Before the restructuring, the BEE 1 consortium consisted of three beneficiaries of the AMU Trust, being Amabubesi Consortium, Miganu Investment Holdings (Pty) Ltd and Unipalm Investment Holdings Ltd (Unipalm). These parties held 100,0 million shares in Growthpoint. Significant value has been created for the beneficiaries and their shareholders due to the performance of Growthpoint’s share price since 2005 when the initial BEE transaction was concluded. During FY14, Unipalm considered it an opportune time to lock in the value created, by selling their entire indirect beneficial interest of 33,3 million Growthpoint shares. Growthpoint Management Services (Pty) Ltd (GMS) acquired 17,0 million of the shares for R365,1 million which are reflected as treasury shares. Additionally, Growthpoint will pay an “agterskot” totalling R17,0 million to Unipalm to the extent that the Growthpoint 15-day volume weighted average price reaches or exceeds R30.00 per share within 18 months of settlement. As part of the restructuring, R39,7 million of the R200,0 million loan advanced, was settled.

Additional interest of R125,5 million was realised on the initial refinancing completed in the 2012 financial year. Growthpoint took a decision to account for the additional interest equally over four years, being the remaining period of the refinanced mezzanine loan. This resulted in R31,4 million of interest being accounted for as the fourth tranche in the current year (FY14: R31,4 million for the third tranche). In order to protect its interest, Growthpoint is entitled, but not obligated, to provide guarantees to the senior lender should there be a breach of any of their loan covenants at any time. The BEE group is entitled, but not obligated, to repay up to a maximum of R25,0 million of the mezzanine loan amount.

323 Festival Street (Pty) Ltd (the borrower) is owned by Isivuno-Apex Properties (Pty) Ltd (Isivuno-Apex). Growthpoint advanced R273,0 million to the borrower for the acquisition of the land and the construction of Tshedimosetso House in Hatfield. The borrower, as the landlord, holds a five-year lease with the Department of Government Communication and Information System (GCIS). The monthly lease payments, net of operating costs, will be utilised for the servicing of the interest and capital repayments of the loan, and the repayment balance on 30 April 2018 is estimated to be R238,0 million. Security of the loan includes:

— a continuing covering mortgage bond
— a cession of rental and insurance proceeds
— a cession of the insurance policies
— a suretyship by Isivuno-Apex for the obligations of the borrower in terms of the loan agreement
— a pledge and security cession by Isivuno-Apex of its shares in and claims against the borrower, as security for its obligation in terms of the suretyship.

Growthpoint has a call option to acquire 50% of the shares in the borrower at any time on or after the expiry of the GCIS lease, on the early termination of the GCIS lease for any reason, on the proposal of a resolution by the shareholders or directors of the company for the disposal of the investment property or on the disposal of the shares in the company by Isivuno-Apex.

This loan is valued by discounting future cash flows using the South African swap curve plus the historic charged credit margin at the dates when the cash flows will take place. Historic credit margin 3% (FY14: 3%). The estimated fair value would increase/(decrease) if the historic credit margin were lower/(higher).

Rabie Property Group (the borrower) has been appointed to carry out and complete Bridgeway Park in Century City (Cape Town). The borrower is required to source funding for the construction of the development and Growthpoint has committed to advance a total amount of R179,4 million.

Security of the loan includes:

— a cession of the security agreement, in terms of which the borrower cedes the insurances and all of its rights under the building contract, including guarantees
— a continuing covering mortgage bond
— a suretyship by Century City Trust for the obligations of the borrower.

The fair value of the loan approximates the nominal value of the loan, as the risk profile of Rabie Property Group has not materially changed and therefore the risk margin applicable to the fair value is equivalent to the risk margin included in the floating interest rate. Upon completion of the building, Century City Trust is committed to pay for the development project expenditure, in order to obtain 50% ownership in Bridgeway Park. In essence the loan to Rabie Property Group converts to a term loan to the Trust. The latest repayment date for the term loan is 31 January 2019.

A development loan agreement was entered into between Acucap Investments (Pty) Ltd and the Augusta Trust with respect to the development of Watercrest Mall. Interest is charged at prime less 1.70%. The loan is not to exceed a maximum of R400,0 million and the mortgage bond is also limited to this amount. The 50% carrying value of Watercrest Mall (still under development) as at 30 June 2015 is R355 million. 50% of Watercrest Mall is owned by Acucap Investments (Pty) Ltd and the remaining 50% by Augusta Trust. Security of the loan includes:
— covering mortgage bond over a one half share in Portion 771 of the Farm Upper End of Lange Fontein No. 980, Registration Division FT, KwaZulu- Natal.

The fair value of the loan approximates the nominal value of the loan, as the Group estimates that the risk profile of Augusta Trust has not materially changed and therefore the risk margin applicable to the fair value is equivalent to the risk margin included in the floating interest rate.

Acucap linked units were issued on loan account to Acucap employees as part of a purchase scheme. The employees carry the risk of non-performance of the loan and have no restrictions placed on them. As a result of the Acucap business combination (note 41.4), the employees received Growthpoint shares in the same ratio as the other shareholders for each Acucap share held.

The terms of the loans are as follows:
— The loans bear interest at a fixed rate per annum, compounded monthly and capitalised to the loan account.
— Interest distributions received on the linked units by the beneficiaries are applied to the interest payable.
— The loans are secured by a pledge and cession of the linked units by the Acucap Unit Purchase Scheme participants.
— The maximum period for the repayment of the loans is a period of ten years.
— In the event of the resignation or dismissal of a beneficiary, the loans are repayable within one year.
— In the event of the retrenchment or death of a beneficiary, the loans are repayable within two years.
— The loans are repayable in cash.

These loans were valued by discounting future cash flows using the South African swap curve at the dates when the cash flows will take place.

The fair value measurement for long-term loans granted of R1 081 million (FY14: R466 million) has been categorised as a level 3 fair value based on the inputs to the valuation technique used. Refer to note 45.2 for level 3 reconciliation.