| Thu 22 Oct 2009, 17:40 | | FFA/FFB - Fortress Income Fund - Acquisition of a property letting business |
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FFA
FORT
FFA/FFB - Fortress Income Fund - Acquisition of a property letting business
FORTRESS INCOME FUND LIMITED
(Registration number 2009/016487/06)
JSE CODES: "FFA" ISIN: ZAE000141313 AND "FFB" ISIN: ZAE000141321
("Fortress" or "the company")
ACQUISITION OF A PROPERTY LETTING BUSINESS
INTRODUCTION
Unitholders are advised that Fortress has concluded an agreement for the
acquisition of a property letting business known as Shoprite Mayville
("Shoprite Mayville") in Pretoria.
RATIONALE FOR THE TRANSACTION
The acquisition of Shoprite Mayville enhances Fortress` retail offering.
TERMS AND CONDITIONS PRECEDENT
With effect from 1 October 2009 ("the effective date"), Fortress has purchased a
property letting business comprising Portion 5 of Erf 16 Mayville Township, Erf
266 Parktown Estate, Portion 3 of Erf 268 Parktown Estate, Portion 5 (a portion
of portion 1) of Erf 268 Parktown Estate and Erf 271 Parktown Estate all of
which are located in the Gauteng Province ("the property").
The purchase price payable for the business is an amount of R196 000 000,
payable as R98 000 000 by the issuing of 9 800 000 "A" linked units at R9,00 per
"A" linked unit and 9 800 000 "B" linked units at R1,00 per "B" linked unit. The
balance is payable in cash.
The acquisition agreement contains warranties normal for acquisitions of this
nature. The transaction is not subject to any conditions precedent.
THE PROPERTY AND THE PROPERTY LETTING BUSINESS
Shoprite Mayville, based on a valuation performed by Peter Parfitt of Quadrant
Properties (Pty) Ltd as at 1 October 2009, is valued at R196 million.
Shoprite Mayville is a "B" grade building situated at Van Rensburg Road,
Pretoria North, Gauteng with a total rentable area of approximately 21,500 m2 at
an average rental of R70.07 per m2. The weighted average rental escalation by
rentable area for the property is 8%.
FINANCIAL INFORMATION
The pro forma financial effects of the transaction on Fortress` forecast
financial information for the nine month period ended June 2010 and the year
thereafter (as published in the prospectus released on 16 October 2009 and
reported by the reporting accountants therein)("the forecast financial
information") are set out below.
The pro forma financial effects on the forecast financial information have not
been reviewed or reported on by the auditors or reporting accountants.
The pro forma financial effects of the transaction on the net asset value and
tangible net asset value per "A" and "B" linked unit are not material and have
not been disclosed.
The pro forma financial effects have been prepared for illustrative purposes
only, to provide information on how the transaction may impact on the forecast
financial information. Due to their nature, the pro forma financial effects may
not fairly present Fortress` financial position, changes in equity, and results
of operations or cash flows after the transaction. The pro forma financial
effects are the responsibility of the directors of Fortress.
The pro forma effect of the transaction on the forecast financial information of
Fortress for the nine month period ending June 2010 is as follows:
Unadjusted Pro forma % Change
before the after the
transaction transaction
(cents) (cents)
Gross investment income 210 441 224 904 6.9%
Net operating profit before 186 310 200 296 7.5%
interest and tax
Distribution per "A" unit 72.56 72.19 (0.5)%
Distribution per "B" unit 6.75 6.72 (0.5)%
Weighted average number of units in 176 592 192 186 392 192
issue
The pro forma effect of the transaction on the forecast financial information
of Fortress for the year ending June 2011 is as follows:
Unadjusted Pro forma % Change
before the after the
transaction transaction
(cents) (cents)
Gross investment income 245 792 295 987 7.6%
Net operating profit before 255 540 275 689 7.9%
interest and tax
Distribution per "A" unit 101.59 101.55 0.0%
Distribution per "B" unit 9.81 9.81 0.0%
Weighted average number of units in 176 592 192 186 392 192
issue
Notes and assumptions:
- The amounts set out in the "Unadjusted before the transaction" column have
been extracted without adjustment from the forecast financial information.
- The forecast financial information and the pro forma financial effects
thereon have been prepared in compliance with International Financial Reporting
Standards.
- The transaction is assumed to be implemented on 1 October 2009.
- The amounts set out in the "Pro forma after the transaction" column
incorporates the following assumptions:
- Rental income in each of the forecast periods is based on a signed
lease agreement.
- There is no uncontracted rental income.
- Interest on the cash consideration payable has been calculated at
a rate of 9.5%.
CATEGORISATION OF THE TRANSACTION
The transaction is a category 2 transaction in terms of section 9.5(a) of the
Listings Requirements of the JSE Limited.
22 October 2009
Corporate advisor, legal advisor and sponsor
Java Capital (Proprietary) Limited
Date: 22/10/2009 17:40:01 Produced by the JSE SENS Department.
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