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Detailed cautionary announcement regarding a proposed asset swap with Resilient REIT Limited
FORTRESS REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share codes: FFA ISIN: ZAE000248498
FFB ISIN: ZAE000248506
Bond Company code: FORI
(Approved as a REIT by the JSE)
("Fortress" or the "Company")
DETAILED CAUTIONARY ANNOUNCEMENT REGARDING A PROPOSED ASSET SWAP WITH RESILIENT REIT LIMITED
1. Introduction and rationale
Fortress shareholders are hereby advised that the Company has entered into a non-binding expression of interest
with Resilient REIT Limited ("Resilient"), in terms of which Fortress proposes to acquire certain properties
("Acquisition Portfolio") from Resilient, and discharge the purchase consideration through the transfer to Resilient
of shares held by Fortress in Resilient and Lighthouse Capital Limited ("Lighthouse Capital"), as well as an interest
in directly held properties ("Disposal Portfolio") (the Acquisition Portfolio and the Disposal Portfolio collectively
referred to as the "Properties") ("Proposed Transaction"). It is envisaged that the Proposed Transaction will be
implemented on or before 28 June 2019, following the fulfilment of the conditions set out in paragraph 2.2 below.
The Proposed Transaction demonstrates Fortress' commitment to exit non-core equity holdings and rotate the listed
portfolio into direct property investments. Post the implementation of the Proposed Transaction, Fortress will no
longer co-own any properties with Resilient. The Proposed Transaction allows Fortress to swap its entire
shareholding in Resilient and a portion of its shareholding in Lighthouse Capital for a quality portfolio of income-
producing retail properties which will complement Fortress’ current retail portfolio.
2. Terms and conditions of the Proposed Transaction
2.1 Consideration for the Proposed Transaction
In terms of the Proposed Transaction, Fortress will discharge the consideration for the Acquisition Portfolio in
exchange for:
2.1.1 Fortress' shares and claims in the Disposal Portfolio, as detailed in paragraph 3.2 below, based on the
property fair values as at 28 February 2019;
2.1.2 Delivering 41 060 000 Resilient shares ("Resilient Shares"), being Fortress' entire shareholding in
Resilient, to Resilient by way of a specific repurchase by Resilient ("Specific Repurchase") in terms of
section 48(8) as read with sections 114 and 115 of the Companies Act, Act 71 of 2008, as amended
("Companies Act"), and in compliance with the JSE Limited Listings Requirements ("JSE Listings
Requirements"). The Specific Repurchase of the Resilient Shares will be undertaken at R59.8393 per
Resilient Share, being the 30-day volume weighted average price ("VWAP") as measured at the close
of market on 28 February 2019 less the most recent dividend declared by Resilient on 15 February 2019
of 263.66 cents per Resilient Share to which Fortress will remain entitled; and
2.1.3 Delivering 33 381 901 Lighthouse Capital shares ("Lighthouse Capital Shares") of the 99 375 366
Lighthouse Capital shares currently owned by Fortress ("Share Disposal") to Resilient. The value of
the Lighthouse Capital Shares at disposal will be at R6.9648 per Lighthouse Capital Share, being the
30-day VWAP as measured at the close of market on 28 February 2019.
Any balance due by either party to the other on implementation of the Proposed Transaction will be settled in
cash.
2.2 Conditions
The Proposed Transaction is subject to the fulfilment or waiver (where possible) of the following suspensive
conditions:
2.2.1 Fortress completing a comprehensive due diligence investigation on all aspects of the Acquisition
Portfolio;
2.2.2 the conclusion of legal agreements to give effect to the Proposed Transaction;
2.2.3 the waiver of any rights of first refusal or pre-emptive rights that any other part-owners of Properties in
the Acquisition Portfolio have;
2.2.4 Resilient's board of directors approving the Proposed Transaction;
2.2.5 Fortress' board of directors approving the Proposed Transaction;
2.2.6 securing, to the extent necessary, regulatory approvals from all relevant regulators, including the
relevant competition authorities, the Takeover Regulations Panel, the JSE Limited ("JSE") and the
Financial Surveillance Department of the South African Reserve Bank in order to be able to conclude
and implement the Proposed Transaction; and
2.2.7 approval, where required, by the requisite majority/ies of Resilient and Fortress shareholders of all
resolutions necessary to implement the Proposed Transaction and the Specific Repurchase as required
in terms of the Companies Act and the JSE Listings Requirements.
3. The Properties
3.1 Acquisition Portfolio
In terms of the Proposed Transaction, Fortress or a wholly-owned subsidiary will acquire the Acquisition
Portfolio, the preliminary details of which are set out in the table below, at the property fair values as at
28 February 2019. Fortress will be entitled to the net operating income from the Acquisition Portfolio from the
Commercial Effective Date, being 1 March 2019, which will be settled on implementation of the Proposed
Transaction.
Property Resilient % ownership Location Value of the properties(1)
(R'm)
Brits Mall 95% North West 769.4
Circus Triangle 100% Eastern Cape 694.1
Northam Plaza 100% Limpopo 538.6
Mahikeng Mall 90% North West 403.3
Village Mall Kathu 100% Northern Cape 473.5
Murchison Mall 100% KwaZulu Natal 381.0
Tzaneen Lifestyle 45% Limpopo 88.5
Centre
Tzaneen Lifestyle 45% Limpopo 27.0
Centre land
Brits Mall land 100% North West 16.5
Total R3 391.9
(1) Fair value of the Properties for Resilient's stake in each property, respectively, as at 30 June 2018 as
independently valued by Jones Lang LaSalle Proprietary Limited ("JLL"). The fair values shown are for
illustrative purposes only and the Proposed Transaction will be concluded based on the fair values of the
Properties as at 28 February 2019.
In addition to the Proposed Transaction, Fortress will acquire the co-owner loan advanced by Resilient in respect
of Tzaneen Lifestyle Centre, which was valued at R59.0 million as at 30 June 2018.
3.2 Disposal Portfolio
In terms of the Proposed Transaction, Fortress will dispose of the Disposal Portfolio based on the property fair
values as at 28 February 2019, the preliminary details of which are set out in the table below:
Property Fortress % ownership(1) Location Value of the properties(2)
(R'm)
Galleria Mall 25% KwaZulu Natal 550.3
Arbour Crossing 25% KwaZulu Natal 122.4
Total R672.7
(1) Ownership form is a 25% shareholding in Arbour Town Proprietary Limited.
(2) Fair value of the properties for Fortress' stake in each property respectively, as at 30 June 2018 as
independently valued by JLL. The fair values shown are for illustrative purposes only and the Proposed
Transaction will be concluded based on the fair values of the Properties as at 28 February 2019.
4. Categorisation of the Proposed Transaction and cautionary announcement
The Proposed Transaction will constitute a Category 2 transaction for Fortress in terms of the JSE Listings
Requirements, which does not require shareholder approval. However, Fortress proposes to obtain shareholder
approval for the Proposed Transaction by way of an ordinary resolution of shareholders and will provide
shareholders with a fairness opinion, prepared by an independent expert as if required in terms of paragraph 10.4(f)
of the JSE Listings Requirements. A circular will be sent to Fortress shareholders in due course.
Until such time as legal agreements have been concluded by the parties and all the details of the Proposed
Transaction are announced, Fortress shareholders are advised to exercise caution when dealing in the Company's
securities.
Johannesburg
5 March 2019
Corporate Advisor and Transaction Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Lead sponsor
Java Capital Proprietary Limited
Legal Advisor
DLA Piper
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