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RDF - Redefine Properties Limited - Disposal to a related party and

Release Date: 09/09/2011 13:17
Code(s): RDF
Wrap Text

RDF - Redefine Properties Limited - Disposal to a related party and cautionary announcement Redefine Properties Limited (Registration No. 1999/018591/06) Share Code: RDF ISIN Code: ZAE000143178 ("Redefine" or "the company") DISPOSAL TO A RELATED PARTY AND CAUTIONARY ANNOUNCEMENT INTRODUCTION Linked unitholders are advised that Redefine has concluded an agreement with Arrow Creek Investments 227 (Proprietary) Limited ("Arrow Creek") for the disposal to Arrow Creek of a portfolio of wholly-owned properties ("the property portfolio"), Redefine`s interest in a number of joint ventures ("the JV`s"), the Upper East Side Hotel and the shares in and claims against UES Hotel (Proprietary) Limited (the manager of the Upper East Side Hotel) (collectively "the transaction"), for an aggregate purchase consideration of R358 300 001 plus an amount equal to the third party debt and undertakings owed by the JV`s at the effective date ("the third party debt"). RATIONALE FOR THE TRANSACTION The transaction is in line with Redefine`s strategy to restructure its core property portfolio in order to improve the quality of its property portfolio by exiting from trading joint ventures and disposing of smaller, secondary grade properties which will be replaced with larger, high-grade investment properties. TERMS OF THE TRANSACTION AND CONDITIONS PRECEDENT Subject to the fulfilment of the conditions precedent set out below, including obtaining the consent of Redefine`s partners in the JV`s, the effective date of the transaction is 31 August 2011. The purchase consideration will be settled by Arrow Creek as follows: - a cash payment of R258.3 million; - the assumption by Arrow Creek of the third party debt; and - R100 million will remain outstanding as a loan by Redefine to Arrow Creek ("the vendor loan"). In the long-term the cash proceeds from the transaction will be used by Redefine to invest in high-grade investment properties. However, in the short-term the cash proceeds will be used to reduce interest- bearing borrowings. The vendor loan is repayable within 24 months from the effective date, bears interest at the prime rate plus 125 basis points and is secured by second covering bonds in favour of Redefine over the property portfolio and personal suretyships from the major shareholders of Arrow Creek. Should Arrow Creek sell any property within the property portfolio prior to settlement of the vendor loan, the proceeds of the sale, after payment of the first covering mortgage bond over that property (if any), will be applied to reducing the vendor loan. The transaction is subject to the following conditions precedent: - Redefine obtaining an opinion from an independent expert which confirms that the transaction is fair to Redefine linked unitholders as contemplated in terms of the JSE Listings Requirements ("the fairness opinion"); - compliance by the parties with the necessary provisions of the Companies Act 2008, including Redefine obtaining approval from its linked unitholders for the vendor loan; - approval of the transaction by the Competition Authorities; - Arrow Creek furnishing Redefine with acceptable confirmation that Arrow Creek has secured finance for the cash portion of the purchase consideration; and - definitive agreements being concluded in respect of the transaction, including obtaining appropriate consents from Redefine`s partners in the JV`s. PROPERTY INFORMATION Details of the property portfolio and the Upper East Side Hotel being sold to Arrow Creek, including property name and address, geographical location, rentable area, sector, weighted average rental per square meter, effective date of acquisition, purchase price and the valuations attributed to the properties as at 28 February 2011 by the company, are as follows: Property name and Geographical Rentable area Sector address location (m2) Manhattan Plaza, Western Cape 4,886 Office 100 Edward Street, Bellville Bloemhof Western Cape 4,233 Office Building, 112 Edward Street, Bellville Sterling Place, Western Cape 4,183 Office 86 Edward Street, Bellville Forum Building, Western Cape 668 Retail 82 Edward Street, Bellville Omnipark, 102 Western Cape 2,212 Office Edward Street, Bellville Plum Park, 25 Western Cape 1,994 Office Gabriel Road, Plumstead Viking Business Western Cape 9,090 Retail Park, Cnr Viking Way and Showgrounds Avenue, Epping Nampak Epping, 7 Western Cape 15,399 Industrial Hewitt Avenue, Epping 1 Paarden Eiland, Western Cape 3,206 Industrial Paarden Eiland 28 Marine Drive, Western Cape 4,455 Industrial Paarden Eiland 30 Marine Drive, Western Cape 2,730 Industrial Paarden Eiland Finsource House, Western Cape 2,971 Office 142 Bree Street, Cape Town Upper East Side Western Cape N/A Hotel Hotel, Brickfield Road, Woodstock, Cape Town Total 56,027 Weighted Effective Purchase Valuation average date of price as at 28 Property name rental per acquisition (R`000) February m2 2011
(R) (R`000) Manhattan Plaza 92.97 01/12/2006 37,225 40,871 Bloemhof Building 75.68 01/12/2006 17,900 20,427 Sterling Place 63.97 01/12/2006 20,100 20,573 Forum Building 40.47 01/12/2006 6,200 4,243 Omnipark 67.28 01/12/2006 14,400 11,563 Plum Park 92.51 01/12/2006 16,700 15,288 Viking Business 53.47 01/12/2006 36,200 33,779 Park Nampak Epping 23.48 01/12/2006 24,000 39,252 1 Paarden Eiland 29.51 01/08/2008 21,300 13,737 28 Marine Drive 26.86 01/04/2008 36,100 23,597 30 Marine Drive 39.60 01/04/2008 12,400 8,456 Finsource House 54.04 01/12/2006 22,700 50,100 Upper East Side N/A 01/12/2006 127,248* 42,500* Hotel Total 392,473 324,386 * The purchase price and valuation amounts represent amounts as at 28 February 2011 at which point Redefine held a 50% interest in the hotel through a joint venture. After 28 February 2011, Redefine acquired the remaining 50% interest in the hotel. THE JV`s The JV`s that are being sold to Arrow Creek comprise Redefine`s 50% interest in each of the Oasis Care Centre (partnership), Josdel 137 (Proprietary) Limited (trading as the Oasis Retirement Resort), the Broadlands Stud Farm Development (partnership) and the Brickfield Joint Venture (partnership). CATEGORISATION OF THE TRANSACTION, RELATED PARTY CONSIDERATIONS, FINANCIAL INFORMATION, FAIRNESS OPINION AND CAUTIONARY As Michael Naftali Flax, a non-executive director of Redefine, is a 42.5% shareholder in Arrow Creek, the transaction constitutes a small related party transaction in terms of section 10.7 of the JSE Listings Requirements. A small related party transaction is not subject to linked unitholder approval, provided an independent expert has confirmed that the terms of the transaction are fair as far as linked unitholders are concerned. Accordingly, a further announcement will be published on receipt of the fairness opinion. This further announcement will also include the pro forma financial effects of the transaction. Until such time as the further announcement has been published, linked unitholders are advised to exercise caution when dealing in their Redefine linked units. 9 September 2011 Corporate advisor and sponsor Java Capital Date: 09/09/2011 13:17:48 Supplied by www.sharenet.co.za 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.

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