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ACCELERATE PROPERTY FUND LIMITED - Voluntary Announcement - The Disposal By Accelerate Of Edcon Warehouse

Release Date: 15/11/2019 08:30
Code(s): APF     PDF:  
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Voluntary Announcement - The Disposal By Accelerate Of Edcon Warehouse

ACCELERATE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2005/015057/06)
Share code: APF ISIN: ZAE000185815
(“Accelerate”, “APF” or the “Company”)

VOLUNTARY ANNOUNCEMENT - THE DISPOSAL BY ACCELERATE OF EDCON
WAREHOUSE

1.   INTRODUCTION
     Shareholders are advised that the Accelerate (the “Seller”) has, entered into a sale
     of letting enterprise agreement (the “Agreement”) with Sheraton Textiles Holdings (Pty)
     Ltd (the “Purchaser”), to dispose of Edcon Warehouse, Erf 166999 in the Township of
     Elfindale, Southfield, City of Cape Town (“Edcon Warehouse” or the “Property”) (“the
     Transaction”).

2.   THE PROPERTY
     The Property is an industrial property located at 134 Princess Vlei Road, Diep River, Cape
     Town, Western Cape. The Property forms part of Accelerate’s portfolio acquired by
     Accelerate on or about 12 December 2013.

     As at 31 March 2019 the Property was valued at R 91 650 811 and is being sold for R 94
     000 000 (ninety-four million Rand) at a yield of 10.0%. The yield is based on current
     income collected from Edcon on a month to month basis.

3.   THE CONSIDERATION AND APPLICATION OF THE SALE PROCEEDS
     The consideration for the Transaction is a total consideration of R 94 000 000 split
     between R 93 000 000 cash and R 1 000 000 refundable deposit (the “Consideration”).
     APF intends to utilise the full sale proceeds towards the reduction of debt.

     As at the date of entering into the agreement, the Transaction was not deemed a
     categorised transaction in terms of the Listings Requirements of the JSE Limited.


4.   RATIONALE FOR THE TRANSACTION AND UPDATE ON BALANCE SHEET OPTIMISATION STRATEGY
     In anticipation of the Fourways Equalisation, whereby Accelerate will own 50% of the
     completed Fourways Mall Super Regional Centre, the Company has earmarked
     approximately R2,5 billion of non-core properties for sale and set a target loan to value
     ratio (“LTV”) of 35%. It is the intention that the proceeds from the sale of these properties
     will be used to either reduce debt or buy back Accelerate shares.

     Since 31 March 2019, properties to the value of approximately R500 million have been sold
     and further sales of approximately R460 million are well advanced, including the Property.
     Accordingly, the Transaction is consistent with Accelerate’s ongoing balance sheet
     optimisation strategy of disposing of non-core properties.

5.   KEY TRANSACTION TERMS
     The effective date for the Transaction will be the date on which the last of the conditions
     precedent are fulfilled or waived, as the case may be, which is expected to be during
     December 2019.

  6.   CONDITIONS PRECEDENT
       The closing of the Transaction is subject to the following conditions precedent:

                •    A Due Diligence investigation that will take 14 calendar days;
                •    The Purchaser obtaining the necessary funding from a financial institution;
                     and
                •    Other necessary consents and approvals customary for a transaction of this
                     nature.


  7.   INFORMATION RELATING TO THE PROPERTY
       The details of the Property including location, gross lettable area (“GLA”), net rent,
       remaining lease term and independent valuation are as follows:


                                                      Net
                                                                                  Remaining            Last              Effective
Property /                                GLA         rent        Disposal
                Location                                                          lease term           valuation         date of the
 Tenant                                   (m2)        per m2      Price
                                                                                  (years)              (ZAR) **          valuation
                                                      *
                Erf 166999 in the
Edcon           Township of
                                          14,775      R           R 94 000                             R 91 650          31 March
Warehouse       Elfindale,                                                        5.0 years
                                          m2          49.79       000                                  811               2019
                Southfield, City of
                Cape Town


             * The weighted average net rent per m2 (also the profit attributable to the net assets of Edcon Warehouse), billed to
             tenants as at the date of signature of the Agreement, which is an amount of R8 827 767,00 per annum.

             ** As per the Company’s last audited financial results for the 12 months ended 31 March 2019, reported on in terms
             of International Financial Reporting Standards.

       In the event that the Transaction does not proceed, the Purchaser has signed a five-year
       lease to occupy the full premises from 1 April 2020 at R56,70 per sqm on a triple nett
       basis, escalating at 6.75%.

  8.   WARRANTIES
       The Seller has provided warranties and indemnities to the Purchaser that are standard for
       a transaction of this nature.

  Johannesburg
  15 November 2019


  Sponsor
  The Standard Bank of South Africa Limited

  CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  Certain statements in this announcement may be considered forward-looking. Although APF
  believes that the expectations reflected in any such forward-looking statements relating to the
  Transaction are reasonable. The information has not been reviewed or reported on by the
  reporting accountants and auditors and no assurance can be given by APF that such
  expectations will prove to be correct. APF does not undertake any obligation to publicly update
  or revise any of the information given in this announcement that may be deemed to be forward-
  looking.

Date: 15/11/2019 08:30:00
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