EQUITES PROPERTY FUND LIMITED - Acquisition of vacant industrial land and conclusion of development lease with Puma

Acquisition of vacant industrial land and conclusion of development lease with Puma

EQUITES PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/080877/06)
JSE share code: EQU  ISIN: ZAE000188843
(Approved as a REIT by the JSE)
(“Equites”)


ACQUISITION OF VACANT INDUSTRIAL LAND AND CONCLUSION OF DEVELOPMENT LEASE WITH PUMA


1.   INTRODUCTION

     Equites has concluded an agreement with Intaprop Investments Proprietary Limited (the “seller”) in terms of which Equites
     will be acquiring all of the shares and claims in Intaprop Hills Proprietary Limited (the “company”) from the seller (the
     “acquisition”). The company owns the Atlantic Hills Industrial Park (the “property”), a 7 hectare industrial park situated
     adjacent to the Potsdam off-ramp on the N7 highway in Cape Town. In addition, Equites has concluded a development lease
     with Puma Sports Distributors Proprietary Limited (“Puma”), the global apparel and sportswear brand, for the construction
     of a new 16 262 square metre distribution centre and head office to be situated on the property, at a capital value of
     approximately R155 million. The lease agreement with Puma has a 9 years and 11 months duration and it is anticipated that
     Puma will take occupation in August 2016.

     Furthermore, the acquisition also includes a completed 3 471 square metre new distribution centre which is currently being
     developed by the company on the property for JF Hillebrand South Africa Proprietary Limited (“JF Hillebrand”), at a
     capital value of approximately R35m. JF Hillebrand, which has entered into an 8 year lease commencing on 1 December
     2015, is the largest logistics solution provider to the wine and spirit industry in the world.

2.   RATIONALE FOR THE ACQUISITION

     2.1 The acquisition will result in Equites owning two new, state of the art distribution centres, both of which will be
         occupied by A-grade tenants on long term leases. These distribution centres will therefore add to the quality,
         defensiveness and income predictability of Equites.

     2.2 This acquisition is consistent with Equites’ strategy of acquiring strategically located vacant industrial land in important
         logistics nodes in Cape Town.


3.   TERMS OF THE ACQUISITION

     3.1 The effective date of the acquisition is 1 October 2015 (“effective date”);

     3.2 The anticipated purchase consideration of R52 088 189, is made up as follows:
          3.2.1    an amount equal to approximately R1 121 per square meter in respect of 64 606 square metres of the property,
                   totalling the sum of R72 451 734;

          3.2.2    minus an amount equal to the agreed cost of implementing the outstanding infrastructure services on the
                   property;

          3.2.3    minus the amount of debt funding as at the effective date;

          3.2.4    plus (if the amount is positive) or minus (if the amount is negative) the net working capital as at the effective
                   date;

          3.2.5    minus the amount of any liabilities of the company as at the effective date;

          3.2.6    plus an amount equal to the sum of:

                   • the net rental income in respect of the JF Hillebrand development for the 12 month period after the lease
                       commencement date, capitalised at 8%;

                   • less the cost of the land on which the JF Hillebrand development is located.
    
     3.3 The purchase consideration will be settled on the later of the effective date or 5 days after the fulfilment or waiver, as
         the case may be, of the last condition precedent, by way of the allotment and issue of Equites shares to the seller, at an
         issue price of R12.00 per Equites share.

     3.4 The agreement governing the acquisition provides for warranties and indemnities that are standard for acquisitions of
         this nature.


4.   CONDITIONS PRECEDENT

     4.1 The acquisition remains subject to the fulfilment or waiver, as the case may be, of the following conditions, by no later
         than 30 September 2015:

          4.1.1    the board of directors of Equites approving the acquisition;

          4.1.2    Equites delivering to the seller a written notice confirming that it is satisfied with the results of the due
                   diligence investigation;

          4.1.3    a development agreement being concluded between the parties in respect of certain development activities to
                   be undertaken by the seller on the property;

          4.1.4    the debt funding counterparties having provided such consents or approvals, in writing, as may be required in
                   order for the acquisition to be able to be effected without triggering any event of default or other potential
                   adverse consequence under the relevant debt funding agreements;

          4.1.5    the board of directors of the seller approving the sale;


5    CATEGORISATION OF THE ACQUISITION

     The acquisition is not categorisable in terms of the JSE Listings Requirements and is not subject to approval by Equites
     shareholders.

14 September 2015


Corporate advisor and sponsor
Java Capital

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