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Letter to Fortress unitholders
FORTRESS INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2009/016487/06
Share codes: FFA ISIN: ZAE000141313
FFB ISIN: ZAE000141321
(“Fortress”)
16 November 2012
Dear Unitholder
Investors will be aware of a long running anonymous smear campaign against Fortress and other
companies in the same stable. It has been ascertained that the campaign emanated from a competitor.
Against this background, the board of Fortress has resolved to tackle head on any attempted
manipulations of disgruntled competitors.
Two of the property acquisitions of Fortress at the time of its listing in 2009 were recently commented on
in a Sunday newspaper. This press report follows an application to the High Court in which Mark
Stevens, the CEO of Fortress, and others were granted an interdict preserving the confidentiality of
private records pending a court review. The review will determine whether the records were sought as an
abuse of process by a disgruntled competitor, its private investigators who sought to use the anonymous
smear emails to their client’s advantage, and certain elements within the SAPS.
The relevant facts, which did not appear in the press, are summarised below.
When Fortress listed, it issued a prospectus setting out relevant information for prospective investors,
including the details of its acquisitions prior to listing, the shareholding of Mark Stevens and Andrew
Teixeira in vendors to Fortress of certain properties, as well as the consideration paid by these vendors in
respect of these properties.
Madison Park properties
Fortress acquired this portfolio of properties for R128.2 million from a company in which Mark had an
indirect interest. Mark’s shareholding, the price paid for the property by the company that sold it to
Fortress and the price paid by Fortress were disclosed in the prospectus. The purchase price paid by
Fortress represented market value, as confirmed by the report of an independent valuer summarised in the
prospectus. In Fortress’ hands, the properties continued to increase in value. Fortress sold two of the
properties in 2011 for a profit and, taking these realised proceeds together with the latest independent
valuations of the retained properties, the portfolio is now worth more than R148.2 million.
Sasol Rosebank
Fortress acquired this property for R96 million from a company in which Andrew had an indirect
interest. Andrew’s shareholding, the price paid by Fortress and the price paid for the property by the
company that sold it to Fortress were disclosed in the prospectus. Similarly, the purchase price paid by
Fortress was market value confirmed by an independent valuer as reflected in the prospectus.
When the company, in which Andrew had an indirect interest, bought the property, the property was
earmarked for demolition by the previous owner, Old Mutual. There were three tenants remaining in the
building, all of whom had been given notice to vacate. The building was effectively a shell and required
redevelopment. In the course of the redevelopment, the lettable area was increased by approximately
1 000 m2 and additional parking was added. The vendor secured Sasol as a key tenant for the majority of
the building on a 5-year lease commencing 1 September 2009 and escalating at 9% annually. The rentals
of the building were disclosed in Fortress’ financial statements. There is clearly no comparison between
the building sold by Old Mutual and the building acquired by Fortress.
In the latest financial statements of June 2012, the Sasol Rosebank property was independently valued at
R128 million.
Performance
All who invested in Fortress at the time of its listing have benefited from the success of Fortress and the
appreciation in the price of its units. The combined unit price of Fortress A and B units at listing was
R10.00. At 13 November 2012, the same combined price had increased to R20.70, an increase of
107.0%. The average increase in value of the listed property sector for the same period (based on the
JSAPY index) was 46.9%.
Mark, Andrew and other executives in the stable, have increased their investment in Fortress since its
listing.
Yours sincerely
The board of directors
Fortress Income Fund Limited
Fortress Income Fund Limited
Reg. no. 2009/016487/06
3rd Floor Rivonia Village, Rivonia Boulevard, Rivonia, 2191 PO Box 2555, Rivonia, 2128 Tel: +27(11) 612 7500 Fax: +27(11) 612 7599
Directors: Jeff Zidel (Chairman); Mark Stevens*; Kura Chihota; Nontando Kunene;
Chris Lister-James; Wiko Serfontein*; Djurk Venter (* executive director)
Company secretary: Stephanie Botha
Date: 16/11/2012 08:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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