Acquisition of Clifton Place and cautionary announcement TOWER PROPERTY FUND LIMITED (formerly Reftin 1004 Proprietary Limited) (Registration number 2012/066457/06) JSE share code: TWR ISIN: ZAE000179040 (Approved as a REIT by the JSE) (“Tower”) ACQUISITION OF CLIFTON PLACE AND CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Tower has concluded an agreement (“acquisition agreement”) with Motifprops 77 Proprietary Limited (“the seller”) for the acquisition of the seller’s rental enterprise in respect of the property known as Clifton Place (“Clifton Place” or “the property”) which includes all of the issued shares in and claims against NIB 69 Share Block Proprietary Limited (“NIB 69 Share Block”), a share block company operating a share block scheme, and all the seller’s rights under leases with tenants of Clifton Place for an amount of R80 500 000 (“the acquisition”). 2. RATIONALE FOR THE ACQUISITION The acquisition is in line with Towers’ strategy of targeting good quality, well located, medium-sized properties in major metropolitan areas. The property is located alongside the well known Musgrave Shopping Centre in Berea, Durban. Berea is an extremely densely populated area and these offices provide suitable office accommodation with access to the retail amenities provided by the adjacent Musgrave Shopping Centre. The location is convenient to staff from Amanzimtoti in the south to Umhlanga in the north. Save for 226 square metres which is vacant, the building is fully occupied and provides desirable space at competitive rentals. 3. DETAILS OF THE PROPERTY Clifton Place (portion 49 of Erf 2242, Durban) is an A-grade 5 storey office block with a gross lettable area of approximately 6 340 square metres. There are 3 levels of basement parking providing 4 bays per 100 square metres. The weighted average rental per square metre of Clifton Place is R114.7. The building provides excellent security which is monitored by 16 CCTV cameras and 24 hour security guards. The building is in excellent condition and has a backup generator in the event of power failures. The South African Local Government Association occupies 1 400 square metres and a well-known firm of attorneys, JH Nicholson, occupies 660 square metres. Other tenants include blue chips such as Discovery Limited and the MMI Group Limited. The board is satisfied that the value of the property is in line with the purchase consideration being paid by Tower for the rental enterprise including the shares in and claims against NIB 69 Share Block. The directors of Tower are not independent and are not registered as professional valuers or as professional associate valuers in terms of the Property Valuers Profession Act, No 47 of 2000. 4. TERMS OF THE ACQUISITION 4.1. Tower will acquire Clifton Place with effect from (“the effective date”) the later of: 4.1.1. the last day of the month following the month during which the last of the conditions precedent are fulfilled or waived; and 4.1.2. the date on which a first mortgage bond over the property has been registered. 4.2. Purchase consideration and rental guarantee 4.3.1. The purchase consideration of R80 500 000 (“purchase consideration”) will be settled on the effective date and will be discharged as follows: 4.3.1.1. R40 250 000 payable in cash; and 4.3.1.2. the balance of R40 250 000 will be payable by crediting an interest-free loan account which will be settled by way of the allotment and issue of such number of Tower shares (“consideration shares”), at an issue price being the lower of R8.50 and the 30 day volume weighted average price per Tower share at the effective date, as equals R40 250 000 (“issue price”). 4.3.2. The seller will receive the distribution on consideration shares for the six month period from 1 December 2013 to 31 May 2014 and accordingly will repay that portion of the distribution relating to the period from 1 December 2013 to the effective date (“undue amount”) to Tower within 5 business days of the payment of the distribution. 4.3.2. The seller has agreed to indemnify Tower and NIB 69 Share Block against any shortfall in the actual rental income of Clifton Place against the forecast gross monthly rental up to a maximum amount of R1 699 042 (“rental guarantee”) for a period of 24 months from the effective date (“rental guarantee period”). 4.4 As security for the due and proper performance of the seller’s obligations in terms of the acquisition agreement, including in respect of the repayment of the undue amount and the rental guarantee, the seller has pledged to Tower a portion of the consideration shares (“pledged shares”) that at the issue price equals the value of the rental guarantee amount and the anticipated undue amount (“pledge”). 4.5 The acquisition agreement provides for warranties and indemnities that are normal for acquisitions of this nature. 5. CONDITIONS PRECEDENT The acquisition is subject to the fulfilment or waiver of the following suspensive conditions: 5.1. that by no later than 17h00 on 15 February 2014, Tower secures a loan in an amount of R44 275 000 plus all related transaction costs, secured by a first mortgage bond over Clifton Place; and 5.2. that by no later than 17h00 on 15 February 2014, Tower receives written confirmation that certain lease agreements with tenants as specified in the acquisition agreement in respect of Clifton Place, remain valid. 6. CATEGORISATION OF THE ACQUISITION The acquisition constitutes a category 2 transaction in terms of the JSE Listings Requirements and accordingly does not require approval by shareholders. 7. FINANCIAL EFFECTS AND CAUTIONARY The financial effects of the acquisition will be published shortly. Shareholders of Tower are advised to exercise caution when dealing in their shares until the financial effects of the acquisition are announced. 11 February 2014 Corporate advisor and sponsor Java Capital Legal advisor Cliffe Dekker Hofmeyr Inc. Date: 11/02/2014 12:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.