Famous Brands to buy its Midrand head office properties for R181m

JSE-listed restaurant franchisor Famous Brands is set to acquire Steers Properties and Halamandaris Property as it pursues expansion plans in Midrand that align with its supply chain objectives.

In a Sens statement issued on Tuesday, the company noted that Midrand remains the most suitable centre of gravity for its Gauteng logistics operation and that it has developed a plan to expand its head office at 478 James Crescent, which it has leased from Steers Properties since 1990.

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Its current lease agreement, dated 1 October 2019, involves monthly rental payments of about R1.8 million (excluding value-added tax) and will be terminated in 2024.

“As a result of spatial capacity constraints, a plan has been developed which requires expansion and reconfiguration of the 478 James Crescent Property to better align with the company’s supply chain plans and activities,” it adds.

Famous Brands says it is best placed to redevelop the property on which its primary operations and head office is located, together with the Halamandaris property situated on 37 Richard Drive and a neighbouring property it owns to create a better functioning, fit-for-purpose campus.

‘Prudent move’

Senior equity analyst at Sasfin Bank Alec Abraham says he believes the acquisition of the properties is a prudent move considering the importance of the campus in the group’s supply chain strategy and because it could derisk the group in terms of future rental escalations on the strategy site.

The transaction is valued at R181 million, with R166 million going towards Steers Properties’s shares and claims and R15 million towards Halamandaris Property’s shares and claims.

It notes that the purchase price will be settled from its existing cash resources and that on the implementation date of the transaction, both Steers Properties and Halamandaris Property will have no liabilities.

Wayne McCurrie, economist and portfolio manager at Ashburton Investments, says the Gauteng logistics campus could achieve significant results, but only if the company establishes a highly functional centre.

“But the big reason I believe they made the announcement is because they want to make clear that they are buying from people who are part of the company,” he adds.

Transaction

Famous Brands noted that the transaction is deemed a small-related party transaction in terms of JSE Listings Requirements because its proposed transaction with Halamandaris Property involves its associate directors.

This includes John Halamandres, one of the sellers of Halamandaris Property and a non-executive director and shareholder of Famous Brands, as well as Panagiotis Halamandaris, Periklis Halamandaris and Theofanis Halamandaris who are also Famous Brands shareholders and associates to Nicolaos Halamandaris, a non-executive director of Famous Brands.

“Accordingly, the board of directors of the company is required to provide the JSE with written confirmation from an independent professional expert confirming that the terms of the transactions are fair insofar as the shareholders are concerned,” the company adds.

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It says a positive fairness opinion is one of the conditions attached to the transactions and has since appointed BDO Corporate Finance as an independent expert to provide the opinion.

The transaction is subject to certain suspensive conditions, including approvals from the relevant regulatory authorities such as the Competition Commission, and due diligence being completed to reasonable satisfaction.

“The effective date of the transaction will be dependent on the fulfilment of the suspensive conditions to the transaction.”

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Nondumiso Lehutso is a Moneyweb intern.