08:30 Wed 24 Jul 2019
Grit Real Estate Inc - Acquisition of Club Med hotel & resort in Senegal
(Registered by continuation in the (Registration number: C128881 C1/GBL) SEM share code: DEL.N0000 JSE share code: GTR LSE share code: GR1T ISIN: MU0473N00036 ("Grit" or the "Company" or the "Group") |
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ACQUISITION OF CLUB MED CAP SKIRRING HOTEL IN
Shareholders are advised that on
Under the terms of the Agreement, the Company will acquire 100% of the shares in SIGHC (the "Shares"), the owner of the property known as Club Med Cap Skirring, a 4-trident hotel situated at the Club Med resort at Vacap Cap Skirring B.P 46 SN, Kabrousse 27009,
Under the terms of the Agreement, Club Med, acting on behalf of SIGHC, will renovate part of the hotel and expand it at a development cost of
RATIONALE FOR THE ACQUISITION
Club Med is an operator of over 70 all-inclusive resort villages in holiday locations in 26 countries across five continents and has successfully been operating Club Med Skirring in
Grit will enter into a strategic relationship through this sale and leaseback, and will target to provide further real estate solutions to Club Med across the other African jurisdictions that it operates in. The addition of Club Med as a tenant consolidates the existing list of strong hotel counterparties that the Company works with in the hospitality sector.
Through the long-term triple net lease underpinned by a new hard currency Euro lease and parent company guarantee, Grit will take no direct hospitality operating risk.
The Acquisition is expected to enable Grit to enter, in a targeted manner, the property market of the
Through Grit's financing under the development programme, Club Med will expand the operations of the hotel and employ an additional 70 permanent staff members in addition to its 250 current employees. Post completion of this Acquisition, Club Med is expected to operate an additional flight from
"We are pleased to be acquiring the Club Med Cap Skirring, a 4-trident hotel and resort village in the
The property is being acquired at an attractive yield and will be on let on a new long term 12-year lease to a strong tenant covenant. Club Med adds further high-quality tenant diversification to Grit's current list of robust hotel operators. I look forward to working with them to deliver a real estate solution across the African jurisdictions in which it operates, creating further value for Club Med and for Grit's shareholders."
PURCHASE CONSIDERATION
The Provisional Purchase Consideration of
The Provisional Purchase Consideration was determined with reference to the pro forma balance sheet and the related profit and loss accounts of SIGHC as at
After the Completion Date (as defined below), the final balance sheet and profit and loss statements of SIGHC ("Final Accounts") will be used to determine the final purchase consideration ("Final Purchase Consideration").
Provided that the Final Purchase Consideration plus the settlement of the Intergroup loans shall not exceed
CONDITIONS PRECEDENT
The remaining conditions precedent ("Conditions Precedent"), including items needing to be addressed based on the findings of the due diligence, and items that are required to be provided as final verification for completion of the transaction are as follows:
· the Purchaser securing a firm offer for bank funding, from one of several top ranking banks;
· the Seller providing the Purchaser with further documentary evidence that the Property is free of any charge, mortgage or encumbrances and that SIGHC is the rightful owner of the Property;
· the Seller providing the Purchaser with documentary evidence of the lawful erection and occupation of the constructions located on (or close to) the waterfront, which are included in the Property;
· the Seller providing the Purchaser with:
o Documentary evidence of the wire transfers of funds made available by the Seller to the Company under the Intra-Group Loan,
o Written confirmation by the bank holding SIGHC's bank accounts that, following the assignment of the Intra-Group Loan, the bank will transfer any reimbursements under the Intra -Group Loan to the Purchaser;
· Société de
The Conditions Precedent must be fulfilled (or waived) by no later than
COMPLETION DATE OF THE ACQUISITION
The completion date of the Acquisition will be the date on which ownership of the Shares is effectively transferred by the Seller to the Purchaser, which is expected to occur no later than
REPRESENTATIONS AND WARRANTIES
The Agreement contains representations and warranties by the Seller in favour of the Company which are standard for a transaction of this nature.
OTHER SIGNIFICANT TERMS
On completion of the Acquisition, a new lease agreement ("New Lease Agreement") will be signed, providing for annual rental of
The Seller will provide SIGHC with a rental guarantee for the duration of the lease to secure the performance by SOGETOC of its payment under the new lease agreement, capped at an amount equal to three years rent payable by SOGETOC to SIGHC, excluding tax.
CLUB MED (or its affiliate, acting as Owner's Agent), on behalf of SIGHC (acting as owner of the Property and client) shall execute a renovation and development programme to the Property. The works are to be financed and owned by Grit (through its by then 100% subsidiary, SIGHC) up to
THE PROPERTY
Details of the Property are as follows:
Property |
Geographical Location |
Sector |
Gross Lettable Area |
Weighted Average Gross Rental / m2/ month |
Club Med Cap Skirring, situated at Vacap Cap Skirring B.P 46 SN, Kabrousse 27009,
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Hospitality |
16,462 |
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Details regarding the Property, as at the anticipated Completion Date, are set out below:
Purchase Yield Attributable to Shareholders |
Weighted Average Annual Escalation |
Weighted Average Lease Duration (years) |
Vacancy % by Gross Lettable Area |
8%
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1% |
12 years |
0% |
Notes:
a) In addition to the Purchase Consideration, the costs associated with the Acquisition are estimated at
b) The Purchase Consideration payable in respect of the Rental Enterprise (which includes the Property) 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. Preliminary independent valuations obtained support the directors appraisals.
FINANCIAL INFORMATION OF THE ACQUISITION
The audited annual financial statements of SIGHC for the year ended
a) The value of the net assets comprising the Rental Enterprise was CFA 1,419,399,330 (EUR 2,163,860 ).
b) The audited profits after tax attributable to the Rental Enterprise for the year ended
Exchange rate: EUR 1: CFA 655.96.
On completion of the Acquisition, the annual rent payable will rise to
CLASSIFICATION OF THE ACQUISITION
The Acquisition constitutes a category 2 transaction in terms of the JSE Limited Listings Requirements.
The Acquisition constitutes an undertaking in the ordinary course of business of Grit and therefore does not fall under the scope of Chapter 13 of the SEM Listing Rules or under any of the LSE reporting requirements.
By order of the Board
FOR FURTHER INFORMATION PLEASE CONTACT:
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+230 269 7090 |
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+44 779 512 3402 |
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+27 82 480 4541 |
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Maitland/AMO - Communications Adviser |
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+44 20 7379 5151 |
Vikki Kosmalska |
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finnCap Ltd - |
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+44 20 7220 5000 |
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+44 20 3772 4697 |
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+44 20 3772 4698 |
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Shamin A. Sookia |
+230 402 0894 |
Kesaven Moothoosamy |
+230 402 0898 |
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+27 21 887 9602 |
The Company's LEI is: 21380084LCGHJRS8CN05
NOTES:
The Company is committed to delivering strong and sustainable income for shareholders, with the potential for income and capital growth. The Company is targeting an annual dividend yield in US$ of 8%+ and a net total shareholder return inclusive of net asset value growth of 12.0%+ per annum.*
The Company currently holds primary listings on both the Main Market of the
Further information on the Company is available at http://grit.group/
*These are targets only and are not a profit forecast, there can be no assurance that they will be met.
Directors:
(* Executive Director) (+ independent Non-Executive Director)
Company secretary:
Registered address: c/o
Transfer secretary (
Registrar and transfer agent (
Corporate advisor and JSE sponsor: PSG Capital Proprietary Limited
Sponsoring Broker:
SEM authorised representative and sponsor:
This notice is issued pursuant to the LSE Listing Rules, JSE Listings Requirements, SEM Listing Rule 11.3 and the Mauritian Securities Act 2005.
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