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Disposal of Property
ORION REAL ESTATE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/021085/06)
Share Code: ORE ISIN: ZAE000075651
("Orion Real Estate" or “the company”)
DISPOSAL OF PROPERTY
INTRODUCTION
Shareholders are advised that a subsidiary of the Company,
Ixia Trading 532 Proprietary Limited (“the Seller”) entered
into an agreement, dated 4 October 2013, with City Deep 4X4
Commercial Spares Proprietary Limited (“the Purchaser”) in
terms of which it will sell Erf 57 City Deep Ext 1 Township
and Portion 1 of Erf 58 City Deep Ext 1 Township (“the
Property) to the Purchaser with effect from the date of
transfer of the Property.
TERMS OF THE DISPOSAL
The Purchaser will purchase the Property from the Seller
for a purchase price of R16 000 000, excluding VAT at 0%.
In the event that VAT is levied, the Purchaser will be
liable for the VAT.
The consideration for the Disposal is to be settled in cash
and will be paid as follows:
(i) A deposit of R1.5 million will be paid into trust
within 14 days of signature date and will be retained
as rouwkoop in the event of a breach by the Purchaser
and such breach remaining after having been notified;
(ii) An amount of R14.5 million will be secured by way of
guarantees issued by the financier of the Purchaser.
The agreement provides for an adjustment account to be
finalised within 60 days of the transfer of the property,
which will reflect a credit for all prepayments and
deposits associated with the Property such as for rates and
taxes, electricity and water as well as any payments
received by the Purchaser for any rentals for any period
prior to the transfer date and a debit for all accrued but
unpaid expenses at the transfer date for property related
expenses.
RATIONALE FOR THE DISPOSAL
The Property is categorised as a C Grade property and
internal and external renovation is required, particularly
on the refrigeration in the building, the cost of which
will not be able to be recovered through rental increases.
Furthermore, property is 80% vacant and is the only
property owned by Orion in that particular area. The board
is of the opinion that offer received presents a good
opportunity to sell the building and apply the proceeds to
acquire property with a better yield.
PROPERTY SPECIFIC INFORMATION
PROPERTY NAME ADDRESS LOCATION SECTOR
CITY DEEP 95 Marino Johannesburg, Industrial
Avenue, City Gauteng
Deep Ext 1
WEIGHTED AVERAGE RENTABLE AREA VALUATION ACQUISITION
RENTAL PER M2 (M2) PRICE
R52.93 3 714 R16 238 375 R6 650 000
SUSPENSIVE CONDITIONS
The agreement is subject to the Purchaser conducting a
satisfactory due diligence in respect of the Property and
the leases and the Seller resolving to approve the sale of
the Property within 30 days of from the signature date,
being 4 November 2013, which approval has now been
obtained.
PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL
The table below summarises the pro forma financial effects
of the Disposal on the published audited results of Orion
for the year ended 30 June 2013, as though the Disposal had
been in effect from 1 July 2012 for statement of
comprehensive income purposes and at 30 June 2013 for
statement of financial position purposes.
The pro forma financial effects, which are the
responsibility of the directors, have been prepared based
on the accounting policies adopted by the Company and in
accordance with IFRS, for illustrative purposes only and,
due to their nature, may not fairly present Orion's
financial position, changes in equity, results of
operations or cash flows.
Published Pro forma Percentage
30 June 2013 30 June 2013 change (%)
Before After
Earnings per
ordinary share
(cents) 4.86 5.03 3.50
Headline earnings
per ordinary share
(cents) 0.30 0.20 (33.33)
Net asset value
per share (cents) 75.52 75.69 0.23
Net tangible asset
value per share
(cents) 75.52 75.69 0.23
Weighted average
shares in issue
('000) 627 009 822 627 009 822 -
Shares in issue at
period end 627 009 822 627 009 822 -
Assumptions:
1. The “Before” column is extracted from the audited
results for the year ended 30 June 2013 as published.
2. The “After” column in terms of net asset and net
tangible asset value per share reflects the adjustment
for the purchase price of the property of R16 000 000,
settled through a cash payment, with a reduction in
the bond liability of R3 953 698. A loss on disposal
of R238 375 has been assumed, with an adjustment of
R1 788 040 to deferred taxation due to the fair value
adjustment of investment properties held. These
adjustments will have a once off effect.
3. The “After” column in terms of earnings and headline
loss per share reflects the adjustment for the results
in relation to the property, adjusted for the revenue
and expenses associated with the Property as well as a
reduction in the finance charges on the bond of R331
524 at an interest rate of 8%, as well as notional
taxation at 28%, as though the Disposal occurred on 01
July 2012. These adjustments are expected to have a
continuing effect on the results of Orion. No
interest received on excess cash received has been
assumed.
4. The weighted average shares and shares in issue at
period end have assumed to stay the same at
630 698 688 shares.
CATEGORISATION
The Disposal is categorised as a Category 2 transaction in
accordance with the JSE Listings Requirements and thus
shareholder approval for the Disposal is not required.
By order of the board
JOHANNESBURG
11 November 2013
SPONSOR
Arcay Moela Sponsors Proprietary Limited
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