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LIBERTY TWO DEGREES - Acquisition of properties pursuant to exercise of Put Option by Liberty Group Limited

Release Date: 26/07/2017 14:19
Code(s): L2D     PDF:  
Wrap Text
Acquisition of properties pursuant to exercise of Put Option by Liberty Group Limited

LIBERTY TWO DEGREES
JSE share code: L2D
ISIN: ZAE000230553
(Approved as a REIT by the JSE)
(“Liberty Two Degrees”)
a portfolio established under the Liberty Two Degrees
Scheme,
a Collective Investment Scheme in Property established
in terms of the Collective Investment Schemes Control Act, No 45 of 2002, as amended,
and managed by STANLIB REIT Fund Managers Proprietary Limited (RF)
(Registration number: 2007/029492/07)
(“the Manager”)


ACQUISITION OF PROPERTIES PURSUANT TO EXERCISE OF PUT OPTION BY LIBERTY GROUP LIMITED


1.   THE TRANSACTION

     Unitholders of Liberty Two Degrees are advised that Liberty Group Limited ("Liberty") has sold to Liberty Two
     Degrees further undivided shares ("Additional Shares") in properties (and letting businesses carried on thereon)
     that it co-owns ("Properties") to the value of R2,512,904,670 pursuant to Liberty exercising its put option
     ("Put Option") in terms of the relationship agreement ("Relationship Agreement") entered into between Liberty
     Two Degrees and Liberty on or about 10 November 2016. A summary of the Relationship Agreement is set out in
     paragraph 2.3 of the pre-listing statement issued by Liberty Two Degrees on 21 November 2016.

     In terms of the Relationship Agreement, Liberty Two Degrees granted Liberty the Put Option in terms of which
     Liberty may sell further portions of its undivided shares in the Properties to Liberty Two Degrees from time to
     time. If Liberty exercises the Put Option, Liberty Two Degrees has the election whether to pay cash or to issue
     units to Liberty in consideration therefor.

     As contemplated in the Relationship Agreement, Liberty Two Degrees delivered an independent valuation of the
     properties carried out by independent registered valuers in accordance with section 13.20 of the JSE Listings
     Requirements to Liberty for the period ended 30 June 2017 ("Valuation Report").

     Pursuant to receiving the Valuation Report from Liberty Two Degrees, Liberty exercised the Put Option in respect
     of the Additional Shares reflected in the table below, and the terms of the resultant transaction ("Transaction") are
     set out in this announcement.

     Prior to the exercise of the Put Option, Liberty Two Degrees owned 22% of the Liberty Property Portfolio. Pursuant
     to the exercise of the Put Option, Liberty Two Degrees will own 31% of the Liberty Property Portfolio, in the
     proportions reflected in the table below.

     Property name       % of             Additional Share     Valuation as at      Consideration      % of
                         ownership of     of the Liberty       30 June 2017         payable for the    ownership of
                         Property         Property Portfolio   (Liberty Two         Additional         Property
                         owned by         (“LPP”) to be        Degrees and LPP      Share              owned by
                         Liberty Two      acquired by          interest,                               Liberty Two
                         Degrees prior    Liberty Two          collectively)                           Degrees
                         to the           Degrees pursuant                                             pursuant to
                         exercise of      to the exercise of                                           the exercise
                         the Put          the Put Option                                               of the Put
                         Option                                                                        Option

     Sandton             City 16.5%       6.75%                R9,939,000,000       R894,510,000       23.25%
     Complex
     Eastgate            22%              9.00%                R8,752,000,000       R787,680,000       31.00%
     Complex
     Melrose Arch*       5.5%             2.25%                R1,962,250,000       R176,602,500       7.75%
     Liberty             22%              9.00%                R1,456,000,000       R131,040,000       31.00%
     Promenade
     Shopping Centre
     Liberty             22%              9.00%                R2,017,500,000       R181,575,000       31.00%
     Midlands Mall
     Nelson Mandela      22%              9.00%                R1,815,000,000       R163,350,000       31.00%
     Square
     Botshabelo Mall     15.4%            6.30%                R210,609,000         R18,954,810        21.70%
     John Ross Eco       22%              9.00%                R158,800,000         R14,292,000        31.00%
     Junction            -
     varying serviced
     stands
     John Ross Eco       22%              9.00%                R58,260,000          R5,243,400         31.00%
     Junction            -
     Tangawizi
     Motors
     John Ross Eco       - 15.4%          6.30%                R245,084,000         R22,057,560        21.70%
     Junction            -
     Melomed
     Hospital**
     Liberty Centre      22%              9.00%                R360,310,000         R32,427,900        31.00%
     Head Office
     (Cape Town)
     Liberty Centre      22%              9.00%                R414,500,000         R37,305,000        31.00%
     Head Office
     (Umhlanga)
     Standard Bank       11%              4.50%                R531,850,000         R47,866,500        15.50%
     Building            -
     5 Simmonds
     Street*
     Total                                                     R27,921,163,000     R2,512,904,670

     * The purchase of the Additional Shares in each of these Properties remains subject to a pre-emptive right in favour
       of a third party co-owner of that Property.** The property is still under construction and due for completion on
       30 September 2017.

2.   RATIONALE FOR THE TRANSACTION

     Liberty Two Degrees believes in the resilient nature and quality of the Properties it already owns and the additional
     stake supplements the existing position and supports the funds growth prospects. Liberty Two Degrees has elected
     to settle the consideration payable in cash in order to deploy the majority of its cash resources.

3.   CONSIDERATION

     The consideration payable by Liberty Two Degrees for the acquisition of the Additional Shares from Liberty is an
     amount of R2,512,904,670 plus an amount equivalent to interest thereon calculated at 9.342% nominal annual
     compounded quarterly (3 month JIBAR as at 30 June 2017 plus 200 basis points) from 30 June 2017 until the date
     on which it is paid to Liberty ("Option Price"). The Option Price was calculated in the manner reflected in the
     table in 1 above by reference to the percentage undivided share of each Additional Share and the valuation of the
     Properties as reflected in the Valuation Reports. Liberty Two Degrees will pay the cash Option Price on or before
     8 August 2017.

4.   THE EFFECTIVE DATE OF THE TRANSACTION

     The Transaction is not subject to any conditions precedent, and, as such, the effective date for the Transaction is
     1 July 2017. With effect from 1 July 2017, the rental income attributable to the Additional Shares is ceded to Liberty
     Two Degrees. Save to the extent that third party co-owners of the Properties have control or management rights,
     the Properties remain subject to Liberty Two Degrees' control in terms of the co-owners agreements between
     Liberty Two Degrees and Liberty governing the Properties.

5.   REQUIREMENT TO ANNOUNCE

     At the time of listing Liberty Two Degrees on the JSE and in the light of the Put Option's valuation and
     consideration protections in favour of Liberty Two Degrees and the fact that the Put Option was pre-existing and
     disclosed, the JSE exempted the Put Option from compliance with the ordinary requirements of the JSE Listings
     Requirements in relation to transactions, although the JSE still required that whenever the Put Option is exercised,
     Liberty Two Degrees must release an announcement on SENS, which Liberty Two Degrees accordingly hereby
     does.

26 July 2017


Sponsor
Java Capital


Legal advisors to Liberty Two Degrees
Webber Wentzel

Date: 26/07/2017 02:19:00 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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