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Strategic Integrated Project – Mooikloof Mega City Residential Development
Balwin Properties Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2003/028851/06
Share code: BWN
ISIN: ZAE000209532
(“Balwin”)
STRATEGIC INTEGRATED PROJECT – MOOIKLOOF MEGA CITY RESIDENTIAL DEVELOPMENT
1. INTRODUCTION
1.1. We are pleased to advise shareholders that the Presidential Infrastructure Coordinating
Commission Council (“Presidential Commission”) designated, inter alia, the Mooikloof
Mega Residential City: Gauteng (“Mooikloof Mega City”) as a Strategic Integrated Project
(“SIP”) in terms of Government Gazette No. 43547 published on 24 July 2020. In essence,
this means that the Department of Public Works and Infrastructure will pay for all external
bulk services installations such as water, sewer, electricity, roads and stormwater in respect
of Mooikloof Mega City. This is in an effort by the government to boost the economy post
Covid-19 and to create employment through infrastructure development. National Treasury
has also recently signed a Memorandum of Agreement with the Development Bank of South
Africa in terms of which a R100 billion infrastructure fund will be available to facilitate
infrastructure development in South Africa.
1.2. In light of the designation of Mooikloof Mega City as a SIP, Balwin has been in negotiations
with two individuals, namely, Johan Franck and Paul Hailwood regarding the possibility of a
joint venture to undertake the Mooikloof Mega City project. These individuals have
extensive sectional title development experience and have been in negotiations with the
Department of Human Settlements, the Department of Public Works and Infrastructure as
well as other governmental departments to have Mooikloof Mega City recognised as a SIP
for the past 10 years.
2. THE SUBSIDIARY
2.1. Shareholders are hereby advised that Balwin has incorporated a new entity called,
Mooikloof Mega City Proprietary Limited with Registration No.: 2020/136141/07 (“the
Subsidiary”), for the purposes of entering into a corporate joint venture with Seafront Lux
Proprietary Limited (“Seafront Lux”) owned majority by Johan Franck and Paul Hailwood.
2.2. Balwin will be a 70% shareholder and Seafront Lux will be a 30% shareholder of the
Subsidiary and their relationship will be governed in terms of a shareholders’ agreement
3. SALE AGREEMENTS
3.1. In order to take advantage of the fact that all bulk services and bulk contributions would be
covered by government the Subsidiary has concluded two sale agreements for purposes of
commencing the Mooikloof Mega City development.
3.2. The Subsidiary has concluded a sale agreement with Central Plaza Investments 28
Proprietary Limited (“CPI”) in terms of which the Remaining Extent of Portion 62 (a portion
of portion 1) of the Farm Rietfontein 375, J.R., measuring 133,94 hectares in extent (“CPI
Property”) will be acquired for a total purchase price of R207,368,000.00 (excluding VAT)
(“Transaction 1”).
3.3. The Subsidiary has concluded a sale agreement with Forum SA Trading 284 Proprietary
Limited (“Forum SA”) in terms of which Portion 1046 of the Farm Rietfontein 375 J.R.
measuring 76,90 hectares in extent (“Forum Property”) will be acquired for a total purchase
price of R125,132,000.00 (excluding VAT) (“Transaction 2”).
4. OVERVIEW OF THE FORUM PROPERTY, CPI PROPERTY AND RATIONALE FOR TRANSACTION 1
AND TRANSACTION 2
4.1. The landholding of the Forum Property and the CPI Property measures approximately 210
hectares in extent and includes a residential component, 2 educational facilities and a
commercial node. It is envisaged that the Forum Property and the CPI Property would be
consolidated to form one property. A filling station is also considered for the development.
Balwin will only develop the residential component and the educational, commercial and
filling station erven will be sold to a third party (the combined area being approximately 20
hectares).
4.2. Both the Forum Property and CPI Property (collectively, the “Properties”) are located in the
upmarket area of Mooikloof in Pretoria East. The surrounding townships include Woodhill
Golf Estate, Mooikloof Equestrian Estate, Mooikloof Heights, Mooikloof Ridge, The Hills Golf
Estate, Grootfontein Country Estate and Mooikloof Glen. Both Properties are situated on
Garsfontein Drive in Pretoria, Gauteng, approximately 6 kilometers from the Junction with
De Ville Bois Mareuil Drive where Woodlands Boulevard Mall is located and 8 kilometers
from Solomon Mahlangu Drive which gives access to the N4 and other main arterial routes.
The Properties have great exposure to Garsfontein Drive being the main road front on the
northern boundary of the Properties.
4.3. The purpose of the Subsidiary is to undertake the Mooikloof Mega City development on the
Properties and to construct and deliver approximately 16,000 residential apartments (with
the potential to increase to 50,000 residential apartments) to the South African market with
prices for a 1 bedroom starting from R499,900 and a 3 bedroom starting from R799,900 in
the Mooikloof area over a period of between 10 and 15 years. Balwin will phase the initial
16,000 apartments over 5 developments, with the first portion estimated to be
approximately 2,500 residential apartments. The township applications to obtain the
required density and rights on the Forum Property and the CPI Property are in the process
of being finalised. As Mooikloof Mega City has been designated a SIP, the town planning and
other regulatory approvals for the Forum Property and CPI Property would be fast tracked
because of its social and economic importance.
4.4. The Subsidiary will conclude a Development Agreement with Balwin in terms of which
Balwin will be appointed as a contractor for the overall construction, project management
and marketing of Mooikloof Mega City in order to ensure that clients receive the high quality
and environmentally friendly building complimented by the innovative lifestyle offering
synonymous with Balwin. Accordingly, this development will follow Balwin’s Green model
and will include Balwin’s new Greenbarn Lifestyle Centre.
4.5. Mooikloof Mega City has been designed specifically for the GAP housing market which can
be defined as housing opportunities for people earning a combined monthly income
between R3,501 and R18,000. These are the income earners who earn too much to get a
free house from the government and earn too little to get a bank bond. Accordingly, first
time home buyers and qualifying individuals will have assistance through the Finance Linked
Individual Subsidy Programme (“FLISP”). The FLISP subsidy grants first time home buyers a
subsidy towards the purchase of a home of between R27,960 up to a maximum of R121,626.
4.6. The vision of the development is to create an affordable estate focusing on outdoor living
and utilising the abundance of green space for leisure activities.
4.7. It is estimated that top structure construction should commence in January 2021, with the
first handovers following approximately 6 months later in June 2021.
5. PURCHASE CONSIDERATION OF THE CPI PROPERTY
5.1. The total consideration payable by the Subsidiary to CPI in terms of Transaction 1 is
R207,368,000.00 (excluding VAT) which is to be paid by the Subsidiary on date of registration
of transfer of the CPI Property into the name of the Subsidiary.
5.2. The intention is for the total purchase consideration to be appropriately geared by a
financial institution to ensure maximum conservation of development equity and supported
by the fact that the current value of the CPI Property exceeds the purchase price to be paid.
5.3. Subsequent to the new bank debt in 5.2 above being obtained, Balwin’s debt to equity ratio
will remain comfortably within the 50% target threshold as mandated by the Balwin board.
6. PURCHASE CONSIDERATION OF THE FORUM PROPERTY
6.1. The total consideration payable by the Subsidiary to Forum SA in terms of Transaction 2 is
R125,132,000.00 (excluding VAT) which is to be paid by the Subsidiary on date of registration
of transfer of the Forum Property into the name of the Subsidiary.
6.2. The intention is for the total purchase consideration to be appropriately geared by a
financial institution to ensure maximum conservation of development equity and supported
by the fact that the current value of the Forum Property exceeds the purchase price to be
paid.
6.3. Subsequent to the new bank debt in 6.2 above being obtained, Balwin’s debt to equity ratio
will remain comfortably within the 50% target threshold as mandated by the Balwin board.
7. VALUE OF THE NET ASSETS AND PROFITS ATTRIBUTABLE TO THE NET ASSETS IN RESPECT OF
TRANSACTION 1
7.1. The value of the CPI Property based on an independent valuation is R305,000,000.00 but
the CPI Property will not generate profits in isolation as the CPI Property will be developed
into sectional title residential apartments and profits will be attributed to the sale of the
respective apartments.
8. VALUE OF THE NET ASSETS AND PROFITS ATTRIBUTABLE TO THE NET ASSETS IN RESPECT OF
TRANSACTION 2
8.1. The value of the Forum Property based on an independent valuation is R283,000,000.00 but
the Forum Property will not generate profits in isolation as the Forum Property will be
developed into sectional title residential apartments and profits will be attributed to the
sale of the respective apartments.
9. CONDITIONS PRECEDENT TO TRANSACTION 1
9.1. Transaction 1 is subject to the fulfilment of the following conditions precedent –
9.1.1. The Subsidiary being satisfied with the outcome of the due diligence investigation
conducted on the CPI Property within 30 business days of signature date.
9.1.2. The Board of Directors of Balwin must provide their written approval to Transaction
1 within 30 business days from the due diligence acceptance date.
9.1.3. The Subsidiary must raise a loan for an amount of not less than the total Purchase
Price of the CPI Property against the security of the CPI Property within 20 business
days after the fulfilment or waiver, as the case may be, of the last of the conditions
precedent.
9.1.4. The Parties must, within 60 business days of the signature date, procure from the
City of Tshwane, Gauteng Department of Roads and Transport (“Gautrans”) and
Eskom, documentary evidence, in a form acceptable to the Subsidiary and Balwin,
confirming whether (a) the City of Tshwane, Gautrans or Eskom will itself be
responsible for funding and installing or procuring the installation of the bulk
engineering services for the Mooikloof Mega City development or (b) the Subsidiary
(or its nominee) will be responsible for installing or procuring the installation of the
said bulk engineering services with the City of Tshwane, Gautrans and Eskom being
responsible for funding the total cost thereof; and if it is the case that the Subsidiary
(or its nominee) will be responsible for installing or procuring the installation of the
said bulk engineering services with the City of Tshwane, Gautrans and Eskom being
responsible for funding the total cost of the respective bulk engineering service,
documentary evidence, in a form acceptable to the Subsidiary and Balwin,
confirming that the total cost of such bulk service installation is readily available in
liquid cash for drawdown by the Subsidiary or its nominee to enable the installation
thereof.
9.1.5. All conditions precedent to which Transaction 2 may be subject must be fulfilled
and/or waived within 5 (five) months of obtaining Balwin’s board approval, thereby
rendering Transaction 2 unconditional.
9.1.6. The Competition Commission and/or Competition Tribunal unconditionally (or on
conditions acceptable to the parties) approves Transaction 1, in writing, within 90
(ninety) days of obtaining Balwin’s board approval.
10. CONDITIONS PRECEDENT TO TRANSACTION 2
10.1. Transaction 2 is subject to the fulfilment of the following conditions precedent –
10.1.1. The Subsidiary being satisfied with the outcome of the due diligence investigation
conducted on the CPI Property within 30 business days of signature date.
10.1.2. The Board of Directors of Balwin must provide their written approval to Transaction
1 within 30 business days from the due diligence acceptance date.
10.1.3. Forum SA must within 10 business days of the signature date procure the approval
of all its shareholders to dispose of the Forum Property to the Subsidiary.
10.1.4. Forum SA must within 15 business days of the signature date, agree the terms and
conditions subject to which the Forum SA’s indebtedness, if any, owed to Nedbank
Limited under their Profit Participation Agreement will be settled in full should the
Transaction 2 be successfully implemented.
10.1.5. The Subsidiary must raise a loan for an amount of not less than the total Purchase
Price of the CPI Property against the security of the CPI Property within 20 business
days after the fulfilment or waiver, as the case may be, of last of the conditions
precedent.
10.1.6. The Parties must, within 60 business days of the signature date, procure from the
City of Tshwane, Gauteng Department of Roads and Transport (“Gautrans”) and
Eskom, documentary evidence, in a form acceptable to the Subsidiary and Balwin,
confirming whether (a) the City of Tshwane, Gautrans or Eskom will itself be
responsible for funding and installing or procuring the installation of the bulk
engineering services for the Mooikloof Mega City development or (b) the Subsidiary
(or its nominee) will be responsible for installing or procuring the installation of the
said bulk engineering services with the City of Tshwane, Gautrans and Eskom being
responsible for funding the total cost thereof; and if it is the case that the Subsidiary
(or its nominee) will be responsible for installing or procuring the installation of the
said bulk engineering services with the City of Tshwane, Gautrans and Eskom being
responsible for funding the total cost of the respective bulk engineering service,
documentary evidence, in a form acceptable to the Subsidiary and Balwin,
confirming that the total cost of such bulk service installation is readily available in
liquid cash for drawdown by the Subsidiary or its nominee to enable the installation
thereof.
10.1.7. All conditions precedent to which Transaction 1 may be subject must be fulfilled
and/or waived within 5 (five) months of obtaining Balwin’s board approval, thereby
rendering Transaction 1 unconditional.
10.1.8. The Competition Commission and/or Competition Tribunal unconditionally (or on
conditions acceptable to the parties) approves Transaction 2, in writing, within 90
(ninety) days of obtaining Balwin’s board approval.
11. EFFECTIVE DATE OF TRANSACTION 1 AND TRANSACTION 2
11.1. The effective date of Transaction 1 will be the date on which all conditions precedent
have been fulfilled and/or waived.
11.2. The effective date of Transaction 2 will be the date on which all conditions precedent
have been fulfilled and/or waived.
3. JSE CATEGORISATION
3.1. Transaction 1 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.
3.2. Transaction 2 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
31 August 2020
Sponsor:
Investec Bank Limited
Date: 31-08-2020 12:03:00
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