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Acquisition Of A New Property
Fairvest Property Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1998/005011/06)
Share code: FVT
ISIN: ZAE000203808
(Approved as a REIT by the JSE)
(“Fairvest” or “the Company”)
ACQUISITION OF A NEW PROPERTY
1. SHOPRITE EMPANGENI ACQUISITION
1.1. Shareholders of the Company are hereby advised that the Company
entered into an agreement (“Sale Agreement”)on 1 March 2017
with Growthpoint Properties Limited (“Seller”) to acquire, as
a going concern, the rental enterprise operated by the Seller
(“Rental Enterprise”) in respect of the property at Erf 3217,
Empangeni Township, Kwazulu-Natal, situated at Corner
Commercial Road and Biyela Street, Empangeni, Kwazulu-Natal
(“Property”), being the shopping centre more commonly known
as Shoprite Empangeni (“Acquisition”).
1.2. The effective date of the Acquisition shall be the date of
registration of transfer of ownership of the Property to
Fairvest (“Effective Date”), which is expected to occur on or
about 1 May 2017.
2. RATIONALE FOR THE ACQUISITION
The Acquisition is consistent with the Company’s growth strategy
whereby the Company will focus on acquiring retail assets with
a weighting in favour of non-metropolitan areas and lower LSM
sectors.
3. PURCHASE CONSIDERATION
3.1. The purchase consideration for the Acquisition is
R172 500 000, which includes VAT at the rate of 0%, payable
on the Effective Date against registration of transfer of
ownership of the Property into the name of Fairvest.
3.2. If the registration of transfer of ownership of the Property
occurs after 31 July 2017, interest will accrue on the purchase
consideration at a rate of 0.583% per month compounded for the
period commencing from 1 August 2017 and terminating on the
date on which the transfer of ownership of the Property is
registered.
3.3. The Company will settle the purchase consideration in cash.
4. THE PROPERTY
Details of the Property are as follows:
Property Name Geographical Sector GLA Weighted
and Address Location (m2) Average
Gross
Rental/m2
(R/m2)
Shoprite Corner Retail 13,645 117.29
Empangeni, Erf Commercial Road
3217, and Biyela
Empangeni, Street,
Kwazulu-Natal Empangeni,
Kwazulu-Natal
5. PROPERTY SPECIFIC INFORMATION
Details regarding the Acquisition, as at the expected Effective
Date, are set out below:
Property Name Weighted Lease Vacancy
and Address Average Duration % by GLA
Escalation (years)
Shoprite 7.91% 2.39 0%
Empangeni,
Erf 3217,
Empangeni,
Kwazulu-Natal
Notes:
a) The costs associated with the Acquisition of the Property
are estimated at R3 018 750.
b) The cost of the Property is considered to be its fair market
value, as determined by the directors of the Company. 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.
6. SUSPENSIVE CONDITION
6.1. The Acquisition is subject to fulfilment of the suspensive
condition that by no later than 17h00 on the 120th day from
the signature date of the Sale Agreement, the Competition
Authorities unconditionally approve the Acquisition, evidenced
by the issue of a merger clearance certificate.
6.2. The parties to the Acquisition may agree in writing to extend
the suspensive condition, which agreement shall not be
unreasonably withheld, provided that the date for such
extension falls within a period of 150 days from the date of
signature of the Sale Agreement.
6.3. The suspensive condition is incapable of being waived.
6.4. Fairvest has conducted a due diligence investigation and is
satisfied with the outcome.
7. FORECAST FINANCIAL INFORMATION IN RESPECT OF THE ACQUISITION
The forecast financial information relating to the Acquisition
for the financial periods ended 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 is the
responsibility of the Company’s directors.
Forecast for Forecast for
the 2 month the 12 month
period ended period ended
30 June 2017 30 June 2018
Rental income 4,571,375 29,008,207
Straight-line rental accrual 244,402 792,747
Gross revenue 4,815,777 29,800,954
Property expenses (1,805,068) (11,600,890)
Net property income 3,010,709 18,200,064
Asset management fee (146,266) (877,594)
Operating profit 2,864,443 17,322,470
Finance cost (2,691,288) (16,147,725)
Profit before taxation 173,155 1,174,745
Taxation - -
Total comprehensive income 173,155 1,174,745
attributable to shareholders
Forecast distribution in - 381,998
respect of the Acquisition
Notes:
a) Rental income includes gross rentals and other recoveries,
but excludes any adjustment applicable to the straight
lining of leases.
b) Property expenses include all utility and council charges
applicable to the Property.
c) The forecast information for the 2 month period ended 30
June 2017 has been calculated from the anticipated Effective
Date, being on or about 1 May 2017.
d) The difference between the total comprehensive income
attributable to shareholders and the forecast distribution,
results from the exclusion of straight-line rental accrual.
e) Contracted revenue constitutes 80.98% of the revenue for the
2 month period ended 30 June 2017 and 67.86% of the revenue
for the 12 month period ended 30 June 2018.
f) Near-contracted revenue constitutes 19.02% of the revenue
for the 2 month period ended 30 June 2017 and 32.14% of the
revenue for the 12 month period ended 30 June 2018.
g) Uncontracted revenue constitutes 0% of the revenue for the
2 month period ended 30 June 2017, as well as for the 12
month period ended 30 June 2018.
h) Leases expiring during the forecast period have been assumed
to renew at the future value of current market related rates.
i) This forecast has been prepared on the assumption that the
Purchase Consideration and acquisition fees will be funded
via debt facilities, at an interest rate of 9.2%.
8. CATEGORISATION
The Acquisition qualifies as a Category 2 acquisition for the
Company in terms of the JSE Listings Requirements.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that, as a result of the publication
of this announcement, the cautionary announcement released on
the Stock Exchange News Service of the JSE on 8 February 2017
is now withdrawn and caution is no longer required to be
exercised by shareholders when dealing in their shares.
1 March 2017
Cape Town
Sponsor
PSG Capital Proprietary Limited
Date: 01/03/2017 03:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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