TEXTON PROPERTY FUND LIMITED - Update on the acquisition of the portfolio referred to as the Blend portfolio

Update on the acquisition of the portfolio referred to as the “Blend” portfolio

TEXTON PROPERTY FUND LIMITED
Granted REIT status by the JSE
(Incorporated in the Republic of South Africa)
(Registration number 2005/019302/06)
JSE code: TEX
ISIN: ZAE000190542
(“Texton” or “the Company”)



UPDATE ON THE ACQUISITION OF THE PORTFOLIO REFERRED TO AS THE “BLEND” PORTFOLIO

1.    INTRODUCTION

Shareholders are referred to the announcement released on SENS on 27 May 2016 (the “Initial
Announcement”) relating to the acquisition of two property portfolios in South Africa and in the
United Kingdom (collectively, the “Blend Acquisition”).

In light of prevailing market conditions, and to ensure that the Company is no longer required to raise
equity to fund the Purchase Consideration, Texton has renegotiated the terms of the Blend
Acquisitions as follows:

      -     Texton has agreed terms to acquire 4 of the original 9 properties contained in the Initial
            Announcement (“Revised Portfolio”). Two of the Revised Portfolio properties are located in the
            UK (collectively the “UK Revised Portfolio”) and 2 of the Revised Portfolio properties are located
            in South Africa (collectively the “SA Revised Portfolio”)
      -     The sale agreements in relation to the remainder of the properties per the Initial Announcement
            have been terminated, except for the Chatham Building in the UK, where Texton has secured an
            option to acquire it for a period of 12 months following the acquisition date of the UK Revised
            Portfolio.

Details of the Revised Portfolio are set out below:

UK Revised Portfolio:

                                Heapham Road            Mowbray House              Total
Purchase consideration          £6.42 million           £9.73 million              £16.15 million 
                                (R111.05 million)1      (R168.30 million)1         (R279.35 million)1
                                                      
Location                        Gainsborough, UK        Nottingham, UK

Sector                          Industrial              Office
                                
Tenant(s)                       Coveris Flexibles UK    Browne Jacobson LLP
                                Limited
                                                
GLA (ft2)                       85 161                  57 690                    142 851

WALE (years)                    15.5                    5.8                       11.76

Vacancies (%)                   0%                      0%                        0%

Rental/ ft2 (£)                 5.09                    13.54                     10.88
                                (R88.04)¹                (R234.20)¹                (R188.19)¹
      

Net Income from 1 Aug 2016 to   433.32                  744.92                    1 178.24
31 July 2017 (£’000)            (R7 495.14)¹            (R12 884.88)¹             (R20 380.02)¹
      
1.   Converted at the spot exchange rate as at 17:00, 16 August 2016 of £1:R17.2970

SA Revised Portfolio:

                                18 Skeen Boulevard      16 Skeen Boulevard                    Total

Purchase consideration          R51.03 million          R47.66 million            R98.69 million

Location                        Befordview, South       Befordview, South
                                Africa                  Africa

Sector                          Office                  Office

Tenant(s)                       PG Glass                Multi-tenanted

GLA (m2)                        3 850                   3 847                   7 697
       
WALE (years)                    6.36                    2.77                    4.56

Vacancies (%)                   0%                      2%                      1%
                  
Rental/m2 (R)                   124.69                  118.68                  121.68

Net Income from 1 Aug 2016 to 31

July 2017 (Rm)                  4.68                    4.47                    9.15
       

The portfolios now represent a yield of 9.3% in SA (previously 9.6%) and 7.3% in the UK (previously
6.9%).

The effective date for the acquisition of the UK Revised Portfolio is 17 August 2016, and the SA Revised
Portfolio will be on or about 23 August 2016 (“Effective Date”).

2.   PROPOSED FUNDING OF THE REVISED PORTFOLIO
     The total purchase consideration of the Revised Portfolio of R378.04 million (“Purchase
     Consideration”), is R88.34 million lower than the initial purchase consideration of the properties
     contained in the Revised Portfolio due to favourable currency movements since the Initial
     Announcement date.
     The Purchase Consideration is payable in cash and will be funded through a combination of new debt
     facilities and cash proceeds generated from the sale of non-core properties.
     The full purchase consideration of the UK Revised Portfolio has been funded using 5-year term funding
     fixed at an all-in rate of 2.49%.
     Shareholders are hereby advised that Texton will no longer consider raising equity to fund any of the
     Purchase Consideration.


3.   CATEGORISATION AND UPDATE ON CONDITIONS PRECEDENT
     The acquisition of the Revised Portfolio constitutes a category 2 transaction in terms of the JSE Listings
     Requirements and, accordingly, does not require approval by Shareholders.
     All conditions precedent relating to the acquisition of the Revised Portfolio have been fulfilled and the
     Blend Acquisition is unconditional.

Hyde Park

17 August 2016


Corporate advisor and Sponsor to Texton
Investec Bank Limited

Corporate advisor to the Blend group of companies
Java Capital

Legal advisors for the SA Acquisition
Cliffe Dekker Hofmeyr

Legal advisors for the UK Acquisition
Osborne Clarke LLP
Pinsent Masons LLP

Competition Law advisors for the SA Acquisition
Baker McKenzie

Date: 17/08/2016 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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