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DELTA PROPERTY FUND LIMITED - Acquisition of Tembisa Mega Mart and Cautionary Announcement

Release Date: 26/03/2014 13:45
Code(s): DLT     PDF:  
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Acquisition of Tembisa Mega Mart and Cautionary Announcement

Delta Property Fund Limited
(formerly Tuffsan 89 Investment Holdings Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2002/005129/06)
Share code: DLT ISIN: ZAE000172052
("Delta" or “the Company”)
REIT status approved

ANNOUNCEMENT REGARDING THE ACQUISITION OF TEMBISA MEGA MART AND CAUTIONARY
ANNOUNCEMENT


   1. Introduction

       Holders of Delta linked units (“Delta Linked Unitholders”) are advised that Delta has
       concluded an agreement for the acquisition of the turnkey development of the letting
       enterprise and property commonly known as Tembisa Mega Mart (“the Property
       Development”) from Realty Dynamix 107 (Pty) Ltd (“the Seller”) (“the Acquisition”).


   2. Rationale for the Acquisition

       The Property Development, which comprises a neighbourhood shopping centre located in
       Tembisa, presents an attractive investment to Delta Linked Unitholders as it:
          - is tenanted with c.81% national tenants including inter alia Pick ‘n Pay, Pep and
              Buildrite;
          - provides Delta with diversification in terms of sectoral spread; and
          - is in line with Delta’s strategy of actively pursuing investment opportunities that will
              enhance the overall quality and value of its portfolio.

   3. Effective date of the Acquisition

       The effective date (“the Effective Date”) of the Acquisition will be 1 September 2014.


   4. Consideration for the Acquisition

       The aggregate purchase consideration for the Acquisition is R240 000 000 (two hundred and
       forty million Rand) (“the Purchase Consideration”).

       The Purchase Consideration excludes ancillary costs related to the Acquisition in the amount
       of R2 700 000 (two million seven hundred thousand Rand).

       The Purchase Consideration will be settled in cash upon registration of transfer of the
       Property Development into the name of Delta.

   5. Conditions precedent

       The Acquisition is subject to, inter alia, the fulfilment or waiver of the following suspensive
       conditions:
       a. all aspects of the development plan being substantially finalised to the satisfaction
          of Delta;

       b. the Seller concluding signed leases on terms and conditions acceptable to Delta in
          respect of at least 85% of the total rentable area of the Property Development on
          practical completion, with no less than 80% being tenanted by national tenants
          acceptable to Delta. In addition the Seller will provide a 24 month head lease in
          respect of the rentable area of the Property Development that, is vacant as at the
          Effective Date;

       c. the Property Development being completed in accordance with the development
          plan, by no later than 1 August 2014, or such longer period as is reasonable in the
          circumstances (which period will not exceed a further 90 days) provided that the
          delay in completing the Property Development is for reasons outside of the control
          of the Seller;

       d. approval by the JSE Limited (“the JSE”) and Competition Commission, to the extent
          required; and

       e. Delta providing written confirmation of a letter of finance on such terms and
          conditions as are acceptable to the Seller

6. Specific information on the Property Development

   Details of the Property Development, including inter alia, the location, sector, weighted
   average rental per square meter, the Purchase Consideration as well as the valuation
   attributed to the Property Development, is set out below.

Vendor           Property development       Sector         Gross     Single    Weighted     Annuali        Purchase       Value(3) (4)
                 description/ location                   lettable        or      average        sed          price R
                                                                                                                                    R
                                                             area     multi        gross    propert
                                                              m2     tenant       rental per          y
                                                                        ed          m²(1)    yield(2)
                                                                                       R          %
Realty Dynamix   Tembisa Megamart,           Retail        14096       Multi          156          9.1   240 000 000   240 000 000
107 (Pty) Ltd    Erven
                 3914,5140,5141,3381,30
                 71,3072,3878 and 3877
                 Tswelapele Extension 6
                 Township
TOTAL                                                     14 096      Multi           156        9,10    240 000 000   240 000 000


            Notes:
                1.         Based on the net rental income, excluding parking, storage and/or recoveries, for the 12 month
                           period from the anticipated date of transfer, assuming the Property Development is fully let.
                 2.        Annualised cap rate is based on property income and variable property expenses (which include
                           property management fees but exclude asset management fees and finance charges) over the
                           purchase price.
                 3.        No independent valuation has been performed on the Acquisition. The value attributed to the
                           Acquisition of R240 000 000 (two hundred and forty million Rand) (“the Value”) was derived at by
                           Delta’s asset management company, MPI Property Asset Management Proprietary Limited.
                 4.        The Value was derived after taking into account costs related to the Acquisition in the amount of
                           R2 700 000 (Two million seven hundred thousand Rand) which has been capitalised to the
                           Acquisition.

         7. Categorisation of the Acquisition

            The transaction constitutes a Category 2 transaction in terms of the JSE Listings
            Requirements and accordingly does not require the approval of Delta Linked Unitholders.


         8. Financial effects

            The financial effects of the Acquisition, as required in terms of the JSE Listings Requirements,
            are in the process of being finalised and will be announced in due course.


         9. Cautionary

            Delta Linked Unitholders are advised to exercise caution in dealing in their linked units until
            the financial effects of the Acquisition are announced.



  26 March 2014

  Johannesburg

  Investment bank and sponsor
  Nedbank Capital

Date: 26/03/2014 01:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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