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Die Direksie van Nova Property Group Holdings Beperk en Nova Property Group Beleggings Eiendoms Beperk

Connie Myburgh, Dominique Haese, Dirk Koekemoer, Rudi Badenhorst

en die Ontvangers van die Groep filiaalmaatskappye

Hans Klopper, Dawie van der Merwe en Connie Myburgh

doen as volg verslag.

Geagte Skuldbriefhouers en nuut gevestigde Aandeelhouers

1.      Die einde van die 1ste jaar na die sanksionering van die Reëlingskemas is in sig en ons wil u bedank dat u die Nova Groep Direksie in die suksesvolle implimentering daarvan ondersteun. Gedurende hierdie eerste jaar is  verskeie belangrike mylpale reeds deur die Raad bereik en ons is opgewonde om die vernaamste hiervan met u te deel.

2.      Alle Aandeelsertifikate van die Historiese Beleggers wat die keuse uitge-oefen het om aandeelhouers van Nova Property Group Holdings Beperk te word sal vanaf 14 Desember 2012 op die Frontier Asset Management and Investments (Pty) Beperk (“Frontier”) webtuiste gepubliseer word en Aandeelhouers sal per sms en/of e-pos kommunikasie ingelig word oor hoe Aandeelhouers afskrifte hiervan kan bekom.

3.      Afskrifte van die Aandeelsertifikate sal gedurende Januarie 2013 aan alle Aandeelhouers gepos word.  Soos reeds voorheen berig met betrekking tot Skuldbriefsertifikate van Skuldbriefhouers sal dieselfde beginsels ten opsigte van Aandeelsertifikate geld, naamlik dat Aandeelsertifikate ook elektronies op die Frontier  webtuiste beskikbaar sal wees en dat Aandeelhouers toegang daartoe sal kan verkry deur die betrokke instruksie op die webtuiste te volg  en soos elke Skuldbriefhouer per sms en/of per  e-pos deur Frontier ingelig sal word.

4.      Die Nova Groep was baie trots om aan te kondig dat dit uiters suksesvol was om eerste fase eksterne befondsing vanaf finansiële instellings te kon bekom vir die opgradering en ander waardetoevoegingsuitbreidings van bestaande eiendomme en vir verdere eiendomaanskaffings binne die Groep.  Hierdie suksesse is meer loofwaardig in ag genome die buitengewoon gunstige finasieringsvoorwaardes wat beding kon word in ag genome en die algemene stand van die ekonomie en die omgewing en die geskiedenis waaruit die die Nova Groep ontstaan het wat moontlik teen die verkryging van dié voordelige befondsing binne ‘n kort tydjie na die herstruktureringsproses kon getel het.

5.      Die Nova Groep kon met trots in die Julie 2012 omsendskrywe, spesifiek aan die Centurion Hazel verwante Skuldbriefhouers, aankondig dat ‘n baie voordelige verkooptransaksie van Centurion Hazel beding kon word ná onafhanklike korporatiewe finansiële en verwante advies hieromtrent ingewin was.  Weens die leegstaanfaktor wat kantoorruimtes landswyd knel, was Centurion Hazel vir die afgelope ongeveer 12 maande nie in staat om opbrengste aan beleggers te lewer nie.  Hazel verwante Skuldbriefhouers is ook ingelig dat hulle hul volle historiese beleggingsbedrag (volle sindikasiebedrag) gedurende Januarie 2014 sal  terugontvang soos voorsiening voor gemaak word in die Skema dokumentasie.  Geskoei op verdere advies het die Raad ook bepaal dat ‘n huidig geprojekteerde inkomste van 4% per jaar, gebaseer op die volle kapitaal wat histories belê is (volle sindikasiebedrag) maandeliks aan Hazel verwante Skuldbriefhouers met ingang van 1 Julie 2012 betaal kon word vir betaling aan Skuldbriefhouers aan die einde van Julie 2012 en dié betaling word tans maandeliks so gedoen.  

6.      Dit is ook vir die Direksie aangenaam om in ‘n posisie te wees waar dit, na baie maande se onderhandelinge, positiewe nuus aan Rivonia  verwante Skuldbriefhouers  kan meedeel in die sin dat die Direksie ook ‘n gunstige verkoop van die Rivonia Square eiendom kon beding,  na onafhanklike korporatiewe finansiële en verwante advies hieromtrent ingewin was.  Gedurende die afgelope jaar was verskeie herontwikkeling konsepte sonder sukses oorweeg in ‘n poging om weer lewe in dié sentrum te blaas.  Die herontwikkelingskoste was ook nie regverdigbaar nie. Weens die feit dat dié winkelsentrum in die huidige marktoestande nie suksesvol was nie, het die ankerhuurder, Pick ‘n Pay, dit ook oorweeg om hulle deure te sluit.  Dit het vir die Direksie duidelik geword dat die eiendom nie suksesvol as ‘n histories ontwerpte inkopiesentrum/ kantoorblok kan fungeer nie en nie met die fasiliteite wat tans in die onmiddelike geografiese omgewingbeskikbaar is, kon meeding nie.  Die Direksie het ook intensief alternatiewe aanwendinge van die eiendom ondersoek met dieselfde resultaat en het tot die gevolgtrekking gekom dat die verkoop van die eindom teen die bes moontlike prys onder die huidige marktoestande, die beste oplossing was.

7.      Openbaarmaking van verkooppryse van eiendomme en/of betrokke kopers sal gedoen word slegs soos vereis vir Finansiële State doeleindes en enige ander amptelike openbaarmakingsvereistes.

8.      Die Nova Groep is van voornemes om die opbrengs van enige verkope van sulke eiendom op so ‘n manier te belê dat die bes moontlike en voordeligste geprojekteerde beleggingsopbrengs, en daarom ook die beleggingsterugbetaling aan Skuldbriefhouers,  deur die Groep verkry kan word, tot  die beste belange van die nuut gevestigde Aandeelhouers en die Skuldbriefhouers van die Groep.

9.      Die Reëlingskemastrukture wat die na-herstruktureerde regte van die Historiese Beleggers beheer maak nie voorsiening daarvoor om betaling van geprojekteerde beleggings terugbetalings aan Skuldbriefhouers te doen vroeër as wat  in die betrokke Skemas gespesifiseer is nie. Op hierdie tydstip word ‘n vroeë uitbetaling  met betrekking tot Rivonia nie voorsien nie, aangesien dit vir die Direksie blyk dat die maksimum tydperk soos aangdui in die betrokke Skema benodig sal word om die huidige batewaarde te laat toeneem tot ‘n waarde om en by die historiese sindikasiebedrag in die beste belange van die Rivonia verwante Skuldbriefhouers en die Aandeelhouers wat verkies het om aandeelhouers in die Nova Groep te word eerder as om Rivonia verwante Skuldbriefhouers te bly.

10.    Weens die redes soos genoem in 6 hierbo, kon Rivonia Square oor die afgelope ongeveer 2 jaar nie ‘n stabiele inkomste aan Historiese Beleggers lewer nie.   Na verdere adviesneming is dit vir die Direksie ook aangenaam om verdere positiewe nuus aan Rivonia verwante Skuldbriefhouers te kan meedeel.  Die Direksie het beding dat daar met ingang van middel Oktober 2012 ‘n huidig geprojekteerde opbrengs van 3% per jaar, gebaseer op die volle kapitaal wat histories in die eiendom belê is (sindikasie waarde) en wat gelykgestel kan word aan ‘n 7,04% opbengs op die billike markwaarde van die Rivonia Square eiendom by tye van die verkoop daarvan, aan Rivonia verwante Skuldbriefhouers betaal kon word.  ‘n Eerste pro rata betaling aan Rivonia verwante Skuldbriefhouers is reeds aan die einde van Oktober 2012 gemaak.  Aan die einde van November 2012 is verdere  betalings, gebaseer op dieselfde persentasies, gemaak.

11.    Die Direksie is verder ook bly om te kan aankondig dat alle Tarentaal verwante Skuldbriefhouers wie se geprojekteerde historiese beleggings terugbetaalbaar is teen 20 Januarie 2013, volgens huidige projeksies, hulle volle histories beleggingskapitaal (volle sindikasiewaarde) op 20 Januarie 2013 sal terugontvang. Tarentaal verwante Skuldbriefhouers sal deur middel van ‘n aparte skrywe in die verband, wat volgens beplanning voor die einde van die jaar uitgestuur sal word, oor die kapitaal terugbetalingsproses ingelig word.

12.    Soos reeds voorheen berig is die proses om verskeie van die huidige inkopiesentrum eiendomme in die geherstruktureerde Groep op te gradeer goed op dreef is met die meeste van die herontwikkelingsplanne wat reeds gefinaliseer is. Dié opgradering sal oor die volgende paar jaar voortduur. Die terreinontwikkelingsplanne vir 6 van die eiendomme is reeds voltooi en die planne is ook alreeds by die betrokke Rade ingedien vir goedkeuring.  Daar word verwag dat dié nodige goedkeuring teen vroeg 2013 verkry sal word.  Die konstruksiewerk by die betrokke eiendomme sal ná goedkeuring ontvang is in aanvang neem.  Ander herontwikkelings en opgraderings vind vinniger plaas as die beplande skedulering.  Voorbeelde hiervan is die bou van die Nandos deurrit by die Witbank Inkopiesentrum en  die uitbreiding van die huidige Checkers Hyper met 540m² asook die opgradering van die totale parkeerterrien by die sentrum.  ‘n Ander voorbeeld is The Village Inkopiesentrum in Nelspruit waar die eerste fase van die opgradering reeds voltooi is.  Meer inligting oor individuele geboue se opgraderings sal in latere skrywes verskaf word.

13.    Flora Sentrum is een van die Groep se vlagskip eiendomme wat deur ‘n lang proses van opgradering gekom het en wat ook die tydperk van die Registrateur van Banke se uitreiking en terugtrekking van direktiewe, deurleef het.  Gedurende hierdie laaste twee jaar waar daar tydens konstruksiewerk en onder moeilike omstandighede handel gedryf is, het die vorige Direksie en die Nova Direksie onder moeilike omstandighede daarin geslaag om die voortgesette bankbefondsing vanaf ‘n Handelsbank te verseker ten einde voort te kon gaan met die konstruksie waar fase 1 van die beplande totale opgradering nou in die finale afhandelingsstadium is.  Ten spyte van hierdie uitdagings het Pick ‘n Pay, die ankerhuurder, sy eie winkelopgradering gdurende November 2012 teen ‘n koste van R13 miljoen voltooi.  Hierdie opgradering was ‘n kritiese deel van Flora Sentrum se suksesvolle opgradering.  Volgens verwagting sal die optimale huurdersamestelling verkry word om sodoende al die huidige vakante kleinhandelruimtes gedurende vroeg 2013  te beset.  Verdere opdaterings sal op die Frontier webtuiste beskikbaar wees.

14.    Die Direksie bring u ook op datum met betrekking tot Liberty Mall in Welkom.  Die vorige ankerhuurder, Edgars, het ontrek uit die sentrum weens die nuwe  Goldfields Mall wat in Welkom geopen het.  Dit het groot leegstaan oppervlaktes in Liberty Mall tot gevolg gehad.   Na vele maande se onderhandelings het die Direksie die verbintenis in die vorm van briewe van voorneme vanaf twee nasionale huurders, een ‘n 2 500m² voedsel huurder en die ander ‘n  2 500m² mode afdelingswinkel huurder. Daar word voorsien dat die huurooreenkomste teen einde Februarie 2013 gefinaliseer sal wees.  Deur hierdie twee huurders te plaas behoort die res van die vakante oppervlaktes gedurende 2013 gevul te word.          

15.    Die Groep se residensiële ontwikkelings (Groeiplan projekte) word ook tans geprioritiseer ten einde, sovêr as marktoestande dit toelaat, te verseker dat die tydslyne geprojekteer in die Groeiplan Skema, nagekom word.  Meer inligting oor individuele residensiële eiendomontwikkelings sal in latere skrywes verskaf word.

16.    Die Direksie wil graag die volgende inligting aangaande Zambezi Retail en die Villa Retail eiendomme met u deel.

17.    Die Nova Groep is steeds in wesentlike litigasie met die Capicol/Capicol 1 Groep van Maatskappye en die beherende aandeelhouer en direkteur, Mnr Paul Kyriacou betrokke.  Hierdie litigasie is histories en sal deurlopend bly.  In vorige gereelde skrywes aan ons Skuldbriefhouers is daar genoem dat, voortvloeiend uit verskeie feitelike situasies wat onstaan het tussen die Capicol Groep van Maatskappye en die geherstruktureerde Zambezi en Villa verwante Maatskappye, sedert Julie 2011 verdere verwikkelings plaasgevind het tot die effek dat   (i) Zambezi Retail GEEN BEDRAG GELD VERSKULDIG was aan Capicol nie en waarvolgens Zambezi Retail amptelik oordrag versoek het van die orige 50% onverdeelde gedeelte van die Zambezi Mall; en   (ii) Villa Retail GEEN BEDRAG GELD VERSKULDIG was aan Capicol 1 nie en waarvolgens Villa Retail amptelik oordrag versoek het van ‘n verdere 50% onverdeelde gedeelte van die Villa Mall eiendom aan Villa Retail vanaf die betrokke Capicol Groep maatskappy (Capicol en Capicol1 onderskeidelik).Soos wat verwag was betwis die Capicol Groep verwante maatskappye wat betrokke was by die transaksies die reg van Zambezi Retail en Villa Retail onderskeidelik om die oordrag van diesulke verdere 50% onverdeelde gedeeltes te bekom.  Ander dispute, uitgesluit die wat betrekking het op die versoeke vir die oordrag van die twee verdere 50% onverdeelde gedeeltes vanaf die Capicol en Capicol 1 na die Zambezi en Villa verwante maatskappye, is reeds die onderwerpe van histories voortdurende en huidige dispute en litigasie wat reeds langer as 2 jaar gelede begin het en wat te syner tyd afgehandel sal word.

18.    Beide Zambezi  Retail en Villa Retail is vol vertroue dat die optredes wat geneem word, hetsy deur litigasie of andersinds, om die oordrag van die verdere gedeeltes van die twee inkopiesentra te verkry, suksesvol sal wees.  Neem asseblief kennis dat die dispute tussen die betrokke Zambezi en Villa maatskappye en die Capicol Groep van maatskappye nie verspreibaar is na die algemene publiek nie.  Die partye tot die geding is ONDERHEWIG AAN ‘N STRENG VERTROULIKHEIDSOOREENKOMS en daarom beperk die Nova Groep kommunikasie in dié verband.

19.    Die Direksie is tans nie net baie besig met die bostaande litigasies nie, maar is ook druk besig met die beplanning om, met betrekking tot The Villa Mall, te verseker dat die huidige struktuur so vinnig as prakties moontlik onder die huidige omstandighede voltooi word  en is in dié verband besig om in samewerking met kundiges te bepaal wat die projek se voordeligste uitkoms en voltooiing is.  Ingewikkelde en uitgebreide onderhandelings in dié verband word tans gevoer. Ons wag tans vir die nuutste Marknavorsingsverslag wat onlangs in opdrag versoek is, in dié verband. Die Direksie sal inligting oor verdere verwikkelings bekend maak sodra dit in ‘n posisie is om dit te kan doen.

20.    Soos reeds genoem in vorige verslae word Zambezi Mall as gevolg van verskeie faktore waarvan sommige hier genoem word, as ‘n nuwe projek hanteer en sal as sulks weer van stapel gestuur word.  Daar is verskeie redes hiervoor, waarvan sommige vervolgens genoem word.  Hierdie inkopiesentrum word, net soos in die geval van die Villa inkopiesentrum, tans deur kundiges bestudeer en oorweeg ten einde die inkopiesentrum se beste potensiaal en sukses te bepaal.  ‘n Opgedateerde Marknavosingsverslag word ingewag en daar word reeds met verskeie voornemende huurders onderhandel.

21.    Voor en soos op die betrokke datum van oorname van die bestuur van Zambezi Inkopiesentrum deur Zambezi Retail in Julie 2011, was groot oppervlaktes (meer as 60%) van die Zambezi Inkopiesentrum aan Capicol Groep/ Mnr Kyriacou verwante en/of beheerde huurders “verhuur”.  Mnr Kariacou en die huurders wat hy en maatskappye beheer het het kort na die oorhandiging al hierdie besighede opgegee en uitgetrek uit die inkopiesentrum. Verder het die voltooiing van die toegangspaaie tot die sentrum, wat Capicol nagelaat het om te voltooi  soos dit  kontraktueel verplig was om te doen, baie bygedra tot die afname in die normale verhuring-, handeldrywing en sentrumaanwendingsaktiwiteite.  Die probleme met betrekking tot die toegangspaaie moes verder deur Zambezi Retail hanteer word.  Die hoof Zambezi toegangsroete en ingang is feitlik deur Zambezi Retail voltooi met ondersteuning en leiding vanaf die Nova Groep.  Die Maloto toegangspad soos deur Capicol ontwerp val binne ‘n vloedlyn en ‘n waterlisensie word, onder andere, benodig alvorens daar teen die middel van 2013 met die konstruksie van dié toegangspad begin kan word indien die onderhandelinge met die betrokke owerhede suksesvol is en daar nie inmenging deur Capicol is nie.  Dit beteken dat die toegangsroete ongelukkig vir ‘n verdere jaar gesluit sal wees totdat die padwerke voltooi is.  Die rede vir hierdie vertaging is verder dat ‘n omgewingsimpakstudie gedoen en gefinaliseer moet word voordat die vereiste waterlisensie deur die plaaslike owerhede uitgereik sal word. Die finalisering van die omgewingsimpakstudie was weereens iets wat Capicol nagelaat het om te doen terwyl dit sy kontraktuele verpligting was.

22.    Verskeie huurders het Zambezi reeds verlaat, insluitend Checkers, Standard Bank, Maxi’s, Pep Stores, Vodacom, Chicken Licken, Cubana, Rhapsodys, Landrover en King Pie.  Die meeste van dié huurders was Capicol Groep/Kyriacou verwante/beheerde huurders. Neem ook kennis dat Standard Bank, Chicken Licken, Vodacom, Rhapsody’s, en Cubana reeds hulle deure gesluit het terwyl Zambezi onder die bestuur van Capicol was voordat die bestuur deur Zambezi Retail gedurende Julie 2011 oorgeneem was.  Checkers, wat die ankerhuurder was, het ook ontrek  weens beloftes wat deur Capicol/Mnr Kyriacou gemaak was, van die bou van ‘n gededikeerde  baie skuins toegangspad (“ramp”), en wat nie nagekom was nie.  Hierdie was bo en behalwe die voltooiing van die toegangspaaie om die sentrum wat ook ‘n Capicol verpligting was en wat nie nagekom was nie.  Checkers het op hierdie beloftes en voorstellings vanaf Capicol staatgemaak vir sy sukses en voortgesette okkupasie van die gehuurde persele in die Inkopiesentrum.  Dit is ook belangrik om daarop te let dat Checkers nie die volle huur betaal het nie weens, onder andere, die bostaande onopgeloste kwessies tussen Checkers en Capicol.  Hierdie optredes van Capicol is die onderwerp van vele geskille tussen Zambezi Retail en Capicol.

23.    Skuldbriefhouers en Aandeelhouers sal op hoogte gehou word van enige noemenswaardige verdere ontwikkelings.

Navrae kan direk  aan die Frontier Kliëntediensafdeling gerig word by 0860 77 7722 of per e-pos aan admin@frontieram.co.za

Namens die Nova Groep en Frontier word u ‘n geseënde feesseisoen toegewens.

The Board of Nova Property Group Holdings Limited and Nova Property Group Investments Proprietary Limited

Connie Myburgh, Dominique Haese, Dirk Koekemoer, Rudi Badenhorst

and the Receivers for the Group subsidiary companies

Hans Klopper, Dawie van der Merwe and Connie Myburgh

report as follows.

Dear Debenture Holders and newly established Shareholders

1.       We are nearing the close of the 1^st year after the sanctioning of the Schemes of Arrangement and would like to thank you for supporting the Nova Group Board in its successful implementation thereof.  Various significant milestones have already been achieved by the Board in this very 1^st year and we are excited to be able to share the most notable of these with you.

2.       All Share Certificates of Historical Investors having elected to become Shareholders of Nova Property Group Holdings Limited will be published on the website of Frontier Asset Management and Investments (Pty) Limited (“Frontier”), from 14 December 2012, and the website, sms and/or e-mail communication will provide information as to what action Shareholders may take in order to obtain copies of their Share Certificates.

3.       Copies of Shareholder Certificates will be posted to all Shareholders during January 2013. As previously advised with regard to Debenture Certificates of Debenture Holders, the same principles will apply to Share Certificates, namely, that Share Certificates will also be available electronically, on the Frontier website, and will be accessible by Shareholders in accordance with the relevant instructions which will appear on the website and as will be communicated to each Shareholder via sms and/or e-mail by Frontier.

4.       The Nova Group is pleased to announce that in pursuing various property upgrading and other value added expansion activities to the Group’s existing shopping Mall properties and further property acquisition actions by the Group, the Group has been extremely successful in obtaining first phase external funding from financial institutions. These successes are even more profound, bearing in mind the beneficial funding terms negotiated by the Board, seen against the background of the general state of the economy and the environment and history from which the Nova Group emerged, which could have been expected to militate against the obtaining of such beneficial funding within a short period after the restructuring process.

5.       The Nova Group was very proud to have included in its July 2012 communication, and specifically to the Centurion Hazel related Debenture Holders, the positive news of having negotiated the beneficial sale of the Centurion Hazel property, following independent corporate finance and related advice in this regard. Centurion Hazel had, due to the countrywide office vacancy situation, not been in a position to provide returns to investors for approximately 2 years. Hazel related Debenture Holders were further informed that they would receive payment of their full capital historically invested (full syndication value), as provided for in the Scheme of Arrangement documentation, during January 2014. Following further advice, the Board has procured that a return of 4% per annum (currently projected), based on full capital historically invested (full syndication value), be paid to Hazel related Debenture Holders with effect from 1 July 2012, with the first payments to Debenture Holders already having been made at the end of July 2012, and subsequent monthly payments having continued since.

6.       The Board is furthermore pleased to now be in a position, after many months of negotiations, to advise positive news to the Rivonia Square related Debenture Holders. The Board achieved a beneficial sale of the Rivonia Square property, following independent corporate finance and related advice in this regard. During the past year a number of redevelopment concepts have been considered to revive the shopping centre, none of which however proved any potential for success. In addition, the redevelopment costs would not have been justifiable. The anchor tenant, Pick ‘n Pay, also considered closing their shop due to the non-performance of the shopping centre in the current market. It became evident to the Board that the property could not trade successfully as a historically designed shopping/office block complex and could not compete with facilities available in the surrounding geographical areas. The Board also extensively investigated alternative uses for the property, with the same result, and came to the conclusion that the best solution was to sell the property at the best possible price under current market conditions.

7.       Disclosure in respect of any property selling prices and/or relevant purchasers will be done, by the Nova Group, only, as required for purposes of relevant Financial Statements and any other formal disclosure requirements.

8.       The Nova Group intends to invest the proceeds of such property sales in a manner so as to procure the best possible and most beneficial projected investment returns and projected ultimate investment repayments to Debenture Holders, as the Group is able to achieve, having the best interests of newly established Shareholders and Debenture Holders of the Group in mind.

9.       The Scheme of Arrangement structures governing the post restructuring rights of Historical Investors do not provide for payment of projected investment repayments to Debenture Holders, earlier than as specified in the relevant Schemes. At this point in time no early repayment is envisaged in regard to Rivonia, as the maximum period provided for in the relevant Scheme appears to the Board to be required in order to grow the current value realised towards achieving values approaching historical syndication value, in the best interests of Rivonia related Debenture Holders and Shareholders having elected to become Shareholders in the Nova Group as opposed to remaining Rivonia related Debenture Holders.

10.   Due to the reasons stated in 6 above, Rivonia Square has not been in a position to provide stable returns to Historical Investors for approximately 2 years. Following further advice, the Board is equally pleased to share further positive news with Rivonia related Debenture Holders. The Board has procured that a return of 3% per annum (currently projected), based on full capital historically invested (full syndication value), equating to 7,04% per annum based on the fair market value of the Rivonia Square property at the time of its sale, be paid to Rivonia related Debenture Holders, with effect from mid October 2012. The first pro-rata payments to Rivonia related Debenture Holders were already made at the end of October 2012. End November 2012 saw follow-up payments based on the same percentages. 

11.   The Board is also pleased to announce that all Tarentaal related Debenture Holders, whose projected historical investment repayments were due by 20 January 2013, in terms of the Income Plan Scheme, will under current projections, receive their full historically invested capital (full syndication value) on 20 January 2013. A separate communication to all Tarentaal related Debenture Holders with regard to the capital repayment process, is expected to still be dispatched before the end of this year.

12.   As previously advised, the process of upgrading of various of the existing shopping Mall properties in the restructured Group is well underway, as most of the pre-development planning has been finalized. The upgrading will be on going over the next few years. Site Development Plans (“SDP”) in respect of 6 properties have already been completed and lodged with the relevant Councils for approval. Such approval is expected early in 2013. Construction works at these properties will commence thereafter. Other redevelopment and upgrading processes are in fact proceeding ahead of planned scheduling. Examples are the building of a Nandos drive through at the Witbank shopping centre and the expansion of the existing Checkers Hyper by 540m² and upgrading the entire shopping centre parking area. Another example is The Village shopping centre in Nelspruit, the upgrading of the first phase of which has been completed. More detailed updates on individual property upgrades will form part of future communiqués.

13.   One of the Group’s flagship properties, which has come through a long process of upgrading, and survived the period of the Registrar of Banks’ Directives issue and withdrawal period, is the Flora shopping centre. During the period of more than 2 years of trading and being upgraded, under distressed circumstances, the previous Board and the Nova Board managed to ensure the continuation of funding from a Commercial Bank in order to continue with the upgrading construction works, which have now reached the completion stage of Phase 1 of the planned ultimate upgrading. Notwithstanding these challenges, Pick ‘n Pay, the anchor tenant, has completed its own store revamp during November 2012 at a cost of R13 Million. This was a crucial part of Flora Centre’s successful upgrading. Going forward, it is expected that the correct tenant mix can be achieved to fill all existing retail vacancies during early 2013. For further updates please visit the Frontier website.

14.   The Board also provides an update on the Liberty Mall in Welkom. The previous anchor tenant, Edgars, vacated the centre due to the opening in the new Goldfields Mall in Welkom. This created large vacancies in Liberty Mall. The Board has finally, after many months of negotiations, received commitments by means of letters of intent from two national tenants, one in respect of a 2500m² food anchor lessee and the other in respect of a 2500m² fashion department store lessee. Anticipated lease agreements will be finalized by end February 2013.  By securing these two tenants, the rest of the vacant areas should be filled during 2013.

15.   The Group’s residential developments are also being prioritised, and planning is progressing well, in so far as market conditions allow, to add maximum value and ensure the achieving of the various timelines projected in the Growth Plan Scheme. More detailed updates on individual residential property developments will form part of future communiqués.

16.   The Board would like to share the following updates with regard to the Zambezi Retail and the Villa Retail properties.

17.   The Nova Group is still involved in substantial litigation with the Capicol/Capicol 1 Group of companies and its controlling shareholder and director, Mr Paul Kyriacou. These litigation processes are historical and will be on-going. In our regular communication to Debenture Holders, we have stated that following numerous factual situations which developed between the Capicol Group of companies and the restructured Zambezi and Villa related companies, since July 2011, further developments had taken place to the effect that (i) Zambezi Retail OWED NO AMOUNTS to Capicol, following which Zambezi Retail has formally requested transfer of the remaining 50% undivided portion of the Zambezi Mall property to Zambezi Retail and that (ii) Villa Retail OWED NO AMOUNTS to Capicol 1, following which Villa Retail has formally requested transfer of an additional 50% undivided portion of the Villa Mall property to Villa Retail, from the relevant Capicol Group companies (Capicol  and Capicol 1 respectively). As was expected, the Capicol Group related companies in those transactions are disputing the rights of, respectively Zambezi Retail and Villa Retail to receive transfer of such further 50% undivided portions. Disputes, in addition to those in regard to the requested transfers of the two 50% undivided portions from Capicol and Capicol 1 to the Zambezi and Villa related companies, form the subject matter of historical on-going and current disputes and litigation which commenced more than 2 years ago and possible future litigation which will be concluded in due course.

18.   Zambezi Retail and Villa Retail are confident that they will be successful in their actions to obtain transfer of such further portions of the two Malls, be it through litigation or otherwise. Please note that the disputes between the relevant Zambezi and Villa companies and the Capicol Group of companies are not for dissemination to the general public. The parties to the disputes ARE UNDER STRICT CONFIDENTIALITY AGREEMENTS and hence the Nova Group restricting its communication in this regard.

19.   The Board is not only busy dealing with the abovementioned litigation, but is, in regard to the Villa Mall, actively busy planning the procuring of the completion of the existing structure as soon as practically possible under the circumstances, and is currently working with experts in determining the Villa project’s most beneficial outcome and successful completion. Intricate and extensive negotiations are underway. We are also presently awaiting a Market Research Report, recently commissioned. The Board will communicate further developments in this regard once in a position to do so.

20.   With regard to the Zambezi Mall and, as mentioned in previous communication, the Zambezi Mall is being treated as a new project and is to be re-launched. There are various reasons for this and some are as stated below. This Mall, as with the Villa Mall, is currently being analysed and considered by experts for purposes of determining the Mall’s best potential and success. An updated Market Research Report is also awaited, and negotiations are already underway with various prospective tenants.

21.   Prior to and as at the relevant takeover date of the management of the Zambezi Mall by Zambezi Retail, in July 2011, vast areas (in excess of 60%) in the Zambezi Mall had been “let” to Capicol Group/Mr Kyriacou related/controlled lessees. Shortly after takeover, Mr. Kyriacou and the lessees controlled by him and his companies, abandoned all of these businesses, and moved out of the Mall. Further, the task of completing the access roads to the Mall, which Capicol failed to do in terms of its contractual commitments, contributed extensively to the decline in normal tenanting, trading and Mall utilisation activities and capabilities. These access road problems were left to be dealt with by Zambezi Retail.  The main Zambezi access road / entrance has been all but completed by Zambezi Retail, with the assistance and under the guidance of the Nova Group. The Moloto access road as designed by Capicol, is located within a flood line, which requires the obtaining of, inter alia, a water licence, before construction can commence. Zambezi Retail is in the process of planning to procure commencement of construction by middle 2013, provided that negotiations with the relevant authorities are successful, and barring no interference from the Capital Group. This means that access to the Zambezi Mall from the Moloto road, will unfortunately be closed for another year until the road works are completed. The cause of the delay is furthermore due to an EIA assessment which is to be finalised and obtained prior to the issuing of the said water licence from the local authorities being possible. Again, the finalising of the EIA assessment was not procured by Capicol as it was contractually obliged to do.

22.   Several tenants has left the Zambezi Mall, including Checkers, Standard Bank, Maxi’s, Pep Stores, Vodacom, Chicken Licken, Cubana, Rhapsodys, Landrover and King Pie. Most of which were Capicol Group/Kyriacou related/controlled lessees. Please note that Standard Bank, Chicken Licken, Vodacom, Rhapsodys and Cubana all closed while still under Capicol’s management, prior to management takeover by Zambezi Retail during July 2011. The anchor tenant, Checkers, vacated its premises, as many promises, made to Checkers by Capicol/Mr Kyriacou, including the building for Checkers of a dedicated access ramp, did not materialise. This was an obligation of Capicol which it failed to fulfil. This was in addition to Capicol also not finishing the access roads to the Mall, which were also obligations of Capicol which it failed to fulfil. Checkers relied on these promises and representations of Capicol, for its success and continued occupation of its leased premises in the Mall. It is furthermore important to note that Checkers had never paid full rental, due to, inter alia, the above outstanding issues between Checkers and Capicol. These actions of Capicol also form part of the subject matter of the numerous disputes between Zambezi Retail and Capicol.

23.   Debenture Holders and Shareholders will be kept advised of any significant further developments.

Queries may be directly addressed by contacting the Frontier Client Services at 0860 77 7722 or emailing admin@frontieram.co.za.

On behalf of the Nova Group and Frontier, we wish you a blessed festive season.