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Update on investment strategy, acquisition of UK retail properties, change of asset manager & disposal of coastal
New Frontier Properties Ltd
(Incorporated in the Republic of Mauritius on 5 June 2014) NEW FRONTIER
NEW FRONTIER PROPERTIES LTD
(Registration number 123368C1/GBL)
SEM share code: NFP.N000
JSE share code: NFP
ISIN: MU0453N00004
(“New Frontier” or “the company”)
UPDATE ON INVESTMENT STRATEGY, ACQUISITION OF UK RETAIL PROPERTIES, CHANGE
OF ASSET MANAGER AND DISPOSAL OF COASTAL HOLDINGS
INTRODUCTION
In line with the refocus of investment strategy, which is detailed further below, and further to the announcement
released on 26 March 2015, the board of directors of New Frontier (the “board”) are pleased to announce that
the company has:
- through wholly owned subsidiaries, entered into agreements to acquire two retail properties in the United
Kingdom (“UK retail properties”);
- changed the company’s asset manager and changed the terms of the asset management agreement; and
- entered into an agreement to dispose of its entire shareholding in Coastal Building Holdings Limited
(“Coastal Holdings”).
REFOCUS OF INVESTMENT STRATEGY
With reference to the investment strategy outlined in the Stock Exchange of Mauritius (“SEM”) listings
particulars dated 13 November 2014 and the JSE pre-listing statement issued on 13 January 2015, wherein the
company’s investment strategy was to target assets situated primarily in frontier markets outside of South Africa
but would pursue strategic investments in developed markets on an opportunistic basis. The company will now
focus primarily on acquiring and developing good quality income generating retail property assets situated in the
United Kingdom (“UK”) to align the investment strategy with the location of its primary assets and experience of
executive management. Investment decisions will be based on the following criteria: UK specific properties,
retail focus only, geographically dominant retail centres, minimum size of 160 000 sqft, asset management
opportunities, quality and location of asset and tenant quality, tenure and sustainability thereof.
ACQUISITION OF UK RETAIL PROPERTIES
The board has entered into agreements to acquire the retail shopping malls known as Coopers Square located in
Burton-upon-Trent, UK (“Coopers Square”) and the Cleveland Centre located in Middlesbrough, UK
(“Cleveland Centre”) for an aggregate consideration of approximately GBP179 million (collectively, the
“Acquisitions”). Completion of the Acquisitions is expected to take place on Tuesday, 14 April 2015 and the
12 month forward yield of New Frontier, from this date, based on the share price of GBP 1.00 per share at which
the private placement referred to in the 26 March 2015 announcement ("the private placement") was
undertaken, is expected to be 7.01%. This forward yield has not been reviewed or reported on by the company’s
auditors or reporting accountants and is the responsibility of the board.
Coopers Square is the dominant shopping centre in Burton-upon-Trent with a gross lettable area (“GLA”) of
396 504 sqft and has been independently valued by Colliers International UK Valuation LLP (“Colliers”) at
GBP93.75 million. Coopers Square is anchored by Marks & Spencer, Primark and BHS amongst other major
retailers.
Cleveland Centre is situated in Middlesbrough, UK and is the largest centre in the conurbation of Teesside with a
GLA of 392 993 sqft and has been independently valued by Colliers at GBP85.25 million. Cleveland Centre is
anchored by BHS, Boots, TopShop, TopMan, New Look and H&M.
The Acquisitions will be funded through a combination of debt funding, which has been secured from HSBC in
the UK, and equity funding through the proceeds of the private placement.
The Acquisitions constitute an undertaking in the ordinary course of business of New Frontier and therefore do
not fall under the scope of Chapter 13 of the SEM Listing Rules requiring a publication of a circular or
shareholder approval.
CHANGE OF ASSET MANAGER AND TERMS OF THE NEW ASSET MANAGEMENT
AGREEMENT
Shareholders are advised that the company has by mutual agreement terminated its investment management
contract with Premier Capital Managers Ltd (a company incorporated in the British Virgin Islands with the
registration number 1512794). The company has now entered into an asset management agreement (“asset
management agreement”) with Waypoint New Frontier Limited (a company incorporated in the UK with the
registration number 09495887) (the “asset manager”). The asset management agreement will become effective
on the completion of the Acquisitions, which is expected to be Tuesday, 14 April 2015.
The asset management agreement regulates the relationship between the asset manager and the company, in
terms of which the asset manager will provide asset management and related services to the company for
consideration payable by the company.
Key terms of the asset management agreement:
New Frontier will pay the asset manager a monthly fee equal to one twelfth of the applicable percentages of the
gross enterprise value of New Frontier, as set out below:
- 0.3% if the enterprise value is lower than GBP250 million;
- 0.4% if the enterprise value exceeds GBP250 million and is below GBP350 million; and
- 0.5% if the enterprise value exceeds GBP350 million.
The asset manager will, for as long as the enterprise value of the company is less than GBP750 million, be
entitled to a transaction fee of 1.0% of the gross value of any assets acquired by the company.
The duration of the asset management agreement will be for an initial fixed period of 10 years, provided that, at
the election of the board or the asset manager, the asset management agreement can be terminated at any time on
5 years notice, without cost. Upon expiry of the initial fixed period the asset management agreement may at the
election of the board be renewed for consecutive 5 year periods, provided that any such renewal will require
shareholder approval, to the extent required by any applicable stock exchange rules.
The company will be entitled, inter alia, to terminate the asset management agreement without cause, on
60 days’ written notice. To the extent that the company elects to terminate the asset management agreement on
this basis, the company will be obliged to pay to the asset manager a termination consideration. The termination
consideration payable to the asset manager will be calculated in accordance with the following formula:
A=6xB
where
A = the termination consideration
B = an amount equal to 12 times the monthly asset management fee that was payable in respect of the month
preceding that during which the notice of termination was given.
DISPOSAL OF COASTAL HOLDINGS
Shareholders are advised that the company has entered into an agreement to sell its entire shareholding in Coastal
Holdings which owns the property known as the Coastal Building situated in the British Virgin Islands, for a
consideration of USD938 736.00. The purchaser will pay 25% of the purchase consideration immediately and
the remaining 75% by no later than 1 December 2015. This disposal is in the ordinary course of business of the
company and therefore does not fall under the scope of Chapter 13 of the SEM Listing Rules.
New Frontier has its primary listing on the Stock Exchange of Mauritius and a secondary listing on the AltX of
JSE.
Corporate advisor and JSE sponsor
Java Capital +27 11 283 0042
Company secretary
Osiris Corporate Solutions (Mauritius) Limited +230 650 4030
South African legal advisors
Cliffe Dekker Hofmeyr +27 21 405 6009
Legal advisor as to Mauritian law +230 210 2034
Mardemootoo Solicitors
UK legal advisors
Eversheds LLP +44 20 7919 4500
Tax advisors
BDO LLP +44 20 7486 5888
8 April 2015
This announcement is issued pursuant to SEM Listing Rules 11.3 and the Securities Act 2005 of Mauritius. The
board of directors of New Frontier Properties Ltd accepts full responsibility for the accuracy of the
information contained in this announcement.
Date: 09/04/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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