SPEAR REIT LIMITED - Disposal of 142 Bree Street Property

Disposal of 142 Bree Street Property

SPEAR REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2015/407237/06)
Share Code: SEA
ISIN: ZAE000228995
Approved as a REIT by the JSE
(“Spear” or “the Company”)

DISPOSAL OF 142 BREE STREET PROPERTY

1.     INTRODUCTION

       Shareholders are hereby advised that the Company, through its
       wholly-owned subsidiary, Spear Holdco Proprietary Limited
       (“Seller”), concluded a sale agreement (“the Agreement”) with
       Arctigen Proprietary Limited (“Purchaser”), on or about 12 March
       2018. In terms of the Agreement, the Purchaser will acquire the
       vacant property situated on Erf 142181, Cape Town, more commonly
       known as 142 Bree Street (“the Property”) (“the Disposal”).

2.     RATIONALE FOR THE DISPOSAL

       The management of Spear have elected to dispose of this asset
       given that the Purchase Consideration was at a substantial premium
       to the book-value of the Property. This Disposal will provide
       Spear with the ability to prudently recycle the capital received
       to fund further strategic and yield accretive acquisitions.

3.     PURCHASE CONSIDERATION

3.1.     In terms of the Agreement, the purchase price for the Property
         is R150 000 000 (exclusive of VAT) (“Purchase Consideration”).

3.2.     The Purchase Consideration will be settled on the date of
         transfer of the Property into the name of the Purchaser,
         (“Transfer Date”), following the fulfilment or, where
         applicable, waiver of the condition precedent as set out in
         paragraph 4 below (“Condition Precedent”).

3.3.     In terms of the Agreement, the Purchase Consideration will be
         settled as follows:

3.3.1.     a deposit in an amount of R10 000 000 is payable on signature
           of the Agreement;

3.3.2.     the balance the Purchase Consideration in an amount of
           R140 000 000 (“Balance”) is payable in cash against
           registration of transfer of the Property into the name of the
           Purchaser; and

3.3.3.     the VAT on the Purchase Consideration in an amount of
           R22 500 000 is payable approximately 45 days prior to the
           registration of transfer of the Property.

3.4.     In respect of the Balance, the Purchaser has furnished the
         Seller with an acceptable guarantee.

4.     CONDITIONS PRECEDENT

       The Disposal is subject to the fulfilment or, where applicable,
       waiver of the Condition Precedent that by no later than 1 June
       2018, to the extent that such approval may be required, the
       Disposal be approved unconditionally by the competition
       authorities in terms of the Competition Act, No. 89 of 1998 or,
       in the event of a conditional approval, on terms acceptable to
       the parties to the Disposal.

5.     EFFECTIVE DATE

       The Disposal will become effective on the Transfer Date.

6.     WARRANTIES AND OTHER TERMS

6.1.     The Agreement contains representations and warranties by the
         Seller in favour of the Purchaser which are standard for a
         transaction of this nature.

6.2.     Subject to such warranties, the Property is sold “voetstoots”.

6.3.     The Property is sold subject to all conditions of title,
         restrictions and servitudes registered against the title deed
         of the Property.

7.     APPLICATION OF THE PURCHASE CONSIDERATION

       The Purchase Consideration proceeds and cash realised will be
       used to fund new acquisitions and if applicable reduce portfolio
       gearing.

8.     THE PROPERTY

       Details of the Property are as follows:

Property Name     Geographical          Sector          Gross          Weighted
 and Address        Location                         Lettable Area     Average
                                                         (m2)            Gross
                                                                       Rental/m2

142 Bree          City of Cape        Commercial         2 805           N/A
Street, Cape      Town
Town

9.     FINANCIAL INFORMATION IN RELATION TO THE PROPERTY

9.1.     In terms of the latest published interim report of Spear for
         the six months ended 31 August 2017, the value of the net assets
         being disposed of (the Property) amounts to R 73 915 130, while
         the distributable profit after tax of the Property amounts to
         R 681 726 for the same period.

9.2.     No independent valuation has been carried out and the directors
         of Spear are of the view that the Purchase Consideration payable
         in respect of the Property is considered to be its fair market
         value. The directors of Spear 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.

9.3.     The financial information contained in this announcement has
         not been reviewed or reported on by Spear’s auditors.

10. CATEGORISATION

       The Disposal constitutes a Category 2 transaction in terms of the
       JSE Listings Requirements.


Cape Town
13 March 2018


PSG Capital Proprietary Limited
Transaction Advisor and Sponsor

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