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Acquisition of Gillwell Taxi Retail Park (Pty) Ltd (including leasehold rights) and cautionary announcement
DIPULA INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/013963/06)
JSE share code for A-linked units: DIA
ISIN for A-linked units: ZAE000158317
JSE share code for B-linked units: DIB
ISIN for B-linked units: ZAE000158325
(Approved as a REIT by the JSE)
(“Dipula”)
ACQUISITION OF GILLWELL TAXI RETAIL PARK PROPRIETARY LIMITED (INCLUDING LEASEHOLD RIGHTS IN RESPECT OF A PROPERTY TO BE DEVELOPED)
AND CAUTIONARY ANNOUNCEMENT
Introduction
Linked unitholders are advised that an agreement has been concluded between Dipula, as the purchaser, and
collectively Eris Property Group Proprietary Limited (“EPG”) and Isibonelo Property Services Proprietary
Limited (“Isibonelo”), as the sellers (“the Sellers”), in terms of which, inter alia, Dipula acquires, subject to
certain conditions precedent, all of the shares and claims in Gillwell Taxi Retail Park Proprietary Limited
(“the company”) (“the acquisition”).
The acquisition remains subject to the following conditions precedent:
- Dipula obtaining a loan from a registered South African bank to partially finance repayment of the
Development Loan, as defined and detailed below;
- The company concluding certain written agreements to the satisfaction of Dipula, including -
o the agreement for the sale of leasehold rights between Isibonelo and the company in terms of
which Isibonelo sells its right, title and interest as lessee in terms of the existing agreement of
lease concluded by the Buffalo City Metropolitan Municipality, as lessor (“the Lessor”), and
Isibonelo, as lessee (“the Lease”), in respect of those portions of Remaining Extent of Erf 14959
East London and Erf 15527 East London measuring 12 050 square metres and 2 762 square
metres, respectively (“the Property”);
o the notarial deed of cession between the company, the Lessor and Isibonelo in terms of which
Isibonelo cedes and assigns it rights and obligations in terms of the Lease to the company;
o a development agreement between the company and EPG (“the Development Agreement”)
governing the terms on which EPG will undertake the construction, preparation and completion
of a retail centre on the Property (“the Centre”);
o the shareholders agreement between the company, EPG and Isibonelo;
o the loan agreements in terms of which the loan obtained by the company in order to fund the
development of the Centre (“the Development Loan”) is made available to the company;
- Dipula Investment Committee granting its approval of the acquisition;
- the company concluding written lease agreements in respect of at least 80% by GLA of the Centre.
Pursuant to the terms of the Development Agreement, the Centre will be developed on the Property.
The effective date of the acquisition is the later of the 10th business day after the –
- date on which a practical completion certificate is issued by the applicable principal agent in respect of
the Centre; or
- 10th business day after the date at which the Centre commences trading,
(“the closing date”).
The Centre is expected to be completed during March 2015 with letting and occupation dates estimated to be
April 2015.
The Property is a well located retail site within East London’s CBD trading hub. The Centre will offer
sustainable income growth which will be underpinned by major national retailers. The acquisition is in line
with Dipula’s acquisition strategy of acquiring larger quality assets that will enhance the overall quality of
the portfolio.
Further terms of the acquisition
The total consideration payable by Dipula in respect of the acquisition (including repayment of the
Development Loan in full) is R316 117 900, subject to upward or downward adjustment, as the case may be,
if the projected net annual income (based on actual signed leases) as at the closing date (for the 12 month
period commencing on the closing date) differs from the projected net annual income stipulated in the
acquisition agreement. The consideration shall be paid in cash on the closing date against the transfer of the
shares and claims in the company into the name of Dipula.
The Centre
Planning consent for the development of the Centre was obtained on 4 December 2013.
Upon completion the Centre will be a commuter based, three-level shopping centre, anchored by Game
Stores and Shoprite (leasing is being finalised in terms of which each will sign a 10 year lease with two 5
year renewal options).
Upon execution of the Development Agreement, the Centre will be developed by EPG and completion of
the Centre is expected during March 2015 with letting and occupation dates estimated to be during April
2015.
The Property is held in terms of the Lease.
Dipula and EPG have agreed that that EPG (either alone or together with Isibonelo) shall manage the Centre
for a period of 24 months from the Closing Date. The terms of such a management contract shall be on the
standard conditions and terms of Dipula as applied to its investment portfolio. The fee and salary
contribution structure of such management service shall be in accordance with the operating cost budgets
that have been agreed between Dipula and EPG.
The property specific information required in terms of the JSE Listings Requirements in relation to the
acquisition is set out below.
Property name Geographical Sector Rentable area Weighted average
and address location gross rental per
m2
Gillwell Taxi East London, Retail 21 521 m2 R128.52
Retail Park, Eastern Cape
Remaining extent
of Erf 14959 East
London and Erf
15527 East London
The board of directors of Dipula is of the view that the Property’s estimated value at current prices and on
the basis of current market conditions after completion and letting of the Centre is R316 117 900, subject to
the purchase price adjustments as set out above.
Isibonelo Option
Dipula has granted Isibonelo an option (“the Isibonelo Option”) to acquire a percentage of the shares and
claims of the company (“the equity”). In terms of the Isibonelo Option, Isibonelo shall be entitled to acquire
not less than R2 million or more than R10 million of the equity, which equates to approximately 0.6% -
3.2% of the purchase price payable by Dipula (before any purchase price adjustments).
Centre leases
To the extent that leases have not been concluded in respect of 100% of the gross lettable area of the Centre
as at the Closing Date as agreed between Dipula and the Sellers regarding acceptable tenants and rentals, the
Sellers undertake to conclude lease agreements with the company in respect of those portions of the Centre
which have not been let as at the Closing Date (the “Vacant Portions”) for:
- a period of 24 months from the Closing Date provided that this period shall be reduced to a period of 12
months from the date on which the portions of the Centre let to the Sellers pursuant to this mechanism
represent not more than 5% of the gross lettable area of the Centre;
- and a rental (per square metre) as at the Closing Date equivalent to the rental stipulated for that space in
the acquisition agreement.
As and when the Sellers procure that tenants are sourced for the Vacant Portions and lease agreements are
concluded at a market related rental with the company (on terms and conditions reasonably acceptable to the
company), the lease agreements concluded by the Sellers in respect of the applicable Vacant Portions shall
be deemed to have been cancelled.
Categorisation of the acquisition
The acquisition is classified as a Category 2 transaction in terms of the JSE Listings Requirements.
Financial effects and cautionary
The financial effects of the acquisition are still in the process of being finalised and will be published in due
course. Unitholders of Dipula are advised to exercise caution when dealing in their linked units until the
financial effects of the acquisition are announced.
15 January 2014
Corporate advisor, legal advisor and sponsor
Java Capital
Date: 15/01/2014 12:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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