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Disposal of a portfolio from Fortress Income Fund Limited
RESILIENT PROPERTY INCOME FUND LIMITED
(Incorporated in the Republic of South Africa)
Registration number 2002/016851/06
Share code: RES ISIN: ZAE000043642
(“Resilient”)
DISPOSAL OF A PORTFOLIO OF PROPERTIES TO FORTRESS INCOME FUND LIMITED
INTRODUCTION
Linked unitholders are advised that wholly owned subsidiary companies of Resilient (hereinafter collectively
referred to as “Resilient”) have concluded agreements with a wholly owned subsidiary of Fortress Income
Fund Limited (“Fortress”) for the disposal of the letting enterprises conducted in respect of the properties
known as Nelspruit Plaza, Rustenburg Plaza, Central Park Bloemfontein, New Redruth Village, Sterkspruit
Plaza (82%) and Tzaneen Lifestyle Centre (25%) (collectively, the “disposal properties”), as well as a loan to
a development partner (collectively, the “disposal”).
RATIONALE FOR THE DISPOSAL
Resilient’s strategy is to own dominant retail centres with a minimum of three anchor tenants. Although the
properties being sold perform well and have excellent prospects, they do not fit Resilient’s strategy.
TERMS OF THE DISPOSAL, USE OF PROCEEDS AND CONDITIONS PRECEDENT
In terms of the agreements concluded for purposes of giving effect to the disposal (the “disposal agreements”),
the disposal will be effective from 1 July 2013. The aggregate selling price for the disposal is R1 062 585 984
which will be settled by the payment of R531 292 992 in cash and the balance through the issue of 25 469 463
Fortress A linked units and 25 469 463 Fortress B linked units by Fortress to Resilient. Of the total selling price
payable, R20 595 291 relates to the loan to the development partner.
The cash proceeds from the disposal will be used by Resilient to reduce interest-bearing borrowings. The
Fortress A and B linked units being issued to Resilient pursuant to the disposal will be retained by Resilient for
the time being.
The disposal is subject to:
- the receipt of approval from Fortress’ linked unitholders;
- the receipt of unconditional approval from the Competition Authorities;
- in respect of Nelspruit Plaza, the receipt of written confirmation from Transnet Limited, within 90 calendar
days after the date of signature of the disposal agreement, that it has no objection to and consents to the sale
of the business and the cessation by Resilient to Fortress of its leasehold rights, title and interest in and to
the notarial deed of lease, to the extent that such consent is required; and
- in respect of the disposals of the 82% undivided share in Sterkspruit Plaza and the 25% undivided share in
Tzaneen Lifestyle Centre, Resilient providing written confirmation, within 30 calendar days from the date
of signature of the disposal agreements, that the co-owners of the remaining undivided shares in these
properties, have not exercised their rights of first refusal to acquire the properties or other rights as co-
owners.
The disposal of each property and the loan to the development partner are inter-conditional and must all
become unconditional in accordance with their terms.
The disposal agreements contain warranties that are typical for disposals of this nature.
DETAILS OF THE DISPOSAL
Details of the properties comprising the disposal properties including the property name and address,
geographical location, rentable area, sector, weighted average rental per square metre, purchase price and
valuations attributed to the properties as at 1 July 2013 by Quadrant Properties (Proprietary) Limited
(“Quadrant”), an independent professional associated valuer, are as follows:
Property name and address Geographical location Rentable area Sector
(100%) (m2)
Nelspruit Plaza, corner Henshall and
Bester Streets, Nelspruit Mpumalanga 18 525 Retail
Rustenburg Plaza, 34 Fatima Bhayat
Street, Rustenburg North West 12 188 Retail
Central Park Bloemfontein, corner
Fichardt and Hanger Streets,
Bloemfontein Free State 12 753 Retail
New Redruth Village, St. Austell Street,
New Redruth, Alberton Gauteng 12 028 Retail
Sterkspruit Plaza, corner of Zastron and
Voyizana Roads, Sterkspruit (82%) Eastern Cape 10 696 Retail
Tzaneen Lifestyle Centre, corner
Voortrekker and the P43-3 Roads,
Tzaneen (25%) Limpopo 9 380 Retail
Total 75 570
Weighted
average rental Valuation as at
per square metre Effective date of Disposal price 1 July 2013
Property name and address (R/m2) disposal (R) (R)
Nelspruit Plaza, corner
Henshall and Bester Streets,
Nelspruit 129.01 1 July 2013 312 500 000 312 500 000
Rustenburg Plaza, 34 Fatima
Bhayat Street, Rustenburg 140.18 1 July 2013 260 000 000 260 000 000
Central Park Bloemfontein,
corner Fichardt and Hanger
Streets, Bloemfontein 116.17 1 July 2013 163 000 000 163 000 000
New Redruth Village, St.
Austell Street, New Redruth,
Alberton 103.59 1 July 2013 151 000 000 151 000 000
Sterkspruit Plaza, corner of
Zastron and Voyizana Roads,
Sterkspruit (82%) 89.45 1 July 2013 105 544 287^ 105 544 287
Tzaneen Lifestyle Centre,
corner Voortrekker and the
P43-3 Roads, Tzaneen (25%) 112.46 1 July 2013 49 946 406† 49 946 406
Sub total 1 041 990 693 1 041 990 693
Sterkspruit Plaza – loan to
development partner 20 595 291
Total 1 062 585 984
3
^ Resilient is disposing of its entire 82% undivided share in this property which includes a portion of land held
for development.
† Resilient is disposing of a 25% undivided share in this property which includes a portion of land held for
development.
FINANCIAL EFFECTS
The unaudited pro forma financial effects have been prepared for illustrative purposes only to provide
information on how the disposal may have impacted on the historical financial results of Resilient for the year
ended 31 December 2012. Due to their nature, the unaudited pro forma financial effects may not fairly present
Resilient’s financial position, changes in equity, results of operations or cash flows after the disposal. The
unaudited pro forma financial effects are the responsibility of the directors of Resilient and have not been
reviewed or reported on by Resilient’s auditors or reporting accountants.
The unaudited pro forma financial effects of the disposal on Resilient’s basic earnings per share and per linked
unit and diluted earnings per share and per linked unit for the year ended 31 December 2012 are set out below.
The unaudited pro forma financial effects of the disposal on Resilient’s distribution per linked unit, headline
earnings per share and per linked unit, diluted headline earnings per share and per linked unit, net asset value
and net tangible asset value per linked unit are not material and have not been disclosed.
The unaudited pro forma financial effects have been prepared in accordance with Resilient’s accounting
policies and in compliance with IFRS.
Unadjusted Pro forma after
before the the disposal
disposal (cents) (cents) % change
Basic earnings per share 444.85 471.60 6.0
Basic earnings per linked unit 700.66 730.64 4.3
Diluted earnings per share 427.87 453.59 6.0
Diluted earnings per linked unit 673.91 702.74 4.3
Weighted average number of shares/linked units in
issue 272 329 259 272 329 259 -
Diluted weighted average number of shares/linked units
in issue 283 140 070 283 140 070 -
Notes and assumptions:
1. The amounts set out in the “Unadjusted before the disposal” column have been extracted, without
adjustment, from the condensed audited consolidated financial statements of Resilient for the year ended
31 December 2012.
2. The disposal is assumed to have been implemented on 1 January 2012 for the statement of comprehensive
income purposes.
3. The properties and the loan to the development partner are assumed to be disposed of to Fortress for a
disposal price of R1.04 billion and R20.6 million, respectively.
4. Of the total disposal price, R531.3 million is assumed to be settled in cash and the balance is assumed to
be settled by the issue of 25 469 463 Fortress A linked units at R13.80 per A linked unit and 25 469 463
Fortress B linked units at R7.06 per B linked unit, respectively.
5. The disposal properties earned historical net rental income of R65.1 million for the year ended
31 December 2012.
6. The historical property revenue and expenses were extracted from the underlying books and records of
each disposal property which have not been reviewed or reported on by the auditors or reporting
accountants. However, the directors of Resilient are satisfied with the quality of the information.
7. The cash proceeds of R531.3 million are assumed to be used by Resilient to partly settle interest-bearing
borrowings. Accordingly, interest on loans is assumed to be saved at a rate of 8.62%, being the historical
cost at which Resilient incurred interest for the year ended 31 December 2012.
8. The disposal of the disposal properties is assumed to result in a fair value adjustment of R70.7 million and
a related tax charge of R13.2 million.
9. Interest which was received on the loan to the development partner is assumed to reverse at a rate of 2%
above prime, in accordance with the terms of the loan agreement with the development partner, in respect
of the year ended 31 December 2012.
10. Interest capitalised on land which is held for development is assumed to reverse in respect of the year
ended 31 December 2012.
11. The issue of 25 469 463 Fortress A linked units and 25 469 463 Fortress B linked units to Resilient results
in Resilient’s voting rights in Fortress changing from approximately 10.51% to 17.53% and accordingly
continues to be accounted for as an investment with an additional distributable income of R33.8 million
assumed to be received from Fortress in respect of the year ended 31 December 2012. The distributable
income received from Fortress was based on Fortress’ final distribution of 53.34 cents per A linked unit
and 9.95 cents per B linked unit for the six months ended 30 June 2012 and Fortress’ interim distribution
of 56.01 cents per A linked unit and 13.46 cents per B linked unit for the six months ended
31 December 2012.
12. The fair value gain on the investment in Fortress is assumed to be R15.3 million (net of deferred capital
gains tax of R3.5 million) based on a closing bid price of R14.60 per A linked unit and R7.00 per B
linked unit at 31 December 2012.
13. Distributable income is assumed to be earned evenly throughout the year ended 31 December 2012.
14. All statement of comprehensive income adjustments have a continuing effect.
CATEGORISATION OF THE DISPOSAL
The disposal constitutes a Category 2 transaction for Resilient in terms of the JSE Listings Requirements.
Accordingly, the disposal is not subject to approval by Resilient linked unitholders.
22 March 2013
Sponsor
Java Capital
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