Castleview Property Fund Limited (JSE: CVW) revealed its plans to divest the Makhaza Shopping Centre located in Khayelitsha, Cape Town. The property will be sold to Mirlem IP Proprietary Limited, a related party whose ultimate beneficial owners are Wilhelmus Loubser and Paul Munday. The transaction, subject to certain conditions, signifies Castleview’s strategic move to optimize shareholder returns and explore new investment opportunities.
The Makhaza Shopping Centre, an expansive retail space spanning 8,794 square meters, has been an integral part of Castleview’s portfolio in the Western Cape Province. Recognizing the potential to generate greater returns by reallocating resources, Castleview aims to utilize the proceeds from the sale to pursue higher-yielding ventures.
The purchase consideration for the Business, including the Property, amounts to R140 million, with the payment set to be made in cash upon the transfer of the Property to the Purchaser. The completion of the transaction hinges on fulfilling specific conditions precedent, such as obtaining requisite board, shareholder, and bank approvals within specified timelines. Additionally, the approval of the Competition Commission, if applicable, is also required.
The sale agreement encompasses standard warranties customary for such transactions, providing a comprehensive framework for the transfer of the Property and associated assets and liabilities. Castleview’s subsidiary, the Seller, will meticulously prepare an adjustment account to accurately reflect various financial aspects of the Business and the Property as of the Date of Transfer. This account will consider rentals, municipal fees, levies, tenant deposits, and other relevant expenses incurred prior to and after the transfer.
An independent property valuation conducted by Spectrum Valuations and Asset Solutions Proprietary Limited as of March 31, 2023, determined the fair market value of the Property. The purchase price negotiated by Castleview’s directors aligns with this valuation, ensuring a fair transaction. However, it is worth noting that the directors of Castleview are not independent professionals registered as valuers.
During the 13-month financial year ending on March 31, 2023, the Business reported a net profit after tax of R12.63 million in Castleview’s consolidated statement of comprehensive income.
Due to the common beneficial ownership between Mirlem’s ultimate owners and I Group Investments Proprietary Limited, a significant shareholder of Castleview, the transaction is classified as a related party transaction. Nevertheless, as the transaction size is considered modest relative to Castleview’s market capitalization, it does not necessitate shareholder approval and only requires public disclosure.
