| Wed 7 Apr 2010, 17:47 | | FFA / FFB - Fortress Income Fund - Acquisition Of A Property Portfolio And |
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FFA FFB
FORT
FFA / FFB - Fortress Income Fund - Acquisition Of A Property Portfolio And
Withdrawal Of Cautionary
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 PORTFOLIO AND WITHDRAWAL OF CAUTIONARY
INTRODUCTION
Linked unitholders are advised that Fortress has concluded agreements for the
acquisition of a portfolio of properties (the "properties" or "property
portfolio") from various companies within the Murray & Roberts group, being
Bellville Station Investments (Pty) Ltd; Biyela Centre (Pty) Ltd; Chataprop
Holdings 88 (Pty) Ltd; Upbeatprops 17 (Pty) Ltd; Upbeatprops 20 (Pty) Ltd;
Upbeatprops 37 (Pty) Ltd; Upbeatprops 39 (Pty) Ltd; Upbeatprops 40 (Pty) Ltd;
Upbeatprops 43 (Pty) Ltd; Upbeatprops 44 (Pty) Ltd; Xtraprops 98 (Pty) Ltd;
Xtraprops 99 (Pty) Ltd; Xtraprops 100 (Pty) Ltd; Xtraprops 101 (Pty) Ltd;
Xtraprops 102 (Pty) Ltd and Xtraprops 103 (Pty) Ltd (collectively, "the
sellers").
RATIONALE FOR THE TRANSACTION
The properties comprise an attractive, diversified portfolio of 16 investment
properties located throughout South Africa. It is expected that the acquisition
of the property portfolio will provide an additional underpin of the
preferential distribution rights of Fortress A linked unitholders and contribute
to growth in distributions for Fortress A and B linked unitholders.
TERMS AND CONDITIONS
Fortress has agreed to acquire the rental enterprises in respect of the
properties with effect, in each instance, from the date of registration of
transfer of ownership of each individual property into the name of Fortress (the
"effective date"). These acquisitions constitute one indivisible transaction.
The purchase price for the property portfolio is an aggregate amount of R373 382
031, payable in cash on the effective date.
The acquisition agreements contain warranties normal for acquisitions of this
nature.
The transaction is subject to the following conditions precedent:
with regards to Bellstar, Bellville, acquired from Bellville Station Investments
(Pty) Ltd, consent from the South African Rail Commuter Corporation Limited to
the assignment of the notarial lease to Fortress, by no later than 31 May 2010;
approval by the shareholders of the sellers in terms of Section 228 of the
Companies Act, 1973, by not later than 31 May 2010;
approval by the Competition Authorities in terms of the Competition Act, No. 89
of 1998, by 29 August 2010; and
the execution of a written agreement in terms of which the sellers, where
applicable, will acquire the bare dominium ownership of the relevant properties,
by the effective date.
THE PROPERTIES AND THE PROPERTY LETTING BUSINESSES
Details of the properties including property description, region, sector,
forecast weighted average rental per square metre, rentable area, purchase price
and the valuation attributed to each of the properties by Mark de Klerk of Mills
Fitchet (Gauteng) cc, an independent professional associated valuer, as at 1
April 2010, are as follows:
Property Region Sector Weighte Rentabl Purchase Valuatio
descripti d e area price n
on average
rental
per m2
Seller (R) (m2) (R`000) (R`000)
Att Yard Chataprop Western Industria 24.57 5 478 10 818 11 200
Gunners Holdings Cape l 182 000
Circle, 88 (Pty)
Epping Ltd
Epp Yard Upbeatprop Western Industria 8.94 38 225 36 663 37 300
Gunners s 20 (Pty) Cape l 636 000
Circle, Ltd
Epping
Hertzog Xtraprops Western Commercia 72.80 7 819 47 909 49 300
Boulevard 100 (Pty) Cape l/Retail 091 000
, Cape Ltd
Town
Biyela Biyela KwaZulu Retail 55.77 6 957 20 000 21 600
Shopping Centre Natal 000 000
Centre (Pty) Ltd
10 Skeen Upbeatprop Gauteng Commercia 91.40 2 908 16 363 18 000
Boulevard s 40 (Pty) l 636 000
Ltd
2 Skeen Upbeatprop Gauteng Commercia 64.77 5 117 32 635 33 600
Boulevard s 39 (Pty) l 636 000
Ltd
312 Kent Upbeatprop Gauteng Commercia 22.67 4 329 7 307 8 200
Avenue, s 37 (Pty) l 692 000
Randburg Ltd
Monument Upbeatprop Gauteng Retail 57.04 6 170 26 956 28 600
Centre s 17 (Pty) 522 000
Ltd
Bayside Xtraprops Eastern Retail 57.64 7 237 30 769 32 200
Centre, 102 (Pty) Cape 231 000
Mossel Ltd
Bay
People`s Upbeatprop Eastern Retail 42.08 5 018 13 076 13 700
Place, s 43 (Pty) Cape 923 000
Queenstow Ltd
n
Queenstow Xtraprops Eastern Retail 43.58 7 588 21 481 23 800
n Mall 103 (Pty) Cape 481 000
Ltd
Taxi Upbeatprop Eastern Retail 55.52 5 127 15 000 15 600
City, s 44 (Pty) Cape 000 000
East Ltd
London
Coronatio Xtraprops Western Industria 28.20 4 074 8 000 8 800
n Road, 99 (Pty) Cape l 000 000
Maitland Ltd
Bellstar, Bellville Western Retail 155.00 5 211 66 400 67 300
Bellville Station Cape 000 000
Investment
s (Pty)
Ltd
Kindon Xtraprops Gauteng Industria 18.17 6 788 6 153 6 100
Street, 101 (Pty) l 846 000
Robertsha Ltd
m
Shorthorn Xtraprops Gauteng Industria 25.64 6 790 13 846 13 900
Street, 98 (Pty) l 155 000
City Deep Ltd
FINANCIAL INFORMATION
The pro forma financial effects have been prepared for illustrative purposes
only to provide information on how the transaction may have impacted on the
historical financial results of Fortress for the three months ended 31 December
2009. Due to their nature, the pro forma financial effects may not fairly
present Fortress` financial position, changes in equity, 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 financial effects
have not been reviewed or reported on by Fortress` auditors.
The pro forma financial effects of the transaction on Fortress` distribution per
B linked unit and headline earnings per B linked unit for the three months ended
31 December 2009 are set out below. The pro forma financial effects of the
transaction on the net asset value per A and B linked unit, the tangible net
asset value per A and B linked unit, basic earnings and headline earnings per A
linked unit and basic earnings per B linked unit are not material and have not
been disclosed.
Unadjusted Pro forma % change
before the after the
transaction transaction
(cents) (cents)
Distribution per B linked unit 2.36 2.59 9.7
Headline earnings per B linked unit 7.13 7.36 3.2
Weighted average number of B linked 186 392 192 186 392 192
units in issue
Notes and assumptions:
The amounts set out in the "Unadjusted before the transaction" column have been
extracted from the condensed unaudited consolidated financial statements of
Fortress for the three months ended 31 December 2009.
The transaction is assumed to be implemented on 1 October 2009 for purposes of
distribution and headline earnings per B linked unit.
The property portfolio was acquired at the aggregate purchase price of R373
382 031, financed through interest bearing debt which is assumed to bear
interest at 9.45%, being the funding rate of prime (10.5%) less 1.05%.
For the three months to 31 December 2009, the property portfolio earned historic
net rental income of R9,25 million.
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.
7 April 2010
Corporate advisor, legal advisor and sponsor
Java Capital (Proprietary) Limited
Date: 07/04/2010 17:47:54 Produced by the JSE SENS Department.
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