Oryx Prop Ltd to Invest N$300m in Tower International ('TIL')

Oryx Properties Limited
(Incorporated in the Republic of Namibia)
(Registration number 2001/673)
Share Code: ORY ISIN Code: NA0001574913

ORYX PROPERTIES LIMITED TO INVEST N$300m IN TOWER INTERNATIONAL (“TIL”)

Introduction and background
Unitholders of Oryx have been informed in the past of the decision to potentially invest in offshore assets, in order to diversify the portfolio away from a single currency and single asset risk.

We are pleased to inform unitholders that, Oryx Properties Limited (“Oryx”) has signed an irrevocable undertaking with Tower Property Fund Limited (“Tower”), a Real Estate Investment Trust (REIT) listed on the Johannesburg Stock Exchange with a market capitalisation of R2.5 billion and a property portfolio valued at R4.7 billion, to co-invest in its offshore properties.

Croatian property portfolio

Tower owns a N$1.46 billion (€96 million) Croatian property portfolio, comprising the Konzum portfolio (of four retail properties with retailer Konzum as the head-lease tenant) and VMD, a high-quality office building in Zagreb.

Tower is in the process of ring-fencing its Croatian properties through a separate offshore company to be named Tower International that would leverage Tower's existing relationships in Croatia and surrounding countries to grow the group’s European exposure and income. Tower International will be incorporated in Mauritius as a Category 1 Global Business License company, with the intention to list the company on the Stock Exchange of Mauritius and the JSE in due course.

Tower International’s strategy will be to continue to invest in high quality, income producing properties in the retail, industrial and office sectors in Croatia and surrounding countries, facilitated through Tower’s strong relationships in the region.

Tower Property Fund’s presence in Croatia

Tower has been active in Croatia since 2015 and please refer to SENS announcements on Tower’s website, towerpropertyfund.co.za, for all updates on Konzum related news (2 May 2017, 6 July 2017 and 22 January 2018). Tower has successfully renegotiated the rental agreements with Konzum and has signed an agreement with Spar Hrvatska d.o.o (“Spar”), which will only come into effect if Konzum is ever successfully evicted by Tower due to a breach of the Konzum lease agreement (See Tower SENS announcement on 7 February 2018).

The Croatian portfolio comprises:
Offices
  • VMD KVART Office Building, Zagreb
  • Property grade - Premium
  • Size 15 floors, Block B
  • Rentable area - 10 691m² office and 253m² storage
  • 280 parking bays

Retail
  • Sub City Centre, Dubrovnik
  • Rentable Area - 12 259 m2
  • Zagreb superKonzum, Zagreb
  • Rentable Area - 3 223 m2
  • Meridijan Centre, Zagreb
  • Rentable Area - 9 362m2
  • Velika Gorica superKonzum, Velika Gorica
  • Rentable Area - 5 510m2

Terms of the agreement

The terms of the undertaking stipulate that Oryx will make a N$300 million investment in Tower International as follows:

- through the acquisition by Oryx of Tower International shares from Tower for N$200 million (“the share sale”); and
- the subsequent subscription by Oryx for further shares in Tower International for N$100 million (“the share subscription”).

The undertaking will lapse if by 31 July 2018:

- a share sale agreement recording the share sale on the terms set out below has not been signed and become unconditional; and
- a share subscription agreement recording the share subscription on the terms set out below has not been signed and become unconditional.

The share sale agreement and the subscription agreement will be signed once Tower International has been formally incorporated in Mauritius.

The sale agreement
The exact number of Tower International shares to be acquired by Oryx will be determined with reference to the number of Tower International shares in issue at that time, the Namibian Dollar: Euro exchange rate and the net assets held by Tower International.
It is the intention that Oryx will own circa 28% of the shares in Tower International pursuant to the sale agreement and subscription agreement.

The sale agreement remains subject to the fulfilment of the following conditions precedent:
- exchange control approval;
- all requisite regulatory and corporate approvals for the transaction being obtained; and
- Tower International becoming the owner of Tower’s Croatian portfolio.

Oryx’s initial yield post the sale agreement is expected to be 6.8%, after having also concluded a rental guarantee with Tower to protect the yield in terms of any shortfall on the contractual rental of the portfolio in the first and second year of the investment.

The sale agreement contains terms, undertakings and warranties that are usual for a transaction of this nature.

The subscription agreement
Upon the fulfilment of the conditions precedent to the subscription agreement, Oryx will subscribe for Tower International shares for the Euro equivalent of N$100 million.
The exact number of Tower International shares to be subscribed for by Oryx will be determined with reference to the number of Tower International shares in issue at that time, the Namibian Dollar: Euro exchange rate and the net assets held by Tower International.

The subscription agreement remains subject to the fulfillment of the following conditions precedent:
- exchange control approval;
- all requisite regulatory and corporate approvals for the transaction being obtained; and
- the sale agreement having been entered into and become unconditional.

Oryx’s initial yield post the subscription agreement should increase to 7%.

The subscription agreement contains terms, undertakings and warranties that are usual for a transaction of this nature.


Financial effects

This transaction is being funded by Absa Bank Limited on the following terms:

Loan amount: N$300 million euro equivalent
Interest rate: 3 months Euribor + 1.37% + 1.35% margin
Term: 3 years from date of first draw-down

Management of Tower International

Tower intends to remain a long-term controlling (or significantly influential) shareholder of TIL and will continue to play an active role in the management of the company which will be operated from Mauritius. Tower will maintain representatives on TIL’s board, including its CEO, Marc Edwards.

Oryx will be represented on the Board of TIL and have representation on the Investment Committee.
By order of the Board of Directors
2 March 2018
Windhoek

Sponsor to Oryx Properties Limited in Namibia
Simonis Storm Securities (Pty) Ltd
Member of the Namibian Stock Exchange