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Growthpoint Properties Limited - Offer to acquire a portfolio of properties from Tresso Trading 119 (Proprietary) Limited ("Tresso") Growthpoint Properties Limited (Incorporated in the Republic of South Africa) (Registration number 1987/004988/06) Share code: GRT ISIN: ZAE000037669 ("Growthpoint") Offer to acquire a portfolio of properties from Tresso Trading 119 (Proprietary) Limited ("Tresso") 1. INTRODUCTION Investec Bank Limited ("Investec") is authorised to announce that Growthpoint has made an offer ("the offer") to Tresso to acquire a portfolio of properties ("the proposed acquisition") from Tresso ("the Tresso property portfolio") for an aggregate purchase consideration of R1 632 663 000 ("the purchase consideration"). The proposed acquisition, the terms of which were accepted by Tresso on Wednesday, 25 January 2006 is subject, inter alia, to the fulfilment of the suspensive conditions as set out in paragraph 3 below. 2. THE PROPOSED ACQUISITION 2.1 Rationale for the proposed acquisition Growthpoint"s stated objective is to offer investors geographically and sectorally diversified exposure to physical property assets underpinned by long-term, sustainable, escalating income streams. The proposed acquisition will offer Growthpoint and its linked unitholders increased exposure to the Gauteng, Western Cape and KwaZulu-Natal commercial, retail and industrial sectors, all of which are expected to provide attractive returns over the medium term. The proposed acquisition will increase Growthpoint"s total asset base from R9.6 billion to in excess of R11.0 billion. The Tresso property portfolio will be acquired at an average cost of R7 170/m2 and an average forward yield of approximately 9%. The average forward monthly net rental amounts to R52.20/m2, which is considered low for a portfolio of this quality and nature. As at 31 December 2005 vacancies in the Tresso property portfolio amounted to 9 692m2 or 4.4% of the total gross lettable area ("GLA") of 220 658 m2, which was available as of that date. 2.2 Background information on Tresso Tresso is an unlisted property loan stock company formed in January 2002. The linked unitholders of Tresso are Investec, Investec Employee Benefits Limited and Liberty Group Limited. 2.3 Salient details of the Tresso property portfolio The Tresso property portfolio consists of 24 properties and will have a GLA of 226 766 m2, on completion of an additional 6 108 m2, with respect to current extensions. The sectoral breakdown of the Tresso property portfolio, as well as the impact on the sectoral composition of Growthpoint"s total property portfolio by value, before and after the proposed acquisition, is set out in the table below: Tresso Growthpoint property Combined
Sector before portfolio after Retail 48.1% 35.5% 46.2% Commercial 44.4% 43.0% 44.3% Industrial 6.1% 11.7% 6.9% Other 1.4% 9.8% 2.6% 100.0% 100.0% 100.0% The Tresso property portfolio will increase Growthpoint"s absolute exposure to the Western Cape, a region where it has traditionally been difficult to find good commercial investment properties. The proposed acquisition will continue to improve the overall quality of Growthpoint"s property portfolio whilst diversifying the overall risk within the portfolio, without significantly changing the sectoral or regional composition of the portfolio. 2.4 Purchase consideration The purchase consideration will be settled as to 44.67% cash ("cash consideration") and 55.33% in new Growthpoint linked units ("linked unit consideration"). 2.4.1 The cash consideration is to be raised by Growthpoint utilising short- term debt facilities which it is anticipated will be refinanced utilising the Commercial Mortgage Backed Securitisation structure. 2.4.2 The linked unit consideration, comprising Growthpoint linked units of one ordinary share linked to ten variable rate debentures of 250 cents, will be issued at an ex-dividend price of 1 065 cents per linked unit. This represents a discount of 3.2% to Growthpoint"s closing price of 1 100 cents on the JSE Limited ("JSE") on Thursday, 19 January 2006, being the date on which the final offer to acquire the Tresso property portfolio was approved by the Growthpoint board of directors. A total of 84 821 596 new linked units will be issued in terms of the linked unit consideration, which will represent approximately 10.8% of the total Growthpoint linked units in issue at the completion of the proposed acquisition. The new linked units will be issued within seven working days of the date of registration and transfer of the Tresso property portfolio into the name of Growthpoint. 3. SUSPENSIVE CONDITIONS The proposed acquisition is subject, inter alia, to the fulfilment of the following suspensive conditions: 3.1 Growthpoint being afforded the opportunity to conduct a 30-day technical due diligence review of the Tresso property portfolio to its satisfaction; 3.2 the approval of the related party transaction by Growthpoint linked unitholders in general meeting; 3.3 the conclusion of binding legal agreements between Growthpoint and Tresso; 3.4 to the extent required, the approvals by the relevant regulatory authorities, including but not limited to the JSE, the Securities Regulation Panel and the Competition Authorities; 3.5 Growthpoint obtaining the necessary finance in order to provide guarantees for the cash consideration; and 3.6 the approval of the shareholders of Tresso in general meeting in terms of section 228 of the Companies Act, 1973. 4. FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION The table below sets out the pro forma financial effects of the proposed acquisition on the headline earnings, distribution, net asset value and tangible net asset value per Growthpoint linked unit on the basis that: 4.1 the figures reflected in the "Published before" column are the figures as reflected in the audited results of Growthpoint for the 12 months ended 30 June 2005, published in the press on 10 November 2005; 4.2 the "Pro forma after" column assumes that: 4.2.1 the proposed acquisition had been implemented and the Tresso property portfolio registered and transferred into the name of Growthpoint with effect from 1 July 2004; 4.2.2 the unaudited net property income attributable to the Tresso property portfolio for the 12 months ended 31 March 2005 of R100 015 803 was earned by Growthpoint for the 12-month period commencing 1 July 2004; 4.2.3 an average interest rate of 8.92% per annum before tax for the 12 months ended 30 June 2005 was paid by Growthpoint on the debt raised to settle the cash consideration; 4.2.4 in relation to the pro forma net asset value and tangible net asset value calculation the proposed acquisition had been implemented on 30 June 2005; 4.2.5 no adjustments have been made for any transactions, other than the proposed acquisition, which have taken place subsequent to 30 June 2005. Per Growthpoint Published Pro forma linked unit before after Increase (cents) (cents) (%)
Headline loss for year ended 30 June 2005 (52.47) (1.03) 98.0 Earnings for year ended 30 June 2005 73.5 68.6(1) 6.7 Distribution for year ended 30 June 2005 73.2 68.3(1) 6.7 Net asset value at 30 June 2005 737 774 5.0 Tangible net asset value for year ended 30 June 2005 737 774 5.0 Note: 1 The pro forma financial effects include transaction costs of R12.2 million. The pro forma financial effects set out in the table above are prepared for illustrative purposes only and do not give a true reflection of the anticipated benefits of the proposed acquisition. Taking into account the anticipated net property income for the Tresso property portfolio for the 12-months ending 31 March 2007, on which the purchase consideration was based, Growthpoint anticipates that the proposed acquisition will be earning enhancing. 5. JSE REQUIREMENTS AND CIRCULAR TO GROWTHPOINT LINKED UNITHOLDERS In terms of the Listings Requirements of the JSE- - Growthpoint and Tresso are related parties. Accordingly, Growthpoint is required to obtain an independent fair and reasonable opinion and unitholder approval in a general meeting of unitholders. - Independent third party valuations will be performed on the properties and the related report will be included in the circular to be sent to linked unitholders. A circular incorporating an independent fair and reasonable opinion will be posted to Growthpoint"s linked unitholders in due course. 6. UNDERTAKINGS As at the date of this announcement, eligible Growthpoint linked unitholders controlling 37% of Growthpoint"s linked units have indicated their support for the proposed acquisition. Sandton 26 January 2006 Investment bank Investec Corporate Finance Investec Bank Limited (Registration number 1969/004763/06) Lead sponsor ERNST & YOUNG Sponsors (Pty) Ltd (Registration number 2000/031483/07) Joint sponsor Investec Securities Limited Member of the JSE (Registration number 1972/008905/06) Legal adviser to Growthpoint Fluxmans Attorneys Website: www.fluxmans.com Fluxmans Inc. Registration No: 2000/024775/21 Independent adviser to Growthpoint Grant Thornton Corporate Finance (Pty) Ltd (Registration number 2000/002649/07) Independent reporting accountants ERNST & YOUNG Chartered Accountants (SA) (Registered Accountants and Auditors) KPMG Legal adviser to Tresso Jowell Glyn & Marais Date: 26/01/2006 05:49:55 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
