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Acquisition of new property - The Matsulu Centre 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 MATSULU CENTRE ACQUISITION
Linked unitholders of the Company are hereby advised that the
Company has entered into an agreement (“the Agreement”) with
Huwani Projects (Pty) Ltd (“Huwani”), to acquire from Huwani a
property situated at Erf 2039 Matsulu-A in the Mbombela Local
Municipality, Mpumalanga (“Matsulu Centre Property”) and the
associated rental enterprise conducted in respect of the
Matsulu Centre Property as a going concern (“the Matsulu
Centre Acquisition”).
The effective date of the Matsulu Centre Acquisition will be
the date of registration of transfer of the Matsulu Centre
Property into the name of the Company at the Deeds Office,
which, subject to fulfilment of the conditions precedent, is
expected to occur on or about 1 May 2013.
2. RATIONALE FOR THE MATSULU CENTRE ACQUISITION
The Matsulu Centre 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.
3. PURCHASE CONSIDERATION
The purchase consideration applicable to the Matsulu Centre
Acquisition is R54 350 000 (fifty four million three hundred
and fifty thousand rand) (“Purchase Consideration”), which
includes VAT at the rate of 0%, payable in cash against
registration of the Matsulu Centre Property into the name of
the Company at the Deeds Office. The Company will fund the
Purchase Consideration through debt and/or equity funding.
4. THE MATSULU CENTRE PROPERTY
Details of the Matsulu Centre 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)
Erf 2039 Mbombela Retail 54.35 6,102 8,907 81.8
Matsulu-A, Local
Mbombela Local Municipality,
Municipality Province of
Mpumalanga
5. PROPERTY SPECIFIC INFORMATION
Details regarding the Matsulu Centre Acquisition, as at the
expected effective date, are set out below:
Purchase Yield
attributable
to Linked Average Lease
Property Name Unitholders Escalation Duration Vacancy
and Address (%) (%) (years) % by GLA
Erf 2039 10.42 7.8% 4.6 3.9
Matsulu-A,
Mbombela Local
Municipality
Notes:
a) The purchase yield attributable to linked unitholders
assumes that the acquisition is funded through new equity.
b) National or corporate tenants with low levels of default
risk (‘A Type’ Tenants) constitute 76.7% of the GLA and
66.9% of the gross rentals within the Matsulu Centre
Property.
c) The costs associated with the Matsulu Centre Acquisition
are estimated at R2.3 million.
d) 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 Matsulu Centre Acquisition is subject the following conditions
precedent:
6.1. in the event that the Company elects to conduct a due
diligence investigation of the Matsulu Centre
Acquisition, the Company providing Huwani with written
notification by no later than 15 days after receipt of
all information requested in the due diligence
investigation, stating that the result of the due
diligence investigation has been to its satisfaction and
that it will be proceeding with the Matsulu Centre
Acquisition;
6.2. by no later than 15 March 2013, a bank or financial
institution granting in writing on its normal terms and
conditions relating to loans of a similar nature, a loan
to the Company in the amount applied for by it, or such
lesser amount as the Company agrees to accept in
writing;
6.3. by no later than 15 March 2013, the Company providing
written confirmation to Huwani of the successful
placement of the Company’s linked units for cash with
third party placees in terms of a vendor consideration
placement and/or an issue of linked units for cash
(“placement”) that will be undertaken in order to
partially fund the Matsulu Centre Acquisition. If the
proceeds of such placement, together with the proceeds
of the loan finance accounts for less than the Purchase
Consideration, this condition and the condition referred
to in paragraph 6.2 above shall be deemed not to have
been fulfilled;
6.4. by no later than 30 business days after the signature
date of the Agreement or 15 March 2013 (whichever is the
sooner), the Company obtaining all the relevant
approvals and completing all relevant processes required
under the Listings Requirements of the JSE Limited;
6.5. the board of directors of the Company approving the
Matsulu Centre Acquisition by no later than 10 business
days after the successful completion of the due
diligence investigation referred to in paragraph 6.1
above;
6.6. the board of directors of Huwani approving the Matsulu
Centre Acquisition by no later than 3 business days
after the signature date of the Agreement; and
6.7. to the extent necessary, the shareholders of Huwani
approving the Matsulu Centre Acquisition in terms of
section 112 and section 115 of the Companies Act, No 71
of 2008 (as amended), by no later than 3 business days
after the signature date of the Agreement.
The Company is entitled to waive the conditions precedent set
out in paragraph 6.2 and paragraph 6.3 above. The parties to
the Agreement can extend the dates for fulfilment of the
conditions precedent by written agreement.
7. WARRANTIES
Huwani has provided warranties to the Company in the Agreement
that are standard for a transaction of this nature.
8. PRO FORMA FINANCIAL EFFECTS OF THE MATSULU CENTRE ACQUISITION
The pro forma financial effects of the Matsulu Centre
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 MATSULU CENTRE
ACQUISITION
The forecast financial information relating to the Matsulu
Centre 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 2 Forecast for the 12
month period ended month period ended
30 June 2013 30 June 2014
(R) (R)
Revenue 1,097,476 6,954,375
Operating costs (191,991) (1,222,048)
Net operating 905,485 5,732,327
income
Debenture interest (905,485) (5,732,327)
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 Matsulu Centre Property.
c) The forecast information for the 2 month period ended 30
June 2013 has been calculated from the anticipated
effective date of the Matsulu Centre Acquisition, being 1
May 2013.
d) Un-contracted revenue constitutes 4.7% of the revenue for
the 2 month period ended 30 June 2013.
e) Un-contracted revenue constitutes 4.6% 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.
10. CATEGORISATION
The Matsulu Centre Acquisition is a Category 2 acquisition in
terms of the listings requirements of the JSE Limited.
6 February 2013
Cape Town
Sponsor
PSG Capital
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