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Disposal of Non-Core Assets
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 NON-CORE ASSETS
1. INTRODUCTION
Shareholders are advised that the Company, through its wholly-owned subsidiary Spear
Holdco Proprietary Limited (“Seller”), entered into various sale agreements
(“Agreements”) with K2018500558 (South Africa) Proprietary Limited (“Purchaser”), in
terms of which the Purchaser will acquire the following properties:
• portion 81 and portion 82 of the Farm Mellish 205, City of Cape Town, Cape Division,
Western Cape, and the letting enterprise conducted by the Seller on property, as a
going concern, for a disposal consideration of R20 900 000 including value added tax
at a rate of 0% (“Atlas Gardens Property”);
• sections 16, 17, 19, 20, 21, 28, 232, 233, 234 and 235 in the sectional title scheme
known as Bella Rosa One, as shown and more fully described on sectional plan no.
SS423/2014, situated at Belville, in the City of Cape Town, Cape Division and the
letting enterprise conducted by the Seller on the property, as a going concern, for a
disposal consideration of R31 500 000 including value added tax at a rate of 0%
(“Bella Rosa Property”);
• erf 12855 Strand, in the City of Cape Town, Stellenbosch Division, Western Cape, and
the letting enterprise conducted on the property, as a going concern, for a disposal
consideration of R4 600 000 including value added tax at a rate of 0% (“Burger King
Property”);
• erf 19890, in the Municipality and Division of George, Western Cape, and the letting
enterprise conducted on the property , as a going concern, for a disposal consideration
of R22 300 000 including value added tax at a rate of 0% (“George Property”); and
• erf 153935 Cape, in the City of Cape Town, Cape Division, Western Cape, and the
letting enterprise conducted on the property , as a going concern, for a disposal
consideration of R30 200 000 including value added tax at a rate of 0% (“Plum Park
Property”),
(together, the “Disposals”)
2. RATIONALE FOR THE DISPOSALS
The Disposals are in line with Spear’s strategy to acquire larger single assets of higher
values in the Western Cape. The disposal of these non-core assets creates operational
efficiencies’ across the business leading to cost optimisation and the effective
redeployment of capital.
3. DISPOSAL CONSIDERATION
The aggregate disposal consideration for the Atlas Gardens Property, the Bella Rosa
Property, the Burger King Property, the George Property and the Plum Park Property
(together, the “Properties”) is R109 500 000 (“Aggregate Disposal Consideration”).
The Aggregate Disposal Consideration is a combined disposal yield of 8.64%.
The Aggregate Disposal Consideration shall be paid by the Purchaser to the Seller on the
date of registration of transfer of the Properties, respectively, into the name of the
Purchaser, which is anticipated as being on or about 1 February 2019 (“Transfer Date”).
If registration of transfer of the Properties take place after the Transfer Date, interest shall
accrue at the prime rate on the disposal price of the Properties from 1 February 2019 until
the registration of transfer of the Properties in the respective deeds offices and shall be
paid by the Purchaser to the transferring attorneys prior to registration of transfer, if the
delay is due to the Purchaser.
If the Purchaser fails to comply with any of its obligations, then without further notice to
the Purchaser, interest will accrue at the prime rate on the disposal price of the Properties
or the balance thereof from the due date for delivery of performance until the date upon
which the Purchaser has complied with its obligations relating to the transfer of the
Properties and shall be paid by the Purchaser to the transferring attorneys prior to the
Transfer Date.
4. APPLICATION OF THE DISPOSAL CONSIDERATION
Management will redeploy the disposal proceeds into funding new acquisitions aligned
with its stated strategy and to the reduction of debt where applicable.
5. CONDITIONS PRECEDENT
The Disposals are subject to the fulfilment of the following outstanding conditions
precedent (“Conditions Precedent”):
- the Purchaser obtaining mortgage finance on terms acceptable to the Purchaser as
determined by the Purchaser in its sole discretion on or before 16 October 2018; and
- the Purchaser simultaneously entering into sale agreements in respect of the Atlas
Gardens Property, the Bella Rosa Property, the Burger King Property, the George
Property and the Plum Park Property , and such agreements becoming unconditional.
The Conditions Precedent must be fulfilled by not later than the date stipulated above,
which date may be extended by the parties in writing.
6. EFFECTIVE DATE OF THE DISPOSALS
The effective date of the Disposals will be the Transfer Date, which is anticipated as being
on or about 1 February 2019.
7. WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT
The Agreement contains representations and warranties by the Company in favour of the
Purchaser which are standard for a transaction of this nature.
Subject to such warranties, the Properties are sold “voetstoots”.
8. THE PROPERTIES
Details of the Properties are as follows:
Property Geographical Sector Gross Weighted
Name and Location Lettable Area Average
Address (m2) Gross Rental /
m2
Portion 81 and City of Cape Industrial 9 972 R15
portion 82 of Town, Cape
the Farm Division
Mellish 205
Sections 16, City of Cape Commercial 1 937 R129
17, 19, 20, 21, Town, Cape
28, 232, 233, Division
234 and 235 in
the sectional
title scheme
known as Bella
Rosa One, as
shown and
more fully
described on
sectional plan
no.
SS423/2014
Erf 12855 City of Cape Commercial 300 R120
Strand Town,
Stellenbosch
Division
Erf 19890 Municipality Commercial 2 500 R76
George and Division of
George
Erf 153935 City of Cape Commercial 2 035 R122
Cape Town, Cape
Division
Details regarding the Properties, as at the anticipated Transfer Date, are set out below:
Property Name Weighted Average Weighted Average Vacancy % by
and Address Escalation Lease Duration Gross Lettable
(months) Area
Portion 81 and 9% 35 0%
portion 82 of the
Farm Mellish 205
Sections 16, 17, 19, 8% 29 0.01%
20, 21, 28, 232,
233, 234 and 235 in
the sectional title
scheme known as
Bella Rosa One, as
shown and more
fully described on
sectional plan no.
SS423/2014
Erf 12855 Strand 7% 209 0%
Erf 19890 George 5.5% 48 0%
Erf 153935 Cape 7% 27 0.01%
Notes:
a) The costs associated with the Disposals are estimated at R 300 000. No agents’
commission is payable in respect of the Disposal.
b) The disposal consideration payable in respect of each of the Properties 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.
9. FINANCIAL INFORMATION IN RESPECT OF THE PROPERTIES
The value of the net assets comprising the Properties as at 28 February 2018, being the
date of the last audited annual financial statements, was R108 959 000.
The audited profits after tax attributable to the Properties for the year ended 28 February
2018, was R13 042 720, based on the audited annual financial statements of Spear
Limited and its subsidiaries for the year ending 28 February2018, which were prepared in
terms of IFRS.
10. CLASSIFICATION OF THE DISPOSALS
The Disposals constitute a category 2 transaction in terms of the JSE Limited Listings
Requirements.
2 October 2018
Sponsor and Corporate Adviser
PSG Capital
Date: 02/10/2018 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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