ARROWHEAD PROPERTIES LIMITED - Acquisition of property letter enterprise and cautionary

Acquisition of property letter enterprise and cautionary

ARROWHEAD PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2011/000308/06)
JSE share code: AWA ISIN: ZAE000158101
JSE share code: AWB ISIN: ZAE000158119
(Approved as a REIT by the JSE)
(“Arrowhead”)


ACQUSITION OF PROPERTY LETTING ENTERPRISE AND CAUTIONARY


1.   Introduction

     Linked unitholders are advised that Arrowhead has concluded an agreement for the acquisition of a
     property letting enterprise and its related immovable properties situate at 55, 57 and 59 Glover Road,
     Honeypark Extension 20 (the “immovable properties”) (the “business”) from The Standard Bank of
     South Africa Limited for an aggregate purchase consideration of R150 million (the “acquisition”).

     The immovable properties comprise 333 residential units, all of which are let to Monash South Africa
     Limited (“Monash”) in terms of a triple net lease. Monash in turn sub-lets the units to students who
     attend Monash.

     The acquisition furthers Arrowhead’s strategy of expanding its residential property portfolio and, at a
     forward yield of approximately 12%, is in line with Arrowhead’s focus on distribution enhancing
     acquisitions. After the implementation of the acquisition and the previously announced Jika acquisition,
     Arrowhead’s residential portfolio will be worth approximately R550 million. Arrowhead intends to
     continue to actively explore opportunities to grow its residential portfolio in an effort to provide
     unitholders exposure to what Arrowhead considers a high growth sector of the real estate market that (at
     approximately 1% of the listed sector compared to approximately 15% in the larger developed markets) is
     underrepresented in the South African listed sector.

2.   Terms of the acquisition and condition precedent

     Arrowhead will acquire the business with effect from 1 February 2014 (the “effective date”), provided
     that should the approval of the Competition Authorities not have been received on or before 1 February
     2014, Arrowhead will acquire the business with effect from the first business day of the month following
     the month in which the Competition Authorities approve the transaction.

     The total purchase consideration payable by Arrowhead in respect of the acquisition is R150 million
     (inclusive of VAT) (the “purchase price”) which will be discharged in cash on the effective date.
     Arrowhead intends funding the purchase price from existing debt facilities.

     The acquisition remains conditional upon approval by the Competition Authorities.
3.   The property portfolio

     The property specific information required in terms of the JSE Listings Requirements in relation to the
     acquisition including property name and address, geographical location, rentable area, and weighted
     average rental per square metre is set out below.

      Property name and address                  Sector          Geographical        Rentable       Weighted
                                                                 location                Area        Average
                                                                                          (m2)    rental per
                                                                                                          m2
      Redwood, 55 Glover Road,                   Residential     Johannesburg           9 257        R88.70*
      Honeypark Extension 20
      Rosewood, 57 Glover Road,                  Residential     Johannesburg           6 838        R88.70*
      Honeypark Extension 20
      Ironwood, 59 Glover Road,                  Residential     Johannesburg           6 362        R88.70*
      Honeypark Extension 20

     * The weighted average rental per square metre amounts to R88.70. However, as the immovable
        properties comprise residential units, the rental of R5 982 per unit is more meaningful. There are 136
        residential units situated at Redwood, 100 residential units situated at Rosewood and 97 residential
        units situated at Ironwood.

     No independent valuation has been carried out and the board of Arrowhead is of the view that the
     purchase price of R150 million represents the value of the immovable properties as at the effective date.

4.   Categorisation of the acquisition

     The acquisition is classified as a Category 2 transaction in terms of the JSE Listings Requirements.
     Accordingly it is not subject to approval by Arrowhead’s linked unitholders.

5.   Financial effects and cautionary

     The financial effects of the acquisition are still in the process of being finalised and will be published in
     due course. Unitholders of Arrowhead are advised to continue to exercise caution when dealing in their
     linked units until the financial effects of the transaction are announced.

9 December 2013


Corporate advisor, legal advisor and sponsor

Java Capital

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