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ARROWHEAD PROPERTIES LIMITED - Proposed acquisition of all Vividend Income Fund Limited (Vividend) linked units and renewal of cautionary

Release Date: 01/04/2014 17:13
Code(s): AWB AWA     PDF:  
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Proposed acquisition of all Vividend Income Fund Limited (“Vividend”) linked units and renewal of cautionary

ARROWHEAD PROPERTIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2011/000308/06)
JSE share code: AWA ISIN: ZAE000158101
JSE share code: AWB ISIN: ZAE000158119
(Approved as a REIT by the JSE)
(“Arrowhead”)


PROPOSED ACQUISITION OFALL VIVIDEND INCOME FUND LIMITED (“VIVIDEND”) LINKED UNITS AND
RENEWAL OF CAUTIONARY


1.   THE VIVIDEND ACQUISITION

     Arrowhead linked unitholders are referred to:

     -     the SENS announcement dated 5 December 2013 in relation to Arrowhead’s acquisition of 31.7% of the Vividend
           linked units in issue from Coronation Fund Managers (the “Coronation acquisition”);

     -     the SENS announcement dated 24 February 2014, in relation to Arrowhead’s acquisition of the equity in Vividend
           Management Group Proprietary Limited (“the Manco acquisition”), the external asset manager of Vividend; and

     -     the joint Arrowhead and Vividend announcement released on SENS today (the “Firm Intention Announcement”)
           relating to Arrowhead’s firm intention to make an offer to acquire all the issued linked units in Vividend (“Vividend
           Linked Units”), which it does not already hold (the “Offer”) by means of one or more indivisibly linked schemes of
           arrangement in terms of section 114 of the Companies Act 71 of 2008, as amended, or if the conditions to which the
           Scheme is subject are not fulfilled, or where applicable waived, (as described more fully below), by means of a
           voluntary general offer extended to all Vividend linked unitholders.

     The Coronation acquisition, the Manco acquisition and the Offer are collectively referred to in this announcement as the
     “Vividend acquisition”. The Vividend acquisition constitutes a category 1 transaction under the JSE Listings Requirements
     and, as set out in the Firm Intention Announcement, the Offer is (amongst other conditions) subject to the requisite approval
     of Arrowhead linked unitholders. A circular in relation to the Vividend acquisition (including details of the Vividend
     acquisition) is being prepared and will be sent to Arrowhead linked unitholders in due course.

2.   PROPERTY SPECIFIC INFORMATION

     The effective date of the Vividend acquisition is 1 April 2014. Details of the properties in the Vividend portfolio, including
     property name and address, geographical location, sector, rentable area, weighted average rental per square meter and the
     valuations attributed to the properties, are as follows:

                                                                                                               Rentable area
         Property name and address                       Geographical location               Sector                     (m2)
         99 Market Street                                Western Cape                        Retail                  28 952
         Montclair Mall                                  KwaZulu-Natal                       Retail                  11 758
         Church Street Pietermaritzburg                  KwaZulu-Natal                       Retail                   5 258
         Clearwater Crossing                             Gauteng                             Retail                  10 092
         Rynfield Shopping Centre                        Gauteng                             Retail                   3 946
         Pick ‘n Pay Odendaalsrus                        Free State                          Retail                   3 682
         Beaufort West Shopping Centre                   Western Cape                        Retail                   6 899
         Market Square Centre King Williams’ Town        Eastern Cape                        Retail                  13 264
         Eersterus Plaza                                 Gauteng                             Retail                   6 950
         Vusani House Witbank                            Mpumalanga                          Retail                   4 632
         Rosettenville Junction                          Gauteng                             Retail                  14 189
         Access Park Retail Centre Kenilworth            Western Cape                        Retail                  18 764
         Sasol Oil, 316 Kent Street, Ferndale            Gauteng                             Office                  13 347
         158 Jan Smuts, Rosebank                         Gauteng                             Office                  19 463
         Owl Street Milpark                              Gauteng                             Office                  14 928
         SARS Durban                                     KwaZulu-Natal                       Office                  21 936
         Tyrwhitt Avenue Rosebank                        Gauteng                             Office                   1 497
         BeyersNaude Blackheath                          Gauteng                             Office                   3 080
         Sasol Gas, 272 Kent Street Ferndale             Gauteng                             Office                   2 526
         Gradner Street Roggebaai                        Western Cape                        Office                   4 901
         SARS Provence House                             Mpumalanga                          Office                   5 866
         Beka Park Jhb                                   Gauteng                      Industrial and Office          21 043
         Beka Park Durban                                Kwa-Zulu Natal               Industrial and Office             735
         Beka Park Bloemfontein                          Free State                   Industrial and Office             391
         Total                                                                                                       238099


                                                           Weighted average rental per square
                                                                                        metre               Valuation as at
         Property name and address                                                     (R/m2)        31 August 2013 (R’000)
         99 Market Street                                                               81.67                       224 000
         Montclair Mall                                                                 93.07                       115 503
         Church Street Pietermaritzburg                                                 73.44                        46 000
         Clearwater Crossing                                                            89.57                        87 600
         Rynfield Shopping Centre                                                       88.85                        27 700
         Pick ‘n Pay Odendaalsrus                                                       61.58                        21 240
         Beaufort West Shopping Centre                                                  58.85                        38 500
         Market Square Centre King Williams’ Town                                       59.67                        74 000
         Eersterus Plaza                                                                56.58                        32 200
         Vusani House Witbank                                                           61.28                        15 600
         Rosettenville Junction                                                         49.29                        42 700
         Access Park Retail Centre Kenilworth                                          160.34                       493 769
         Sasol Oil, 316 Kent Street, Ferndale                                          115.22                       131 000
         158 Jan Smuts, Rosebank                                                        89.85                       182 800
         Owl Street Milpark                                                             92.99                       123 200
         SARS Durban                                                                    72.31                       180 529
         Tyrwhitt Avenue Rosebank                                                      223.00                        33 500
         BeyersNaude Blackheath                                                        130.43                        44 800
         Sasol Gas, 272 Kent Street Ferndale                                            68.09                        29 100
         Gradner Street Roggebaai                                                       63.78                        41 000
         SARS Provence House                                                            88.79                        45 000
         Beka Park Jhb                                                                     62                       142 000
         Beka Park Durban                                                                 Nil                         1 500
         Beka Park Bloemfontein                                                           Nil                         1 500
         Total                                                                           84.34                    2 174 741

     ^ Arrowhead is acquiring the equity in Vividend and has not attributed individual valuations to each of the properties in the
       Vividend portfolio. The values of the properties as set out above are based on the Vividend directors’ valuations as
       extracted from the annual report of Vividend for the year ended 31 August 2013.

3.   UNAUDITED PRO FORMAFINANCIAL EFFECTS

     The table below sets out the unaudited pro forma financial effects of the Vividend acquisitionbased on Arrowhead’s audited
     results for the year ended 30 September 2013. These financial effects are the responsibility of the directors of Arrowhead and
     have been prepared for illustrative purposes only, in order to provide information about the results and financial position of
     Arrowhead assuming that the Vividend acquisitionhad been implemented on 1 October 2012 for purposes of the statement of
     comprehensive income and on 30 September 2013 for purposes of the statement of financial position.

     The table below sets out the pro forma financial effects of the Vividend acquisition based on the 12 months results of
     Arrowhead to 30 September 2013:

                                                                              Before1               After2             Change
                                                                                                                            %
      Basic earnings per A linked unit (cents)                                 145.17               118.03              (18.7)
      Basic earnings per B linked unit (cents)                                 138.02               108.44              (21.4)
      Headline earnings per A linked unit (cents)                               82.48                77.75               (5.7)
      Headline earnings per B linked unit (cents)                               75.32                68.17               (9.5)
      Distribution per A linked unit (cents)                                    60.00                60.00                   -
      Distribution per B linked unit (cents)                                    53.01                50.42               (4.9)
      Net asset value per A and B linked unit                                    6.06                 6.32                6.32
      Tangible net asset value per A and B linked unit                           6.06                 6.17                 1.9

     Notes and assumptions:
      1. The figures set out in the “Before” column above have been extracted, without adjustment, from the reviewed results of
         Arrowhead for the year ended 30 September 2013.

      2. The financial information in the “After” column has been calculated after taking in to account the following
         adjustments:

               a.   The purchase consideration for the Vividend acquisition is assumed to be R1 476.5 million of which R88.6
                    million relates to the Manco acquisition.

               b.   The purchase consideration for the Manco acquisition will be fully funded from interest bearing liabilities at a
                    cost of 9% per annum.The purchase consideration for the Vividend acquisition excluding the Manco acquisition
                    will be settled through the issue of 100 356 052 A and B linked units at a combined linked unit price of R13.53
                    (being the 30 day volume weighted average price immediately prior to and including 28 March 2014).

               c.   Goodwill of R13.6 million has been recognised.

               d.   Transaction costs are assumed to be approximately R5 million and are capitalised in full.

      3. The unaudited pro forma financial effects have not been reviewed or reported on by Arrowhead’s auditors.

4.   RENEWAL OF CAUTIONARY ANNOUNCEMENT

     Arrowhead linked unitholders are referred to the unrelated cautionary announcement released on 19 March 2014 and advised
     that they should continue to exercise caution when dealing in their Arrowhead linked units until such time as a further
     announcement is made.

1 April 2014

Sponsor and Corporate Advisor to Arrowhead
Java Capital

Legal Advisor to Arrowhead
DLA Cliffe Dekker Hofmeyr






Date: 01/04/2014 05:13:00 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.

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