10 Aug - 10 min read

Posting of circular, revised listing particulars, notice of general meeting and abridged revised listing particulars

Posting of circular, revised listing particulars, notice of general meeting and abridged revised listing particulars

FAIRVEST PROPERTY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/005011/06)
JSE share code: FVT ISIN: ZAE 000203808
(Approved as a REIT by the JSE Limited)
(“Fairvest” or the “Company”)


POSTING OF CIRCULAR, REVISED LISTING PARTICULARS AND NOTICE OF GENERAL MEETING AND ABRIDGED REVISED LISTING PARTICULARS


POSTING OF CIRCULAR, REVISED LISTING PARTICULARS AND NOTICE OF GENERAL MEETING

Shareholders are referred to previous announcements (the last of which was released on 2 August 2021) relating to the
conclusion of share swap agreements in terms of which Fairvest will acquire, after fulfilment of conditions, a majority
of B ordinary shares (“AHB shares”) in Arrowhead Properties Limited in exchange for Fairvest ordinary shares (“FVT
shares”), based on a swap ratio of 1.85 FVT shares per AHB share (the “transaction”) and the proposed internalisation
of Fairvest’s asset management function (“Fairvest Manco internalisation”),

Shareholders are advised that, on Tuesday, 10 August 2021, Fairvest has posted a circular relating to:

-     the acquisition by Fairvest of 507 778 681 AHB shares in consideration for the issue of 939 390 559 FVT shares in
      terms of the share swap agreements and approval to acquire further AHB shares and Arrowhead A ordinary shares
      (“AHA shares”) thereafter pursuant to acceptances, if any, of any mandatory offer and comparable offer triggered
      by implementation of this acquisition;
-     the conclusion of a share swap agreement with a related party;
-     the conclusion of the share purchase agreement to give effect to the Fairvest Manco internalisation, being a
      transaction with a related party;
-     an authority to increase Fairvest’s authorised share capital; and
-     an authority to issue shares in excess of 30% of the current issued share capital of the Company.

The circular incorporates a notice of general meeting for the purposes of approving the resolutions required to implement
the transaction and the Fairvest Manco Internalisation and is accompanied by revised listing particulars in respect of the
Company. Copies of the circular and revised listing particulars are available on the Company’s website at:
https://fairvest.co.za/news/notices and may be requested from investor@fairvest.co.za or the transaction sponsor, Java
Capital, at sponsor@javacapital.co.za.

A general meeting of shareholders will be held at 10:00 on Tuesday, 7 September 2021 virtually and at the offices of
the Company in the boardroom, 8th Floor, The Terraces, 34 Bree Street, Cape Town, 8001, for the purpose of
considering and, if deemed fit, passing with or without modification, the resolutions required to be approved by
shareholders in order to authorise the transaction and the Fairvest Manco internalisation, or, failing that, approve the
renewal of the asset management agreement for a period of 5 years.

In light of the regulations, directives and/or preventative measures required to be adhered to relating to the COVID-19
pandemic as published or issued by the relevant South African authorities from time to time, and the guidance from the
South African Government regarding the need for social distancing, as a result of the COVID-19 pandemic, shareholders
are encouraged to make use of the virtual meeting facility and/or proxies for purposes of voting at the general meeting.

The salient dates and times relating to the circular and the general meeting are set out below:

                                                                                                                    2021
 Record date to receive the circular and notice of general meeting                                       Friday, 30 July

 Circular and notice of general meeting issued                                                        Tuesday, 10 August

 Announcement relating to the issue of the circular and notice of general meeting                     Tuesday, 10 August
 announced on SENS and ANS
 
 Announcement relating to the issue of the circular and notice of general meeting                   Wednesday, 11 August
 published in the press

 Last day to trade in order to be eligible to participate in and vote at the general meeting          Tuesday, 24 August

 Voting record date                                                                                    Friday, 27 August

 Expected date of receipt of approval of the transaction from the Competition                        Friday, 3 September
 Authorities

 Last day to lodge forms of proxy for the general meeting with the transfer secretaries,             Friday, 3 September
 by 10:00 (forms of proxy not lodged with the transfer secretaries in time may be handed
 to the chairperson of the general meeting immediately before the commencement
 thereof)

 General meeting at 10:00                                                                           Tuesday, 7 September

 Results of the general meeting announced on SENS and ANS on or before                              Tuesday, 7 September

 Results of the general meeting published in the press on or before                               Wednesday, 8 September

Notes:
1. All dates and times in this circular are local dates and times in South Africa and are subject to change. Any changes
   will be announced on SENS and ANS and published in the press.
2. Shareholders are referred to the circular for information on the action required to be taken by them.
3. Shareholders should note that as transactions in shares are settled in the electronic settlement system used by Strate,
   settlement of trades takes place three business days after such trades. Therefore, shareholders who acquire FVT
   shares after close of trade on Tuesday, 24 August 2021 will not be eligible to vote at the general meeting.
4. No dematerialisation and rematerialisation of FVT shares may take place between Wednesday, 25 August 2021 and
   Friday, 27 August 2021, both days inclusive.

ABRIDGED REVISED LISTING PARTICULARS

The revised listing particulars which accompany the circular are issued in compliance with the JSE Listings
Requirements for the purpose of providing information with regard to Fairvest and are not an offer or invitation to
subscribe for shares in Fairvest.

Fairvest invests primarily in retail assets weighted toward non-metropolitan and rural shopping centres, as well as
convenience and community shopping centres servicing the lower LSM market, in high-growth nodes, close to
commuter networks. Fairvest maintains a predominately retail portfolio across South Africa, with the four largest
provinces, Gauteng, KwaZulu-Natal, Western Cape and Free State contributing 77% of the revenue. The properties are
predominately blue-chip tenanted, grocery-anchored shopping centres. The high national tenant component of 72% of
the portfolio provides shareholders with a low-risk investment profile with national food retailers occupying 35.3% of
the portfolio in terms of GLA. Yield accretive acquisitions remain part of Fairvest’s strategy with a focus on quality
retail assets with sustainable income streams in order to extract maximum value, whilst disposals are in line with the
Company’s focus on value extraction and maintaining a focus on retail assets in favour of non-metropolitan areas and
the lower LSM market.

During May 2021, Fairvest concluded the share swap agreements in order to acquire, on implementation after fulfilment
of conditions, an aggregate of 507 778 681 AHB shares in exchange for 939 390 559 FVT shares.

Fairvest’s views are that:

-     investors in the listed property sector generally favour larger REITs in which their investment is liquid;

-     while investors understand the numerous hurdles that must be overcome to be able to achieve any merger, they
      welcome initiatives aimed at achieving consolidation between REITs;

-     investors have expressed confidence in Fairvest to unlock value both operationally and through capital allocation
      within its traditional low-income retail focus as well as from other sub-classes of investment property;
-     in a market with limited access to growth capital, Fairvest should seek opportunities to grow through M&A
      activity, even if doing so may, for a period, result in Fairvest being invested in non-core assets; and

-     if Fairvest is proposing to issue more shares pursuant to M&A activity, it should seek shareholder approval to
      internalise its asset management, with investors expecting that an internally managed Fairvest will be well-
      positioned to drive value-adding cost efficiencies both internally and through M&A activity.

Fairvest’s intentions regarding Arrowhead are supported by the AHB shareholders who have concluded the share swap
agreements with Fairvest in terms of which Fairvest proposes to acquire, in aggregate, a majority of the Arrowhead
shares in issue.

Fairvest is continuing to engage constructively with Arrowhead regarding the possibility of proposing a single-step
merger subject to shareholder approval for both companies. Subject to final agreement on the implementation of a single-
step merger, Fairvest expects to work together with Arrowhead on the appropriate processes to obtain the required
approvals. As the process to achieve a single-step merger will only be completed after the general meeting to approve
the transaction, Fairvest is proceeding to seek shareholder approval for the required resolutions, on the basis that Fairvest
will only implement the transaction if a single-step merger can not be timeously achieved for any reason.

If a single-step merger is not achieved, then on implementation of the share swap agreements, Fairvest will become the
controlling shareholder of Arrowhead, whereafter Fairvest will become obliged to make a mandatory offer and
comparable offer to Arrowhead shareholders. Any acceptances of these offers would result in Fairvest acquiring further
AHB shares and/or AHA ordinary shares (up to a theoretical maximum of all such shares in issue) in exchange for FVT
shares.

Fairvest owns 43 investment properties. As at 31 December 2020, the property portfolio was valued at R3.43 billion,
with a GLA of 250 911m2. The portfolio is predominantly focused in the retail sector (95%), with selective exposure to
office properties (5%). Fairvest is well diversified across the main provinces of South Africa, with a regional income
split of KwaZulu-Natal (22%), Western Cape (20%), Gauteng (24%), Free State (11%), Northern Cape (7%), Limpopo (4%), 
Eastern Cape (10%) and Mpumalanga (2%) as at 30 June 2020.

The asset management function of the Fairvest portfolio is outsourced to New Star Asset Management Proprietary
Limited pursuant to the asset management agreement. Fairvest’s proposal to internalise its asset management function
through the acquisition of 100% of the issued share capital of the asset manager or, in the alternative, the renewal of the
asset management agreement, is detailed in the circular.

The lasting impact of the COVID-19 pandemic on the local economy remains uncertain. While the vaccine rollout in
South Africa is slow to gain traction, the Company expects the infection waves to continue, with trading restrictions for
certain tenants a possibility. Fairvest is well positioned to remain resilient during the COVID-19 pandemic. The focus
remains on maintaining viable tenancies and letting of vacancies, with a strong focus to reduce arrears even further.

Even though the Company expects consumer spending to be under pressure with a level of uncertainty regarding the
vaccine rollout, given Fairvest’s performance for the six months ended 31 December 2021, the Fairvest Board expects
the distribution per share for the full 2021 financial year to be between 0% and 2% higher than the previous year. This
assumes no material deterioration in the macroeconomic environment relative to current levels, that no major corporate
and tenant failures will occur, that tenants will be able to absorb increases in municipal and utility costs, that no further
significant trading restrictions are implemented by government and no further pandemic outbreaks similar to
COVID-19. This forecast is the responsibility of the board of directors of Fairvest and has not been reviewed or reported
on by the auditors.

Recent civil unrest impacted on twelve properties in Fairvest’s portfolio, in KwaZulu-Natal and Gauteng. The extent of
the damage to these properties is still being assessed, but is mainly limited to shop fronts, roller shutter doors, fixtures
and fittings. Fairvest has deployed additional security measures at all its properties and is closely monitoring them. All
other assets across the country are expected to remain open and to operate normally. Fairvest has insurance in place for
losses and damage, and most of the Company’s tenants have similar cover in place. Loss of rental and security costs
relating to imminent danger are also insured.

The share capital of Fairvest currently comprises authorised FVT shares of 3 000 000 000 and issued FVT shares of
1 027 332 675. On the implementation of the share swap agreements and the increase in Fairvest’s authorised share
capital, the authorised share capital of Fairvest shall comprise 6 000 000 000 FVT shares, with issued share capital of
1 966 723 234 FVT shares. After implementation of the share swap agreements, Fairvest will be obliged to make the
offers to Arrowhead shareholders. On the theoretical assumption that the offers are then accepted by all Arrowhead
shareholders, the issued share capital of Fairvest will comprise 3 126 239 836 FVT shares.

Set out below are the names and designation of the Fairvest directors.

 Director and designation                                  Business address
 Jacques du Toit (Non-Executive Chairman_                  46 Orange Street, Gardens, Cape Town, 8001
 Darren Wilder (Chief Executive Officer)                   8th Floor, The Terraces, 34 Bree Street, Cape Town, 8001
 Jacques Kriel (Chief Financial Officer)                   8th Floor, The Terraces, 34 Bree Street, Cape Town, 8001
 Adam Marcus (Alternate Director to Darren Wilder)         8th Floor, The Terraces, 34 Bree Street, Cape Town, 8001
 Louis Andrag (Lead Independent Non-Executive Director)    Edward 2 Building, Edward Street, Bellville, Cape Town, 7530
 Khegu Nkuna (Independent Non-Executive Director)          41 West Street, Houghton Estate, Johannesburg 7490
 Ndabezinhle Mkhize (Independent Non-Executive Director)   EPPF Office Park, 24 Georgian Crescent East, Bryanston East,
                                                           Johannesburg, 2191
 Jacob Wiese (Independent Non-Executive Director)          36 Stellenberg Road, Parow Industria, Cape Town, 7490
 Trevor Cohen (Independent Non-Executive Director)         4 Bernsbury Complex, St. Johns Road, Saint Andrews,
                                                           Bedfordview, Johannesburg, 2008

There will be no change to the board of directors of Fairvest pursuant to the transaction or the Fairvest Manco internalisation.

10 August 2021


Corporate advisor and transaction sponsor to Fairvest
Java Capital

Legal advisor to Fairvest
Werksmans

Sponsor to Fairvest
PSG Capital

Date: 10-08-2021 03:00:00
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