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Detailed Cautionary Announcement regarding the acquisition of two properties
ORION REAL ESTATE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/021085/06)
Share Code: ORE ISIN: ZAE000075651
("Orion Real Estate" or “the Company”)
DETAILED CAUTIONARY ANNOUNCEMENT REGARDING THE ACQUISITION OF TWO PROPERTIES
1. INTRODUCTION
Shareholders are advised of the acquisition by the Company of two properties, namely:
1.1 Erf 21 Webber Township, Registration Division I.R., Gauteng, situated at 6 Morgan Road,
Webber, Germiston, together with all land and buildings and other improvements
thereon (also known as the Royal Palms Lodge) (“Royal Palms Property”), including all
assets necessary to conduct the business of the rental enterprise from the Royal Palms
Property (“Royal Palms Acquisition”); and
1.2 Portion 2 of Erf 173 Airport Park Extension 4 Township, Germiston, Registration Division
I.R., Gauteng, together with all land and buildings and other improvements thereon
(also known as Dakota Business Park) (“Dakota Business Park Property”), including all
assets necessary to conduct the business of the rental enterprise from the Dakota
Business Park Property (“Dakota Business Park Acquisition”),
(collectively “Acquisitions” or “Properties”), as going concerns from Jacques Landman
and Osborn Property Holdings Proprietary Limited (which company is represented by
Jacques Landman), respectively (“Seller/s”, as the context indicates). The Sellers are
not related parties to the Company. The effective date of the Acquisitions will be the
date of transfer of the respective properties into the name of the Company.
2. RATIONALE FOR THE ACQUISITIONS
Orion Real Estate continually evaluates its property portfolio and seeks to maximise its
return to its shareholders. The Acquisitions are in line with this strategy.
3. TERMS OF THE ROYAL PALMS ACQUISITION
3.1 Purchase price
3.1.1 The total consideration for the Royal Palms Acquisition is R13 500 000, exclusive of VAT
at 0%, of which R11 500 000 will be payable in cash (“Royal Palms Cash Price”) and the
balance of R2 000 000 through the issue of 2 105 264 Orion Real Estate shares at R0.95
per share (“Royal Palms Subscription Price”) (“Royal Palms Share Issue”).
3.1.2 If VAT becomes payable at a rate exceeding 0%, the agreement will immediately be
cancelled without a claim against the other party.
3.1.3 The Royal Palms Cash Price shall be paid against registration of transfer of the Royal
Palms Property into the name of the Company (“Royal Palms Transfer Date”). This will
be secured by way of a guarantee/s.
3.1.4 The Royal Palms Subscription Price will be paid on the Royal Palms Transfer Date.
3.2 Description of the Royal Palms Property
3.2.1 The Royal Palms Property is described as Erf 21 Webber Township, Registration Division
I.R., Province of Gauteng, and is known as the Royal Palms Lodge. This property is a
residential lodge with limited services.
3.2.2 Property specific information is detailed below:
PROPERTY NAME ADDRESS LOCATION SECTOR
Royal Palms Lodge 6 Morgan Road Germiston, Gauteng Residential
Webber
Germiston
WEIGHTED AVERAGE
RENTABLE AREA NET RENTAL PER M2 TENANT PROFILE
2 713m2 R66.35 • J. Landman
4. TERMS OF THE DAKOTA BUSINESS PARK ACQUISITION
4.1 Purchase price
4.1.1 The total consideration for the Dakota Business Park Acquisition is R32 000 000, exclusive
of VAT at 0%, of which R30 000 000 will be payable in cash (“the Dakota Business Park
Cash Price”) and the balance of R2 000 000 through the issue of 2 105 264 Orion Real
Estate shares at 95 cents per share (“the Dakota Business Park Subscription Price”) (“the
Dakota Business Park Share Issue”).
4.1.2 If VAT becomes payable at a rate exceeding 0%, the agreement will immediately be
cancelled without a claim against the other party.
4.1.3 The Dakota Business Park Cash Price shall be paid against registration of transfer of the
Dakota Business Park Property into the name of the Company (“Dakota Business Park
Transfer Date”). This will be secured by way of guarantee/s.
4.1.4 The Dakota Business Park Subscription Price will be paid on the Dakota Business Park
Transfer Date.
4.2 Description of the Dakota Business Park Property
4.2.1 The Dakota Business Park Property is described as Portion 2 of Erf 173 Dakota Business
Park Extension 4 Township, Registration Division I.R., Province of Gauteng, and is known
as Dakota Business Park. This property is a newly build modern multipurpose
factory/warehouse complex.
4.2.2 Property specific information is detailed below:
PROPERTY
NAME ADDRESS LOCATION SECTOR
Dakota Portion 2 of Erf 173 Germiston, Gauteng Commercial
Business Park Airport Park Extension 4
Township, Registration
Division I.R., Province of
Gauteng
WEIGHTED AVERAGE
RENTABLE AREA NET RENTAL PER M2 TENANT PROFILE
5 040m2 R52,91 • Doosan International
(Pty) Ltd
5. SUSPENSIVE CONDITIONS OF THE ACQUISITIONS
The Acquisitions are subject to a number of conditions precedent, including, inter alia,
the following:
5.1 within 30 business days from the successful completion of the due diligence
investigation in respect of the Properties by the Company, the Company procuring
loans in the amount equal to the Royal Palms Cash Price and the Dakota Business Park
Cash Price, respectively, on such terms that are acceptable in the sole discretion of
the Company, secured by the registration of a first mortgage bond over the respective
Properties. The Company may, at any time prior to the fulfilment of this suspensive
condition, advise the Seller in writing that it waives the benefit of this suspensive
condition;
5.2 within 15 business days from the date of signature of the purchase agreements
(“Signature Date”), the Company conducting a due diligence investigation in respect
of the Properties and satisfies itself, in its sole discretion, regarding the condition or
quality of the leases or property or any of the improvements thereon or accessories
thereof;
5.3 confirmation of approval of the Acquisitions by the board of directors of the Company
within 15 business days after the Signature Date;
5.4 in respect of the Royal Palms Acquisition, the Seller providing the Company with a triple
net head lease in favour of the Company, within 30 business days of conclusion of the
due diligence period referred to in paragraph 5.2 above, in a form acceptable to the
Company, and on terms and conditions acceptable to the Company, for 12 months,
calculated from the Royal Palms Transfer Date, with a gross rental income of R130 000,
plus VAT, per month with an escalation rate of 8%;
5.5 in respect of the Dakota Business Park Acquisition, the Seller and/or its nominee
providing the Company with a lease in favour of the Company, within 30 business days
of conclusion of the due diligence period referred to in paragraph 5.2 above, in a form
acceptable to the Company, and on terms and conditions acceptable to the
Company, on the vacant space at the Dakota Business Park Property for 24 months
calculated from the Dakota Business Park Transfer Date with a gross rental income to
be derived from the Dakota Business Park Property of R180 000, plus VAT, per month
with an escalation on the rental at 8%;
5.6 in respect of the Royal Palms Acquisition, the Seller providing the Company, within
30 business days from the Signature Date, a signed restraint of trade agreement in a
form acceptable to the Company to the effect that the Seller and/or his family and
associates agree to be restrained from conducting or opening a similar
business/businesses, as conducted by the Seller currently from the Royal Palms
Property, or competing with the Company’s or any other business, in any way, of the
Orion Group to be conducted from the Royal Palms Property, within a radius of
75 (seventy five) kilometres from the Royal Palms Property;
5.7 the Sellers, within 30 business days from the Signature Date, delivering to the Company
an asset list as well as a list of all trading licences, which will be transferred to the
Company on the transfer date of the respective Properties; and
5.8 the Company and the Sellers concluding subscription agreements which govern the
Royal Palms Share Issue and the Dakota Business Park Share Issue, respectively, which
agreements are subject to a number of conditions precedent, including, inter alia, the
following:
5.7.1 the Acquisitions becoming unconditional;
5.7.2 to the extent necessary, all regulatory approvals are obtained within 30 business
days from procurement of the loans referred to in paragraph 5.1 above; and
5.7.3 the board of directors of the Company approving the Royal Palms Share Issue
and the Dakota Business Park Share Issue, and the allotment of such shares.
6. CLASSIFICATION OF THE TRANSACTIONS
The Acquisitions, on an aggregated basis, are classified as a Category 2 transaction in
terms of section 9 of the JSE Listings Requirements and thus will not require shareholder
approval.
7. FINANCIAL INFORMATION
7.1 The aggregate purchase consideration for the Acquisitions, totalling R45.5 million, is
considered to be the approximate valuation of the properties acquired. The Properties
will be valued following the due diligence investigation referred to in paragraph 5.2
above, details of which will be announced on SENS and included in the Company’s
annual financial statements.
7.2 The aggregate net rental received in respect of the aforementioned properties
amounts to R5.390 million per month, excluding VAT.
7.3 A further announcement regarding the net profit after tax and the net asset value in
respect of the Acquisitions will be made once this information becomes available.
7.4 It is expected that transaction fees of not more than 4% of the total purchase
consideration will be payable on the fulfilment of the suspensive conditions of the
respective Acquisitions.
7.5 No material additional costs are expected to be incurred.
8. WARRANTIES
The normal warranties are in place for acquisitions of this nature.
9. CAUTIONARY ANNOUNCEMENT
Shareholders are advised to exercise caution when dealing in the Company’s securities
until a further announcement is made in respect of the following:
- the publication of details regarding the valuation of the Properties; and
- the receipt and publication of the financial information in respect of the
Acquisitions (i.e. the net profit after tax and the net asset value).
By order of the Board
6 November 2018
Sponsor
Arbor Capital Sponsors Proprietary Limited
Date: 06/11/2018 04:31:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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