| Thu 29 Oct 2009, 17:49 | | RES - Resilient Property Income Fund - Disposal Of A Subsidiary |
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RES
RES
RES - Resilient Property Income Fund - Disposal Of A Subsidiary
Resilient Property Income Fund Limited
(Incorporated in the Republic of South Africa)
Registration number 2002/016851/06
Share code: RES ISIN: ZAE000043642
("Resilient") or ("the company")
DISPOSAL OF A SUBSIDIARY
INTRODUCTION
Unitholders are advised that an agreement was concluded between Resilient, as
vendor, and Fortress Income Fund Limited, a newly listed property loan stock
company ("Fortress"), as purchaser, pursuant to which Resilient disposed of the
entire issued share capital of and shareholder claims against its wholly owned
subsidiary Fortress Income 2 (Proprietary) Limited ("Fortress Income 2") to
Fortress ("the disposal agreement") (hereinafter referred to as "the
transaction"). Fortress Income 2 owns 19 properties valued at R665 402 100 ("the
properties").
TERMS AND CONDITIONS PRECEDENT
With effect from 1 October 2009 ("the effective date"), Resilient disposed of
Fortress Income 2 for an aggregate purchase price of R665 402 100 which purchase
price was settled as follows:
by the allotment and issue or delivery to Resilient of 63 213 200 "A" linked
units in Fortress at R9,00 per "A" linked unit and 63 213 200 "B" linked units
in Fortress at R1,00 per "B" linked unit; and
the balance of the purchase price for cash in an amount of R33 270 100.
Save for Mussina Shopping Centre valued at R28,5 million, all properties have
been transferred to Fortress Income 2.
The disposal agreement contains warranties normal for disposals of this nature.
All of the conditions precedent to which the disposal agreement was subject have
been fulfilled.
RATIONALE FOR THE TRANSACTION
The disposal of Fortress Income 2 will enable Resilient to increase its focus on
larger and dominant regional malls.
Resilient will use the cash portion of the sale proceeds to reduce debt.
The company may dispose of the Fortress "A" and "B" linked units, depending on
market conditions, to fund new retail developments.
THE PROPERTIES
Details of the properties including property description, region, sector,
forecast weighted average rental per square metre, rentable area, purchase price
and the valuation attributed by Peter Parfitt of Quadrant Properties
(Proprietary) Limited, an independent professional associated valuer, as at 1
October 2009 to each of the properties is as follows:
Property description Region Sector Forecast Rentable Purchase
weighted area price/
average valuation
rental
per m2
(R) (m2) (R`000)
Ptn 109 of Ptn 10 and LP Retail 76,56 6 114 34 800
Ptn 293 of the farm
Sterkloop 688 LS
(40% interest)
Erf 8499 Secunda Ext 1 MP Retail 62,99 5 064 24 500
(50% interest)
Erf 5874 Secunda Ext 1 MP Retail 56,34 7 006 32 500
(50% interest)
Erf 1544 to 1547 and MP Retail 71,79 3 100 17 500
Erf 4790, Secunda Ext
1
(50% interest)
Erven 1636 and 1637 LP Retail 57,24 4 380 28 500
Messina Ext 2
Ptn 29 of Erf 642 KZN Retail 42,61 3 949 27 000
Dundee
Erf 142 Randjespark GP Industrial 15,02 2 204 8 000
Ext 65
Erf 215 Isando GP Industrial 26,48 11 300 38 800
RE of Erf 4493 EC Retail 58,45 8 161 58 200
Grahamstown
Erf 2790 Umtata EC Retail 71,05 5 248 39 700
RE of Erf 2782 Umtata EC Commercial 48,77 4 242 28 200
Ptns 274, 280 and 356, SWA Retail 64,47 3 828 29 752
Manzini, Swaziland
(22,37% interest)
Erf 14616 Evaton West GP Retail 57,31 13 110 92 350
(50% interest)
Erf 4008 Nquthu KZN Retail 60,10 7 356 50 150
(50% interest)
RE of Erf 13751 KZN Retail 67,66 9 852 78 700
Newcastle
RE of Erf 13434 KZN Retail 33,34 2 721 9 600
Newcastle
Erf 2536 Vryheid KZN Retail 60,31 8 417 52 000
Ptn 4 of Erf 28 GP Commercial 43,36 700 7 500
Edenburg
(50% interest)
RE of Erf 28 Edenburg GP Commercial 54,69 960 7 650
(50% interest)
FINANCIAL INFORMATION
The pro forma financial effects of the transaction on Resilient`s financial
results for the six months ended June 2009 ("the financial information") are set
out below and have not been reviewed or reported on by the company`s auditors.
The pro forma financial effects of the transaction on the net asset value and
tangible net asset value per 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 the financial
information. Due to their nature, the pro forma financial effects may not fairly
present Resilient`s 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 Resilient.
The pro forma effect of the transaction on the financial information of
Resilient for the six months ended June 2009 is as follows:
Unadjusted Pro forma % Change
before the after the
transaction transaction
(cents) (cents)
Earnings per linked unit 115,95 104,99 (9,5%)
Headline earnings per linked unit 107,73 96,76 (10,2%)
Distribution per linked unit 91,51 80,54 (12,0%)
Weighted average number of linked 241 457 001 241 457 001
units in issue
Notes and assumptions:
1. The amounts set out in the "Unadjusted before the transaction" column have
been extracted without adjustment from the financial information.
2. The financial information and the pro forma financial effects thereon have
been prepared in compliance with International Financial Reporting Standards.
3. The transaction is assumed for the purposes of earnings per linked unit,
headline earnings per linked unit and distribution per linked unit to have been
implemented on 1 January 2009.
4. The transaction was at the fair value of the assets disposed of.
5. The historical rental income and related property expenditure was extracted
from the financial information.
6. The cash proceeds of R33 270 00 has been utilised to reduce interest
bearing liabilities at an effective interest rate of 9,5%.
7. R632 132 000 of the purchase consideration was received in the form of 63
213 200 "A" linked units in Fortress at R9,00 per "A" linked unit and 63 213 200
"B" linked units in Fortress at R1,00 per "B" linked unit. Fortress listed on
the JSE Limited in October 2009. The forecast yield of 10,75% on the "A" linked
units and 9% on the "B" linked units, as reported on by the reporting
accountants in the prospectus issued by Fortress dated 16 October 2009, have not
been taken into account in the calculation of these financial effects in
compliance with the SAICA Guide on Pro Forma Financial Reporting.
8. The transaction includes the sale of four properties with an aggregate
value of R109 300 000 that were acquired by Resilient after the six month period
ending 30 June 2009 and in respect of which no rental income was included in the
financial information, and hence not adjusted for in the calculation of the
financial effects included above.
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.
29 October 2009
Corporate advisor, legal advisor and sponsor
Java Capital (Proprietary) Limited
Date: 29/10/2009 17:49:27 Produced by the JSE SENS Department.
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