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Acquisition of new property - Nyanga Junction Acquisition
Fairvest Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/005011/06)
Linked unit code: FVT ISIN: ZAE000034658
(“Fairvest” or “the Company”)
ACQUISITION OF NEW PROPERTY
1. THE NYANGA JUNCTION ACQUISITION
Linked unitholders of the Company are hereby advised that the
Company has entered into an agreement (“the Agreement”) with
Momentum Property Investments (Proprietary) Limited
(“Momentum”), to acquire all rights and obligations in
relation to the notarial lease held by Momentum (“Notarial
Lease”) over the properties situated at Erf 113702 Cape Town,
Erf 10315 Guguletu, Erf 113308 Cape Town and Erf 10172
Guguletu, all situated in the City of Cape Town and commonly
known as Nyanga Junction (“the Nyanga Junction Property”), and
the associated rental enterprise conducted on the Nyanga
Junction Property (“the Nyanga Junction Property
Acquisition”).
In order to procure the transfer of Momentum’s rights and
obligations in relation to the Notarial Lease to the Company,
the parties will procure the preparation and registration of a
notarial deed of assignment at the Deeds Office (“Deed of
Assignment”).
The effective date of the Nyanga Junction Acquisition shall be
the date of registration of the Deed of Assignment at the
Deeds Office which, subject to fulfilment of the conditions
precedent, is expected on or about 1 April 2013.
2. RATIONALE FOR THE ACQUISITION
The Nyanga Junction Acquisition is consistent with the
Company’s growth strategy whereby the Company will focus on
acquiring retail assets with a weighting in favour of non-
metropolitan areas and lower LSM sectors.
Situated at the Nyanga train station, the Nyanga Junction
Property is a prime example of commuter retail. At 10,079
square meters, the centre is the right size for its target
market and presents an opportunity for Fairvest, to further
its growth in the lower LSM retail market. Management is of
the view that by undertaking a phased upgrade of the centre,
the centre will attract a greater percentage of national
tenants resulting in an improvement in the tenant profile as
well as the lease expiry profile which has been managed by the
current owner to enable the redevelopment of the centre.
3. PURCHASE CONSIDERATION
The purchase consideration applicable to the Nyanga Junction
Acquisition is R58 000 000 (fifty eight million rand), which
includes VAT at the rate of 0%, payable in cash against
registration of the Deed of Assignment at the Deeds Office.
The Company will fund the purchase consideration through debt
and/or equity funding.
4. THE NYANGA JUNCTION PROPERTY
Details of the Nyanga Junction Property are as follows:
Average
Cost gross
Cost/ per rental per
Value GLA GLA m2
Property Name Geographical
and Address Location Sector (R’m) (m2) (R/m2) (R/m2)
Nyanga Junction, City of Cape Retail 58 10,079 R5,754 R92.80
Erf 113702 Cape Town,
Town, Erf 10315 Western Cape
Guguletu, Erf
113308 Cape Town
and Erf 10172
Guguletu
5. PROPERTY SPECIFIC INFORMATION
Details regarding the Nyanga Junction Acquisition, as at the
expected effective date, are set out below:
Purchase Yield
attributable
to Linked Average Lease
Unitholders Escalation Duration
Property Name Vacancy
and Address (%) (%) (years) % by GLA
Nyanga 10.9% 8.4% 1.40 2.1%
Junction ,Erf
113702 Cape
Town, Erf
10315
Guguletu, Erf
113308 Cape
Town and Erf
10172 Guguletu
Notes:
a) The purchase yield attributable to linked unitholders
assumes that the acquisition is funded through new equity.
b) The costs associated with the Nyanga Junction Acquisition
are estimated at R2.5 million.
c) The cost of the 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 Nyanga Junction Acquisition is subject to the following
conditions precedent:
6.1. the board of directors of Momentum approving and
ratifying the entering into of the Agreement by no later
than close of business on 4 February 2013;
6.2. the board of directors of the Company approving and
ratifying the entering into of the Agreement by no later
than close of business on 4 February 2013;
6.3. the Company obtaining funding for the Nyanga Junction
Acquisition by way of a loan from a bank or other
financial institution or an additional equity investment
in an amount not exceeding the amount of the purchase
price, by no later than 15 February 2013; and
6.4. the owner of the Nyanga Junction Property, being the
Passenger Rail Agency of South Africa, consenting in
writing to the assignment of the Notarial Lease to the
Company, by no later than 31 March 2013.
Momentum is entitled to waive the condition precedent set out
in 6.1. The Company is entitled to waive the conditions
precedent set out in 6.2 and 6.3 above. The condition
precedent set out in 6.4 cannot be waived however the parties
can extend the date for fulfilment of same.
7. WARRANTIES
Momentum has provided warranties to the Company that are
standard to a transaction of this nature.
8. PRO FORMA FINANCIAL EFFECTS OF THE NYANGA JUNCTION ACQUISITION
The pro forma financial effects of the Nyanga Junction
Acquisition on net asset value and net tangible asset value
per linked unit are not significant and have therefore not
been disclosed.
9. FORECAST FINANCIAL INFORMATION OF THE NYANGA JUNCTION
ACQUISITION
The forecast financial information relating to the Nyanga
Junction Acquisition for the financial periods ended 30 June
2013 and 30 June 2014 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 Listings
Requirements of the JSE Limited and is the responsibility of
the Company’s directors.
Forecast for the 3 Forecast for the 12
month period ended month period ended
30 June 2013 30 June 2014
(R) (R)
Revenue 3,305,776 13,553,634
Operating costs (1,686,675) (7,256,628)
Net operating 1,619,101 6,297,006
income
Debenture interest (1,619,101) (6,297,006)
Total
comprehensive
income
attributable to
linked unitholders - -
Notes:
a) Contractual revenue includes gross rentals and other
recoveries but excludes any adjustment applicable to the
straight lining of leases.
b) Operating costs include all utility and council charges
applicable to the Nyanga Junction Property.
c) The forecast information for the 3 month period ended 30
June 2013 has been calculated from the anticipated
effective date of the Nyanga Junction Acquisition, being 1
April 2013.
d) Un-contracted revenue constitutes 22.4% of the revenue for
the 3 month period ended 30 June 2013.
e) Un-contracted revenue constitutes 42.1% of the revenue for
the 12 month period ended 30 June 2014.
f) Current vacant space has been has been assumed to remain
vacant unless it is deemed probable that such space will
be let, in which case the rental is forecast at prevailing
rates.
g) Leases expiring during the forecast period have been
assumed to renew at current market rates, unless the
lessee has indicated its intention to terminate the lease.
h) It is assumed that 100% of net operating income is
distributed to linked unit holders, as interest, in
accordance with the debenture trust deed of the Company.
i) Distributions to linked unitholders occur through the
payment of debenture interest.
10. CATEGORISATION
The Nyanga Junction Acquisition is a Category 2 acquisition in
terms of the listings requirements of the JSE Limited.
28 January 2013
Cape Town
Sponsor
PSG Capital
Date: 28/01/2013 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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