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DIPULA INCOME FUND LIMITED - Acquisition of an interest in a portfolio of properties

Release Date: 18/08/2015 14:00
Code(s): DIB DIA     PDF:  
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Acquisition of an interest in a portfolio of properties

DIPULA INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/013963/06)
JSE share code: DIA  ISIN: ZAE000203378
JSE share code: DIB  ISIN: ZAE000203394
(Approved as a REIT by the JSE)
(“Dipula” or the “company”)


ACQUISITION OF AN INTEREST IN A PORTFOLIO OF PROPERTIES


1.   INTRODUCTION AND RATIONALE

     Shareholders are advised that Dipula group has concluded a transaction that will see it acquire an 80%
     interest in an R860 million portfolio of retail and industrial assets (“the property portfolio”), held in
     two joint venture companies currently owned by members of the Moolman group of companies (“the
     Moolman group”). The remaining 20% interest in the joint venture companies will be retained by
     members of the Moolman group.

     The transaction is in line with Dipula’s strategy of acquiring retail and industrial assets in chosen
     markets. The portfolio has low vacancies (at circa 2.5% of gross income) and is yield enhancing.

     In addition, the Moolman group is a respected industry player with assets and expertise focused on the
     market segment on which Dipula is focused, and it is contemplated that the joint venture relationship
     may be a source of further opportunities for the respective parties.

     A company in the Moolman group will continue to manage the property portfolio for a minimum
     period of three years.

2.   DETAILS OF THE PROPERTY PORTFOLIO

     Details of the properties comprising the property portfolio, including property name, geographical
     location, sector, gross lettable area (“GLA”), weighted average rental per square metre, the value
     attributed to the properties and the estimated net income, are as follows:


                                                                         Weighted
                                                                           average         Value    Estimated
                                 Geographical                 GLA     rental per m2   attributed   net income
      No.    Property name       location        Sector       (m2)           (R/m2)          (R)           (R)

             Shoprite Checkers
      1      Sibasa              Limpopo         Retail       5 907          78.04    56 051 000    5 324 845


      2      Excelsior 13        Limpopo         Retail       1 661          66.21    11 687 657    1 285 642



      3      Saint Gobain        Limpopo         Industrial   1 810          57.76    10 451 229    1 254 147



      4      Duivelskloof        Limpopo         Retail       1 655          58.18    10 619 991    1 168 199
                                                                                                     

      5     Concor2             Limpopo         Industrial     828          111.02     10 004 731    1 050 497



      6     Dulux Polokwane     Limpopo         Retail        2 103          43.99     10 891 371    1 170 822



      7    51 Joubert Street    Limpopo         Retail         843           66.01      6 444 291      708 872
          

      8    14 President         Mpumalanga      Retail        1 530          63.79     10 309 435    1 134 038
           Avenue Witbank
           

      9    Boxer Tzaneen       Limpopo         Retail        5 112          78.41     46 674 652    4 434 092



     10   Fin Forum           Gauteng         Retail        5 848         149.57     90 191 517    9 019 152



     11    Game Groblersdal    Mpumalanga      Retail        7 856         101.18     98 734 660    8 886 119



     12    Dawn Warehouse      Limpopo         Industrial    4 500          32.58     16 244 792    1 705 703



     13    Soweto              Gauteng         Retail       10 434          79.69     99 252 895    9 429 025



     14    Phangami Mall       Limpopo         Retail        7 290          91.00     60 456 747    7 660 474



     15    Henshall Street     Mpumalanga      Retail        2 141          90.68     21 783 725    2 469 532


          
     16    Seshego Circle -    Limpopo         Retail       15 066         105.10    112 929 177    9 222 926
           50%


     17   Greywies3           Limpopo         Retail        2 248          91.59     23 083 893    2 797 681
          8 Livingston
          Street
   

     18   Kuruman3            Northern Cape   Retail        1 676         116.61     21 928 984    2 485 999


         
     19   144 Walter Sisulu   North West      Retail        1 636          30.81      7 326 508      835 224
          Potchefstroom3                                                                                                     

    
              John Orr
      20      Klerksdorop3        North West      Retail      272          75.04      2 205 605      250 040



      21      Theo’s Building3    North West      Retail    2 122          69.20     14 831 526    1 681 389


              66 Kerk Street
      22      Klerksdorp3         North West      Retail      462          87.98      3 915 879      443 927


              60 Mark Street
      23      Vryburg3            North West      Retail    2 329          92.96     23 636 143    2 864 612


              Foschini
      24      Kimberley3          Northern Cape   Retail    1 763          83.70     15 886 670    1 925 405


              Botha Street
      25      Northam3            North West      Retail      877          74.33      7 494 706      849 664


              2 Botha Street
      26      Northam3            North West      Retail    2 052          87.78     21 568 815    2 455 168


              Livingston Street
      27      Kuruman3            Northern Cape   Retail    3 380          74.25     27 162 726    3 079 327



      28      JR Mall3            North West      Retail    2 296          64.03     16 539 243    1 874 986



      Total                                                95 697                   858 349 569   87 457 491

     Notes:
     1. The board of directors of Dipula is satisfied that the aggregate value attributed to the properties
        comprising the property portfolio is in line with the aggregate amount to be invested by the Dipula
        group. 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.
     2. The GLA of Concor excludes rentable yard space and bulk.
     3. Properties subject to put and call options.

3.   TERMS OF THE TRANSACTION

     3.1.     The Dipula group have concluded subscription and funding agreements (the “agreements”)
              with Jarrabilla Investments Holdings Proprietary Limited and Lizinex Proprietary Limited
              (collectively, “the joint venture companies”), Mobe Investments Proprietary Limited,
              Mafried Beesboerdery Proprietary Limited, Stylestar Investments Proprietary Limited, Luvon
              Investments Proprietary Limited and East & West Investments Proprietary Limited (all
              members of the Moolman group) in terms of which the Dipula group will enter into a joint venture 
              arrangement with members of the Moolman group.

3.2.   In terms of the transaction –

       3.2.1.      Dipula will, via its wholly-owned subsidiary acquire an 80% equity interest in
                   each of the joint venture companies (“the subscription”) and provide shareholder
                   loan funding to the joint venture companies, such subscription and provision of
                   shareholder loan funding to be effected on the 5th business day after the last of the
                   conditions precedent set out in paragraph 4 below have been fulfilled or waived, as
                   the case may be (“the closing date”); and
       3.2.2.      the joint venture companies will acquire the properties which they do not already
                   own from entities in the Moolman group with commercial effect from
                   1 August 2015 (“the effective date”).

3.3.   The net value attributable to each joint venture company (“the net company value”) for
       purposes of the transaction is to be determined as follows:

       3.3.1.      an amount of R858 349 569, being the agreed gross market value of the property
                   portfolio;
       3.3.2.      minus the amount of the existing debt funding attributable to the portfolio as at the
                   effective date;
       3.3.3.      plus (if the amount is positive) or minus (if the amount is negative) the net
                   working capital of the joint venture company as at the effective date,
       and is subject to certain further adjustments.

3.4.   The aggregate amount to be paid by the Dipula group in terms of the subscription and
       provision of shareholder loan funding is 80% of the net company value, escalated at a rate of
       9.98% from the effective date to the closing date.

3.5.   The transfer of the properties comprising the property portfolio which are not already owned
       by the joint venture companies, into the joint venture companies, will be effected as soon as
       practicably possible after the last of the conditions precedent set out in paragraph 4 below have
       been fulfilled or waived, as the case may be.

3.6.   The relevant members of the Moolman group have provided rental guarantees in respect of the
       property portfolio for a period of between 12 and 24 months.

3.7.   Certain of the properties forming part of the property portfolio will be subject to put and call
       arrangements, in terms whereof they could be sold back to the Moolman group at a price not
       less than the value attributed thereto for purposes of the transaction plus an annual escalation
       of 3.5%.

3.8.   The 20% interest of the Moolman group in the joint venture companies is subject to put and
       call arrangements, in terms whereof such interest could be acquired by the Dipula group after a
       period of 2 years.

3.9.   The agreements provide for warranties and indemnities that are normal for a transaction of this
       nature.
                                                                                                                  

4.   CONDITIONS PRECEDENT

     The agreements are subject to the fulfilment or waiver, as the case may be, of the following conditions
     precedent:

     4.1.      the board of Dipula approving and ratifying the agreements and all other agreements and
               transactions contemplated in the agreements;

     4.2.      the conclusion of certain related agreements necessary to give effect to the transaction,
               including certain portfolio sale agreements and shareholders agreements (all of which are
               already in substantially agreed form) and such agreements becoming unconditional;

     4.3.      any consents or approvals required in terms of any applicable debt funding and related
               agreements being provided;

     4.4.      any third parties who have leases, rights of occupation, options, rights of first refusal or similar
               rights in respect of any properties comprising the property portfolio providing such consents or
               waivers as may be required in connection with the implementation of the transaction;

     4.5.      Dipula arranging the requisite third party debt funding required to refinance the existing debt
               attributable to the property portfolio; and
     4.6.      Dipula notifying the Moolman group that it has raised such debt funding and/or equity capital
               as it may deem necessary in order to fund its participation in the transaction.


5.   CATEGORISATION

     The transaction is a category 2 transaction in terms of the JSE Listings Requirements and accordingly
     does not require approval by shareholders.

18 August 2015


Corporate advisor and sponsor
Java Capital


Legal advisor
Cliffe Dekker Hofmeyr

Date: 18/08/2015 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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