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The acquisition of OMC Durban and the Marine 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 OMC DURBAN AND THE
MARINE 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 letting enterprises
and properties commonly known as:
- OMC Durban, comprising Old Mutual Centre, Westguard
House, 300 Smith Street, and the 400 bay carpark
situated on the former Gardiner House/Mutual Building
Sites (“OMC Durban”); and
- The Marine and The Marine Parking (“The Marine”);
(collectively, “the Properties”) from Old Mutual Life
Assurance Company (South Africa) Limited (“the Seller” or
“OMLACSA”) (collectively, “the Acquisitions”).
2. Rationale for the Acquisitions
The Acquisitions present attractive investment
opportunities to Delta Linked Unitholders as:
- the Properties are well-established and tenanted with
low-risk tenants;
- OMC Durban is underpinned by a rental guarantee from
the Seller for a period of two years (“Rental
Guarantee”);
- vacancies have been excluded in determining the
purchase consideration and will accordingly provide
further upside on re-letting; and
- the Acquisitions are 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 Acquisitions
The effective date of the Acquisitions will be the date
of registration of transfer of the Properties into the
name of Delta, which is expected to be during September
2014 (“the Effective Date”).
4. Purchase Consideration
Pursuant to the due diligence investigations process,
Delta has identified vacancies within the Properties,
which have been quantified as follows:
- R10 000 000 (ten million Rand) in respect of OMC
Durban; and
- R18 600 000 (eighteen million six hundred thousand
Rand) in respect of The Marine;
(collectively, “the Vacancy Adjustment”).
The aggregate purchase consideration for the Acquisitions
(net of the Vacancy Adjustment) is R487 200 000 (four
hundred and eighty seven million two hundred thousand
Rand) (“the Purchase Consideration”) comprising:
? R291 000 000 (two hundred and ninety one million Rand)
in respect of OMC Durban; and
? R196 200 000 (one hundred and ninety six million two
hundred thousand Rand) in respect of The Marine.
The Purchase Consideration excludes ancillary costs
related to the Acquisitions in the amount of R3 350
000(three million three hundred and fifty thousand Rand).
The Purchase Consideration will be settled in cash upon
registration of transfer of the Properties into the name
of Delta.
5. Rental Guarantee
The Seller guarantees Delta gross rental income in the
sum of R10 000 000 (ten million Rand) for the mothballed
premises in the building known as 300 Smith Street, for
the period from the transfer date until 31 December 2016,
payable upon transfer into Delta’s name.
6. Conditions precedent
The Acquisitions are subject to, inter alia, the
fulfilment or waiver of the following suspensive
conditions:
a. Delta obtaining all regulatory approval required, by
no later than 30 May 2014;
b. Delta providing written confirmation that adequate
funding has been secured on such terms and
conditions as are acceptable to the Seller;
c. the board of Delta providing written unconditional
approval of the Acquisitions, by no later than 30
May 2014; and
d. the relevant Competition authorities unconditionally
approving the Acquisitions or subject to such
conditions acceptable to the Seller and Delta.
7. Specific information on the Properties
Details of the Acquisitions, including inter alia, the
location, sector, weighted average rental per square
meter, the Purchase Consideration as well as the
valuation attributed to the Acquisitions, are set out
below.
Vendor Property Sector Gross Single Weighted Annualised Purchase Value
(3) (4)
description lettable or multi average property price Rm
/ location area m2 tenanted gross yield (2) Rm
rental %
R/m²(1)
OMLACSA OMC / Offices 44 668 Multi Retail 11 291 305
KwaZulu – 68
Natal Office
–290
OMLACSA OMC / Offices 24 517 Multi 163 11 196 225
KwaZulu
Natal
TOTAL 487 530
Notes:
1) Based on the net rental income, including parking,
storage and/or recoveries, for the 12 month period
from the anticipated date of transfer excluding all
vacant areas.
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
Consideration.
3) No independent valuation has been performed on the
Acquisitions. The valuations attributed to the
Acquisitions of R530 000 000 000 (five hundred and
thirty 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 Acquisitions in the amount of
R3 350 000(three million three hundred and fifty
thousand Rand which has been capitalised to the
Acquisitions.
8. Categorisation of the Acquisitions
The Acquisitions constitute a Category 2 transaction in
terms of the JSE Listings Requirements and accordingly do
not require the approval of Delta Linked Unitholders.
9. Financial effects
The financial effects of the Acquisitions, as required in
terms of the JSE Listings Requirements, are in the
process of being finalised and will be announced in due
course.
10. Cautionary
Delta Linked Unitholders are advised to exercise caution
in dealing in their linked units until the financial
effects of the Acquisitions are announced.
22 April 2014
Johannesburg
Investment bank and sponsor
Nedbank Capital
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