THE PIVOTAL FUND LIMITED - Disposal by Pivotal of shares in Setso Property Fund

Release Date: 22/12/2016 11:08
Code(s): PIV
 
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Disposal by Pivotal of shares in Setso Property Fund

THE PIVOTAL FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2005/030215/06)
JSE share code: PIV ISIN: ZAE000196440
(“Pivotal” or “the company”)


ACQUISITION BY SETSO HOLDCO PROPRIETARY LIMITED OF SHARES IN SETSO PROPERTY FUND


INTRODUCTION AND RATIONALE

Pivotal shareholders are referred to the announcement released on the Stock Exchange News Services (“SENS”) of
the JSE Limited (“JSE”) on 30 August 2016 relating to the proposed acquisition by Redefine Properties Limited
(“Redefine”) of the entire issued share capital of Pivotal by way of a scheme of arrangement in terms of section 114 of
the Companies Act, No. 71 of 2008, as amended (“Companies Act”), to be proposed by the board of directors of
Pivotal between Pivotal and the Pivotal shareholders (“scheme”) and the posting of the circular incorporating the
notice of the general meeting announcement (“the circular”) released on SENS on 31 October 2016.

Pivotal had previously resolved to implement a broad-based black economic empowerment (“B-BBEE”) transaction in
respect of the properties described in the property portfolio details below (“the Setso portfolio”), with a view to
facilitating the establishment of a substantial B-BBEE-owned property fund (“the Setso B-BBEE transaction”).

Consequently, it was agreed with Redefine that the conclusion of the Setso B-BBEE transaction would be a condition
precedent to the scheme.

Pivotal shareholders are advised that Pivotal has concluded a transaction with Setso Holdco Proprietary Limited
(“Setso Holdco”) in terms of which Setso Holdco has acquired 100% of the issued share capital of Setso Property
Fund Proprietary Limited (“Setso”), a subsidiary of Pivotal (“the Setso transaction”).

ARC REAL ESTATE

Setso Holdco is being acquired by African Rainbow Capital Proprietary Limited and Signature Investment Holdings
Proprietary Limited whom have recently entered into a joint venture, ARC Real Estate, with a specific investment
mandate relating to empowerment linked property transactions.

SALIENT TERMS OF THE SETSO TRANSACTION

In terms of the Setso transaction, Setso Holdco has acquired 100% of Setso’s issued share capital with effect from
1 December 2016 (the “effective date”).

Setso Holdco has secured capital of approximately R1.207 billion (“Setso capital”), which includes R410 million of
long-term debt funding from Pivotal (“Pivotal loan”). Setso Holdco will utilise the Setso capital to capitalise Setso
through a combination of subscribing for new equity in Setso as well as advancing debt funding to Setso. Setso will
utilise the Setso capital to discharge its obligations to Pivotal and Pivotal group entities of approximately R1.207 billion
in cash. The cash proceeds of R1.207 billion received by Pivotal will be used to advance the Pivotal loan and the
balance, being approximately R797 million, will be used by Pivotal to pay down existing debt facilities.

The Setso transaction remains conditional upon the conclusion of administrative arrangements and procedural
statutory requirements necessary to give effect to the Setso transaction.

The Setso transaction includes warranties, undertakings and indemnities which are normal for an acquisition of this
nature.

DETAILS OF THE SETSO PORTFOLIO

Details of the properties in the Setso portfolio, including property name, address, geographical location, sector, gross
lettable area, weighted average rental per square metre, the net property income for the period 1 September 2015 to
31 August 2016 and the Setso transaction values as at 1 December 2016 attributed to the properties are as follows:

 Property name                Address and geographical              Total       Gross     Attributable             Setso
 (% ownership)                location                           GLA (m2)      rental    net property       transaction
                                                                               per m2      income (R)        values (R)

 OFFICES
 55 Hyde Park (100%)          55 Sixth Road, Hyde Park,             2 191         125       2 872 490        40 879 941
                              Gauteng
 Avanti Office (100%)         35 Carl Cronje Drive, Tyger           8 600         170      12 011 446       152 336 714
                              Valley, Cape Town
 Carnation Place (100%)       Constantia Boulevard,                 4 541         143       8 818 952        78 954 618
                              Roodepoort, Gauteng
 Detnet (66%)                 Centenary Road,                       2 074         135       2 714 760        30 179 357
                              Modderfontein, Gauteng
 GM Hatfield (25%)            Cnr Francis, Baard and Jan            2 958         204       1 021 499        12 991 834
                              Shoba Street, Hatfield
 Hertford (A – E) (33%)       Bekker Road, Vorna Valley,           28 852         117       5 886 450        59 661 883
                              Midrand, Gauteng
 Monte Circle (18%)           Monte Circle Office Park,             5 095         150       1 764 430        18 925 342
                              Fourways, Gauteng
 Valley View Office Park      680 Joseph Lister Street,             6 943         111       9 280 560        65 779 032
 (100%)                       Roodepoort, Gauteng
 Wanderers Office Park,       52 Corlett Drive, Illovo,             7 771         123      12 483 208       140 656 917
 The Oval (100%)              Gauteng
 Wanderers Office Park,       52 Corlett Drive, Illovo,             4 444         146       8 880 504       102 224 032
 The Pavillion (100%)         Gauteng
 Total Office                                                      73 469           -      65 734 299       702 589 671

 RETAIL
 Chilli Lane Shopping         Cnr Rivonia and Leeuwkop             13 318         138      20 397 699       183 103 711
 Centre (100%)                Roads, Sunninghill, Gauteng
 Chilli on Top Shopping       Cnr Rivonia and Leeuwkop              5 140         112       4 505 942        74 251 068
 Centre (100%)                Roads, Sunninghill, Gauteng
 The Square @                 Cnr Klei & Klip Roads,                6 521         158      10 596 242       116 273 694
 Farrarmere (100%)            Farrarmere, Benoni, Gauteng
 Total Retail                                                      11 661           -      35 499 883       373 628 474

 DEVELOPMENTS
 Hertford Office Park         Bekkers Road, Vorna Valley,          12 606           -               -        41 681 346
 (33%) Buildings F & G        Midrand
 Monte Circle Office Park     Montecasino Boulevard,                4 435           -               -        10 461 860
 (18%) – Building B           Fourways
 Total Developments                                                17 041           -               -        52 143 206

 VACANT LAND
 Constantia Corner            William Nicol Road North,                 -           -               -         7 100 000
 (100%)                       Constantia Kloof, Roodepoort
 Hertford Office Park         Bekkers Road, Vorna Valley,               -           -               -        21 473 833
 (33%)                        Midrand
 Monte Circle Office Park     Montecasino Boulevard,                    -           -               -        24 965 669
 (18%)                        Fourways
 Monte Place (Signature       Cnr Montecasino Boulevard,                -           -               -        25 384 233
 Square) (20%)                William Nicol Road, Fourways
 Total Vacant Land                                                      -           -               -        78 923 735
 Total                                                            102 171           -     101 234 182     1 207 285 086

VALUATION

The board of directors of Pivotal is satisfied that the aggregate value attributed to the Setso portfolio, and the
individual values attributed to each of the properties forming part of the Setso portfolio, for purposes of the
determination of the amounts payable in terms of the Setso B-BBEE transaction, as summarised above, are in line
with the directors own assessment of the aggregate value of the Setso portfolio and the individual values of each of
the properties forming part of the Setso portfolio. The directors of the company 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.

CATEGORISATION

The Setso transaction is classified as a category 2 transaction in terms of the JSE Listings Requirements and
accordingly does not require the approval of Pivotal shareholders.

22 December 2016

Sponsor
Java Capital

Legal advisor
Cliffe Dekker Hofmeyr

Date: 22/12/2016 11:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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