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Redefine Income Fund Limited - Acquisition of Rand Leases Portfolio of Investment Properties Redefine Income Fund Limited (Registration No. 1999/018591/06) (a company incorporated in South Africa) ("Redefine") Share Code: RDF ISIN: ZAE 000023503 Announcement relating to the acquisition of the investment property portfolio of Rand Leases Properties Limited ("Rand Leases") and Withdrawal of Cautionary Announcement Introduction Redefine, through its wholly owned subsidiary, Outward Investments (Pty) Limited ("Outward") owns a portfolio of listed securities focused exclusively on the real estate sector of the JSE Securities Exchange South Africa ("JSE") and a portfolio of commercial properties covering the retail, office and industrial sectors. Further to the previous cautionary announcements, the last of which was published on 3 October 2002, Corpcapital Corporate Finance is authorised to announce that Redefine and Outward have concluded an agreement ("the agreement") with Rand Leases (acting in its own capacity and on behalf of its wholly owned fixed property subsidiaries) for the acquisition of 27 property letting businesses ("the properties") within its investment property portfolio ("the acquisition"). Rationale Redefine has actively been seeking to augment its direct property holdings against its larger portfolio of listed securities. The acquisition and the Rand Leases linked unit buy-back provides Redefine with the opportunity to acquire the Rand Leases portfolio of investment properties, comprising a mix of mainly A grade commercial offices in prominent locations with single to multi-tenanted occupancies and three retail centres, and reduces Redefine`s exposure to the property development business within Rand Leases. The acquisition In terms of the agreement, Outward will, with effect from 1 November 2002, purchase as a going concern the properties subject to the fulfilment (or waiver) of the conditions precedent set out below. The aggregate purchase price in respect of the acquisition is R349 500 000. The purchase price is to be settled as follows: * an amount in cash of R6 000 000 payable into trust on the effective date; * an amount in cash necessary to settle any outstanding mortgage bonds over the underlying properties as at and payable on the transfer date in respect of each property, up to a maximum of R267 000 000 for all the properties; * the balance by the issue of Redefine linked units at an issue price of R2,47 per linked unit ("consideration units") on the transfer date of each property, subject to the set-off described in paragraph 4. Specific repurchase of Rand Leases linked units Rand Leases has agreed to repurchase 14 000 000 Rand Leases linked units from Outward (the "buy-back"). The buy-back purchase consideration payable by Rand Leases is to be set-off against Redefine`s obligation to allot consideration units (in a ratio of one consideration unit for every 1.6 Rand Lease linked units repurchased) as and when Redefine would otherwise be obliged to allot consideration units in terms of the agreement. Condition precedent The agreement is subject to the fulfilment (or waiver) of the following conditions precedent: * the furnishing by Outward of a bank guarantee for payment of the cash portion of the purchase price on the effective date; * the approval of Redefine linked unitholders to the acquisition being obtained; * the approval of Rand Leases linked unitholders to the acquisition and the buy- back being obtained; and * the approval of the Competition Commission being obtained. Other than the furnishing of the bank guarantee by Outward, the remaining conditions precedent are required to be fulfilled (or waived) by 15 December 2002 or such later date as agreed in writing between the parties. Financial effects of the acquisition The pro forma financial effects of the acquisition on the historical earnings, headline earnings and net asset value (inclusive of unpaid distributions) per Redefine linked unit are illustrated in the table below: Cents per Cents per linked unit linked unit after the before the acquisition %
acquisition and buy back Historical earnings 8.52 9.60 12.68 Historical headline 37.07 35.61 (3.94) earnings Historical net asset value 244.00 243.23 (0.32) (inclusive of unpaid distributions) Historically, the net income from the Rand Leases portfolio of investment properties for the financial year ending 30 June 2002 includes certain under- recoveries of a non-recurring abnormal nature. The necessary adjustments were effected to the purchase price of the portfolio. It is anticipated that future performance of the portfolio (when compared to the historic financial effects) will consequentially improve under Redefine`s management. The historical earnings and headline earnings per Redefine linked unit as set out in the "before acquisition" column of the table, are based upon Redefine`s audited results for the year ended 31 August 2002. The historical net asset value (inclusive of unpaid distributions) per Redefine linked unit as set out in the "before acquisition" of the table, is based upon Redefine`s audited balance sheet at 31 August 2002, in which both the listed security portfolio and the direct property portfolio are stated at their fair value. The historical earnings and headline earnings per Redefine linked unit as set out in the "after acquisition" column of the tab1e, are based on the assumption that certain of the properties were effectively acquired on 1 September 2001 and the remainder on 15 November 2001 (as Rand Leases acquired the investment portfolio in tranches) and the acquisition was settled by the payment of the requisite cash amount and issue of Redefine linked units, on those dates. The historical net asset value (inclusive of unpaid distributions) per Redefine linked unit as set out in the "after acquisition" column of the table, is based on the assumption that certain of the properties were acquired on 1 September 2001 and remainder on 15 November 2001 (as Rand Leases acquired the investment portfolio in tranches) and the acquisition was settled by the payment of the requisite cash amount and issue of Redefine linked units, on those dates. Circular and Withdrawal of cautionary announcement A circular containing further details of the acquisition and incorporating a notice of general meeting will be sent to Redefine unitholders in due course. Redefine unitholders are no longer advised to exercise caution when dealing in their linked units. Johannesburg 10 October 2002 Corporate Advisor and Legal Advisor Reporting Sponsor Accountants Corpcapital Corporate Corpcapital Fisher Hoffman Finance Transaction PKF (Jhb) Inc. Support Date: 10/10/2002 05:15:00 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
