Wrap Text
Further Acquisition of a Property in the UK, Joint Venture Agreement and Expansion of Texton's UK Property Portfolio
TEXTON PROPERTY FUND LIMITED
(formerly Vunani Property Investment Fund Limited)
Granted REIT status by the JSE
(Incorporated in the Republic of South Africa)
(Registration number 2005/019302/06)
JSE code: TEX
ISIN: ZAE000190542
(formerly ISIN: ZAE000185872)
(“Texton” or “the Company”)
FURTHER ACQUISITION OF A PROPERTY IN THE UNITED KINGDOM (“UK”), JOINT VENTURE AGREEMENT
AND EXPANSION OF TEXTON’S UK PROPERTY PORTFOLIO
1. INTRODUCTION
Further to the announcement on Monday, 2 March 2015, and the establishment by Texton of a
UK platform (“Initial UK Investment”), Texton is pleased to advise holders of Texton shares
(“Shareholders”) that it has entered into agreements, including a joint venture agreement with
Moorgarth Holdings (Luxembourg) S.à.r.l (“Moorgarth”), a subsidiary of JSE-listed Tradehold
Limited., whereby Texton will acquire 50% of a special purpose vehicle, Inception (Reading)
S.à.r.l (“Inception”). Inception will then be used as the vehicle to acquire a well-located retail
shopping centre (“Broad Street Mall”) in Reading, England (the “Property”), with Texton’s 50%
contribution for the total purchase price of the Property being approximately £30,564,000
(“Acquisition”).
Conclusion of the Acquisition ensures a further sectoral and geographic enhancing property
acquisition which is pursuant to Texton’s stated strategy to diversify its portfolio and achieve
geographic diversification beyond South African borders into the UK where Texton’s asset
management company, Texton Property Investments Proprietary Limited, has knowledge and
experience, and where property acquisition opportunities and related financing in domestic UK
currency is attractive.
Property information and other details pertaining to the Acquisition are set out in section 3
below.
2. RATIONALE FOR THE ACQUISITION
Further to the above, rationale for the Acquisition is as follows:
- Further geographic investment and risk diversification into the UK, a region with
significant economic stability and growth prospects and where pricing is attractive
- Increase in Texton’s annual distributable income
- Potential upward rental reversion
- Access to a property whose “asset type” and quality is consistent with Texton’s current
South African portfolio
- Adding scale to Texton’s existing UK portfolio through the further acquisition of a
portfolio enhancing transaction in the manner consistent with Texton’s stated
investment strategy
- A cooperative arrangement and investment alongside joint venture partners whom are
well known to the Texton management company, have detailed experience in extracting
value from this asset type and whom have a similar UK investment strategy to Texton.
3. INFORMATION RELATING TO THE ACQUISITION AND THE PROPERTY
Details relating to the Broad Street Mall are as follows:
Description Acquisition of 50% of the issued share capital of
Inception, a company registered in Luxembourg.
Inception’s initial investment will solely be Broad Street
Mall
Property description: - Broad Street Mall, Reading, registered at the Land
Registry with freehold under title numbers BK383592
and BK383593
- Retail shopping centre including an office space in 2
office buildings and a car park with over 740 spaces
Tenants: Consists of 75 retail units and 6 kiosks
Location: Reading, England
GLA: 35,860.27m2
Lease expiry Weighted average lease length of 5.4 years
Net annual income: £4,350,000 (R81,258,000 converted at the spot exchange
rate as at 15 May 2015 of £1:18.68), being 100% of the
net annual income of which Texton is entitled to 50%
Weighted average net rental £10.11 per m2 (R188.85 per m2 converted at the spot
per m2 exchange rate as at 15 May 2015 of £1:18.68), being
100% of the weighted average net rental
Purchase price: £61,128,000 (excluding acquisition costs of approximately
£3,545,000) (R1,141,871,040 converted at the spot
exchange rate as at 15 May 2015 of £1:18.68), being
100% of the purchase price of which Texton will be liable
for 50%
Vendor Ivypark through their Asset Managers Englander
Independent gross valuation £63,000,000 (R1,176,840,000 converted at the spot
exchange rate as at 15 May 2015 of £1:18.68).
(May 2015):
Broad Street Mall will be a 50% held joint venture of Texton whose memorandum of
incorporation will comply with the JSE Listings Requirements.
Moorgarth, qualified and experienced property managers, will be appointed as the property
and strategic manager.
The Property has been valued by Savills Plc on behalf of HSBC Bank Plc (Broad Street Mall).
Savills Plc are independent and RICS (Royal Institution of Chartered Surveyors) registered
valuers.
4. PURCHASE CONSIDERATION
The aggregate purchase consideration for the Acquisition amounts to £30,564,000
(R570,935,520 converted at the spot exchange rate as at 15 May 2015 of £1:18.68).
Acquisition costs of approximately £1,772,500 (R33,110,300 converted at the spot exchange
rate as at 15 May 2015 of £1:18.68) will also be incurred. The purchase consideration
(including acquisition costs) will be funded by way of pound sterling loan facilities, in order to
mitigate as much currency risk as possible, as well and an equity raise by way of a vendor
placement.
5. EFFECTIVE DATE
The effective date of the Acquisition will be on or about 01 June 2015.
6. CONDITIONS PRECEDENT
The Acquisition is conditional on the fulfilment of the following outstanding conditions
precedent:
- The funders approval of Texton’s acquisition of the shares in Inception;
- Exchange control approval by the South African Reserve Bank;
- Transfer of registered title; and
- Completion of the Acquisition in terms of the sale and purchase agreement which
includes the registration of mortgages or charges registered against the titles, approval
of all authorities, reliance letters, elections, construction documents and assignment of
intellectual property rights and commercial agreements.
The conditions precedent are expected to have been completed by the end of May 2015.
7. CLASSIFICATION OF THE ACQUISITION
The Acquisition constitutes a category 2 transaction, in terms of the JSE Listings Requirements
and accordingly a circular will not be posted to Shareholders.
Dunkeld West
19 May 2015
Investment Bank and Sponsor
Investec Bank Limited
Legal Advisers
Osborne Clarke
Walker Morris
Date: 19/05/2015 04:00:00 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 
