Wrap Text
Acquisition of properties pursuant to exercise of Put Option by Liberty Group Limited
LIBERTY TWO DEGREES
JSE share code: L2D
ISIN: ZAE000230553
(Approved as a REIT by the JSE)
(“Liberty Two Degrees”)
a portfolio established under the Liberty Two Degrees
Scheme,
a Collective Investment Scheme in Property established
in terms of the Collective Investment Schemes Control Act, No 45 of 2002, as amended,
and managed by STANLIB REIT Fund Managers Proprietary Limited (RF)
(Registration number: 2007/029492/07)
(“the Manager”)
ACQUISITION OF PROPERTIES PURSUANT TO EXERCISE OF PUT OPTION BY LIBERTY GROUP LIMITED
1. THE TRANSACTION
Unitholders of Liberty Two Degrees are advised that Liberty Group Limited ("Liberty") has sold to Liberty Two
Degrees further undivided shares ("Additional Shares") in properties (and letting businesses carried on thereon)
that it co-owns ("Properties") to the value of R2,512,904,670 pursuant to Liberty exercising its put option
("Put Option") in terms of the relationship agreement ("Relationship Agreement") entered into between Liberty
Two Degrees and Liberty on or about 10 November 2016. A summary of the Relationship Agreement is set out in
paragraph 2.3 of the pre-listing statement issued by Liberty Two Degrees on 21 November 2016.
In terms of the Relationship Agreement, Liberty Two Degrees granted Liberty the Put Option in terms of which
Liberty may sell further portions of its undivided shares in the Properties to Liberty Two Degrees from time to
time. If Liberty exercises the Put Option, Liberty Two Degrees has the election whether to pay cash or to issue
units to Liberty in consideration therefor.
As contemplated in the Relationship Agreement, Liberty Two Degrees delivered an independent valuation of the
properties carried out by independent registered valuers in accordance with section 13.20 of the JSE Listings
Requirements to Liberty for the period ended 30 June 2017 ("Valuation Report").
Pursuant to receiving the Valuation Report from Liberty Two Degrees, Liberty exercised the Put Option in respect
of the Additional Shares reflected in the table below, and the terms of the resultant transaction ("Transaction") are
set out in this announcement.
Prior to the exercise of the Put Option, Liberty Two Degrees owned 22% of the Liberty Property Portfolio. Pursuant
to the exercise of the Put Option, Liberty Two Degrees will own 31% of the Liberty Property Portfolio, in the
proportions reflected in the table below.
Property name % of Additional Share Valuation as at Consideration % of
ownership of of the Liberty 30 June 2017 payable for the ownership of
Property Property Portfolio (Liberty Two Additional Property
owned by (“LPP”) to be Degrees and LPP Share owned by
Liberty Two acquired by interest, Liberty Two
Degrees prior Liberty Two collectively) Degrees
to the Degrees pursuant pursuant to
exercise of to the exercise of the exercise
the Put the Put Option of the Put
Option Option
Sandton City 16.5% 6.75% R9,939,000,000 R894,510,000 23.25%
Complex
Eastgate 22% 9.00% R8,752,000,000 R787,680,000 31.00%
Complex
Melrose Arch* 5.5% 2.25% R1,962,250,000 R176,602,500 7.75%
Liberty 22% 9.00% R1,456,000,000 R131,040,000 31.00%
Promenade
Shopping Centre
Liberty 22% 9.00% R2,017,500,000 R181,575,000 31.00%
Midlands Mall
Nelson Mandela 22% 9.00% R1,815,000,000 R163,350,000 31.00%
Square
Botshabelo Mall 15.4% 6.30% R210,609,000 R18,954,810 21.70%
John Ross Eco 22% 9.00% R158,800,000 R14,292,000 31.00%
Junction -
varying serviced
stands
John Ross Eco 22% 9.00% R58,260,000 R5,243,400 31.00%
Junction -
Tangawizi
Motors
John Ross Eco - 15.4% 6.30% R245,084,000 R22,057,560 21.70%
Junction -
Melomed
Hospital**
Liberty Centre 22% 9.00% R360,310,000 R32,427,900 31.00%
Head Office
(Cape Town)
Liberty Centre 22% 9.00% R414,500,000 R37,305,000 31.00%
Head Office
(Umhlanga)
Standard Bank 11% 4.50% R531,850,000 R47,866,500 15.50%
Building -
5 Simmonds
Street*
Total R27,921,163,000 R2,512,904,670
* The purchase of the Additional Shares in each of these Properties remains subject to a pre-emptive right in favour
of a third party co-owner of that Property.** The property is still under construction and due for completion on
30 September 2017.
2. RATIONALE FOR THE TRANSACTION
Liberty Two Degrees believes in the resilient nature and quality of the Properties it already owns and the additional
stake supplements the existing position and supports the funds growth prospects. Liberty Two Degrees has elected
to settle the consideration payable in cash in order to deploy the majority of its cash resources.
3. CONSIDERATION
The consideration payable by Liberty Two Degrees for the acquisition of the Additional Shares from Liberty is an
amount of R2,512,904,670 plus an amount equivalent to interest thereon calculated at 9.342% nominal annual
compounded quarterly (3 month JIBAR as at 30 June 2017 plus 200 basis points) from 30 June 2017 until the date
on which it is paid to Liberty ("Option Price"). The Option Price was calculated in the manner reflected in the
table in 1 above by reference to the percentage undivided share of each Additional Share and the valuation of the
Properties as reflected in the Valuation Reports. Liberty Two Degrees will pay the cash Option Price on or before
8 August 2017.
4. THE EFFECTIVE DATE OF THE TRANSACTION
The Transaction is not subject to any conditions precedent, and, as such, the effective date for the Transaction is
1 July 2017. With effect from 1 July 2017, the rental income attributable to the Additional Shares is ceded to Liberty
Two Degrees. Save to the extent that third party co-owners of the Properties have control or management rights,
the Properties remain subject to Liberty Two Degrees' control in terms of the co-owners agreements between
Liberty Two Degrees and Liberty governing the Properties.
5. REQUIREMENT TO ANNOUNCE
At the time of listing Liberty Two Degrees on the JSE and in the light of the Put Option's valuation and
consideration protections in favour of Liberty Two Degrees and the fact that the Put Option was pre-existing and
disclosed, the JSE exempted the Put Option from compliance with the ordinary requirements of the JSE Listings
Requirements in relation to transactions, although the JSE still required that whenever the Put Option is exercised,
Liberty Two Degrees must release an announcement on SENS, which Liberty Two Degrees accordingly hereby
does.
26 July 2017
Sponsor
Java Capital
Legal advisors to Liberty Two Degrees
Webber Wentzel
Date: 26/07/2017 02:19:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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