Wrap Text
Acquisition Of A New Property
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 A NEW PROPERTY
1. RICHMOND SHOPPING CENTRE
Linked unitholders of the Company are hereby advised that the
Company has entered into an agreement (“the Agreement”) dated
13 May 2014 (“Signature Date”) with Magnificent Four
Properties Proprietary Limited (“Magnificent Four Properties”
or “the Seller”), to acquire, as a going concern, the rental
enterprise operated by the Seller (“the Rental Enterprise”),
which acquisition will include the cession and delegation of
the notarial lease held by Magnificent Four Properties
(“Notarial Lease”) over the properties situated at Erf 261,
262, 263, 264, 1/265, 9/266, 267, Richmond, KwaZulu-Natal
(collectively the “Richmond Shopping Centre Property”),
commonly known as the Richmond Shopping Centre (“the Richmond
Shopping Centre Acquisition”).
In order to procure the transfer of Magnificent Four
Properties’ rights and obligations in relation to the Notarial
Lease to the Company, the parties will procure the preparation
and registration of a notarial deed of assignment at the Deeds
Office (“Deed of Assignment”).
The effective date of the Richmond Shopping Centre Acquisition
shall be the date of registration of the Deed of Assignment at
the Deeds Office which, subject to fulfilment of the
conditions precedent, is expected on or about 1 October 2014.
2. RATIONALE FOR THE ACQUISITION
The Richmond Shopping 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 Richmond Shopping
Centre Acquisition is R61 390 000 (sixty one million three
hundred and ninety thousand), which includes VAT at the rate
of 0%, payable in cash against registration of the Deed of
Assignment at the Deeds Office.
The Company will fund the purchase consideration through debt
and/or equity funding.
4. THE RICHMOND SHOPPING CENTRE PROPERTY
Details of the Richmond Shopping Centre Property are as
follows:
Property Geographic Sector Cost/ GLA Cost Average
Name and al Value (m2) per GLA Gross
Address Location (R’m) (R/m2) Rental/m2
(R/m2)
Erf 261, Richmond Retail 61.4 9,157 6,704 69.2
262, 263, Shopping
264, Centre,
1/265, Corner
9/266, Chilley
267, Street and
Richmond, Nelson
Kwazulu- Street,
Natal Richmond,
Kwazulu-
Natal
5. PROPERTY SPECIFIC INFORMATION
Details regarding the Richmond Shopping Centre Acquisition, as
at the expected effective date, are set out below:
Property Name Purchase Yield Average Lease Vacancy
and Address attributable Escalation Duration % by GLA
to Linked (years)
Unitholders
Erf 261, 262, 10.0% 7.0% 3.0 9.0%
263, 264,
1/265, 9/266,
267, Richmond,
Kwazulu-Natal
Notes:
a) The costs associated with the acquisition of the Richmond
Shopping Centre Property are estimated at R0.92 million.
b) The cost of each 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 Richmond Shopping Centre Acquisition is subject the
following conditions precedent that:
6.1. by no later than 13 June 2014, Fairvest has concluded
the due diligence in terms of the Agreement, to its
entire satisfaction and has given written notice thereof
to the Seller, the date of Fairvest giving the said
written notice to the Seller being hereinafter referred
to as the “Due Diligence Approval Date”.
6.2. by no later than 25 June 2014, the Seller procures the
written unconditional consent of the landlord to the
Richmond Shopping Centre Acquisition, as well as consent
to the Registration of the Notarial Deed.
6.3. by no later than 20 July 2014, Fairvest confirms in
writing to the Seller, that adequate funding has been
secured by the Company from an acceptable financial
institution to acquire the Rental Enterprise, on terms
satisfactory to the Company and/or it has successfully
placed “linked units” to be issued by the Company either
in terms of a vendor consideration placement and/or an
issue of linked units for cash (the “Placement”) with
third party/ties such that the Company is satisfied that
it can fund, wholly or partially, as the Company may
require, the acquisition of the Rental Enterprise from
the proceeds of the Placement and the financial
institution funding referred to above;
6.4. within 10 (ten) business days from the Due Diligence
Approval Date, the board of directors of the Company
approving the purchase of the Rental Enterprise and the
Company delivering a copy of such resolution to the
Seller; and
6.5. to the extent necessary, within 20 (twenty) business
days from the Signature Date, the approval of the
shareholders of the Seller in accordance with the
provisions of sections 112 and 115 of the Companies Act,
2008.
The parties are jointly entitled to waive the conditions
precedent set out in 6.2 and 6.5 and the Company is entitled
to waive the conditions precedent set out in 6.1, 6.3, and 6.4
above.
7. WARRANTIES
Magnificent Four Properties has provided warranties to the
Company that are standard to a transaction of this nature.
8. PRO FORMA FINANCIAL EFFECTS OF THE RICHMOND SHOPPING CENTRE
ACQUISITION
The pro forma financial effects of the Richmond Shopping
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 RICHMOND SHOPPING CENTRE
ACQUISITION
The forecast financial information relating to the Richmond
Shopping Centre Acquisition for the financial periods ended
30 June 2015 and 30 June 2016 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 9 Forecast for the 12
month period ended month period ended
30 June 2015 30 June 2016
Revenue 5,751,536 8,052,939
Operating costs 1,158,786 1,624,256
Net operating 4,592,750 (6,428,683)
income
Debenture interest (4,592,750) (6,428,683)
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 Richmond Shopping Centre Property.
c) The forecast information for the 9 month period ended 30
June 2015 has been calculated from the anticipated
effective date of the Richmond Shopping Centre
Acquisition, being 1 October 2014.
d) Un-contracted Revenue constitutes 17.9% of the revenue for
the 9 month period ended 30 June 2015.
e) Un-contracted Revenue constitutes 22.9% of the revenue for
the 12 month period ended 30 June 2016.
f) Current vacant space has been has been assumed to be fully
let at a rate below market value, with a vacancy provision
of 3% of operating income being deducted.
g) Leases expiring during the forecast period have been
assumed to renew at an escalation of 0% of the contractual
expiry rate.
h) It is assumed that 100% of net operating income is
distributed to linked unitholders in accordance with the
debenture trust deed of the Company.
i) This forecast has been prepared on the assumption that the
Richmond Shopping Centre Acquisition is funded through the
proceeds of the Placement only, however the Company could
elect to partially or fully utilise its existing debt
facilities.
10. CATEGORISATION
The Richmond Shopping Centre Acquisition is a Category 2
acquisition in terms of the Listings Requirements of the JSE
Limited.
15 May 2014
Cape Town
Sponsor
PSG Capital
Date: 15/05/2014 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
