BALWIN PROPERTIES LIMITED - Acquisition of prime property in Umhlanga Rocks

Acquisition of prime property in Umhlanga Rocks

Balwin Properties Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2003/028851/06
Share code: BWN
ISIN: ZAE000209532
(“Balwin”)


ACQUISITION OF PRIME PROPERTY IN UMHLANGA ROCKS



1. INTRODUCTION
Shareholders are hereby advised that Balwin has concluded a Sale Agreement (the “Agreement”),
with Tongaat Hulett Development Proprietary Limited (the “Seller”) in terms of which Balwin has
agreed to purchase Portion 3 & 4 of Erf 3465 Umhlanga Rocks; Portion 6 of ERF 3465 Umhlanga Rocks,
Remainder of Erf 3434 Umhlanga Rocks, Remainder of Erf 3465 and 3457 Umhlanga Rocks, measuring
64 hectares in extent (collectively the “Property”) for a total purchase price of R167,264,956.96 (the
“Transaction”).


2.      OVERVIEW OF THE PROPERTY
    2.1. The Property is situated within the Izinga Precinct north of Umhlanga Ridge and above the
         town of Umhlanga Rocks. The Property is designed for clients looking for affordable living
         combined with the tranquillity of coastal life and a rich natural environment. The Property
         is minutes away from the commercial hub of Umhlanga.
    2.2. A portion of the Property is zoned and will be serviced for immediate construction of 335
         residential apartments. Balwin intends to obtain rights for a minimum of 1286 residential
         apartments which will be built on the remainder of the Property and all phases will be linked
         into one development.

3.      RATIONALE FOR THE TRANSACTION
        Balwin has been negotiating with the Seller since 2018 to acquire the Property which is the
        last remaining significant portion of developable land with an Umhlanga address. The
        acquisition of the Property is aligned with Balwin’s strategic objectives highlighted in its 2019
        Integrated Annual Report to expand its development operations in Kwa-Zulu Natal.
        In addition, one of Balwin’s plans for 2020 as well as the “Boards focus Area” in the 2019
        Integrated Annual Report was to investigate opportunities and increase its presence in Kwa-
        Zulu Natal following the success of Balwin’s Ballito Hills Estate. Balwin believes that the
        acquisition of the Property will assist it to achieve its goal of expanding within the Kwa-Zulu
        Natal region.


4.       PURCHASE CONSIDERATION
     4.1. The total consideration payable by Balwin to the Seller in terms of the Agreement is
          R167,264,956.96 (excluding VAT) (“Purchase Consideration”), which is to be paid by Balwin
          on date of registration of transfer of the Property.
     4.2. The Purchase consideration is payable as follows –
         4.2.1. R16,726,495.70 refundable deposit payable into the Conveyancer’s Trust Account by
                6 March 2020;
         4.2.2.R117,085,469.87 to be secured by way of a bank guarantee by 6 March 2020 ; and
         4.2.3.R33,452,991.39 to be secured by guarantee or paid in cash to the Conveyancer’s Trust
              Account by 6 March 2020.
     4.3. The purchase consideration will be funded from a combination of existing cash reserves
          and new bank debt. The bank debt will be ring-fenced to the development to be
          completed on the Property being acquired.
     4.4. Subsequent to the new bank debt in 4.3 above being obtained, Balwin’s total debt to
          equity ratio will remain comfortably within the 50% target threshold as mandated by
          the Balwin board.



5.        VALUE OF THE NET ASSETS AND PROFITS ATTRIBUTABLE TO THE NET ASSETS
          The value of the land to be acquired is R167,264,956.96 (excluding VAT). The land will not
          generate profits in isolation as the land will be developed into sectional title residential
          apartments and profits will be attributed to the sale of the respective apartments.
6.        CONDITIONS PRECEDENT TO THE TRANSACTION
      6.1. Balwin to obtain board approval by 28 February 2020;
      6.2. Balwin to obtain bank funding approval by 28 February 2020;
      6.3. The Seller to obtain consent from the Mortgagee to sell the Property by 28 February 2020;
      6.4. The Seller to obtain a Water-Use License by 13 March 2020;
      6.5. The Seller to obtain Local Authority approval for rezoning of Portion 6 of Erf 3434 Umhlanga
          Rocks to “Education” by 28 February 2020; and
      6.6. The Seller to obtain the necessary Local Authority certificates to transfer the Property by 28
          February 2020.



 7.  EFFECTIVE DATE OF THE TRANSACTION

In terms of the Agreement, the effective date of the Transaction will be the date that all Conditions
Precedents are fulfilled or waived.


 8.   JSE CATEGORISATION

The Transaction is categorised as a category 2 transaction in terms of paragraph 9.5(a) of the JSE
Listings Requirements and accordingly no shareholder approval is required.




Johannesburg
19 February 2020


Sponsor and corporate advisor:
Investec Bank Limited

Date: 19-02-2020 12:08:00
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