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Disposal of Jane Furse Crossing to Depoway Proprietary Limited
ARROWHEAD PROPERTIES LIMITED
(formerly Gemgrow Properties Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2007/032604/06)
JSE share code: AHA ISIN: ZAE000275491
JSE share code: AHB ISIN: ZAE000275509
(Approved as a REIT by the JSE)
(“Arrowhead” or “the Company”)
DISPOSAL OF JANE FURSE CROSSING TO DEPOWAY PROPRIETARY LIMITED
1. INTRODUCTION
Shareholders are advised that Moolgem Proprietary Limited (the “Seller”), a subsidiary of Cumulative Properties Limited, which is a wholly-owned
subsidiary of the Company, has, on 3 September 2020 (the “Signature Date”), entered into an agreement (the “Sale Agreement”) with Depoway
Proprietary Limited (the “Purchaser”) to dispose of the rental enterprise comprising Jane Furse Crossing in Limpopo, (the “Property”) as a going
concern (the “Rental Enterprise”), for an aggregate disposal consideration of R174 000 000 (the “Purchase Consideration”)(the “Transaction”).
2. RATIONALE
The Transaction is in line with Arrowhead’s previously announced disposal programme aimed at repositioning the Company’s property portfolio through
strategic disposals. The proceeds of the Transaction will be used to reduce debt in line with Arrowhead’s intention to improve gearing and strengthen the
Company’s balance sheet.
3. TERMS OF THE TRANSACTION
3.1. The Transfer Date of the Transaction is the date of registration of transfer of ownership of the Property into the name of the Purchaser with such
date expected to occur on or about 3 months from the date of signature of the Sale Agreement, but no later than 31 March 2021, at which point the
Seller has the right to cancel the Sale Agreement by notice and any party who has performed in terms thereof will be restored to its position quo
ante.
3.2. On the Transfer Date, delivery of the Rental Enterprise will take place, and all risks and benefits of ownership of the Rental Enterprise and the
Property shall pass to the Purchaser.
3.3. The assets of the Rental Enterprise comprise the Property and all rights, title and interests of the Seller in and to the existing rental agreements
between the Seller and the tenants occupying the Property as at 3 September 2020.
3.4. The Purchaser shall be entitled to conduct a due diligence investigation in respect of the Rental Enterprise, including all matters relating to the
Property as the Purchaser may reasonably deem relevant (the “Due Diligence Investigation”).
3.5. The Purchase Consideration (which includes value-added tax levied at a rate of 0%) will be payable in cash on the Transfer Date. To the extent
that the Rental Enterprise has not been transferred to the Purchaser on or before 31 January 2021, the Purchase Consideration shall escalate on a
pro rata basis by 0.66% per month compounded monthly in arrears calculated with effect from 1 February 2021 up to and including the Transfer
Date, provided that the delay in transferring the property is not as a result of any event or circumstance beyond either the Purchaser or the Seller’s
control.
3.6. The Sale Agreement provides for undertakings, warranties and indemnities which are normal for transactions of this nature.
4. CONDITIONS PRECEDENT
4.1. The Transaction is subject to the fulfilment or waiver, as the case may be, of the following conditions precedent:
4.1.1. that by no later than 30 days from the Signature Date, the Purchaser has delivered written confirmation to the Seller that it has conducted
the Due Diligence Investigation to its satisfaction, acting reasonably and in good faith;
4.1.2. that by no later than 5 business days from the Signature Date, the Purchaser has delivered a signed copy of the resolution of the board of
directors of the Purchaser approving the conclusion of the Sale Agreement;
4.1.3. that by no later than 30 days from fulfilment or waiver (as the case may be) of the condition precedent stipulated in paragraph 4.1.1 above,
the Purchaser has furnished a written guarantee for the payment of the Purchase Consideration which shall be payable to the Seller on the
Transfer Date; and
4.1.4. that by no later than 90 days from fulfilment or waiver (as the case may be) of the condition precedent stipulated in paragraph 4.1.1 above,
the Competition Authorities have unconditionally approved the Transaction, provided that the period for the fulfilment of the condition
precedent in this paragraph shall be extended by agreement in writing between the Parties for such period as it reasonable in the
circumstances (which will not exceed another 75 (seventy five) business days) if there is a delay in obtaining the approval of the
Competition Authorities, with such delay caused by the Competition Authorities.
5. PROPERTY SPECIFIC INFORMATION
Weighted average
Geographical rental per m2 Net operating Valuation2
Property name location Sector GLA (m2) (R/m2) profit1 (R’m) (R’m)
1 Jane Furse Crossing, Limpopo Retail 10 766 150 8.5 179
portion 8 of the Farm
Duizendannex 816 KS
Notes:
1. Extracted from the unaudited condensed consolidated interim results of Arrowhead for the six months ended 31 March 2020 which was prepared in
terms of International Financial Reporting Standards.
2. The Property was valued as at 30 September 2019 by the board of directors of Arrowhead. The board of directors of Arrowhead is not independent,
and its members are not registered as professional valuers or as professional associate valuers in terms of the Property Valuers Profession Act, No 47
of 2000. The Purchase Consideration is considered to be its fair market value, as determined by the board of directors of Arrowhead.
6. CATEGORISATION OF THE TRANSACTION
The Transaction is classified as a category 2 transaction in terms of the JSE Listings Requirements. Accordingly, it is not subject to approval by
shareholders.
7 September 2020
Sponsor
Java Capital
Date: 07-09-2020 02:40:00
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