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Acquisition and Dollar long-term lease back of Imperial’s new East African distribution center
MARA DELTA PROPERTY HOLDINGS LIMITED
(previously Delta Africa Property Holdings Limited)
(Registered by continuation in the Republic of Mauritius)
(Registration number C128881 C1/GBL)
SEM share code: DEL.N0000
JSE share code: MDP
ISIN: MU0473N00028
(“Mara Delta” or “the Company”)
ACQUISITION AND DOLLAR LONG-TERM LEASE BACK OF IMPERIAL’S NEW EAST AFRICAN DISTRIBUTION
CENTER
1. INTRODUCTION
1.1. Shareholders are apprised that on 9 November 2016 Mara Delta, through two wholly-owned
subsidiaries, entered into the following interlinked agreements:
1.1.1. Warehousely Limited (a wholly owned subsidiary of Mara Delta) entered into a sale of
property agreement with Imperial Health Sciences Kenya Limited (“Vendor”), a subsidiary
of Imperial Holdings Limited (“Imperial”), for the acquisition of a distribution facility located
in Nairobi, Kenya (“Property A”), for a purchase consideration of USD16 880 000, on a debt
free basis, excluding VAT (“Property A Purchase Price”) (“Property A Acquisition”).
Following the Property A Acquisition, Warehousely Limited will lease back Property A to the
Vendor in terms of a triple net lease concluded with the Vendor (“Lease Back”); and
1.1.2. Mara Viwandani Limited (a wholly owned subsidiary of Mara Delta) entered into a sale of
property agreement with the Vendor for the acquisition of a vacant plot of land adjoining
Property A (“Property B”) for a purchase consideration of USD2 996 000, on a debt free
basis (“Property B Purchase Price”) (“Property B Acquisition”). Following the Property B
Acquisition, Mara Viwandani Limited will grant the Vendor a licence to occupy Property B
for a period of 2 years (“License”),
collectively referred to as “the Acquisitions”.
1.2. The interests acquired in Property A and Property B (“the Properties”) are, in each case,
interests for the remainder of a 99 year term running from 1 November 1983.
1.3. Subject to the conditions precedent as listed in paragraph 5 below being fulfilled, it is
anticipated that the Acquisitions will be implemented, and the above property interests be
acquired, on or about 1 February 2017 (“Effective Date”).
2. RATIONALE FOR THE ACQUISITIONS
2.1. Mara Delta has identified Property A as an asset with a blue chip tenant, on a long-term lease,
presenting an opportunity to enter a new asset class in line with Mara Delta’s investment
strategy. The modern distribution facility situated on Property A is built to world class
specifications and will provide Mara Delta with a quality industrial property asset and asset class
diversification to the existing portfolio.
2.2. In terms of the Lease Back, Imperial, a JSE-listed global conglomerate, will guarantee the lease
payments over the duration of the lease period (“Guarantee”).
2.3. Mara Delta will incur no operating costs as a result of the triple net lease granted to Imperial in
terms of the Lease Back.
2.4. The Acquisitions will increase Mara Delta’s geographical spread with a new asset allocation in
Kenya of 5.4% (based on value and other pipeline acquisitions completing on time) of the total
Mara Delta portfolio. Kenya has been identified as one of Mara Delta’s primary investment
jurisdictions.
2.5. It is intended that Property B be temporally housed in Mara Delta and be sold to a development
partner, at the Property B Purchase Price, 1 month after the Effective Date (“Property B Sale”).
The License granted to the Vendor shall remain unaffected by the Property B Sale.
2.6. The distribution centre situated on Property A currently services Imperial’s entire East African
pharmaceutical distribution operation.
3. PURCHASE PRICE
3.1. The total purchase price due by Mara Delta in respect of the Acquisitions will be settled as
follows:
3.1.1. within 30 days of execution of the acquisition agreements, a deposit equal to 10% of the
Property A Purchase Price and the Property B Purchase Price (“the Purchase Prices”) will be
paid to the Vendor; and
3.1.2. on or before the Effective Date, the balance of the Purchase Prices will be paid to the
Vendor.
3.2. Mara Delta intends to fund the Purchase Prices through the issue of new Mara Delta ordinary
shares to existing and interested new investors (vendor consideration placement) and debt.
4. LEASE BACK
4.1. The Property A Acquisition is conditional upon the conclusion of the Lease Back agreement. In
terms of the Lease Back, the lease will be for a fixed period of 10 years from the Effective Date,
with the Vendor (as tenant) having the option to renew the lease for a further two periods, each
totalling five-years and 3-months.
4.2. The rental due by the Vendor to Mara Delta in respect of the Lease Back shall, for the first year
of the lease term, be USD1 440 000, excluding VAT, payable in twelve equal monthly
instalments. Thereafter the rent shall escalate annually at a rate equal to the United States
consumer price index plus 3%, with effect from each anniversary of the Effective Date.
4.3. The Lease Back will be a triple-net lease with the Vendor, as tenant, being obliged to fully repair,
maintain and insure Property A.
5. CONDITIONS PRECEDENT
5.1. The Property A Acquisition is subject to and conditional upon the fulfilment or waiver by Mara
Delta, in its sole and absolute discretion, of the following conditions by no later than the Effective
Date:
5.1.1. that completion of the Property B Acquisition occurs simultaneously with the completion
of the Property A Acquisition;
5.1.2. simultaneous execution of the Lease Back and entry into the Guarantee;
5.1.3. receipt by the Vendor of approval from the relevant competent authorities, including the
Commissioner of Lands (now National Land Commission), for the building plans and
specifications in relation to the buildings and improvements on Property A being done;
5.1.4. the Vendor obtaining all approvals from the relevant competent authorities for the change
of use of Property A from residential to industrial;
5.1.5. the Vendor delivering satisfactory evidence to Mara Delta of having settled all disputes or
claims relating to the improvements in respect of Property A, including any disputes with
the building contractors or consultants engaged in development and construction of such
improvements; and
5.1.6. Mara Delta obtaining debt financing from a third party debt financier and equity funding
from investors for the payment of 90% of the Property A Purchase Price.
5.2. The Property B Acquisition is subject to and conditional upon the fulfilment or waiver by Mara
Delta, in its sole and absolute discretion, of the following conditions by no later than the Effective
Date:
5.2.1. that completion of the Property A Acquisition occurs simultaneously with the completion
of the Property B Acquisition;
5.2.2. the conclusion of the Licence;
5.2.3. the Vendor obtaining all approvals from the relevant competent authorities for the change
of use of Property B from residential to industrial; and
5.2.4. Mara Delta obtaining debt financing from a third party debt financier and equity funding
from investors for the payment of 90% of the Property B Purchase Price.
6. WARRANTIES AND OTHER MATERIAL TERMS
6.1. Imperial will guarantee to Mara Delta the due, proper and timeous performance by the Vendor
of all its obligations to Mara Delta arising under the Lease Back.
6.2. The Acquisitions are subject to warranties that are standard for transactions of this nature.
6.3. Under the Property B Acquisition, the Vendor has been granted the option to require a
distribution facility to be developed on Property B that will be leased by the Vendor following
completion of the development on commercial terms which are market-related. The option
granted to the Vendor shall not be affected by the Property B Sale and shall be exercised within
21 months from the Effective Date, failing which such option shall automatically lapse, subject
only to the parties negotiating and concluding a detailed development agreement.
7. THE PROPERTIES
7.1. The details of Properties are as follows:
Property A Geographical Sector Gross Lettable Area Weighted Average
Name and Address Location (m2) Gross Rental/m2
/pm (USD)
Imperial Nairobi, Kenya Light Industrial 13,560 8.85
Distribution Center
Kutch Road,
Mlolongo
Property B Geographical Zoning Land Area Weighted Average
Name and Address Location (m2) Gross Rental/m2
/pm (USD)
Site 12715/438 Nairobi, Kenya Industrial 20,220 0
Kutch Road, (vacant land)
Mlolongo
7.2. Details regarding Property A, as at the expected Effective Date of 1 February 2017, are set out
below:
Purchase Yield Weighted Average Lease Duration Vacancy % by Gross
Attributable to Escalation (years) Lettable Area
Shareholders
8.4% 3% +US CPI 10 years 0%
Notes:
a) The costs associated with the Acquisitions are estimated at USD 4,202,635, including equity and debt raising costs, VAT
at 16% and stamp duty 4% of the purchase price.
b) It has been assumed, for purposes of calculating the above purchase yield attributable to shareholders, that the
Acquisitions will be financed through a combination of debt and equity consisting of 50% debt at a total cost of debt of
6.2%.
c) Property A has been valued, as at 11 February 2016, by Knight Frank Limited, an independent external chartered valuer,
who has attributed a value of USD 16 880 671 to Property A.
d) Property B has been valued, as at 11 February 2016, by Knight Frank Limited, an independent external chartered valuer,
who has attributed a value of USD 2 996 055 to property B.
e) The net rental of the Lease Back generates a purchase yield attributable in Kenya of 8.5% and an 8.4% return to
shareholders in Mauritius.
8. FORECAST FINANCIAL INFORMATION OF THE ACQUISITION
The forecast financial information relating to the Acquisitions for the financial periods ending 30
June 2017 and 30 June 2018 are set out below. The forecast financial information has not been
reviewed or reported on by a reporting accountant in terms of section 8 of the JSE Listings
Requirements and Chapter 12 of the Stock Exchange of Mauritius Ltd (“SEM”) Listing Rules and is
the responsibility of Mara Delta’s directors.
Forecast for the Forecast for the
5-month period ending 12-month period ending
30 June 2017 30 June 2018
(USD) (USD)
Revenue – contracted income 600,000 1,458,000
Revenue – uncontracted income 0 0
Near contracted revenue 0 0
Non-rental revenue 0 0
Operating expenses 0 0
Operational net income 600,000 1,458,000
Net profit after finance costs and tax 181,729 827,877
Earnings available for distribution 342,802 847,211
Forecast distribution 342,802 847,211
Notes:
a. Contracted income is based on the Lease Back.
b. There is no uncontracted revenue or near contracted revenue in respect of the Acquisitions.
c. Operating expenses are nil as the Lease Back is a triple net lease.
d. The above net profit after finance costs and tax includes an assumed fair value adjustment.
e. The Acquisitions are anticipated to enhance the Company’s previously forecasted
distributions.
f. While the Lease Back agreement provides for rental escalation to occur at US CPI plus 3% per
annum, Mara Delta has followed a conservative approach in basing the above forecast figures
on a rental escalation of 3% per annum.
9. CATEGORISATION
9.1. The Acquisitions collectively qualify as a category 2 acquisition by Mara Delta in terms of the JSE
Listings Requirements.
9.2. The Acquisitions constitute an undertaking in the ordinary course of business of Mara Delta and
therefore do not fall under the scope of Chapter 13 of the SEM Listing Rules.
10 November 2016
PSG Capital Proprietary Limited Perigeum Capital Ltd
JSE sponsor and corporate advisor to Mara Delta SEM authorised representative and sponsor to Mara Delta
Directors: Sandile Nomvete (chairman), Bronwyn Anne Corbett*, Peter Todd (lead independent), Maheshwar
Doorgakant, Chandra Kumar Gujadhur, Ian Macleod, Leon van de Moortele*, Ashish Thakkar, Jaqueline Roxanne van
Niekerk and David Stanley Savage
(*executive director)
Company secretary: Intercontinental Fund Services Limited
Registered address: C/o Intercontinental Fund Services Limited, Level 5, Alexander House, 35 Cybercity, Ebène,
72201, Mauritius
Transfer secretary (South Africa): Computershare Investor Services Proprietary Limited
Registrar and transfer agent (Mauritius): Intercontinental Secretarial Services Limited
Corporate advisor and JSE sponsor: PSG Capital Proprietary Limited
Sponsoring Broker: Capital Markets Brokers Limited
SEM authorised representative and sponsor: Perigeum Capital Ltd
This Notice is issued pursuant to the JSE Listings Requirements, SEM Listing Rule 11.3 and the Securities Act of
Mauritius 2005.
The board of directors of the Company accepts full responsibility for the accuracy of the information contained in
this communiqué.
Date: 10/11/2016 10:00:00 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
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