PRE-LISTING STATEMENT

Transcription

1 Tower Property Fund Limited (formerly Reftin 1004 Proprietary Limited) (Registration number 2012/066457/06) (JSE share code: TWR) (ISIN: ZAE ) ( Tower or the company ) PRE-LISTING STATEMENT The definitions and interpretations commencing on page 8 of this pre-listing statement have, where appropriate, been used on this cover page. This pre-listing statement is not an invitation to the public to subscribe for shares, but is issued in compliance with the Listings Requirements of the JSE, for the purpose of providing information to the public with regard to the company and is issued in respect of: a capital raising of between R300 million and R600 million by way of a private placement of between and shares at an indicative issue price of R8,70 per share; and the subsequent listing of all shares in the company on the Diversified REITs sector of the JSE. Opening date of the private placement (9:00) Friday, 12 July Closing date of the private placement (12:00)* Tuesday, 16 July Results of the private placement released on SENS on Wednesday, 17 July Results of the private placement published in the press on Thursday, 18 July 2013 Proposed listing date of the shares on the JSE (9:00) Friday, 19 July * Invited investors must advise their CSDP or broker of their acceptance of the placement shares in the manner and cut-off time stipulated by their CSDP or broker. Immediately prior to the private placement and the listing (including Tower shares issued for the acquisition of the existing portfolio and under the Tower subscription agreement): the authorised share capital of Tower will comprise ordinary shares of no par value; and the issued share capital of Tower will comprise ordinary shares of no par value. Assuming Tower shares are issued in terms of the private placement, and upon the implementation of the Capital transaction, the Fortress transaction and the Turquoise Moon acquisition, immediately after the private placement and the listing: the authorised share capital of Tower will comprise ordinary shares of no par value; the issued share capital of Tower will comprise ordinary shares of no par value; and there will be no shares held in treasury. On the listing and thereafter, all shares of Tower will rank pari passu in respect of all rights including the right to dividends. There are no convertibility or redemption provisions relating to any shares offered in terms of the private placement. The placement shares will only be issued in dematerialised form. There will be no certificated shares issued pursuant to the private placement. The listing is subject to a minimum amount of R300 million being raised in terms of the private placement. In the event of an over subscription, the placement shares will be allocated and issued on an equitable basis at the discretion of the directors. There will be no fractions of placement shares offered in terms of the private placement. The private placement will not be underwritten.

2 The JSE has granted Tower a listing of all of its issued ordinary shares in the Diversified REITs sector of the JSE lists, in terms of the FTSE classification, under the abbreviated name: Tower, JSE share code: TWR and ISIN: ZAE with effect from the commencement of trade on Friday, 19 July The directors, whose names are given in paragraph 4.1 of this pre-listing statement, collectively and individually, accept full responsibility for the accuracy of the information given herein and certify that, to the best of their knowledge and belief, no facts have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this pre-listing statement contains all information required by law and the Listings Requirements. Each of the corporate advisor, sponsor and bookrunner, independent transaction sponsor, independent reporting accountant and auditor, attorneys, independent valuer and transfer secretaries whose names are included in this pre-listing statement have consented in writing and have not prior to publication of this pre-listing statement withdrawn their written consent to the inclusion of their names in the capacity stated and where applicable, to their reports being included in this pre-listing statement. An abridged version of this pre-listing statement was published on SENS on Friday, 12 July 2013 and in the press on Monday, 15 July Corporate advisor, sponsor and bookrunner Independent transaction sponsor Independent reporting accountant and auditor Independent valuer Attorneys Date of issue: Friday, 12 July This pre-listing statement is only available in English. Copies of this pre-listing statement may be obtained from the registered office of the company, Java Capital or the transfer secretary whose addresses are set out in the Corporate Information section of this pre-listing statement from Friday, 12 July 2013 to Monday, 29 July 2013.

3 CORPORATE INFORMATION Registered office Tower Property Fund Limited 2nd Floor, Spire House Tannery Park 23 Belmont Road Rondebosch, 7700 (PO Box 155, Rondebosch, 7701) Corporate advisor and bookrunner Java Capital Proprietary Limited (Registration number 2002/031862/07) Redefine Place 2 Arnold Road Rosebank, 2196 (PO Box 2087, Parklands, 2121) Independent transaction sponsor Deloitte & Touche Sponsor Services Proprietary Limited (Registration number 1996/000034/07) Building 6, The Woodlands Woodmead, 2196 (Private Bag X6, Gallo Manor, 2052) Independent valuer Mills Fitchet Magnus Penny Proprietary Limited (Registration number 1996/004736/07) Suite 303, 3rd Floor Newspaper House 122 St George s Mall Cape Town, 8001 (PO Box 4442, Cape Town, 8000) Transfer secretary Link Market Services South Africa Proprietary Limited (Registration number 2000/007239/07) 13th Floor, Rennie House 19 Ameshoff Street Braamfontein, 2001 (PO Box 4844, Johannesburg, 2000) Company secretary Ovland Management Services Proprietary Limited (Registration number 2006/020063/07) 1st Floor, Spire House Tannery Park 23 Belmont Road Rondebosch, 7700 (PO Box 155, Rondebosch, 7701) Sponsor Java Capital Trustees and Sponsors Proprietary Limited (Registration number 2006/005780/07) Redefine Place 2 Arnold Road Rosebank, 2196 (PO Box 2087, Parklands, 2121) Independent reporting accountants and auditors Mazars (Practice number ) Mazars House Rialto Road Century City, 7441 (PO Box 134, Century City, 7446) Attorneys Cliffe Dekker Hofmeyr Inc. (Registration number 2008/018923/21) 11 Buitengracht Street Cape Town, 8001 (PO Box 695, Cape Town, 8000 ) Bankers First National Bank A division of First Rand Bank Limited (Registration number 1929/001225/06) 6th Floor, FirstPlace, Bank City Corner Simmonds and Pritchard Streets Johannesburg, 2001 (PO Box 1153, Johannesburg, 2000) Place and date of incorporation Incorporated on 11 April 2012 in the Republic of South Africa 1

4 Offers in South Africa only This pre-listing statement has been issued in connection with the private placement in South Africa only and is addressed only to persons to whom the private placement may lawfully be made. The distribution of this pre-listing statement and the making of an offer through this private placement may be restricted by law. Persons into whose possession this pre-listing statement comes must inform themselves about and observe any such restrictions. This pre-listing statement does not constitute an offer of or invitation to subscribe for and/or purchase any of the shares in any jurisdiction in which such offer, subscription or sale would be unlawful. No one has taken any action that would permit a public offering of shares in the company to occur outside South Africa. Forward-looking statements This pre-listing statement includes forward-looking statements. Forward-looking statements are statements including, but not limited to, any statements regarding the future financial position of the company and its subsidiaries and its future prospects. These forward-looking statements have been based on current expectations and projections about future results which, although the directors believe them to be reasonable, are not a guarantee of future performance. 2

5 TABLE OF CONTENTS The definitions and interpretations commencing on page 8 of this pre-listing statement have been used in the following table of contents: Page Corporate information 1 Salient features 5 Important dates and times 7 Definitions and interpretations 8 Pre-listing statement Section One Information on Tower Introduction Overview and background Prospects Directors and material third parties Major and controlling shareholders 28 Section Two Details of the property Summary of the property portfolio Analysis of the property portfolio Valuation reports Property, assets and business undertakings acquired or to be acquired Disposal of property Vendors 46 Section Three Details of the private placement Purpose of the private placement Anticipated application of proceeds of private placement Salient dates and times Particulars of the private placement Minimum subscription 51 Section Four Financial information Forecast statements of comprehensive income Unaudited consolidated pro forma statement of financial position Historical financial information of Tower Share capital Dividend distributions Material commitments, lease payments and contingent liabilities Material borrowings and loans receivable Material changes 55 Section Five Additional material information Advisor s interests Statement as to listing on the JSE Material contracts Commissions paid or payable Government protection and investment encouragement law Applicants resident outside the common monetary area Corporate governance Working capital Litigation statement Directors responsibility statement Consents Preliminary expenses and issue expenses Documentation available for inspection 58 3

6 Page Annexure 1 Group structure 59 Annexure 2 Details of subsidiaries 60 Annexure 3 Information on the directors and material third parties 61 Annexure 4 Current and past directorships 66 Annexure 5 Extracts from the MOI 69 Annexure 6 Salient features of the asset management and property management agreements 73 Annexure 7 Details of the property portfolio 87 Annexure 8 Independent valuer s abridged valuation report on the property portfolio 94 Annexure 9 Details of vendors 101 Annexure 10 Forecast statements of comprehensive income of Tower 109 Annexure 11 Independent reporting accountants limited assurance report on the forecast statements of comprehensive income of Tower 115 Annexure 12 Unaudited consolidated pro forma statement of financial position of Tower 118 Annexure 13 Independent reporting accountants limited assurance report on the unaudited consolidated pro forma statement of financial position of Tower 127 Annexure 14 Independent reporting accountants assurance report on the total assets and non-current and current liabilities of the acquisition companies included in the pro forma statement of financial position of Tower 129 Annexure 15 Independent reporting accountants review report on the value and existence of the assets and liabilities acquired 131 Annexure 16 Historical financial information of Tower 132 Annexure 17 Independent reporting accountants report on the historical financial information of Tower 139 Annexure 18 Share capital 141 Annexure 19 Material borrowings and loans receivable 151 Annexure 20 Material contracts 154 Annexure 21 Corporate governance statement 158 Specimen private placement application form Attached 4

7 SALIENT FEATURES The information set out in this section of the pre-listing statement is only an overview and is not intended to be comprehensive. It should be read in conjunction with the information contained in other sections of this pre-listing statement. 1. INTRODUCTION Tower is a public limited liability company which currently owns the existing portfolio of 14 properties in the retail and office sectors, valued at approximately R , comprising the Cape Quarter portfolio (3 properties), the Lucky Bean portfolio (7 properties) and the City Square portfolio (4 properties). Tower has entered into the Capital transaction, the Fortress transaction and the Turquoise Moon acquisition, for the acquisition of a further 13 properties, comprising the Capital transaction portfolio (7 properties), the Fortress transaction portfolio (5 properties) and the Turquoise Moon portfolio (1 property), in the retail and office sectors, valued at R OVERVIEW AND BACKGROUND Tower was incorporated on 11 April 2012 and converted into a public company on 22 February 2013 to invest in assets and opportunities within the retail and office sectors. Tower is a property investment fund that is structured as a REIT. The business of the Tower group is long-term investment in property, and the Tower group owns a diversified portfolio of office and retail properties based predominantly in Gauteng and the Western Cape, with some exposure in KwaZulu-Natal. The company s objective is to provide investors with strong investment returns, comprising a growing income stream and capital value. This will be achieved firstly, by adding value through active property asset management, and secondly, through the cost-effective greening of properties in the portfolio which will result in reduced occupation costs for tenants and increased investment performance. Tower is managed by TAM, which is owned by Spire and partners. Spire is an experienced, highly-regarded property group which has successfully assembled and managed listed property funds before, has demonstrated an ability to add value to the assets it manages, and is one of the leaders in the green building field. Property management is contracted to SPM. 3. PROSPECTS Tower will look to grow the portfolio aggressively once listed, and will target medium-sized (R30 million to R200 million) properties, diversified across the retail, office and industrial sectors, and geographically across the major metropolitan areas. Competition for medium-sized properties is less intense, and well-located, good-quality, medium-sized properties provide a diversified earnings base, better yields, and frequently, the opportunity to improve performance. Larger properties will not be excluded where suitable opportunities arise. Tower will adopt an active strategy of greening properties over time. The initial focus will be on improving energy efficiency, which will result in significant savings in electricity costs, thus making buildings more competitive and helping to future-proof them against future rises in tariffs. Basic cost effective energy and water savings measures that can be implemented at low or no cost will be applied immediately, while additional measures will be implemented over time as opportunities arise. Buildings will be benchmarked against the Green Building Council of South Africa s Energy and Water Benchmarking tool and their improvement in performance will be monitored and reported on. These measures will increase the competitiveness and values of buildings in Tower s portfolio over time. 4. DETAILS OF THE PRIVATE PLACEMENT The company is undertaking a capital raising by way of a private placement to invited investors to subscribe for between and placement shares at an indicative issue price of R8,70 per share. Applications must be for a minimum subscription of R per investor acting as principal. The private placement is conditional on the minimum subscription of R300 million being raised. 5

8 There are no convertibility or redemption provisions relating to the placement shares offered in terms of the private placement. Placement shares will be issued in dematerialised form only. There are no fractions of placement shares being issued pursuant to the private placement. The private placement will not be underwritten. 5. STATEMENT AS TO LISTING ON THE JSE The JSE has granted Tower a listing of all of its issued shares on the JSE under the abbreviated name: Tower, JSE share code: TWR and ISIN: ZAE with effect from the commencement of trade on Friday, 19 July FORECAST STATEMENTS OF COMPREHENSIVE INCOME The abridged summary of the unaudited forecast financial information for Tower for the year ending 31 May 2014 and the year ending 31 May 2015 are set out below and have been prepared on the assumption that R300 million is raised in terms of the private placement and all properties comprising the entire Tower property portfolio are acquired. 1 month ended 30 June 2013 R months ending 30 November 2013 R months ending 31 May 2014 R 000 Year ending 31 May 2014 R 000 Year ending 31 May 2015 R 000 Weighted average number of shares in issue Number of shares in issue at period-end Earnings (net loss/profit) (35 165) (5 409) Headline earnings Distributable profit Distributable earnings Distribution per share (cents) 4,9 31,4 40,3 76,5 86,6 7. ACTION REQUIRED Applications for placement shares must be made by invited investors in accordance with paragraph 15 of this pre-listing statement on the application form accompanying this pre-listing statement. Applications for placement shares can only be made for dematerialised shares and must be submitted through a CSDP or broker in accordance with the agreement governing the relationship between the applicant and the CSDP or broker by the cut-off time stipulated by the CSDP or broker. If you are in any doubt as to what action to take, you should consult your broker, attorney or other professional advisor immediately. 8. FURTHER COPIES OF THE PRE-LISTING STATEMENT Copies of the pre-listing statement may be obtained between 08:30 and 17:00 on business days from Friday, 12 July 2013 to Monday, 29 July 2013 at the following places: Tower 2nd Floor, Spire House, Tannery Park, 23 Belmont Road, Rondebosch, 7700 Java Capital 2 Arnold Road, Rosebank, Johannesburg, 2196 Link Market Services 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001 An abridged version of this pre-listing statement was released on SENS on Friday, 12 July 2013 and in the press on Monday, 15 July

9 IMPORTANT DATES AND TIMES 1 The definitions and interpretations commencing on page 8 of this pre-listing statement apply to these important dates and times: Opening date of the private placement (09:00) Friday, 12 July Abridged pre-listing statement released on SENS Friday, 12 July Abridged pre-listing statement published in the press Monday, 15 July 2013 Closing date of the private placement (12:00) 2 Tuesday, 16 July Results of the private placement released on SENS Wednesday, 17 July Notification of allotments Thursday, 18 July Results of the private placement published in the press Thursday, 18 July Shares listed on the JSE (09:00) Accounts at CSDP or broker updated and credited in respect of dematerialised shareholders 3 Friday, 19 July Friday, 19 July Notes: 1. All references to dates and times are to local dates and times in South Africa. These dates and times are subject to amendment. Any such amendment will be released on SENS and published in the press. 2. Invited investors must advise their CSDP or broker of their acceptance of the private placement in the manner and cut-off time stipulated by their CSDP or broker. 3. CSDPs effect payment on a delivery-versus-payment basis. 7

10 DEFINITIONS AND INTERPRETATIONS In this pre-listing statement and the annexures hereto, unless inconsistent with the context, an expression which denotes one gender includes the other genders, a natural person includes a juristic person and vice versa, the singular includes the plural and vice versa and the expressions set out in the first column bear the meaning assigned to them in the second column. acquisitions acquisition agreements acquisition portfolio application form asset management agreement collectively the Cape Quarter acquisition, the Capital acquisition, the Monyetla acquisition, the Pangbourne acquisition, the Siyathenga acquisition, the City Square acquisition, each of the Fortress acquisitions, the Lucky Bean acquisition, and the Turquoise Moon acquisition; collectively, the agreements governing the acquisitions, the salient details of which are set out in paragraph 9; collectively the Capital transaction portfolio, the Fortress transaction portfolio and the Turquoise Moon portfolio; the application form attached to and forming part of this pre-listing statement, which invited investors are required to complete and return in accordance with the instructions contained therein in order to be considered for participation in the private placement; the management agreement concluded between Tower and the asset manager dated 4 July 2013, in terms of which, inter alia, the asset manager will provide asset management services to Tower, the salient details of which are set out in Annexure 6; asset manager or TAM Tower Asset Managers Proprietary Limited (Registration number 2008/012316/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; board or directors or board of Tower business day Cape Quarter Cape Quarter acquisition Cape Quarter acquisition agreement Cape Quarter closing date 5 June 2013; Cape Quarter effective date accounts the board of directors of Tower as set out paragraph 4.1 of this pre-listing statement; any day other than a Saturday, Sunday or official public holiday in South Africa; collectively, Cape Quarter Property Company and Parch Properties; the acquisition by Tower of the entire issued share capital of and shareholder and related party claims against Cape Quarter, the terms and conditions of which are set out in the Cape Quarter acquisition agreement; the agreement entered into between Cape Quarter Property Company, Parch Properties, the Cape Quarter vendor, Paul Knight Moxley, Charles Robert Hall Knight, Ross Stegmann and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The Cape Quarter acquisition agreement was reinstated on 20 May In terms of the first addendum to the Cape Quarter acquisition agreement entered into on 20 May 2013, Parimate Proprietary Limited, Grazibase Proprietary Limited and Nascipath Proprietary Limited were added as parties to the Cape Quarter acquisition agreement and gave a rental guarantee; the signed, unqualified, audited financial statements of each of Cape Quarter Property Company and Parch Properties as at 1 June 2013 and for the financial period from 1 March 2013 to 31 May 2013; 8

11 Cape Quarter portfolio Cape Quarter Property Company Cape Quarter property sale agreements Cape Quarter subscription agreement Cape Quarter transaction Cape Quarter vendor Capital Capital acquisition Capital acquisition agreement Capital acquisition properties the property portfolio currently owned by Cape Quarter comprising the properties known as Cape Quarter Square, Cape Quarter Piazza, which are owned by Cape Quarter Property Company and the property known as 32 Napier Street which is owned by Parch Properties, further details of which are set out in Annexure 7; Cape Quarter Property Company Proprietary Limited (Registration number 2001/006412/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; the sale of rental enterprise agreement entered into between Tower and Cape Quarter Property Company on 20 May 2013 in terms of which Tower has acquired the rental enterprise conducted by Cape Quarter Property Company in respect of the properties known as Cape Quarter Square and Cape Quarter Piazza, the salient features of which are set out in Annexure 20; and the sale of rental enterprise agreement entered into between Tower and Parch Properties on 20 May 2013 in terms of which Tower has acquired the rental enterprise conducted by Parch Properties in respect of the property known as 32 Napier Street, the salient features of which are set out in Annexure 20; the subscription agreement entered into between the trustees for the time being of the Propfin Investment Trust, Paul Knight Moxley, Tower, Cape Quarter Property Company, Parch Properties, Charles Robert Hall Knight, Ross Stegmann, Parimate Proprietary Limited, Grazibase Proprietary Limited and Nascipath Proprietary Limited on 20 May 2013, the salient features of which are set out in Annexure 20; the transactions contemplated in each of the Cape Quarter acquisition agreement, the Cape Quarter subscription agreement and the Cape Quarter property sale agreements; the trustees for the time being of the Propfin Investment Trust, being the seller of the shares in and shareholder and related party claims against Cape Quarter in terms of the Cape Quarter acquisition agreement. The beneficial holders of the shares in and shareholder claims against Cape Quarter are set out in Annexure 9; First Rand Bank Limited as trustee for the Capital Property Fund (Master s reference T811/94), a portfolio in Capital Property Trust Scheme, a collective investment scheme in property registered as such in terms of the Collective Investment Schemes Control Act (Act 45 of 2002), and managed by Property Fund Managers Limited (Registration number 1980/009531/06); the acquisition by Tower of each of the letting enterprises conducted in respect of the Capital acquisition properties, including each of the relevant immovable properties comprising the Capital acquisition properties, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Capital acquisition agreement; the agreement entered into between Capital, Property Fund Managers Limited and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Capital acquisition agreement was entered into between Capital, Property Fund Managers Limited and Tower on 23 May 2013; the properties currently owned by Capital comprising the properties known as Constantia View, The Braides and Willowvale, further details of which are set out in Annexure 7; 9

12 Capital group Capital transaction Capital transaction portfolio certificated shareholders certificated shares City Square City Square acquisition City Square acquisition agreement City Square portfolio City Square vendors common monetary area CSDP dematerialisation dematerialised shareholders dematerialised shares documents of title Capital and its subsidiaries, including, without limitation, Pangbourne, Siyathenga and Monyetla; the Capital acquisition, the Pangbourne acquisition, the Monyetla acquisition and the Siyathenga acquisition, each of which is conditional upon the other of those acquisitions becoming unconditional in accordance with their terms and conditions and are thus indivisibly linked to each other; collectively the Capital acquisition properties, the Monyetla acquisition property, the Pangbourne acquisition properties, the Siyathenga acquisition property; Tower shareholders who hold certificated shares; Tower shares which have not yet been dematerialised into the Strate system, title to which is represented by share certificates or other physical documents of title; City Square Trading 522 Proprietary Limited (Registration number 2005/018491/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; the acquisition by Tower of the entire issued share capital of and claims against City Square, the terms and conditions of which are set out in the City Square acquisition agreement; the agreement entered into between City Square, the City Square vendors and Tower on 29 April 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the City Square acquisition agreement was entered into between City Square, Tower and the City Square vendors on 10 June 2013; the property portfolio currently owned by City Square comprising the properties known as Sections of Block B Upper Grayston, Sections 3, 4, 5, 7 and 8 of Block D Upper Grayston, Block E Upper Grayston and Block F Upper Grayston, further details of which are set out in Annexure 7; collectively, the trustees for the time being of the Pencil Creek Trust, the trustees for the time being of the Alpha Trust, True North Developments Proprietary Limited and Qumo Projects Proprietary Limited, being the sellers of the shares in and shareholder claims against City Square in terms of the City Square acquisition agreement. The beneficial holders of the shares in and shareholder claims against City Square are set out in Annexure 9; collectively, South Africa, the Kingdoms of Swaziland and Lesotho and the Republic of Namibia; a Central Securities Depository Participant in South Africa appointed by a shareholder for purposes of, and in regard to, dematerialisation and to hold and administer securities or an interest in securities on behalf of a shareholder; the process whereby certificated shares are converted to an electronic form as dematerialised shares and recorded in the sub-register of shareholders maintained by a CSDP or broker in South Africa; Tower shareholders who hold dematerialised shares; Tower shares which have been incorporated into the Strate system, title to which is no longer represented by share certificates or other physical documents of title; share certificates, certified transfer deeds, balance receipts and any other documents of title to share acceptable to the board; 10

13 Exchange Control Regulations existing properties or existing portfolio the Exchange Control Regulations of South Africa issued under the Currency and Exchanges Act (Act 9 of 1933), as amended; collectively, the Cape Quarter portfolio, the Lucky Bean portfolio and the City Square portfolio; Fortress Fortress Income Fund Limited (Registration number 2009/016487/06), a public company duly registered and incorporated with limited liability under the company laws of South Africa; Fortress acquisitions collectively, the Fortress 2 acquisition, the Fortress 3 acquisition, th e Fortress 4 acquisition and the Fortress 5 acquisition; Fortress group Fortress and its subsidiaries, including, without limitation, Fortress 2, Fortress 3, Fortress 4 and Fortress 5; Fortress transaction Fortress transaction portfolio the Fortress 2 acquisition, the Fortress 3 acquisition, the Fortress 4 acquisition and the Fortress 5 acquisition, each of which is conditional upon the other Fortress acquisitions becoming unconditional in accordance with their respective terms and conditions and are thus indivisibly linked to the other; collectively the Fortress 2 acquisition property, the Fortress 3 acquisition properties, the Fortress 4 acquisition property and the Fortress 5 acquisition property; Fortress 2 Fortress Income 2 Proprietary Limited (Registration number 2009/005857/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; Fortress 2 acquisition the acquisition by Tower of the letting enterprise conducted in respect of the Fortress 2 acquisition property, including the Fortress 2 acquisition property, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Fortress 2 acquisition agreement; Fortress 2 acquisition agreement the agreement entered into between Fortress 2 and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Fortress 2 acquisition agreement was entered into between Fortress 2 and Tower on 23 May The second addendum to the Fortress 2 acquisition agreement, reinstating the Fortress 2 acquisition was entered into between Fortress 2 and Tower on 28 June 2013; Fortress 2 acquisition property the property currently owned by Fortress 2 known as Hertzog Boulevard, further details of which are set out in Annexure 7; Fortress 3 Fortress Income 3 Proprietary Limited (Registration number 2009/ /07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; Fortress 3 acquisition the acquisition by Tower of the letting enterprises conducted in respect of each of the Fortress 3 acquisition properties, including each of the relevant immovable properties comprising the Fortress 3 acquisition properties, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Fortress 3 acquisition agreement; Fortress 3 acquisition agreement the agreement entered into between Fortress 3 and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Fortress 3 acquisition agreement was entered into between Fortress 3 and Tower on 23 May The second addendum to the Fortress 3 acquisition agreement, reinstating the Fortress 3 acquisition was entered into between Fortress 3 and Tower on 28 June 2013; 11

14 Fortress 3 acquisition properties the properties currently owned by Fortress 3 comprising the properties known as 308 Kent Avenue and Wedgefield, further details of which are set out in Annexure 7; Fortress 4 Fortress Income 4 Proprietary Limited (Registration number 2008/023040/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; Fortress 4 acquisition Fortress 4 acquisition agreement Fortress 4 acquisition property the acquisition by Tower of the letting enterprise conducted in respect of the Fortress 4 acquisition property, including the Fortress 4 acquisition property, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Fortress 4 acquisition agreement; the agreement entered into between Fortress 4 and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Fortress 4 acquisition agreement was entered into between Fortress 4 and Tower on 4 June The second addendum to the Fortress 4 acquisition agreement, inter alia, reinstating the Fortress 4 acquisition agreement, was entered into between Fortress 4 and Tower on 28 June 2013; the property currently owned by Fortress 4 known as 6 8 Sturdee Avenue, further details of which are set out in Annexure 7; Fortress 5 Fortress Income 5 Proprietary Limited (Registration number 2009/014236/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; Fortress 5 acquisition the acquisition by Tower of the letting enterprise conducted in respect of the Fortress 5 acquisition property, including the Fortress 5 acquisition property, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Fortress 5 acquisition agreement The second addendum to the Fortress 5 acquisition agreement, reinstating the Fortress 5 acquisition was entered into between Fortress 5 and Tower on 28 June 2013; Fortress 5 acquisition agreement the agreement entered into between Fortress 5 and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Fortress 5 acquisition agreement was entered into between Fortress 5 and Tower on 23 May 2013; Fortress 5 acquisition property GLA government GPV green star rating independent reporting accountants and auditors or independent reporting accountants or Mazars independent valuer or Mills Fitchet the property currently owned by Fortress 5 known as Hanover Square, further details of which are set out in Annexure 7; gross lettable area being the total area of a property that can be rented to a tenant; the government of South Africa; the consolidated gross value of the property portfolio of the company, including its associates, calculated in terms of IFRS; an objective rating system, developed by the Green Building Council of South Africa, proving an objective measurement for green buildings and to recognise and reward environmental leadership in property; Mazars, registered accountants and auditors, being the auditors of the Tower group; the independent property valuers of the company, being Mills Fitchet Magnus Penny (Registration number 2000/007239/07), a private company duly incorporated in accordance with the laws of South Africa; 12

15 invited investors issue price IFRS Java Capital JSE King III last practical date the listing listing date Listings Requirements Lucky Bean Lucky Bean acquisition Lucky Bean acquisition agreement Lucky Bean portfolio Lucky Bean vendors MOI those specifically identified individuals to whom the offer under the private placement will be addressed and made; the assumed price at which the shares are to be issued by Tower pursuant to the private placement being an indicative price of R8,70; International Financial Reporting Standards; collectively, Java Capital Proprietary Limited (Registration number 2002/031862/07), the corporate advisor and bookrunner and Java Capital Trustees and Sponsors Proprietary Limited ( Re gistration number 2008/005780/07), the JSE sponsor to Tower, full details of which are set out in the Corporate Information section; JSE Limited ( Registration number 2005/022939/06), licensed as an exchange under the Securities Services Act (Act 36 of 2004), and a public company incorporated in terms of the laws of South Africa; the Code of Corporate Practices and Conduct in South Africa representing principals of good corporate governance as laid out in the King Report, as amended from time to time; the last trading date before the finalisation of this pre-listing statement, being Thursday, 4 July 2013; the proposed listing of the entire issued share capital of Tower in the Diversified REITs sector of the JSE under the abbreviated name TOWER, share code: TWR, ISIN: ZAE with effect from the listing date; the date of the listing of the entire issued share capital of Tower on the JSE, which is expected to be the commencement of trade on Friday, 19 July 2013; the Listings Requirements, as issued by the JSE from time to time; Lucky Bean Property Investments Proprietary Limited (Registration number 2007/032243/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; the acquisition by Tower of the entire issued share capital of and claims against Lucky Bean, the terms and conditions of which are set out in the Lucky Bean acquisition agreement; the agreement entered into between Lucky Bean, the Lucky Bean vendors and Tower on 12 April 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement; the property portfolio currently owned by Lucky Bean comprising the properties known as Block C and D Coachman s Crossing, St Andrews, Viscount Road, Waterfall, Waterford, Woodlands and 7 Stirrup Lane, further details of which are set out in Annexure 7; collectively Martin Evans, the Alpha Trust, the Pencil Creek Trust, Russel Irons, Longmeadow Stand 933 Proprietary Limited, The Larairo Trust, Geoffrey Baker, the Russel & Diane Family Trust, the McLintock Family Trust, Brian McLintock, Denis Hoffman, Lag Properties CC, Stand 59 Northriding Proprietary Limited, Brian Golding and the Thomas Edward Family Trust, being the sellers of the shares in and shareholder claims against Lucky Bean in terms of the Lucky Bean acquisition agreement. The beneficial holders of the shares in and shareholder claims against Lucky Bean are set out in Annexure 9; the memorandum of incorporation of the company, extracts of which are set out in Annexure 5; 13

16 Monyetla Monyetla acquisition Monyetla acquisition agreement Monyetla acquisition property m 2 square metres; own-name dematerialised shareholders Monyetla Property Holdings Proprietary Limited (Registration number 2004/031911/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; the acquisition by Tower of the letting enterprise conducted in respect of the Monyetla acquisition property, including the Monyetla acquisition property, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Monyetla acquisition agreement; the agreement entered into between Monyetla and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Monyetla acquisition agreement was entered into between Monyetla and Tower on 23 May 2013; the property currently owned by Monyetla known as Musgrave Road, further details of which are set out in Annexure 7; dematerialised Tower shareholders who/which have elected own-name registration; Pangbourne Pangbourne Properties Limited (Registration number 1987/ /06), a public company duly registered and incorporated with limited liability under the company laws of South Africa; Pangbourne acquisition the acquisition by Tower of each of the letting enterprises conducted in respect of the Pangbourne acquisition properties, including each of the relevant Pangbourne acquisition properties, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Pangbourne acquisition agreement; Pangbourne acquisition agreement the agreement entered into between Pangbourne and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Pangbourne acquisition agreement was entered into between Pangbourne and Tower on 23 May 2013; Pangbourne acquisition properties the properties currently owned by Pangbourne comprising the properties known as 382 Jan Smuts Avenue and 3 River Road, further details of which are set out in Annexure 7; Parch Properties Parch Properties 30 Proprietary Limited (Registration number 2004/013180/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; placement shares between and Tower shares to be issued to invited investors at an indicative issue price of R8,70 per share in terms of the private placement; the/this pre-listing statement this pre-listing statement and its annexures hereto dated 1 2 July 2013; press private placement promoters properties the Business Day newspaper; the private placement by Tower by way of an offer to invited investors to subscribe for between and placement shares at an indicative issue price of R8,70 per share; each of Rodney Squire-Howe, Bruce Kerswill, Marc Edwards, Keith Craddock, Fred Jenkings, Johan Malherbe and Bruce Rogerson; the immovable properties acquired by the Tower group in terms of the acquisitions, further details of which immovable properties are set out in Annexure 7; 14

17 property management agreement property manager or SPM R or Rand or ZAR REIT SARB SENS shares or ordinary shares or Tower shares Siyathenga Siyathenga acquisition the property management agreement concluded between Tower and the property manager dated 20 May 2013 in terms of which the property manager will provide property management services to Tower, the salient details of which are set out in Annexure 6; Spire Property Management Proprietary Limited (Registration number 1991/001963/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; the South African Rand, the lawful currency of South Africa; Real Estate Investment Trust which is a company listed on the JSE which receives a REIT status in terms of the Listings Requirements; South African Reserve Bank; Stock Exchange News Service of the JSE; ordinary shares of no par value in the share capital of Tower; Siyathenga Properties One Proprietary Limited (Registration number 2004/005348/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; the acquisition by Tower of the letting enterprise conducted in respect of the Siyathenga acquisition property, including the Siyathenga acquisition property, the buildings, the fixtures, and fittings, the leases and service and maintenance agreements, if any, the terms and conditions of which are set out in the Siyathenga acquisition agreement; Siyathenga acquisition agreement the agreement entered into between Siyathenga and Tower on 3 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement. The first addendum to the Siyathenga acquisition agreement was entered into between Siyathenga and Tower on 23 May 2013; Siyathenga acquisition property solvency and liquidity test the property currently owned by Siyathenga known as 31 Beacon Road, further details of which are set out in Annexure 7; has the meaning attributed thereto in section 4 of the Companies Act (Act 71 of 2008) ; Spire Spire Property Group Proprietary Limited (Registration number 2006/032072/07) a private company duly incorporated in accordance with the laws of South Africa; Strate Strate Limited ( Registration number 1998/022242/06), a private company which is registered in terms of the Securities Services Act of South Africa (Act 36 of 2004), as amended responsible for the electronic settlement system of the JSE; subsidiaries the subsidiaries of Tower, as defined in the Companies Act (Act 71 of 2008), which at the last practical date comprise Cape Quarter Property Company, Parch Properties, Lucky Bean and City Square; Tower or the company Tower Property Fund Limited (Registration number 2012/ /06), a public company duly registered and incorporated with limited liability under the company laws of South Africa; Tower group or the group collectively, Tower, its subsidiaries, associates and joint ventures; 15

18 Tower pledged shares Tower property portfolio or property portfolio or combined portfolio Tower shareholders or shareholders Tower subscription agreement transfer transfer date transfer secretaries or Link Market Services Turquoise Moon Turquoise Moon acquisition Turquoise Moon acquisition agreement Turquoise Moon portfolio Turquoise Moon vendors VWAP yield in respect of the Cape Quarter acquisition agreement and the Cape Quarter subscription agreement, Tower shares; in respect of the Turquoise Moon acquisition agreement, Tower shares; in respect of the Lucky Bean acquisition agreement, Tower shares; and in respect of the City Square acquisition agreement, Tower shares; the entire property portfolio currently held or to be held by the Tower group comprising 27 properties, further details of which are set out in Annexure 7; holders of Tower shares, as recorded in the share register of Tower; the subscription agreement entered into between Tower and the promoters on 3 June 2013, the salient features of which are set out in Annexure 20; the registration of transfer of the relevant immovable property into the name of Tower in the relevant deeds registry office; the date of registration of transfer of the relevant immovable property into the name of Tower in the relevant deeds registry office; Link Market Services South Africa Proprietary Limited (Registration number 2000/007239/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; Turquoise Moon Trading 258 Proprietary Limited (Registration number 2005/010038/07), a private company duly registered and incorporated with limited liability under the company laws of South Africa; the acquisition by Tower of the entire issued share capital of and claims against Turquoise Moon, the terms and conditions of which are set out in the Turquoise Moon acquisition agreement; the agreement entered into between the Turquoise Moon vendors and Tower on 22 March 2013 together with the first addendum thereto, entered into between the Turquoise Moon vendors and Tower on 12 April 2013, and the second addendum thereto, entered into between the Turquoise Moon vendors and Tower on 17 May 2013, the salient terms and conditions of which are set out in paragraph of this pre-listing statement; the immovable property known as Clearview Motor Village, situate at Tugela Road, Florida Glen, Johannesburg, further details of which are set out in Annexure 7; collectively, the Strategic Property Investment Fund Limited, Daniel Jacobus du Plessis and Gert Cornelis du Plessis being the sellers of the shares in and shareholder claims against Turquoise Moon; volume weighted average price; and the distribution available to a holder of a share in any financial year divided by the market price of that share. 16