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Related party acquisition of a 50% undivided share in Mamelodi Square
Exemplar REITail Limited
(Incorporated in the Republic of South Africa)
(Registration number 2018/022591/06)
Approved as a REIT by the JSE
JSE share code: EXP ISIN: ZAE000257549
LEI: 3789000558287E37F130
("Exemplar" or "the Company")
RELATED PARTY ACQUISITION OF A 50% UNDIVIDED SHARE IN MAMELODI SQUARE
1. INTRODUCTION AND RATIONALE
Shareholders are advised that Exemplar has concluded a sale and purchase agreement to acquire a 50% undivided
share in Erf 41319, Mamelodi Extension 35 Township, Registration Division J.R., Province of Gauteng (the
"Property"), as well as the assets and liabilities attached to the undivided share (collectively, the "Target
Enterprise") from McCormick Property Development Proprietary Limited ("MPD") with effect from
1 November 2022 (the "Acquisition"). The ultimate beneficial owner of MPD is the John McCormick Family
Trust. The Acquisition is subject to the fulfilment of the conditions precedent detailed in paragraph 2 below.
The shopping centre known as Mamelodi Square is constructed on the Property. Mamelodi Square is a 16 533m2
retail centre located in Tshwane, Gauteng which opened for trading in October 2022.
The Acquisition is in line with Exemplar's strategy to acquire high quality assets from MPD, which assets have
fundamentals consistent with the existing Exemplar property portfolio.
2. TERMS OF THE ACQUISITION
2.1. Purchase consideration
The consideration payable for the Target Enterprise is R116 500 000, which shall be paid to MPD in cash
on the unconditional date, being the date of fulfilment of the last of the conditions precedent, as detailed
below.
2.2. Conditions precedent
The Acquisition is subject to the fulfilment of the following conditions precedent by 30 April 2023:
- all approvals required in terms of the Competition Act to enable the Acquisition are granted without
conditions or are granted subject to such conditions which Exemplar and MPD agree are acceptable
to them; and
- all approvals required by the JSE Limited to enable the Acquisition are granted.
The conditions precedent may not be waived, but the date for fulfilment thereof may be extended by way
of agreement between Exemplar and MPD.
2.3. Other material terms
MPD has guaranteed 100% of the net income of the Target Enterprise on which the valuation is based for
a period of two years, from 1 November 2022.
The agreement in respect of the Acquisition contains warranties which are normal for a transaction of this
nature.
3. PROPERTY SPECIFIC INFORMATION
Weighted Purchase Value attributed to
average consideration the entire
basic rental for the Target enterprise as at 31
Property Geographical GLA per m2 Enterprise October 2022
name location Sector (m2) (R/m2) (R) (R)
Mamelodi Tshwane, Retail 16 533 R145.98 R116 500 000 R233 000 000
Square Gauteng
The valuation of the Property has been carried out by Quadrant Properties Proprietary Limited as at 31 October
2022. Quadrant Properties is an external valuer as defined in section 13 of the JSE Listings Requirements.
The purchase price payable for the Target Enterprise is considered to be its fair market value, as determined by
the directors of the Company. The directors of the Company are not independent and are not registered as
professional valuers or as professional associate valuers in terms of the Property Valuers Profession Act, No.47
of 2000.
4. FINANCIAL INFORMATION
Set out below are the forecast revenue, operational net income, net profit after tax and earnings available for
distribution relating to the Target Enterprise (the "Forecast") for the 12 months ending 29 February 2024 and the
12 months ending 28 February 2025 (the "Forecast Period").
The Forecast has been prepared on the assumption that the Acquisition was implemented on 1 March 2023 and
on the basis that the forecast includes forecast results for the duration of the Forecast Period.
The Forecast, including the assumptions on which it is based and the financial information from which it has been
prepared, is the responsibility of the directors of the Company. The Forecast has not been reviewed or reported
on by independent reporting accountants.
The Forecast presented in the table below has been prepared in accordance with the Company's accounting
policies, which are in compliance with International Financial Reporting Standards.
Forecast for the 12 months Forecast for the 12 months
ending 29 February 2024 ending 28 February 2025
Rand Rand
Rental and recovery income 19 911 574 21 107 974
Net property income 9 719 046 11 073 235
Net after tax profit 9 719 046 11 073 235
Total comprehensive (loss)/profit for the
period (1 018 759) 335 430
Profit available for distribution (cps) (0.31) 0.10
The forecast incorporates the following material assumptions in respect of revenue and expenses:
1. The forecast is based on information derived from the management accounts, budgets, and rental contracts
provided by MPD.
2. Rental income is derived from the forecasts provided to the Company by MPD.
3. Net property income excludes the effects of straight lining rental income.
4. Total comprehensive profit includes the effects of finance costs.
5. Contracted revenue is based on existing lease agreements including stipulated increases, all of which are
valid and enforceable.
6. 100% of rental income is contracted. No near contracted rental income is forecast.
7. Property operating expenditure has been forecast by the property manager on a line-by-line basis based on
management's review of historical expenditure, where available, and discussion with the property manager.
8. No fair value adjustment is recognised.
9. There will be no unforeseen economic factors that will affect the lessees' ability to meet their commitments
in terms of existing lease agreements.
5. RELATED PARTY TRANSACTION
In terms of section 10 of the JSE Listings Requirements, the acquisition constitutes a small related party
transaction as MPD is a material shareholder of Exemplar, and John McCormick and Jason McCormick are
directors of both MPD and Exemplar. Accordingly, Exemplar is required to obtain a fairness opinion from an
independent expert in this regard.
A further announcement will be released following the finalisation of the independent expert's opinion.
9 March 2023
Sponsor
Java Capital
Date: 09-03-2023 10:00:00
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