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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
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