To view the PDF file, sign up for a MySharenet subscription.

VIVIDEND INCOME FUND LIMITED - Acquisition of new property

Release Date: 22/10/2012 09:03
Code(s): VIF     PDF:  
Wrap Text
Acquisition of new property

Vividend Income Fund Limited
Incorporated in the Republic of South Africa
(Registration Number 2010/003232/06)
JSE Alpha Code: VIF
ISIN: ZAE000150918
(“Vividend” or “the Company”)

ACQUISITION OF NEW PROPERTY

1.   THE CONTINUITY SA ACQUISITION

     Linked unitholders of the Company are hereby advised that the Company has entered into an agreement with Fortress
     Income 3 (Proprietary) Limited (“Fortress”) to acquire the property and associated letting enterprise commonly known as
     Continuity SA (“the Continuity SA Property”) situated at 308 Kent Avenue Ferndale Randburg (“the Continuity SA
     Acquisition”).

     The effective date of the Continuity SA Acquisition shall be the date of transfer of the Continuity SA Property into the name of
     the Company, which, subject to fulfilment of the conditions precedent, is expected on or about 1 March 2013.

2.   RATIONALE FOR THE ACQUISITION

     The Continuity SA Acquisition is consistent with Vividend’s strategy of identifying and acquiring properties that have free cash
     flow yields that provide adequate value enhancement to Linked Unitholders from the effective date of their acquisition. The
     Continuity SA Acquisition provides further quality, stability, longevity and growth potential to the Company’s earnings by
     introducing a well established, single tenanted property with a low risk, medium-term lease into the Company’s lease profile.

3.   PURCHASE CONSIDERATION

     The purchase consideration applicable to the Continuity SA Acquisition is R56,500,000 (fifty six million five hundred thousand
     rand), payable in cash against transfer of the Continuity SA Property into the name of the Company. The Company will fund
     the purchase consideration through a combination of debt financing and new equity raised from new and/or existing Linked
     Unitholders. Details of the debt financing and equity raising will be announced in due course.


4.   THE CONTINUITY SA PROPERTY

     Details of the Continuity SA Property, as at the expected effective date, are as follows:

         Property Address         Geographical           Sector          Cost/Value              GLA      Cost per     Average
                                    Location                                                                GLA         Gross
                                                                                                                      Rental per
                                                                                                                       m2 per
                                                                                                                        month

         308 Kent Avenue             Gauteng           Commercial        R56,500,000        5,503m2       R10,267      R84.95
        Ferndale, Randburg


5.   PROPERTY SPECIFIC INFORMATION

     Details regarding the Continuity SA Acquisition, as at the expected effective date, are set out below:

       Property Address      Purchase Yield attributable        Weighted          Weighted Lease       Vacancy %
                               to Linked Unitholders          Average Lease         Duration            by GLA
                                                                Escalation

        308 Kent Avenue                 11.65%                      7%                 3.1 years              0%
           Ferndale,
           Randburg
Notes:

           a)        The Purchase Yield attributable to Linked Unitholders assumes a 30% Loan to Value (LTV) gearing limit with an
                     annual interest cost of 8.0%, which is the current indicative cost available to the Company from its bankers
           b)        Corporate tenants with low levels of default risk (‘A Type’ Tenants) constitute 100% of the GLA and 100% of the
                     Gross Rentals within the Continuity SA Property.
           c)        Save for costs associated with the transfer of the Continuity SA Property, which are estimated at R200,000, no
                     expenditure will be incurred by the Company in connection with the Continuity SA Acquisition
           d)        The cost of the Continuity SA 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

      The Continuity SA Acquisition is subject to the following material conditions precedent:

     a)   The satisfactory completion of a due diligence investigation, to be performed by the Company on the Continuity SA
          Property and associated letting enterprise by 1 November 2012;

     b)   The Company obtaining the appropriate irrevocable funding commitments from existing and/or new debt funders, in
          relation to the Continuity SA Acquisition, by 1 March 2013;

     c)   The Company obtaining the appropriate irrevocable undertakings to subscribe for additional equity from new and/or
          existing Linked Unitholders by 1 March 2013; and

     d)   Linked Unitholders approving the issue of any Linked Units required to conclude the Continuity SA Acquisition, in terms of
          the JSE Listing Requirements, by 1 March 2013.

      The Company is entitled to waive the conditions precedent set out in paragraphs a), b) and c) above.

7.    WARRANTIES

      Fortress has provided warranties and indemnities to the Company that are standard to a transaction of this nature.

8.    PRO FORMA FINANCIAL EFFECTS OF THE CONTINUITY SA ACQUISITION

      The pro forma financial information in relation to the Continuity SA Acquisition is still in the process of being finalised and will
      be published in due course.

9.    FORECAST FINANCIAL INFORMATION OF THE CONTINUITY SA ACQUISITION

      The forecast financial information in relation to the Continuity SA Acquisition is still in the process of being finalised and will
      be published in due course.

10. CATEGORISATION

      The Continuity SA Acquisition is a Category 2 acquisition in terms of the Listings Requirements of the JSE Limited

11. CAUTIONARY ANNOUNCEMENT

      Linked Unitholders are advised to exercise caution when dealing in the Company’s securities until a full announcement
      regarding the pro forma financial effects and the forecast financial information in relation to the Continuity SA Acquisition is
      made.


22 October 2012
Cape Town

Sponsor
PSG Capital (Pty) Limited

Date: 22/10/2012 09:03:00 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.

Share This Story