| Tue 30 Aug 2011, 9:05 | | FFA/FFB - Fortress - Proposed Acquisition of a Portfolio Of Retail Properties |
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FFA FFB
FORT
FFA/FFB - Fortress - Proposed Acquisition of a Portfolio Of Retail Properties
FORTRESS INCOME FUND LIMITED
Incorporated in the Republic of South Africa
Registration number 2009/016487/06
Share codes "FFA" ISIN ZAE000141313 and "FFB" ISIN ZAE000141321 respectively
("Fortress")
PROPOSED ACQUISITION OF A PORTFOLIO OF RETAIL PROPERTIES
INTRODUCTION
Linked unitholders are advised that Fortress has concluded an agreement with
Capital Property Fund ("Capital") for the acquisition of a portfolio of retail
properties ("the property portfolio") from Capital (the "transaction").
RATIONALE FOR THE TRANSACTION
Capital is disposing of the property portfolio as part of its strategy to reduce
its retail holdings. From a Fortress perspective the property portfolio
represents an attractive opportunity to increase its retail holdings with a
portfolio of good quality retail properties, providing steady income flow and
enhancing the underpin of Fortress` distribution commitments.
TERMS OF THE TRANSACTION, USE OF PROCEEDS AND CONDITIONS PRECEDENT
The effective date of the transaction is 1 December 2011. The purchase
consideration payable by Fortress to Capital pursuant to the transaction is R704
million which will be settled by the issue of 51 014 493 Fortress A linked units
and 51 014 493 Fortress B linked units.
The transaction is subject to approval by the Competition authorities.
THE PROPERTY PORTFOLIO
Details of the property portfolio, including property name and address,
geographical location, rentable area, sector, weighted average rental per square
meter, effective date of acquisition, purchase price and the valuations
attributed to the properties as at 1 December 2011 by Quadrant Properties
(Proprietary) Limited, an independent professional associated valuer, are as
follows -
Property name Geographical Rentable area Sector
and address location (m2)
Park Central Gauteng 8 613 Retail
Shopping
Centre, Noord
and Twist
Streets,
Johannesburg
Mutsindo Mall & Limpopo 12 330 Retail
Capricorn Plaza
Post Office
Street,
Thohoyandou
Morone Shopping Limpopo 13 487 Retail
Centre
Burgersfort
Kastania
Street,
Burgersfort
Crossroads Mpumalanga 10 708 Retail
Crossroads
Centre,
KwaMahlanga
Venda Plaza Limpopo 10 284 Retail
Main Street,
Thohoyandou
West Street, KwaZulu-Natal 6 202 Retail
336 - 342 West
Street, Durban
Shoprite Port KwaZulu-Natal 8 792 Retail
Shepstone
Dick King Road,
Port Shepstone
Total 70 416
Weighted Effective date Valuation as
average of acquisition Purchase at 1 December
Property rental per price as at 1 2011
name and m2 December 2011 (R`000)
address (R) (R`000)
Park Central R172 1 December 2011 156 500
Shopping
Centre,
Noord and
Twist
Streets, 154 000
Johannesburg
Mutsindo R91 1 December 2011 131 000
Mall &
Capricorn
Plaza
Post Office
Street, 145 000
Thohoyandou
Morone R77 1 December 2011 115 800
Shopping
Centre
Burgersfort
Kastania
Street,
Burgersfort 120 500
Crossroads R78 1 December 2011
Crossroads
Centre,
KwaMahlanga 90 000 104 600
Venda Plaza R82 1 December 2011 87 500
Main Street,
Thohoyandou 81 000
West Street, R97 1 December 2011 74 500
336 - 342
West Street,
Durban 83 500
Shoprite R36 1 December 2011 34 100
Port
Shepstone
Dick King
Road, Port 30 000
Shepstone
Total 704 000 704 000
CATEGORISATION OF THE TRANSACTION
The transaction constitutes a Category 2 transaction in terms of the JSE
Listings Requirements and is accordingly not subject to approval by Fortress`
linked unitholders.
FINANCIAL INFORMATION
The unaudited 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 year ended 30 June 2011.
Due to their nature, the unaudited pro forma financial effects may not fairly
present Fortress` financial position, changes in equity, results of operations
or cash flows after the transaction. The unaudited pro forma financial effects
are the responsibility of the directors of Fortress and have not been reviewed
or reported on by Fortress` auditors.
The unaudited pro forma financial effects of the transaction on Fortress` basic
earnings per A and B share, basic earnings per B linked unit, headline earnings
per A and B share, distribution per B linked unit for the year ended 30 June
2011 as well as net asset value and net tangible asset value per B linked unit
at 30 June 2011 are set out below. The unaudited pro forma financial effects of
the transaction on basic earnings per A linked unit, headline earnings per A and
B linked unit, distribution per A linked unit, as well as net asset value and
net tangible asset value per A linked unit are not material and have not been
disclosed.
Unadjusted Pro forma after % Change
before the the transaction
transaction (cents)
(cents)
Basic earnings per A share 62.62 64.79 3.5%
Basic earnings per B share 62.62 64.79 3.5%
Basic earnings per B linked 75.30 80.39 6.8%
unit
Headline earnings per A share 11.81 9.64 (18.4%)
Headline earnings per B share 11.81 9.64 (18.4%)
Distribution per B linked unit 12.67 15.59 23.0%
Net asset value and net 142.00 164.00 15.5%
tangible asset value per B
linked unit
Weighted average number of A 225 875 000 276 889 493
and B shares/linked units in
issue
Actual number of A and B 231 000 000 282 014 493
linked units in issue
Notes and assumptions:
- The amounts set out in the "Unadjusted before the transaction" column have
been extracted, without adjustment, from the audited consolidated financial
statements of Fortress for the year ended 30 June 2011.
- The transaction is assumed to be implemented on 1 July 2010 for purposes of
basic earnings per A share and B share, basic earnings per B linked unit,
headline earnings per A and B share and distribution per B linked unit.
- The transaction is assumed to be implemented on 30 June 2011 for purposes
of net asset value and net tangible asset value per B linked unit.
- The property portfolio is assumed to have been acquired from Capital for a
consideration of R615.2 million which was settled by the issue of 51 014
493 Fortress A linked units at R9.96 per A linked unit and 51 014 493
Fortress B linked units at R2.10 per B linked unit, being the 30-day VWAP
prior to 1 July 2010 for the Fortress A and B linked units, respectively.
- The fair value of the property portfolio at 30 June 2011 is assumed to be
R704 million and accordingly the fair value adjustment for the year ended
30 June 2011 is assumed to be R76.0 million (net of deferred taxation).
- For the year ended 30 June 2011 the property portfolio earned historic net
rental income of R66.4 million.
- The historical property revenue and expenses were extracted from the
underlying books and records of each property which have not been reviewed
or reported on by reporting accountants. However, the directors of Fortress
are satisfied with the quality of the information.
- Distributable income is assumed to be earned evenly throughout the year
ended 30 June 2011.
- Estimated transaction costs of approximately R0.4 million are assumed to be
incurred by Fortress and have been capitalised.
- All adjustments have a continuing effect.
30 August 2011
Sponsor
Java Capital
Date: 30/08/2011 09:05:06 Produced by the JSE SENS Department.
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