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. NONDWENGU SHOPPING CENTRE ACQUISITION
Linked unitholders of the Company are hereby advised that the
Company has entered into an agreement with Sporting Affair
Investment 40 Proprietary Limited (“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 the Seller (“Notarial Lease”) over the properties situated
at Erf 475 Ulundi BA, Ulundi, KwaZulu-Natal (collectively,
“the Property”), commonly known as Nondwengu Shopping Centre
(“Nondwengu Shopping Centre Acquisition”).
In order to procure the transfer of the Seller’s 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 Nondwengu 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 September
2014.
2. RATIONALE FOR THE ACQUISITION
The Nondwengu 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 Nondwengu
Shopping Centre Acquisition is R38 950 000 (thirty eight
million nine hundred and fifty thousand Rand), 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 PROPERTY
Details of the 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 475 Nondwengu Retail 38.95 3,966 9,821 90.0
Ulundi Shopping
BA, Centre,
Ulundi Princess
Entity, Magogo
Kwazulu- Street,
Natal Ulundi BA,
Kwazulu-
Natal
5. PROPERTY SPECIFIC INFORMATION
Details regarding the Nondwengu 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 475 Ulundi 9.9% 7.0% 4.8 0%
BA, Ulundi
Entity,
Kwazulu-Natal
Notes:
a) The costs associated with the acquisition of the Property
are estimated at R0.58 million.
b) The cost of the 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 Nondwengu Shopping Centre Acquisition is subject the
following conditions precedent that:
6.1. by no later than 21 (twenty-one) days from the date on
which the Seller has provided Fairvest with access to or
copies of the due diligence information requested by
Fairvest, Fairvest has concluded its due diligence
investigation 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. within 10 (ten) business days from the Due Diligence
Approval Date, any third parties holding any pre-emptive
right(s) or similar rights over the Notarial Lease or
the Rental Enterprise, that have been disclosed by the
Seller to Fairvest, have waived such pre-emptive rights
or similar rights;
6.3. by no later than 10 (ten) business days from the Due
Diligence Approval Date, the Seller procures the written
unconditional consent of the owner, as landlord, of the
Property to this transaction, as well as consent to the
registration of the Deed of Assignment, such consent to
be in the form required by the Seller’s attorneys;
6.4. within 10 (ten) business days from the Due Diligence
Approval Date, the investment committee of Fairvest
approving the purchase of the Rental Enterprise and
Fairvest delivering a copy of such resolution to the
Seller;
6.5. by no later than 10 (ten) business days from the Due
Diligence Approval Date, and to the extent that such
consent is required, the written unconditional consent
of the owner of the Property is procured to the
registration in favour of Standard Bank of South Africa
Limited (“SBSA”) of a first continuing covering mortgage
bond (in form and substance to the SBSA’s satisfaction)
over the Notarial Lease, which mortgage bond will
hypothecate the right, title and interest of Fairvest in
and to the Notarial Lease;
6.6. by no later than 10 (ten) business days from the Due
Diligence Approval Date, the owner of the Property
concludes in writing a tripartite agreement (in the form
and substance to the SBSA’s satisfaction) with Fairvest
and SBSA in terms of which SBSA (or its nominee) has the
option to lease the Property, on the same terms and
conditions as the Notarial Lease and for the balance of
the Notarial Lease duration, in the event that the
Notarial Lease is cancelled or terminated during the
currency of its term.
The parties are jointly entitled to waive the condition
precedent set out in 6.3 and Fairvest is entitled to waive the
conditions precedent set out in 6.1, 6.2, 6.4, 6.5, and 6.6
above.
7. WARRANTIES
The Seller has provided warranties to the Company that are
standard for a transaction of this nature.
8. PRO FORMA FINANCIAL EFFECTS OF THE NONDWENGU SHOPPING CENTRE
ACQUISITION
The pro forma financial effects of the Nondwengu 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 NONDWENGU SHOPPING
CENTRE ACQUISITION
The forecast financial information relating to the Nondwengu
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 (“JSE Listings Requirements”)
and is the responsibility of the Company’s directors.
Forecast for Forecast for
the 10 month the 12 month
period ended period ended
30 June 2015 30 June 2016
Rental income 3,672,232 4,684,039
Straight-line rental accrual 507,052 365,945
Gross revenue 4,179,284 5,049,984
Property expenses (468,677) (602,172)
Net property income 3,710,607 4,447,812
Asset management fee (164,726) (197,671)
Operating profit 3,545,881 4,250,141
Fair value adjustment to (507,052) (365,945)
debentures
Finance cost (2,843,171) (3,411,806)
Profit before debenture interest 195,657 472,390
Debenture interest (195,657) (472,390)
Profit before taxation - -
Taxation - -
Total comprehensive income - -
attributable to linked
unitholders
Notes:
a) Rental income includes gross rentals and other recoveries
but excludes any adjustment applicable to the straight
lining of leases.
b) Property expenses include all utility and council charges
applicable to the Property.
c) The forecast information for the 10 month period ended 30
June 2015 has been calculated from the anticipated
effective date of the Nondwengu Shopping Centre
Acquisition, being 1 September 2014.
d) Un-contracted Revenue constitutes 5.19% of the revenue for
the 10 month period ended 30 June 2015.
e) Un-contracted Revenue constitutes 14.52% of the revenue
for the 12 month period ended 30 June 2016.
f) Leases expiring during the forecast period have been
assumed to renew at the future value of current market
related rates.
g) This forecast has been prepared on the assumption that the
Nondwengu Shopping Centre Acquisition is funded through
existing debt facilities at the average cost of debt of
8.6%. The Company could elect to partially or fully
utilise its existing debt facilities.
h) Distributions to linked unitholders occur through the
payment of debenture interest.
10. CATEGORISATION
The Nondwengu Shopping Centre Acquisition qualifies as a
Category 2 acquisition for the Company in terms of the JSE
Listings Requirements.
26 June 2014
Cape Town
Sponsor
PSG Capital
Date: 26/06/2014 04:45:00 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 
