To view the PDF file, sign up for a MySharenet subscription.

REBOSIS PROPERTY FUND LIMITED - Proposed disposal of two properties for an aggregate consideration of R897 million

Release Date: 13/02/2019 16:28
Code(s): REB REA REBC09     PDF:  
Wrap Text
Proposed disposal of two properties for an aggregate consideration of R897 million

REBOSIS PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2010/003468/06)
JSE share codes:
REA ISIN: ZAE000240552
REB ISIN: ZAE000201687
Alpha code: REBI
(Approved as a REIT by the JSE)
(“Rebosis” or the “Company”)


PROPOSED DISPOSAL OF TWO PROPERTIES FOR AN AGGREGATE CONSIDERATION OF R897 MILLION


1. Introduction and rationale

Rebosis shareholders are hereby advised that the Company (the “Seller”) has entered into two sale
and purchase agreements, with two separate parties, dated 12 February 2019 to dispose of two
properties together with the rental enterprises in respect thereto (the “Property/ies”) in its office
portfolio (the “Disposal/s”).

The Disposals, comprising of office buildings, forms part of the Company’s strategy to be a retail-
focused fund and to reduce the Company’s gearing in line with the road-map outlined in the results
announcement released on the Stock Exchange News Service on 12 November 2018. The proceeds of
the Disposals will be used to reduce the existing debt of the Company. The Disposal will become
effective on the date of registration of transfer of the Properties into the name of the respective
purchasers (“Transfer Date/s”).

The Disposals once again demonstrates Rebosis’ commitment to transformation in the property sector.


2. The Disposals

2.1 The SALU Building disposal
    Narefin (Proprietary) Limited (“Narefin” or, as the context may require, the “Purchaser”) is a 100%
    black owned and managed company represented by Mkasiri Msebenzi.

    In terms of the sale and purchase agreement entered into between Rebosis and Narefin (“Narefin
    Sale Agreement”), Rebosis has agreed to dispose of Erf 2908 Pretoria, measuring 4 190m² in
    extent, held by Deed of Transfer T39585/2011, situated at 255 Frances Baard Street, Pretoria
    (“SALU Building”).

    The SALU Building together with the rental enterprise in respect thereto will be sold for a purchase
    consideration of the lesser of the sum of R695 million, including value added tax (“VAT”) at the
    rate of 0%, or the equivalent of a 9.75% yield on 12 months forward income in respect of the SALU
    Building (the “SALU Building Purchase Consideration”).

2.2 The Bank of Lisbon disposal
    Narevax (Proprietary) Limited (“Narevax” or, as the context may require, the “Purchaser”) is a
    majority black owned and managed company, and is represented by George Smith.

    In terms of the sale and purchase agreement between Rebosis and Narevax (“Narevax Sale
    Agreement”), Rebosis has agreed to dispose of Erf 2939 Pretoria, measuring 2 551m² in extent,
    held by Deed of Transfer T39585/2011, situated at 400 Paul Kruger Street, Pretoria (“Bank of
    Lisbon Building”).

    The Bank of Lisbon Building together with the rental enterprise in respect thereto will be sold for
    an individual purchase consideration of R202 million, including VAT at the rate of 0% (the “Bank
    of Lisbon Building Purchase Consideration”).

2.3 The consideration payable in respect of the Disposals
    The SALU Building Purchase Consideration and the Bank of Lisbon Building Purchase Consideration
    (jointly, the “Purchase Considerations”), shall be payable on the Transfer Dates and will be
    discharged by the Purchasers by means of payment to the conveyancers appointed by the Seller
    (“Conveyancers”) in cash, on the Transfer Dates and against transfer of the Properties.

    As security for the payment of the Purchase Considerations, the Purchasers shall, furnish the
    Conveyancers with a bank guarantee or guarantees as required and approved of by the Seller or
    the Conveyancers, payable to the Seller or the Seller's nominee upon registration of transfer of the
    Properties at such place or places in the Republic of South Africa as the Seller stipulates for an
    amount equal to the respective Purchase Considerations in respect of the Properties.

    The SALU Building Purchase Consideration shall be increased by an amount determined by
    applying to the SALU Building Purchase Consideration, the percentage rate obtained by multiplying
    the rate of 9.75%, calculated and expressed as an effective daily rate, by the number of days
    elapsed between 1 May 2019 and the Transfer Date of the Property, excluding the first day and
    including the last day of that period.

    In terms of the Sale Agreements, the Purchasers will procure a loan and equity, if required, for the
    Disposals and the Seller shall be willing to assist with equity in the form of a vendor loan at the
    appropriate time.

2.4 Warranties
    The Narefin Sale Agreement and the Narevax Sale Agreement governing the Disposals contains
    representations and warranties by the Seller in favour of the Purchasers which are standard for
    transactions of this nature.


3. The Properties and related financial information

3.1 Property information

      Property      Location         Sector       Lettable      Single or      Weighted      Value of the
                                                      area      multi-          average      Properties*
                                                                tenanted       rental per
                                                                                  m2
                                                      (m2)                        (R)            (R’m)
      SALU          255 Frances      Office        30 354       Single -          117.9           725
      Building      Baard Street,                               tenanted
                    Pretoria
      Bank of       400 Paul         Office        14 599       Multi -           78.5            202
      Lisbon        Kruger                                      tenanted
                    Street,
                    Pretoria

    *The value of the Properties has been extracted from the Company’s audited results for the year
    ended 31 August 2018, which have been prepared in terms of International Financial Reporting
    Standards (“IFRS”). The valuations were performed by LDM Valuation Solutions (Pty) Ltd, who is
    independent from the Company and registered as a professional valuer in terms of the Property
    Valuers Profession Act, No. 47 of 2000.

3.2 Value of the Net Assets of the Subject of the Disposals
    The value of the assets that are the subject of the Disposals is R725 million (SALU Building) and
    R202 million (Bank of Lisbon Building), as extracted from the Company’s audited results for the
    year ended 31 August 2018 and prepared in terms of IFRS.

3.3 Related financial information
    The profits attributable to the net assets that are the subject of the Disposals are as follows:
                                            Net profit after tax (R’m)
      SALU Building disposal                62.0
      Bank of Lisbon disposal               17.4

    The financial information provided above, has been extracted from the Company’s audited results
    for the year ended 31 August 2018, is prepared in terms of IFRS, is the responsibility of the directors
    of Rebosis and has not been reported on or reviewed by a reporting accountant.

    The Purchase Considerations are based on the aggregated 12 months forward net income of R86.8
    million in respect of the Properties. The forecast financial information provided is the responsibility
    of the directors of Rebosis and has not been reported on or reviewed by a reporting accountant in
    terms of Section 8 of the JSE Listings Requirements.


4. Conditions Precedent

The Disposals are subject to the fulfilment of the following outstanding conditions precedent
(“Conditions Precedent”) in respect of each of the Narefin and the Narevax Sale Agreements (jointly,
the “Sale Agreements”):

   4.1 Within five business days of the signature date of the Sale Agreements (“Signature Date/s”),
       the board of directors of the Seller shall have approved the Disposals on the terms and
       conditions of the Sale Agreements;
   4.2 within five business days of the Signature Dates, the board of directors of the Purchasers shall
       have approved the Disposals on the terms and conditions of the Sale Agreements;
   4.3 by no later than 11 March 2019, the Purchasers, at their own cost and expense, shall have
       completed and have confirmed in writing to the Seller whether or not they are satisfied with
       the outcome of a due diligence investigation in respect of each Property, and wish to proceed
       with the Disposals;
   4.4 by no later than 31 March 2019, the Purchasers shall have furnished the Seller with
       confirmation of funding from banks and/or financial institutions, in a form reasonably
       acceptable to the Seller, for the payment to the Seller of the respective Purchase
       Considerations upon registration of transfer of the Properties;
   4.5 by no later than 15 April 2019, the Purchasers shall have furnished the Seller with guarantees
       from banks and/or financial institutions, in a form reasonably acceptable to the Seller, for the
       payment to the Seller of the respective Purchase Considerations upon registration of transfer
       of the Properties; and
   4.6 by no later than 15 April 2019, and only to the extent if legally required, the competition
       authority constituted in terms of the Competition Act No. 89 of 1998 (“Competition Act”)
       (“Competition Authority”), approves in writing, the Disposals, either unconditionally or
       subject to such conditions as the Seller and the Purchasers agree are acceptable to them,
       provided that:
       4.6.1 to the extent that any such condition imposed by the Competition Authority affects only
             one of the Seller or the Purchaser ("Party/ies”), then only that Party which is affected
             thereby shall be entitled to accept such condition, in its sole discretion, in which event
             such conditions shall be deemed to be acceptable to the Parties;
       4.6.2 if the Competition Authority disapproves of the Disposals contemplated in the Sale
             Agreements and either of the Parties upon receipt of legal advice does not reasonably
             believe that there are prospects of success in appealing or reviewing such findings, and
             advises the other Party in writing of its decision not to so proceed with an appeal or
             review, the suspensive condition contemplated in this paragraph 4.6.2 shall be deemed
             to have failed;
       4.6.3 the suspensive condition contemplated in paragraph 4.6 is imposed for the benefit of
             the Parties and shall not be capable of waiver, but the Parties may extend the date for
             fulfilment thereof by agreement in writing; and
       4.6.4 the Seller and the Purchasers undertake to use their best endeavours to procure that all
             of the necessary and required documentation for submission to the Competition
             Authority is in order to secure approval of the Disposals in terms of the Competition Act,
             and is completed and filed with the Competition Authority as soon as reasonably
             possible after the Signature Dates. The Parties shall file the required notification as a
             joint filing to be prepared by Vani Chetty Competition Law (the “Competition
             Attorneys”), appointed by the Seller, and the Parties shall instruct the Competition
             Attorneys in writing as soon as possible pursuant to the Signature Dates to proceed with
             the application. All costs relating to the fulfilment of the Condition Precedent set forth
             in this paragraph 4.6.4 shall be borne equally by the Parties.


5. Agents Commission

It is hereby recorded that no agent was involved in the Disposals and that no agent’s commission is
due and payable.


6. Categorisation

Each of the two Disposals constitute a Category 2 transaction for Rebosis in terms of the JSE Listings
Requirements, which merely require an announcement.


Johannesburg
13 February 2019

Investment Bank, Corporate Advisor, and Equity and Debt Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited

Date: 13/02/2019 04:28:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story