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Acquisition of Eden Meander Lifestyle Centre
ACCELERATE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 2005/015057/06)
Share code: APF ISIN: ZAE000185815
(Approved as a REIT by the JSE)
(“Accelerate” or “the Company”)
ACQUISITION OF EDEN MEANDER LIFESTYLE CENTRE
1. INTRODUCTION
Accelerate is pleased to inform its shareholders (“Shareholders”) that it has entered into an
agreement with Laritza Investments No. 183 Proprietary Limited (“the Seller”) in terms of which
Accelerate will acquire the property letting enterprise known as Eden Meander Lifestyle Centre
(“Eden Meander”) as a going concern, together with unutilised bulk, for approximately R364.9
million (“Purchase Consideration”) (“Proposed Transaction”). The effective property yield for
Eden Meander is approximately 9%. In addition to the above, Accelerate has also secured
adjacent land to Eden Meander (“Portion A”) to be acquired from the Sellers in three years
from the date Eden Meander is transferred into Accelerate’s name (“Portion A transaction
date”). This will allow Accelerate to accommodate future tenant driven demand for additional
lettable space. The purchase consideration payable for Portion A at the Portion A transaction
date is R12 million.
Eden Meander is a newly built multi-tenanted lifestyle shopping centre located in the residential
hub of George, Western Cape. George is the administrative and commercial hub of the Garden
Route and is one of the largest towns in the Western Cape.
Eden Meander is located next to the Garden Route Mall and complements the Garden Route
Mall by offering a lifestyle shopping centre experience and larger scale premises to national
retailers. Eden Meander is accessible from the George Central Business District, neighbouring
residential suburbs, including Groenkloof Retirement Village, Blue Mountain Retirement Estate,
Thembalethu, and the site of the proposed Destiny Africa Estate multi-purpose development.
The Garden Route Mall and Eden Meander retail node services customers from George and
neighbouring towns such as Wildernes, Sedgefield, Knysna, Groot Brakrivier, Tergniet, Klein
Brakrivier, Hartenbos and Mossel Bay.
2. EFFECTIVE DATE
The effective date of the Proposed Transaction will be on transfer of Eden Meander into
Accelerate’s name (“Effective Date”) which is expected to be no later than 30 September
2016.
3. RATIONALE FOR THE PROPOSED TRANSACTION
The Proposed Transaction is consistent with Accelerate’s strategy of building a quality property
portfolio in strategic nodes with a retail bias that offers long-term distribution and capital growth
underpinned by strong underlying contractual cash flows.
Further to the above, the Proposed Transaction presents an opportunity for Accelerate to:
- Purchase a sizeable retail property with long-term leases underpinned by various
national tenants;
- Further increase its portfolio weighting within the retail sector and improve its
geographical spread in the Western Cape with the addition of an A grade shopping
centre within an established retail node; and
- Increase the potential development/re-development opportunities available to it.
4. OVERVIEW OF EDEN MEANDER
Accelerate has agreed the terms with the Seller to acquire Eden Meander as a going concern
together with unutilised bulk forming necessary parts of the letting enterprise. The details of
Eden Meander are set out below:
Property description: - Retail shopping centre - a well located lifestyle centre
which is next to the Garden Route Mall;
- Eden Meander is located on the remaining extent of Erf
26207 George, in the Municipality and Division of George,
Western Cape;
- Unutilised bulk – means the rights attaching to the land for
2
further development, measuring 4,487m (“Unutilised
Bulk”); and
- Portion A – means the vacant portion of land known as Erf
26832, a portion of Erf 26207 George, in the Municipality
and Division of George, Western Cape, measuring
2
7,094m ;
Tenants: National tenants include, inter alia, Builders Warehouse,
Sportsman’s Warehouse, Pick ‘n Pay, Checkers Hyper, the Pro
Shop and House & Home, comprising approximately 70% of
total gross lettable area;
Location: George, Western Cape;
2
GLA: 28,240m (of which approximately 94.5% is let at present) ;
Weighted average lease 7.6 years;
expiry:
Net annual income: Forecast net annual property income of Eden Meander for the
period 1 July 2016 to 30 June 2017 (“Initial Forward Net
Income”) of R31,018,347, assuming a transfer date of 1 July
2016. The Initial Forward Net Income will be guaranteed by the
Seller for 12 months from the Effective Date;
Weighted average rental 6.7%; and
escalation
Weighted average gross R96.33.
2
rental per m :
5. PURCHASE CONSIDERATION
5.1. Purchase Consideration
The Purchase Consideration based on the capitalised Initial Forward Net Income assuming an
Effective Date of 1 July 2016 is expected to be an amount of R364,921,730, comprising the
following amounts to be paid to the Seller:
- R347,069,480 calculated by capitalising the Initial Forward Net Income of R31,018,347
at a rate of 8.94%;
- R10,000,000 payable to the funders of the development in settlement of their profit
share; and
- 2
R7,852,250 for the Unutilised Bulk of 4,487m at a rate of R1,750 per m².
The investment committee of Accelerate (“Investment Committee”) is satisfied that the value
of Eden Meander is in line with the purchase price being paid by Accelerate. The Investment
Committee is not registered as a professional valuer or professional associate valuer in terms
of the Property Valuers Profession Act, No. 47 of 2000.
5.2. Settlement of Purchase Consideration
The Purchase Consideration will be settled fully in cash (through the issue of Accelerate
shares by way of a vendor placement and/or the utilisation of new and/or existing debt
facilities).
6. SUSPENSIVE CONDITIONS
The Proposed Transaction is conditional on the fulfilment or waiver, as the case may be, of the
following suspensive conditions:
- The Seller delivering a copy of the Proposed Transaction agreement to a key tenant,
whom elects not to exercise its pre-emptive right over the land and Portion A;
- Accelerate signing an agreement to acquire Portion A from the Sellers three years from
the Eden Meander transfer date for R12 million;
- Accelerate obtaining the necessary funding from a registered bank or financial institution
to settle the Purchase Consideration to the extent required;
- At least 95% of Eden Meander’s gross lettable area being let by July 2016; and
- Competition commission approval of the Proposed Transaction in terms of the
Competition Act, No. 89 of 1998 (as applicable).
7. CLASSIFICATION OF THE PROPOSED TRANSACTION
The Proposed Transaction constitutes a category 2 transaction, in terms of the Listings
Requirements of the Johannesburg Stock Exchange and accordingly a circular will not be
posted to Shareholders.
Johannesburg
6 May 2016
Investment Bank and Transaction Sponsor
Investec Bank Limited
Legal Advisers
Glyn Marais Incorporated
Sponsor
The Standard Bank of South Africa Limited
Date: 06/05/2016 04:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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