writing to the implementation of those agreements;
4.4. the vendors having delivered to Castleview written confirmation that the Takeover Regulation Panel has
either:
4.4.1. granted an exemption in terms of section 119(6) of the Companies Act exempting the vendors
from submitting a mandatory offer to the remaining shareholders of Castleview in terms of
section 123 of the Companies Act and the Takeover Regulations pursuant to the implementation
of the acquisition agreements; or
4.4.2. issued a compliance certificate indicating compliance with the requirements in parts B and C of
chapter 5 of the Companies Act and the Companies Regulations promulgated under the
Companies Act;
4.5. the acquisition agreements have all been concluded and become unconditional in accordance with their
terms; and
4.6. the unconditional approval of the acquisitions contemplated in the acquisition agreements by the
Competition Authorities in terms of the Competition Act No. 89 of 1998, or the conditional approval on
terms and conditions acceptable the affected parties.
Should any of the conditions precedent not be fulfilled or waived, as the case may be, by 17:00 on 31 October
2022, or such other date as agreed by the parties, then the acquisition agreements shall not automatically lapse
and be of no further force and effect. Rather, any party may on or after the aforementioned date and time, on
written notice (the "notice") to the other parties, require that the condition precedent in question be fulfilled within
one month after the date of the notice and, failing fulfilment of the condition precedent in question within the
one-month period, then the acquisition agreements shall terminate.
The acquisition agreements contain warranties normal for transactions of this nature and are limited to the
respective parties' capacity and authority to enter into, and perform their obligations in terms of, the acquisition
agreements and entitlement to issue and/or transfer (as the case may be) unencumbered shares to the relevant
party/ies.
5. Terms of the share subscription
In terms of the share subscription, Womens Soccer League will subscribe for approximately 34 908 876
Castleview shares and Streepperdjie will subscribe for approximately 17 000 000 Castleview shares (altogether,
the "subscription shares").
The aggregate subscription consideration shall be calculated with reference to the NAV of Castleview on the basis
of the pro forma consolidated balance sheet of Castleview on 31 August 2022, in terms of the following formula:
SC = (NAVCVW / CVWs) x SS
where:
SC stands for the aggregate subscription consideration for the subscription shares;
NAVCVW stands for the NAV of Castleview. For the avoidance of doubt, it is recorded that the calculation of
the NAV of Castleview shall be determined before the implementation of the acquisition agreements,
and shall therefore not have regard to the changes to NAV pursuant to the implementation of those
agreements;
CVWs stands for 41 042 547 Castleview shares, being the total number of Castleview shares in issue as at
31 August 2022 (before having regard to the shares to be issued in terms of the acquisition
agreements), excluding treasury shares (if applicable); and
SS stands for the total number of subscription shares.
The estimated aggregate subscription consideration to be received by Castleview is set out below:
- Womens Soccer League will subscribe for 34 908 876 subscription shares at an indicative subscription
price of R5.97 per Castleview share for a total subscription consideration which is anticipated to be
R208 405 989.70; and
- Streepperdjie will subscribe for 17 000 000 subscription shares at an indicative subscription price of at
R5.97 per Castleview share for a total subscription consideration which is anticipated to be R101 490 000.
Womens Soccer League and Streepperdjie will also be afforded the opportunity to settle a portion of the
subscription price in Emira shares on a NAV for NAV basis. If such election is exercised, the number of Emira
shares to be delivered will be calculated with reference to the NAV of Emira, in terms of the following formula:
NCS = SC / NAVEMI
where:
NCS stands for the number of Emira shares to be delivered, which shall be rounded up or down (as the
case may be) to the nearest integer;
SC stands for the aggregate subscription consideration or the balance thereof not settled in cash as
described above, as the case may be; and
NAVEMI stands for the NAV per Emira share.
The cash proceeds received from both Womens Soccer League and Streepperdjie pursuant to the share
subscription will be used to reduce Castleview's existing debt facilities and to provide capacity for further growth.
6. Conditions precedent to the share subscription
The share subscription is subject to the fulfilment or waiver, as the case may be, of the following conditions
precedent:
6.1. the approval by Castleview shareholders of the subscription agreements;
6.2. all other resolutions of the boards of directors and shareholders of the relevant parties required in order
to authorise the conclusion of the subscription agreements and the implementation of the acquisitions
contemplated thereby have been validly adopted; and
6.3. those acquisition agreements identified by Castleview have been concluded, become unconditional in
accordance with their terms and are implemented.
The share subscription agreements contain warranties normal for transactions of this nature
7. Property specific information
Details of the Willowbridge retail properties, the iRes residential properties and the K346 development properties,
are set out in the table below:
Property name Geographical Sector GLA Weighted average rental Valuation
location (m2) per m2 per month or per (R'million)
residential unit per
month, as applicable
(R)
Willowbridge retail properties
1 Bougainville shopping Gauteng Retail 11 337 95.65 143.000
centre
2 Mitchells Plain shopping Western Cape Retail 19 110 88.54 229.000
centre 2
3 Makhaza Centre Western Cape Retail 8 795 144.32 139.000
4 Pick n Pay Hyper Gauteng Retail 19 602 98.15 256.000
Klerksdorp 3
5 Willowbridge south Western Cape Retail 26 657 175.45 660.000
shopping centre 4
iRes residential properties
6 Aurora Sands Western Cape Residential 1 144 8 963 16.400
7 Cherrywood Western Cape Residential 3 770 7 863 66.410
8 Glen Valley Western Cape Residential 2 140 7 677 23.000
9 Heritage Villas Western Cape Residential 1 030 6 193 18.532
10 Nightingale Western Cape Residential 1 534 9 725 22.035
11 Sunrise Villas Western Cape Residential 2 852 6 843 49.357
12 Tuscan Park Villas Western Cape Residential 1 519 7 763 22.500
13 Essenhout Western Cape Residential 4 057 13 435 63.505
K346 development properties
14 10 Trek Road Western Cape Development 1 363 - 19.000
15 13 and 17 Nettleton Road Western Cape Vacant Land 3 812 - 153.000
16 14 Higgo Road Western Cape Vacant Land 931 - 7.500
17 14 Quebec Road Western Cape Vacant Land 1 722 - 37.000
18 115 Victoria Road Western Cape Development 691 - 35.000
19 Infinity Llandudno Western Cape Development 980 - 89.000
Notes:
1. All of the properties set out in the table above will be acquired with effect from the effective date of the acquisitions.
2. Castleview will acquire a 50% interest in the Mitchells Plain shopping centre.
3. Castleview will acquire a 50% interest in Pick n Pay Klerksdorp.
4. Castleview will acquire a 75% interest in Willowbridge south shopping centre.
5. The independent valuations of the Willowbridge retail properties and the K346 development properties, which were
undertaken by Juan Hattingh of Spectrum Valuations and Asset Solutions Proprietary Limited, have an effective date
of 31 May 2022. Juan Hatting is an independent external valuer registered in terms of the Property Valuers
Association Act, (Act 47 of 2000).
6. The independent valuations of the iRes residential properties which were undertaken by Michael Gibbons of Mills
Fitchet Magnus Penny Proprietary Limited, have an effective date of 30 June 2022. Michael Gibbons is an
independent external valuer registered in terms of the Property Valuers Association Act, (Act 47 of 2000).
8. Financial information on the acquisition assets
The net asset value and net profit after tax for each of the acquisition assets and their subsidiaries detailed in
paragraph 3 is as follows:
Acquisition Note Net asset Adjustments Net asset Profit after Adjustments Profit after
asset value before to net asset value after tax before to profit tax after
adjustments value adjustments adjustments after tax adjustments
(R'000) (R'000) (R'000) (R'000) (R'000) (R'000)
Interurban 1 36 497 499 347 535 844 (16 264) 55 543 39 279
Willowbridge
K346 2 (5 073) 226 788 221 715 (4 049) - (4 049)
TPS 3 24 026 1 944 616 1 968 642 (4 994) (17 684) (22 678)
U Reit Collins 4 40 304 - 40 304 68 903 - 68 903
Emira and 5,6 7 026 335 (5 017 199) 2 009 136 1 292 122 (897 773) 394 349
UReit combined
Maitlantic 7 2 940 - 2 940 (7 287) - (7 287)
Investments
iRes 8 52 935 145 225 198 160 12 598 8 220 20 818
Resi 9 (440) - (440) (118) - (118)
Developments
Total 4 976 301 489 217
Consideration 833 271 372
shares
Notes:
1. Extracted from Interurban Willowbridge's unpublished management accounts for the year ended 28 February 2022.
2. Extracted from K346's unpublished management accounts for the year ended 28 February 2022.
3. Extracted from TPS' unpublished management accounts for the year ended 28 February 2022.
4. Extracted from U Reit Collins' unpublished management accounts for the year ended 28 February 2022.
5. Extracted from Emira's interim half year results for 31 December 2021 as published on SENS on 17 February 2022.
The profit before tax has been extracted, without adjustment, from Emira's results for the 12-month period ended
31 December 2021, calculated by starting with Emira's audited results for the years ended 30 June 2021, less its
interim results for the six months ended 31 December 2020, plus the interim results for the six months ended 31
December 2021. Emira's financial results have been prepared in terms of IFRS and can be accessed on Emira's
website at www.emira.co.za/results-presentations.
6. Extracted from U Reit's unpublished management accounts for the year ended 28 February 2022.
7. Extracted from Maitlantic Investments' unpublished management accounts for the year ended 28 February 2022.
8. Extracted from iRes' unpublished management accounts for the year ended 28 February 2022.
9. Extracted from Resi Developments' unpublished management accounts for the year ended 28 February 2022.
10. Where financial information has been extracted from unpublished management accounts, Castleview management is
satisfied with the quality of those accounts.
9. JSE requirements for the transaction
The acquisitions constitute a category 1 transaction with related parties, as the ultimate beneficial owners of
I Group are associates of Mirlem IP Proprietary Limited, a material shareholder in Castleview. In addition, the
related parties are the ultimate beneficial shareholders of U Big, which is the controlling shareholder of
Castleview's asset manager.
The acquisitions, if implemented, will also result in the issue of new Castleview shares in excess of 100% of the
existing Castleview shares in issue and consequently constitutes a reverse take-over of Castleview in terms of the
JSE Listings Requirements.
In terms of the JSE Listings Requirements, a category 1 transaction with related parties requires the approval of
Castleview shareholders, excluding the related parties, by way of an ordinary resolution. Castleview is also
required to obtain a fairness opinion from an independent expert in compliance with the provisions of paragraph
21.12(b) (read with paragraph 10.4(f)) of the JSE Listings Requirements in respect of the acquisitions and include
a statement advising whether or not the acquisitions are fair to Castleview shareholders.
Accordingly, Castleview has appointed an independent expert to provide external advice to the board of directors
of Castleview in relation to the acquisitions in terms of the JSE Listings Requirements. The independent expert's
report, as well as the statements of the board of directors of Castleview as to whether the acquisitions are fair to
shareholders, will be included in the circular to Castleview shareholders, as detailed below.
In terms of the JSE Listings Requirements, the share subscription is required to be approved by an ordinary
resolution of shareholders achieving a 75% majority of the votes cast on the resolution at a general meeting.
10. Documentation and timing relation to the transaction
Full details of the transaction will be set out in a circular and accompanying revised listings particulars which will
be distributed by Castleview to its shareholders in due course. The circular will include, inter alia, the opinion of
the independent expert in respect of the acquisitions, a notice of general meeting of Castleview shareholders to
approve the transaction and the applicable salient dates and times relating to the transaction.
11. Withdrawal of cautionary announcement
In light of the release of this announcement, Castleview shareholders are advised that caution is no longer required
to be exercised in their dealings in Castleview shares.
12. Detailed information on the direct property assets to be acquired
Willowbridge retail properties
The properties listed below are collectively defined in this announcement as the "Willowbridge retail
properties."
- Bougainville shopping centre in Pretoria;
- a 50% interest in the Mitchells Plain shopping centre in Cape Town;
- the Makhaza Centre in Khayelitsha;
- a 50% interest in the property housing the Pick n Pay Hyper in Klerksdorp; and
- a 75% interest in the Willowbridge South shopping centre in Bellville.
The vendors of the Willowbridge retail properties (collectively, the "Willowbridge vendors") are as follows:
- U Big Investments Proprietary Limited ("U Big");
- Interurban Holdings Proprietary Limited;
- K2016458796 (South Africa) Proprietary Limited;
- K2018365895 (South Africa) Proprietary Limited;
- K2018365955 (South Africa) Proprietary Limited;
- K2018365994 (South Africa) Proprietary Limited;
- K2018366028 (South Africa) Proprietary Limited; and
- K2018366052 (South Africa) Proprietary Limited.
K346 development properties
The development properties listed below are all held in K2019141346 (South Africa) Proprietary Limited
("K346") and are collectively defined in this announcement as the "K346 development properties."
- 10 Trek Road;
- 13 and 17 Nettleton Road;
- 14 Higgo Road;
- 14 Quebec Road;
- 115 Victoria Road; and
- Infinity Llandudno.
The vendor of the K346 development properties is U Big.
iRes residential properties
The residential properties listed below are all held in iRes Fund Proprietary Limited ("iRes") and are collectively
defined in this announcement as the "iRes residential properties."
- Aurora Sands;
- Cherrywood;
- Essenhout;
- Glen Valley;
- Heritage Villas;
- Nightingale;
- Sunrise Villas; and
- Tuscan Villas.
The vendor of the iRes residential properties is I Group Financial Holdings Proprietary Limited ("IGFH").
28 July 2022
Corporate advisor and designated advisor
Java Capital
Legal and tax advisor
ENSafrica
Date: 28-07-2022 03:00:00
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