this document and any accompanying documents are … · the existing ordinary shares are admitted...

THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE

YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action you should take, you arerecommended to seek your own financial advice immediately from an independent financial adviserwho specialises in advising on shares or other securities and who is authorised under the FinancialServices and Markets Act 2000 (“FSMA”) if you are resident in the United Kingdom or, if not, fromanother appropriately independent financial adviser.

This document, which comprises (i) a circular prepared in accordance with Chapter 13 of the UK ListingRules for the purposes of the Extraordinary General Meeting convened pursuant to the Notice of EGMset out at the end of this document and (ii) a prospectus relating to Redefine International P.L.C.(“Redefine International”) for, to the extent the Placing proceeds, the purposes of section 85(2) ofFSMA, has been prepared in accordance with the UK Prospectus Rules of the UK Listing Authoritypursuant to Part VI of FSMA and has been approved as a prospectus by the Financial Conduct Authority(“FCA”) in accordance with section 87A of FSMA. This prospectus has been filed with the FCA andmade available to the public in accordance with Rule 3.2.1 of the Prospectus Rules by the same beingavailable at www.redefineinternational.com.

If you sell or have sold or otherwise transferred all of your Existing Ordinary Shares, you should sendthis document (but not any personalised Form of Proxy) at once to the purchaser or transferee or to thebank, stockbroker or other agent through whom the sale or transfer was effected for delivery to thepurchaser or the transferee. However, the distribution of this document and the Form of Proxy intojurisdictions other than the United Kingdom may be restricted by law. Therefore, persons outside theUnited Kingdom into whose possession this document and any accompanying documents come shouldinform themselves about, and observe, any such restrictions. Any failure to comply with theserestrictions may constitute a violation of the securities laws of the relevant jurisdiction.

The Company and the Directors, whose names are set out on page 38 of this document, acceptresponsibility for the information contained in this document. To the best of the knowledge and belief ofthe Company and the Directors (who have taken all reasonable care to ensure that such is the case),the information contained in this document is in accordance with the facts and does not omit anythinglikely to affect the import of such information.

This document should be read in its entirety by Shareholders. Your attention is drawn to the

letter from the Chairman of Redefine International which is set out in Part 7 (Letter fromChairman of Redefine International P.L.C.) of this document and which contains arecommendation from (i) the Directors that you vote in favour of the Share Authority

Resolutions and the Related Party Resolution and (ii) the Independent Directors that you vote in

favour of the Rule 9 Waiver Resolution, in each case to be proposed at the Extraordinary

General Meeting referred to below. Part 2 of this document entitled “Risk Factors” includes adescription of certain important factors, risks and uncertainties that may affect the Enlarged

Group’s business and the Ordinary Shares, and which should be taken into account when

considering the matters referred to in this document.

REDEFINE INTERNATIONAL P.L.C.

(Incorporated in the Isle of Man under the Companies Acts, 1931 – 2004 (as amended) andre-registered under the Companies Act 2006 of the Isle of Man with registered number 010534V)

Potential Placing of up to 375,000,000 Placing Shares

Approval of waiver of Rule 9 of the UK Takeover Code

Approval of the Related Party Transaction

and

Notice of Extraordinary General Meeting

Peel Hunt J.P. Morgan Cazenove Java Capital

UK Sponsor and Joint UK Bookrunner JSE Sponsor, South African Joint UK Bookrunner Corporate Adviser

and SA Bookrunner

AIII/6.1

LR 13.3.1 (1)

LR 13.3.1 (6)

AI/1.1, 1.2

AIII/1.1, 1.2

AI/5.1.1/

5.1.2

LR 13.6.1(1)(a)

AIII/4.1

LR 13.1.1 (a)

AIII/ 5.4.1

LR 13.3.1

(9) (a)

166810 Proof 7 Thursday, January 28, 2016 06:18

LR 13.3.1 (4)

166810 Proof 7 Wednesday, January 27, 2016 23:14

sterling 166810

166810 Project Burgundy Prospectus_13mm Spine (CMYK)_166810 Project Burgundy Prospectus_13mm Spine (CMYK) 28/01/2016 06:23 Page 1

The Existing Ordinary Shares are admitted to (a) the premium listing segment of the Official List and totrading on the London Stock Exchange’s main market for listed securities and (b) listing and trading onthe Main Board of the JSE. It is proposed that, subject to Shareholder approval of the Resolutions andthe Board (in consultation with the Bookrunners) electing to proceed with the Placing, application willbe made to (a) the UK Listing Authority for the Placing Shares to be admitted to the premium listingsegment of the Official List and to the London Stock Exchange for the Placing Shares to be admittedto trading on the London Stock Exchange’s main market for listed securities and (b) the JohannesburgStock Exchange (the “JSE”) for the Placing Shares to be listed and traded on the Main Board of theJSE (together “Admission”). If the Placing proceeds, it is expected that Admission would becomeeffective and that dealings would commence by 8.00 a.m. (London time) on 23 February 2016 inrespect of the UK Placing Shares and 9.00 a.m. (South African time) on 23 February 2016 in respectof the South African Placing Shares.

A Notice of Extraordinary General Meeting, which is to be held at 2nd Floor, 30 Charles II Street,London SW1Y 4AE, on 15 February 2016, at 9.30 a.m. (London time) is set out at the end of thisdocument. A Form of Proxy for use in relation to the Extraordinary General Meeting is enclosed. To bevalid, the Form of Proxy should be completed, signed and returned in accordance with the instructionsprinted on it and the notes in the Notice of Extraordinary General Meeting. Completion and return of aForm of Proxy will not preclude Shareholders from attending and voting in person at the ExtraordinaryGeneral Meeting, should they so wish.

This document does not constitute or form part of any offer to buy or any invitation to sell orissue, or any solicitation of any offer to buy or subscribe for, Placing Shares in any jurisdiction.This document has been produced for the purposes of, inter alia, Admission, should the Placingproceed. Accordingly, no Placing Price is included in this document, which will only bedetermined by the Board and the Bookrunners following the Bookbuild, should the Placingproceed.

The release, publication or distribution of this document and the Form of Proxy in jurisdictions otherthan the United Kingdom may be restricted by law and, therefore, any persons who are subject to thelaws of any jurisdiction other than the United Kingdom should inform themselves about, and observe,any applicable requirements. Failure to comply with any such restrictions may constitute a violation ofthe securities laws of any jurisdiction. This document has been prepared to comply with requirementsof English law, the UK Listing Rules, the UK Prospectus Rules and the Rules of the London StockExchange and information disclosed may not be the same as that which would have been disclosed ifthis document had been prepared in accordance with the laws of jurisdictions outside England.

Peel Hunt LLP, which is authorised and regulated in the United Kingdom by the Financial ConductAuthority, is acting as UK sponsor and joint UK bookrunner to the Company in connection with thepotential Placing and will not be responsible to anyone other than the Company for providing theprotections afforded to clients of Peel Hunt LLP, nor for providing advice in relation to the potentialPlacing.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. MorganCazenove), which is authorised in the United Kingdom by the Prudential Regulation Authority (“PRA”)and regulated by the FCA and the PRA, is acting as joint UK bookrunner to the Company in connectionwith the potential Placing and will not be responsible to anyone other than the Company for providingthe protections afforded to clients of J.P. Morgan Securities plc, nor for providing advice in relation tothe potential Placing.

Java Capital Proprietary Limited is acting as JSE sponsor, SA corporate adviser and SA bookrunnersolely for the Company in relation to matters referred to in the document and will not be responsible toanyone other than the Company for providing the protections afforded to clients of Java CapitalProprietary Limited, nor for providing advice in relation to the potential Placing.

Aside from the responsibilities and liabilities, if any, which may be imposed under FSMA or theregulatory regime established thereunder, or any other applicable regulatory regime, none of Peel HuntLLP, J.P. Morgan Securities plc, Java Capital Proprietary Limited or any of their respective affiliatesaccept any responsibility or liability whatsoever for, nor make any representation or warranty, expressor implied, as to the contents of this document, including its accuracy, fairness, completeness orverification, or for any other statement made or purported to be made by it, or on its behalf, inconnection with the Company or the potential Placing and nothing in this document is, or shall be reliedupon as a promise or representation in this respect, whether as to the past or future. Each of Peel HuntLLP, J.P. Morgan Securities plc and Java Capital Proprietary Limited and their respective affiliatesaccordingly disclaims to the fullest extent permitted by law all and any responsibility or liability whether

2


arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respectof this document or any such statement.

NOTICE TO US INVESTORS

This document does not constitute an offer of Placing Shares to any person, including those with aregistered address in, or who is resident in, the United States or any other Restricted Jurisdiction. Anypotential Placing Shares have not been and will not be registered under the US Securities Act, or withany regulatory authority or under the applicable securities laws of any state or other jurisdiction of theUnited States, or the relevant laws of any state, province or territory of any other Restricted Jurisdiction,or any other Restricted Jurisdiction, and may not be offered, sold, taken up, exercised, resold,renounced, transferred or delivered, directly or indirectly, within any Restricted Jurisdiction or within theUnited States (as defined in Regulation S under the US Securities Act (“Regulation S”)) unless anyoffer and sale of Placing Shares has been registered under the US Securities Act or pursuant to anexemption from, or in a transaction not subject to, the registration requirements of the US SecuritiesAct. Any potential Placing Shares would be offered or sold outside the United States in reliance onRegulation S. This document does not constitute an offer to sell or a solicitation of an offer to buyPlacing Shares in any jurisdiction in which such offer or solicitation is unlawful. Neither this documentnor any other document connected with the potential Placing will be distributed in or into the UnitedStates or any of the other Restricted Jurisdictions.

Neither the potential Placing Shares, the Form of Proxy, this document nor any other documentconnected with the potential Placing have been or will be approved or disapproved by the SEC, anystate securities commission in the United States or any other US regulatory authority, nor have any ofthe foregoing authorities passed upon or endorsed the merits of the offering of any Placing Shares orthe accuracy or adequacy of this document connected with any potential Placing. Any representation tothe contrary is a criminal offence in the United States. There will be no public offer of the Placing Sharesin the United States.

NOTICE TO OVERSEAS SHAREHOLDERS

EXCEPT AS OTHERWISE SET OUT HEREIN, THE POTENTIAL PLACING DESCRIBED IN THISDOCUMENT IS NOT BEING MADE TO SHAREHOLDERS OR INVESTORS IN ANY RESTRICTEDJURISDICTIONS. NONE OF THE SECURITIES REFERRED TO IN THIS DOCUMENT SHALL BESOLD, ISSUED OR TRANSFERRED IN ANY JURISDICTION IN CONTRAVENTION OFAPPLICABLE LAW.

Capitalised terms have the meanings ascribed to them in Part 17 (Definitions) of this document.

Any reproduction or distribution of this document, in whole or in part, and any disclosure of its contentsis prohibited, except to the extent such information is otherwise publicly available.

No person has been authorised to give any information or make any representations other thanthose contained in this document and, if given or made, such information or representationsmust not be relied upon as having been authorised by Redefine International, Peel Hunt, JPMCor Java Capital. None of Redefine International, Peel Hunt, JPMC or Java Capital takes anyresponsibility for, or can provide assurance as to the reliability of, other information that youmight be given. Redefine International will comply with its obligation to publish a supplementaryprospectus containing further updated information required by law or by any regulatoryauthority but assumes no further obligation to publish further information. Subject to FSMA, theUK Listing Rules, the UK Disclosure and Transparency Rules and the UK Prospectus Rules, thedelivery of this document shall not, under any circumstances, create any implication that therehas been any change in the affairs of Redefine International since the date of this document orthat the information in this document is correct as at any time after this date. Without limitation,the contents of the Group’s website do not form part of this document. Investors should onlyrely on the information contained in this document and contained in any documentsincorporated into this document by reference.

THE CONTENTS OF THIS DOCUMENT OR ANY SUBSEQUENT COMMUNICATION FROMREDEFINE INTERNATIONAL, PEEL HUNT, JPMC OR JAVA CAPITAL OR ANY OF THEIRRESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS ARE NOT TO BECONSTRUED AS LEGAL, FINANCIAL OR TAX ADVICE. INVESTORS SHOULD CONSULT THEIROWN SOLICITORS, INDEPENDENT FINANCIAL ADVISERS OR TAX ADVISERS FOR LEGAL,FINANCIAL OR TAX ADVICE.

The date of this document is 28 January 2016.

3


CONTENTS

Page

PART 1 SUMMARY 5

PART 2 RISK FACTORS 18

PART 3 IMPORTANT INFORMATION 30

PART 4 EXPECTED TIMETABLE OF PRINCIPAL EVENTS 36

PART 5 PLACING STATISTICS 37

PART 6 DIRECTORS, COMPANY SECRETARY AND ADVISERS 38

PART 7 LETTER FROM THE CHAIRMAN OF REDEFINE INTERNATIONAL P.L.C. 41

PART 8 INFORMATION ON THE POTENTIAL PLACING SHARES 60

PART 9 INFORMATION ON REDEFINE INTERNATIONAL 63

PART 10 OPERATING AND FINANCIAL REVIEW OF THE GROUP 71

PART 11 HISTORICAL FINANCIAL INFORMATION RELATING TO THE GROUP 80

PART 12 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE GROUP 81

PART 13 PROPERTY VALUATION REPORTS 86

PART 14 WAIVER OF RULE 9 OF THE UK TAKEOVER CODE AND INFORMATION

ON THE CONCERT PARTY 188

PART 15 ADDITIONAL INFORMATION 211

PART 16 DOCUMENTS INCORPORATED BY REFERENCE 277

PART 17 DEFINITIONS 279

PART 18 NOTICE OF EXTRAORDINARY GENERAL MEETING 288

4


PART 1

SUMMARY

Summaries are made up of disclosure requirements known as “Elements”. These elements arenumbered in Sections A–E (A.1–E.7).

This summary contains all the Elements required to be included in a summary for this type of securityand company. Because some Elements are not required to be addressed there may be gaps in thenumbering sequence of the Elements.

Even though an Element may be required to be inserted into the summary because of the type ofsecurity and company, it is possible that no relevant information can be given regarding the Element.In this case a short description of the Element is included in the summary with the mention of “notapplicable”.

Section A – Introduction and warnings

DisclosureElement requirement Disclosure

A.1 Warning This summary should be read as an introduction to this

document. Any decision to invest in the securities should be

based on consideration of this document as a whole by the

investor. Where a claim relating to the information contained in

this document is brought before a court, the plaintiff investor

might, under the national legislation of the member states of the

European Union, have to bear the costs of translating this

document before the legal proceedings are initiated. Civil liability

attaches only to those persons who have tabled the summary

including any translation thereof, but only if the summary is

misleading, inaccurate or inconsistent when read together with

the other parts of this document or it does not provide, when read

together with the other parts of this document, key information in

order to aid investors when considering whether to invest in such

securities.

A.2 Not applicable. Redefine International P.L.C. is not engaging any

financial intermediaries for any resale of securities or final

placement of securities after publication of this document.

Section B – Company and any guarantor


B.1 The Company’s legal and commercial name is Redefine

International P.L.C. (the “Company”) and it trades under the

name Redefine International.

B.2 The Company was initially incorporated with limited liability under

the laws of the Isle of Man under the Companies Acts 1931 –

2004 (as amended), and is domiciled in the Isle of Man. The

Company is subject to the provisions of the Companies Act 2006

of the Isle of Man.

Resale or final

placement of

securities through

financial

intermediaries

Legal and

Commercial Name

Domicile/Legal

Form/Legislation/

Country of

Incorporation

5


B.3 The Company is an income focused property investment

company with exposure to a broad range of properties and

geographical areas. The Company has direct and indirect

property investments geographically diversified across the UK

and Germany, providing exposure to the retail, office, industrial

and hotel sectors.

B.4a Significant trends The investment market, both in the UK and Germany, continues

to benefit from strong demand, albeit that levels of investment

have normalised following record investment volumes in the

second quarter of 2015. International investors continue to

dominate the UK investment market with a similar trend now

evident in Germany. Rental values in the UK have continued on

an upward trend although this has been driven to a large extent

by the office and distribution sectors, principally in London and

the South East. Growth in retail rents has been more muted

although there has been some encouraging data in the second

half of 2015. Demand from retailers in Germany continued to

strengthen during the year, with interest improving from both local

and international brands. Demand continues to outweigh supply

in prime locations which is having a positive knock-on effect on

secondary locations.

With performance in the next phase of the property cycle likely to

be more heavily weighted to income returns and rental growth,

the Group’s approach toward recycling capital into assets with

strong fundamentals and occupier demand is as important as

ever.

B.5 Group structure The Company is the parent company of the Group and has a

number of subsidiaries. The Company’s interests in these

subsidiary companies are comprised as follows:

• 74 of the companies are wholly-owned subsidiary companies;

• 14 of the companies are interests held amounting to 75 per

cent. or more but less than 100 per cent. of the ownership of

the relevant company;

• 30 of the companies are interests held in companies of 50 per

cent. or more but less than 75 per cent. of the ownership of

the relevant company; and

• 21 of the companies are minority interests held in companies

amounting to less than 50 per cent. of the ownership of the

relevant company.

The Company holds each of its properties through its

subsidiaries and Group companies.

B.6 Notifiable interests As at the Latest Practicable Date, no person (other than the

Shareholders listed below) had a notifiable interest in the issued

share capital of the Company:

• Redefine Properties held 449,757,285 Ordinary Shares (equal

to 30.07 per cent. of the Company’s issued share capital); and

• Allan Gray Unit Trust Management (RF) (Pty) Limited held

57,348,481 Ordinary Shares (equal to 3.83 per cent. of the

Company’s issued share capital).

Key factors of

Company’s

current operations

and principal

activities

6



Redefine Properties and Allan Gray Unit Trust Management (RF)

(Pty) Limited have the same voting rights in connection with their

Ordinary Shares as are enjoyed by all other Shareholders.

B.7 Selected historical financial information relating to the Company

which summarises the financial condition of the Company for the

three financial years ended 31 August 2015, 31 August 2014 and

31 August 2013 is set out in the following table.

Year ended Year ended Year ended

31 August 31 August 31 August

2015 2014 2013

Financial Information £m £m £m

Gross rental income 68.3 66.2 51.4

Investment and other income 11.4 11.1 4.6

Net operating income 63.3 61.2 36.9

Profit from operations 109.0 135.6 89.5 ———— ———— ————Profit for the Year 77.9 102.8 61.1 ———— ———— ————Total assets 1,226.8 1,183.3 1,062.7

Total liabilities 590.0 673.6 752.3 ———— ———— ————Net Assets 636.8 509.7 310.4 ———— ———— ————Net asset value per share –

Basic (pence) 40.6p 37.1p 31.0p ———— ———— ————Net asset value per share –

Diluted (pence) 40.5p 37.1p 29.1p ———— ———— ————

The Company completed the acquisition of Banbury Cross Retail

Park on 7 September 2015 and the Tranche 1 Properties on

2 October 2015. Save for entering into the AUK Facility, the

drawdown of £155.0 million from the AUK Facility, the acquisition

of Banbury Cross Retail Park and the Tranche 1 Properties, there

has been no significant change to the Company’s financial

condition and operating results during or subsequent to the

period covered by the historical key financial information on the

Company set out in this section.

B.8 The unaudited pro forma financial effect of:

• the potential Placing (assuming the Company raises the

minimum gross proceeds of £100.0 million);

• the acquisition of the Combined AUK Portfolio (being the

acquisition of Banbury Cross Retail Park and the AUK

Portfolio (assuming the completion of the acquisition of both

Tranche 1 and Tranche 2 of the AUK Portfolio);

• entering into the AUK Facility; and

• receipt of proceeds from the sale of the Cromwell Group, the

Swiss Coop portfolio and certain petrol filling stations (the

cash receipts from these transactions will be used to part fund

the acquisition of the Combined AUK Portfolio),

on the Group’s assets and liabilities as if they had occurred on

31 August 2015 would be to increase total assets from

£1,226.8 million to £1,513.6 million, and total liabilities from

£590 million to £799.9 million.

Historical financial

information

Pro forma

financial

information

7



B.9 Profit forecast Not applicable as the Company has not published any profit

forecasts or estimates.

No profit forecast or estimate is included in this document.

B.10 Not applicable; the audit reports on the historical financial

information contained in, or incorporated by reference into, this

document are not qualified.

B.11 Not applicable; the Company is of the opinion that the Group’s

and the Enlarged Group’s working capital is sufficient for its

present requirements, that is, for at least the next 12 months from

the date of publication of this document.

Section C – Securities


C.1 The Company would propose to issue up to 375,000,000 Placing

Shares pursuant to the Placing. The ISIN which the Placing

Shares would trade under is IM00B8BV8G91.

C.2 The Ordinary Shares are denominated in Pounds Sterling.

The Existing Ordinary Shares held on the UK share register are

quoted and traded in Pounds Sterling and the Existing Ordinary

Shares held on the SA share register are quoted and traded in

Rand.

The potential Placing Shares to be held on the UK share register

would be quoted and traded in Pounds Sterling and the potential

Placing Shares to be held on the SA share register would be

quoted and traded in Rand.

C.3 As at the Latest Practicable Date, the Company had in issue

1,495,566,887 fully paid Ordinary Shares of 8.0 pence each,

none of which are held in treasury.

C.4 Any Placing Shares would be issued credited as fully paid and

would rank pari passu in all respects with the Existing OrdinaryShares, including the right to receive all dividends and other

distributions declared in respect of the ordinary share capital of

the Company after the date of the allotment and issue of any

such Placing Shares.

Subject to any special rights, restrictions or prohibitions as

regards voting for the time being attached to any Ordinary Shares

(for example, in the case of joint holders of a share, the only vote

which will count is the vote of the person whose name is listed

before the other voters on the register for the share),

Shareholders shall have the right to receive notice of and to

attend and vote at general meetings of the Company. Subject to

the provisions of the Companies Act 2006, the Company may

from time to time declare dividends and make other distributions

on the Ordinary Shares. Shareholders are entitled to participate

in the assets of the Company attributable to their shares in a

winding-up of the Company or other return of capital, but they

have no rights of redemption.

Qualifications in

the audit report

Working capital

explanation

Type and class of

securities being

admitted to trading

Currency of the

securities issue

Number of shares

issued

Description of the

rights attaching to

the securities

8



C.5 The following restrictions apply to the free transferability of the

Ordinary Shares:

• If any Shareholder has been served with a request notice

under Article 162 of the Articles of Association and does not

within the 14 day period prescribed therein supply to the

Company the information thereby requested, the Company

may (at the absolute discretion of the Directors) at any time

thereafter by a restriction notice to such Shareholder direct

that no transfer of any of the shares held by such member (the

“Default Shares”) shall be recognised or registered by the

Directors unless:

(i) the transfer is a permitted transfer; or

(ii) the member is not himself in default as regards supplying

the requisite information required under Article 162 and,

when presented for registration, the transfer is

accompanied by a certificate by the member in a form

satisfactory to the Directors to the effect that after due

and careful enquiry the member is satisfied that none of

the shares the subject of the transfer are Default Shares

under the Articles,

provided the Default Shares represent at least 0.25 per cent.

(in nominal value) of the issued shares of the same class as

the Default Shares.

• The Board may refuse to register a transfer if in its opinion

(and with the concurrence of the FCA or the JSE or such other

competent authority) exceptional circumstances so warrant.

• Transfers of shares to a prohibited person under the Articles

will not be registered.

C.6 Admission Subject to Shareholder approval of the Resolutions, and the

Board (in consultation with the Bookrunners) electing to proceed

with the potential Placing, application would be made to (a) the

UK Listing Authority and to the London Stock Exchange for the

Placing Shares to be admitted to the premium listing segment of

the Official List and to trading on the London Stock Exchange’s

main market for listed securities; and (b) the JSE for the Placing

Shares to be listed and traded on the Main Board of the JSE. In

that case, Admission of the Placing Shares could be expected to

become effective, and dealings to commence at 8.00 a.m.

(London time) on 23 February 2016 in respect of the UK Placing

Shares and 9.00 a.m. (South African time) on 23 February 2016

in respect of the South African Placing Shares.

C.7 Dividend policy The Company’s dividend policy is consistent with the UK-REIT

Regime, at the date of this document. Currently, as a UK-REIT

the Company is required to distribute at least 90 per cent. of its

UK property rental profits to Shareholders.

Restrictions on the

free transferability

of the securities

9



Section D – Risks


D.1 The Company believes that the following are key risks affecting

the Enlarged Group and its business:

• The Enlarged Group’s operations are capital intensive and are

financed on an asset specific basis. The Group has a number

of asset-specific financings and also has general corporate

borrowings in place to finance its property acquisitions and

development activities. There can be no assurance that the

Enlarged Group will be able to find lenders in the longer term

who are willing to lend on similar terms to those which apply

to existing financing arrangements, or at all, upon maturity. An

increase in loan-to-value ratio, for example, as a result of

declines in property values associated with the Combined

AUK Portfolio or generally, would be one factor which could

restrict the Enlarged Group’s ability to arrange such financing

or refinancing in the longer term. If, in the longer term, the

Enlarged Group is not able to refinance borrowings as they

mature in the longer term and/or the terms of such refinancing

are less favourable than the existing terms of borrowing, this

may have a material adverse effect on the business, financial

condition, results of operations and future prospects of the

Enlarged Group.

• The Enlarged Group operates in a highly competitive market

for investment opportunities. Heightened competition in the

real estate market in the countries in which the Enlarged

Group invests may reduce investment opportunities, increase

prices of real estate and affect occupancy and rental rates of

the Enlarged Group’s properties. Some competitors and

potential competitors may have advantages over the

Company, including greater name recognition, greater

financial, marketing and other resources and better access to

capital, which would allow them to respond more quickly to

new or changing opportunities.

• The Enlarged Group competes for tenants for its properties

with real estate investment funds, developers, owners and

operators of commercial real estate businesses in the regions

where the Enlarged Group’s properties are located. If, as a

result of competition or lack of demand, the Enlarged Group is

required to reduce rental rates or to offer more substantial rent

abatements, tenant improvements, early termination rights or

below-market renewal options to retain existing or to attract

new tenants, the Enlarged Group’s cash flow and operating

results could be adversely affected.

• The Enlarged Group’s net asset value may be reduced by

downward property valuations, which may occur, for example,

as a result of prevailing economic conditions allowing for a

tapering of global government asset purchase programmes,

decreased demand for commercial and/or government

occupied office space, adverse change in retail economic

conditions and/or decline in the hotel industry. This may affect

the Enlarged Group’s ability in the longer term to refinance

debt when required or to pay dividends.

Key information

on the key risks

specific to the

issuer or its

industry

10


• The valuation of the Enlarged Group’s properties is inherently

subjective due to the individual nature of each property, its

location and the expected future rental revenues from that

particular property. As a result, valuations are subject to

uncertainty and, in determining market value, valuers are

required to make certain assumptions and such assumptions

may prove to be inaccurate. Incorrect assumptions or flawed

assessments underlying a valuation report could negatively

affect the Enlarged Group’s financial condition and potentially

inhibit the Enlarged Group’s ability to realise a sale price that

reflects the stated valuation. This is particularly so in periods

of volatility or when there has been limited real estate

transactional evidence against which property valuations can

be benchmarked. In addition, incorrect assumptions or flawed

assessments underlying a valuation could potentially inhibit

the Enlarged Group’s ability to raise finance in the future.

Further, if the Enlarged Group acquires properties based on

inaccurate valuations, the Enlarged Group’s net assets and

results of operations may be materially adversely affected.

There can also be no assurance that the valuations of the

Enlarged Group’s current and prospective properties will be

reflected in the actual transaction prices, even where any

such transactions occur shortly after the relevant valuation

date, or that the estimated yield and estimated annual rental

income will prove to be attainable. In addition, property

valuations are dependent on the level of rental income

receivable and anticipated to be receivable on that property in

the future and, as such, declines in rental income could have

an adverse impact on revenue and the value of the Enlarged

Group’s properties.

• The Company is internally managed and therefore relies on its

management and their experience, skill and judgement, in

identifying, selecting and negotiating the acquisition of

suitable investment opportunities. The Company also relies

on the Directors, and in particular, the Executive Directors, to

manage the day-to-day affairs of the Company. There can be

no assurance as to the continued service of these individuals

as directors and employees of the Company. The departure of

any of these individuals from the Company without adequate

replacement may have a material adverse effect on the

Company’s business prospects and results of operations. The

Company is also reliant on its senior asset managers and

senior finance staff. The departure of key personnel may

require an extended period in which to find suitable

replacements and may have a temporary adverse effect on

the business.

• Under the Companies Act 2006, subject to the provisions of its

memorandum and articles of association, a company may

make distributions (including cash dividends) provided that it

satisfies the statutory solvency test prescribed by section 49

of the Companies Act 2006. The solvency test is satisfied if a

company is able to pay its debts as they become due in the

normal course of the company’s business and the value of the

company’s assets exceeds the value of its liabilities. The

Company’s ability to pay dividends is affected by its

11



profitability and there can be no assurance that the Company

will be able to pay a dividend in the future or as to the amount

of any such dividend, if paid.

• If the Resolutions are not passed by Shareholders at the

Extraordinary General Meeting or prevailing market conditions

mean that the Board (in consultation with the Bookrunners)

elects not to proceed with the Placing or if, inter alia, thePlacing fails to raise gross proceeds of at least £100.0 million,

the Board will not proceed with the Placing and will utilise the

RPL Loan instead to complete the acquisition of the Tranche

2 Properties. In such circumstances, if the Board elects not to

raise funds through a debt or equity fundraising prior to the

repayment date of the RPL Loan, the Company may elect to

implement the Conversion resulting in the Disposal (or, in the

absence of election by the date being three months following

drawdown, it will automatically convert). This would result in

the Company being in a 50:50 joint venture with Redefine

Properties in respect of the Combined AUK Portfolio.

Consequently, the Directors would not be able to exclusively

direct the strategy and operating decisions of Redefine AUK in

the same manner as it would with full control. In particular,

material decisions relating to the Combined AUK Portfolio,

such as a planned operational change, acquisition, disposal

or development, or the refinancing or repayment of debt,

would require the consent of Redefine Properties, which may

restrict the Enlarged Group’s ability to proceed with such a

decision. This lack of control may decrease the value of the

assets held by Redefine AUK. Conflict with Redefine

Properties may lead to deadlock and result in the Enlarged

Group being unable to pursue its desired strategy or exit the

joint venture other than on disadvantageous terms. However,

under the terms of the RPL JV Agreement, neither the

Company nor Redefine Properties is capable of forcing the

other to sell its shareholding in Redefine AUK in the event of

a deadlock.

• The Company cannot guarantee that it will maintain UK-REIT

status nor can it guarantee that it will maintain continued

compliance with all of the UK-REIT conditions. If the Company

was to leave the UK-REIT Regime within 10 years of joining,

HMRC has wide powers to direct how it would be taxed which

could have a material impact on the financial condition of the

Company.

D.3 The Company believes that the following are key risks affecting

the Ordinary Shares:

• Redefine Properties is currently interested in 30.07 per cent.

of the issued share capital of the Company (or 30.80 per cent.

when aggregated with the interests of the other members of

the Concert Party in the issued share capital of the Company)

and following completion of the Placing, its percentage

shareholding may increase to up to 35.79 per cent. (or

36.45 per cent. when aggregated with the other members of

the Concert Party) if, for illustrative purposes, (a) the Placing

Price is set at the Minimum Placing Price, (b) Redefine

Properties subscribes for the RPL Equity Commitment in full,

Key information

on the risks

specific to the

securities

12



(c) the other Placees subscribe for Placing Shares for an

aggregate value of £30.0 million and (d) no further issues of

Ordinary Shares occur between publication of this document

and Admission. The concentration of ownership may affect the

market price and liquidity of the Ordinary Shares. In addition,

Redefine Properties may have the ability to control the

outcome of matters requiring Shareholder approval, including

appointments to the Board and significant corporate

transactions, such as an acquisition or other change of control

of the Enlarged Group. On 14 November 2014, the Company

entered into the Relationship Agreement with, inter alia,Redefine Properties to regulate aspects of the ongoing

relationship between the Company and Redefine Properties.

The Directors believe that the terms of the Relationship

Agreement enable the Enlarged Group to carry on an

independent business as its main activity. However, the

interests of Redefine Properties may not be the same as the

interest of minority shareholders in the Company and

Redefine Properties may make decisions that may have a

material adverse impact on an investment in the Ordinary

Shares and on the business operations of the Group.

• Prospective investors should be aware that the value of an

investment in Redefine International may go down as well as

up. The market price of Ordinary Shares could be volatile and

subject to significant fluctuations due to a variety of factors

including changes in sentiment in the market regarding the

Ordinary Shares (or securities similar to them), any regulatory

changes affecting the Enlarged Group’s operations, variations

in its operating results, business developments or its

competitors, the operating and share price performance of

other companies in the industries and markets in which it

operates, or speculation about the Enlarged Group’s business

in the press, media or investment community.

• The potential Placing would be made on a non pre-emptive

basis, primarily to institutional investors only. If Shareholders

do not or are unable to participate in the Placing, their

proportionate ownership and voting interests in Redefine

International will be reduced and the percentage that their

Ordinary Shares will represent of the total issued share capital

of Redefine International will be reduced accordingly.

Section E – Placing


E.1 If the Placing were to proceed, the net proceeds of the potential

Placing would be dependent on the number of Placing Shares

issued and the actual Placing Price, however, the Placing would

be conditional, inter alia, on the Company raising minimum grossproceeds of at least £100.0 million.

By way of illustration, assuming (a) the Placing Shares were

issued at 44.4 pence per share (being a five per cent. discount to

the mid-market price per Ordinary Share at the Latest Practicable

Net proceeds and

costs of the

Placing

13



Date) (b) Redefine Properties participated in the Placing and

subscribed for Placing Shares representing £70.0 million and (c)

other Placees subscribed for Placing Shares representing

£30.0 million, the Company would expect to raise net proceeds

of approximately £94.5 million through the Placing after

deduction of estimated expenses of approximately £5.5 million.

No expenses would be charged by the Company to Shareholders

who acquire Placing Shares.

E.2a If the Placing were to proceed, the Company would seek to raise

a minimum of £100.0 million (gross) for the Company which will

allow the Company to complete the acquisition of the Tranche 2

Properties, with the balance of the consideration being funded

from existing cash resources and the AUK Facility.

Any additional equity raised would be used to provide capital for

further disciplined asset management opportunities within the

Group’s existing portfolio as well as new investment

opportunities. Additionally any excess equity raised would

support refinancing and restructuring of the Group’s existing

facilities at lower leverage levels.

For example, should the Company raise up to £150.0 million

(gross) through the potential Placing, following the scale back of

the RPL Equity Commitment, the excess of £50.0 million may be

utilised to reduce the Company’s leverage on the Acquisition. The

AUK Facility provides the required flexibility (through the

£148.0 million revolving credit facility) with the margin charged

subject to the amount of debt drawn and the resultant loan-to-

value ratio. Utilising the maximum drawdown of £98.0 million

would result in a loan-to-value ratio on the Combined AUK

Portfolio of 55 per cent. and a margin of 1.9 per cent. Limiting the

drawdown to £75.0 million would result in a reduced margin of

1.75 per cent. Should the overall facility be reduced to £263.0

million following the sale of 16 Grosvenor Street, London and to

maintain headroom of £33.0 million, the marginal return on the

additional £23.0 million of equity would be 4.6 per cent.

E.3 If the Resolutions are passed, and if the Board then considers it

in the best interests of the Company to pursue an equity raising

and the Placing proceeds, the Bookrunners, as agents of the

Company, have agreed to use their respective reasonable

endeavours to procure placees for the Placing Shares.

The Placing, if it were to proceed, would be on a non pre-emptive

basis, primarily to institutional investors only, and conditional on

the Company raising minimum gross proceeds of £100.0 million.

RPL Equity CommitmentIn connection with the potential Placing, if it were to proceed,

Redefine Properties has irrevocably agreed to subscribe for such

number of Placing Shares at the Placing Price as equals an

aggregate subscription amount of up to £70.0 million (the “RPL

Equity Commitment”). The RPL Equity Commitment is subject

to the Placing Price representing a minimum discount of five per

cent. to the volume weighted average price of an Existing

Ordinary Share over the 30 days prior to the date of

announcement of any such Placing (the “Maximum RPL Price”).

Terms and

conditions of the

potential Placing

Reason for the

Placing and use of

proceeds

14



If the Placing proceeds, the Company would seek to raise a

minimum additional aggregate of £30.0 million from Placees

(other than Redefine Properties) in order to raise a minimum of

£100.0 million (gross) through the Placing. If there is a successful

procurement of Placees (other than Redefine Properties)

representing in excess of £30.0 million of gross proceeds, the

Board expects to scale back Redefine Properties’ maximum

participation of up to £70.0 million on a pound for pound basis, for

every pound raised from other Placees in excess of the additional

aggregate £30.0 million, subject to Redefine Properties’

entitlement to participate in the Placing at the level which would

maintain its current percentage shareholding in the Company,

being 30.07 per cent.

Size of potential Placing and Placing PriceIf the Placing proceeds and there is sufficient demand from

Placees (including from Redefine Properties, to the extent that it

seeks to participate in excess of its pro-rata entitlement in the

Placing, subject to its terms and conditions), the Board may then

decide to increase the size of the Placing up to a maximum

amount of £150.0 million.

The potential Placing would comprise two separate but

simultaneous and co-ordinated placings. Placees would be able

to participate outside of South Africa and subscribe for UK

Placing Shares in Pounds Sterling pursuant to the UK Placing or

within South Africa and subscribe for Placing Shares in Rand

pursuant to the South African Placing. Investors who participate

in the UK Placing would be required to make bids for Placing

Shares in Pounds Sterling. Investors who participated in the

South African Placing would be required to make bids for Placing

Shares in Rand. The South African Placing would be subject to a

minimum application of R1 million per investor, acting as

principal, except for those categories of exempted persons

contemplated in section 96(1)(a) of the South African Companies

Act. The South African Placing would be undertaken with certain

existing shareholders and new institutional investors. Members of

the public (other than any member of the South African public

who acts as principal and offers to subscribe for a minimum of

R1 million worth of Placing Shares and those categories of

exempted persons contemplated in section 96(1)(a) of the South

African Companies Act) would not be entitled to participate in the

South African Placing. Similarly, the UK Placing would be

undertaken with certain existing and new institutional investors.

The potential Placing would be conducted, subject to the

satisfaction of certain conditions, through an accelerated

bookbuild process (the “Bookbuild”) to be carried out by the

Joint UK Bookrunners (in respect of the UK Placing) and Java

Capital (in respect of the South African Placing). If the

Resolutions are passed at the Extraordinary General Meeting,

and assuming the Company decides to proceed with the potential

Placing, it is expected that the book would open on 16 February

2016 and close at any time thereafter. The timing of the closing

of the book, the Placing Price and the number of Placing Shares

would be agreed between the Bookrunners and the Board

following completion of the Bookbuild and announced as soon as

practicable on a Regulatory Information Service in the UK and

15



the Stock Exchange News Service of the JSE. It is expected that

a Pricing Statement containing the Placing Price and the number

of Placing Shares issued, would (subject to certain restrictions)

be published at the same time and would be available on the

Company’s website at www.redefineinternational.com.

If the Placing proceeds, the Placing Price per UK Placing Share

would be set by the Directors and the Bookrunners, following

their assessment of market conditions and discussions with a

number of institutional investors in the course of the Bookbuild. In

addition, in accordance with Listing Rule 9.5.10R, the Placing

Price would not represent a discount of more than 10 per cent. to

the middle market price at the time of agreeing the Placing. The

Placing Price per South African Placing Share will be the

equivalent price of a UK Placing Share in Rand (subject only to

adjustment in terms of the prevailing exchange rate agreed

between the Bookrunners and the Board at the time of the

Bookbuild).

As this document does not constitute or form part of any offer to

buy or any invitation to sell or issue, or any solicitation of any offer

to buy or subscribe for, Placing Shares in any jurisdiction, no

maximum price has been included in this document.

If the Company and the Joint Bookrunners agree that the UK

Placing will proceed, the UK Placing is conditional upon, interalia, the following:

• the Resolutions being passed by the relevant Shareholders

at the Extraordinary General Meeting (without material

amendment);

• the Company raising gross proceeds of at least

£100.0 million through the Placing;

• the Placing Agreement becoming unconditional; and

• Admission becoming effective by not later than 8.00 a.m.

(London time) on 23 February 2016 or such later time and/or

date as the Company and the Joint UK Bookrunners may

agree (being not later than 8.00 a.m. (London time) on

31 May 2016).

Accordingly, if any of such conditions were not satisfied, or, if

applicable, waived, the proposed UK Placing would not proceed,

and the Company would utilise the RPL Loan in order to

complete the acquisition of the Tranche 2 Properties, to the

extent the South African Placing has not otherwise taken place

and raised sufficient funds.

If the Company and Java Capital agree that the South African

Placing will proceed, the South African Placing would be

conditional upon, inter alia, the following:

• the Resolutions being passed by the relevant Shareholders

at the Extraordinary General Meeting (without material

amendment);

• the Company raising gross proceeds of at least

£100.0 million through the Placing;

• the South African Placing Agreement becoming

unconditional; and

16



• Admission becoming effective by not later than 9.00 a.m.

(South African time) on 23 February 2016 or such later time

and/or date as the Company and the Bookrunners may agree

(being not later than 9.00 a.m. (South African time) on 31 May

2016).

Accordingly, if any of such conditions are not satisfied, or, if

applicable, waived, the proposed South African Placing would not

proceed, and the Company would utilise the RPL Loan in order

to complete the acquisition of the Tranche 2 Properties, to the

extent the UK Placing has not otherwise taken place and raised

sufficient funds.

E.4 Material interests Redefine Properties holds 30.07 per cent. and the Concert Party

holds 30.80 per cent. of the existing issued share capital of the

Company as at the Latest Practicable Date. If the Placing

proceeds, these percentages may increase depending on the

number of Placing Shares allocated to Redefine Properties

which, in turn, will depend on the actual Placing Price. In addition,

Michael Watters and Marc Wainer (who are members of the

Concert Party) have irrevocably undertaken to participate in the

Placing: (a) Michael Watters has irrevocably agreed to subscribe

for such number of Placing Shares at the Placing Price as equals

an aggregate amount of £150,000 and (b) Marc Wainer has

irrevocably agreed to subscribe for 175,000 Placing Shares at

the Placing Price (to be held through his Drawood Trust) and

procure that his wife subscribes for 20,000 Placing Shares at the

Placing Price. Accordingly, the Company is proposing the Rule 9

Waiver Resolution at the Extraordinary General Meeting to waive

the need for the Concert Party to make a mandatory takeover

offer for the Company under Rule 9 of the UK Takeover Code in

the event the Placing proceeds and the Concert Party’s

percentage shareholding increases.

E.5 Not applicable.

E.6 Dilution The potential Placing would be made on a non pre-emptive

basis, primarily to institutional investors only. As the potential

Placing does not involve a pre-emptive offer of shares to Existing

Shareholders, Existing Shareholders who do not, or are not

permitted to, participate in the potential Placing would suffer a

dilution of up to 20 per cent. to their interests in the Company

(assuming the Maximum Placing Shares are issued under the

Placing).

E.7 Not applicable; no expenses would be directly charged to the

investor by the Company.

Name of person

selling

Securities/lock up

agreements

Expenses charged

to the Investor

17



PART 2

RISK FACTORS

Any investment in the Ordinary Shares is subject to a number of risks. Before making any investment

decision, prospective investors should carefully consider the factors and risks attaching to an

investment in the Ordinary Shares, together with all other information contained in this document

including, in particular, the risk factors described below. Some of these risk factors apply to carrying on

the Enlarged Group’s business generally, while others are specific to the Group. They are not set out

in any order of priority. Additional risks and uncertainties currently unknown to the Company, or that it

currently believes to be immaterial for taking investment decisions, may also have an adverse (or

materially adverse) effect on the Enlarged Group’s business. If any of or a combination of the following

risk factors materialise, the Enlarged Group’s business, financial condition and/or operational

performance could be materially adversely affected. In such case, the trading price of the Ordinary

Shares may decline and potential investors may lose all or part of their value. An investment in Ordinary

Shares is only suitable for investors capable of evaluating the risks and merits of such investment and

who have sufficient resources to bear any loss which may result from the investment. Accordingly,

prospective investors are recommended to obtain independent financial advice from an adviser

authorised under FSMA (or another appropriately authorised independent professional adviser) who

specialises in advising upon investments. Investors should consider carefully whether an investment in

the Ordinary Shares is suitable for them in light of the information in this document and their personal

circumstances.

1. RISKS RELATING TO THE ENLARGED GROUP AND ITS BUSINESS

1.1 The valuation of the Enlarged Group’s properties is inherently subjective and uncertainand is based on assumptions which may prove inaccurateThe valuation of the Enlarged Group’s properties is inherently subjective due to the individual

nature of each property, its location and the expected future rental revenues from that particular

property. As a result, valuations are subject to uncertainty and, in determining market value,

valuers are required to make certain assumptions and such assumptions may prove to be

inaccurate. Incorrect assumptions or flawed assessments underlying a valuation report could

negatively affect the Enlarged Group’s financial condition and potentially inhibit the Enlarged

Group’s ability to realise a sale price that reflects the stated valuation. This is particularly so in

periods of volatility or when there has been limited real estate transactional evidence against

which property valuations can be benchmarked. In addition, incorrect assumptions or flawed

assessments underlying a valuation could potentially inhibit the Enlarged Group’s ability to raise

finance in the future. Further, if the Enlarged Group acquires properties based on inaccurate

valuations, the Enlarged Group’s net assets and results of operations may be materially

adversely affected. There can also be no assurance that the valuations of the Enlarged Group’s

current and prospective properties will be reflected in the actual transaction prices, even where

any such transactions occur shortly after the relevant valuation date, or that the estimated yield

and estimated annual rental income will prove to be attainable. In addition, property valuations

are dependent on the level of rental income receivable and anticipated to be receivable on that

property in the future and, as such, declines in rental income could have an adverse impact on

revenue and the value of the Enlarged Group’s properties.

Any of the foregoing factors could have an adverse impact on the Enlarged Group’s business,

financial condition and/or results of operations.

1.2 The Enlarged Group may not be able to refinance its borrowings in the longer termThe Enlarged Group’s operations are capital intensive and are financed on an asset-specific

basis. The Group has a number of asset-specific financings, including the AUK Facility, and also

has general corporate borrowings in place to finance its property acquisitions and development

activities. There can be no assurance that the Enlarged Group will be able to find lenders in the

longer term who are willing to lend on similar terms to those which apply to existing financing

arrangements, or at all, upon maturity. An increase in loan to value ratio, for example, as a result

of declines in property values associated with the Combined AUK Portfolio or generally, would be

18


one factor which could restrict the Enlarged Group’s ability to arrange such financing or

refinancing in the longer term. Declines in property values may occur, for example, as a result of

prevailing economic conditions stemming from the global economic downturn, decreased

demand for commercial and/or government occupied office space, adverse change in retail

demand or economic conditions and/or decline in the hotel industry. If, in the longer term, the

Enlarged Group is not able to refinance borrowings as they mature and/or the terms of such

refinancing are less favourable than the existing terms of borrowing, this may have a material

adverse effect on the business, financial condition, results of operations, future prospects of the

Enlarged Group, the price of the Ordinary Shares and the Enlarged Group’s ability to pay

dividends.

1.3 The Enlarged Group’s cost of finance could increaseAn increase in the cost, or lack of availability of finance (whether for macroeconomic reasons,

such as a lack of liquidity in debt markets (in particular in the relevant UK, German or South

African markets) or reasons specific to the Enlarged Group, such as the extent to which it is

leveraged and decline in property values, as outlined above), could impact both the ability to

progress capital investment opportunities necessary to deliver required rates of return to meet

shareholder expectations and the day-to-day financing (or refinancing) requirements of the

Enlarged Group in the longer term. Adverse interest rate movements could lead to an increase

in the cost of borrowing. Although the Enlarged Group has historically been able to obtain

financing on reasonable terms, there is no guarantee that future financing will be available on

terms that the Enlarged Group considers acceptable. It is possible in the current lending

environment that the terms of any new facilities entered into by the Enlarged Group in the future

could be more onerous than the terms of the Enlarged Group’s existing financing facilities.

Any of the foregoing factors may have an adverse impact on the Enlarged Group’s business,

financial condition and/or results of operations.

1.4 The Enlarged Group may be subject to increases in operating expensesThe Enlarged Group’s operating and other expenses could increase without a corresponding

increase in turnover or tenant reimbursements of operating and other costs. Factors which could

increase operating and other expenses include:

• increases in the cost of financing;

• increases in the rate of inflation and currency fluctuation;

• increases in the costs of services provided by third party providers;

• increases in taxes, tax laws and other statutory charges;

• changes in laws, regulations or government or local authority policies (including those

relating to health and safety and environmental compliance) which increase the costs of

compliance with such laws, regulations or policies;

• increases in insurance premiums;

• increases in the costs of maintaining properties; and

• capital expenditure which may arise as a result of defects affecting the properties which

need to be rectified, failure to perform by sub-contractors or increases in maintenance

costs.

Such increases could have a material adverse effect on the Enlarged Group’s financial position,

capital resources and ability to make distributions at historic levels or any distributions to

Shareholders.

1.5 The market for the Enlarged Group’s properties is relatively illiquidThe Enlarged Group’s properties, and those in which the Enlarged Group may invest in the

future, are relatively illiquid and investors may be reluctant to purchase or sell property in the

current or future market. Investor appetite for the Enlarged Group’s property assets may be

dampened by a dislocation in the global financial markets and a limited availability of financing,

any resulting decrease in the value of the Enlarged Group’s property assets, including on account

19


of decreased demand for relevant types of properties (e.g. government occupied office space,

which represents approximately seven per cent. of the Enlarged Group’s properties). Investor

appetites may also be decreased if demand for commercial properties decreased and/or there

was an adverse change in retail economic conditions and/or a decline in the hotel industry. The

resulting lack of liquidity in commercial real estate may inhibit the Enlarged Group’s ability to

strategically adjust the identity and mix of its property portfolio and may affect the Enlarged

Group’s ability to dispose of, or liquidate part of, its portfolio in a timely fashion and at satisfactory

prices in response to changes in economic, real estate market or other conditions or to finance

its development activity. In the case of an accelerated sale or a sale required for compliance with

covenants contained in the Enlarged Group’s financing, or in the event of enforcement of security

by a lender under one of the Enlarged Group’s non-recourse financings, there may be a

significant shortfall between the carrying value of the property on the Enlarged Group’s

consolidated balance sheet and the price achieved on the disposal of such property, and there

can be no assurance that the price obtained from such a sale would cover the book value of the

property sold.

Periods of reduced liquidity in the capital markets may also mean that it may be difficult to

achieve the sale of property assets at prices reflecting the Enlarged Group’s property valuations.

Failure to achieve successful sales of properties in the future at acceptable prices could have an

adverse impact on the Enlarged Group’s business, financial condition and/or results of

operations.

1.6 The Enlarged Group is reliant on the performance and retention of key personnel and maynot be able to retain key members of the management teamThe Company is internally managed and therefore relies on its management and their

experience, skill and judgement, in identifying, selecting and negotiating the acquisition of

suitable investment opportunities. The Company also relies on the Directors, and in particular,

the Executive Directors, to manage the day-to-day affairs of the Company. There can be no

assurance as to the continued service of these individuals as directors and employees of the

Company. The departure of any of these individuals from the Company without adequate

replacement may have a material adverse effect on the Company’s business prospects and

results of operations. The Company is also reliant on its senior asset managers and senior

finance staff. The departure of key personnel may require an extended period in which to find

suitable replacements and may have a temporary adverse effect on the business.

1.7 The Company may incur losses as a result of fluctuations in the foreign currencyexchange rates between the Pound and other foreign currencies for which it has not, ornot effectively, hedged its riskRevenues in Euros are earned from the Enlarged Group’s European business. The Enlarged

Group is, therefore subject to currency fluctuations on translating revenues and costs from those

foreign currencies to Sterling. This exposure is hedged by matching the value of the foreign

assets with borrowings in foreign currencies where practicable. To the extent that the Enlarged

Group does not hedge its exposure to foreign currency exchange rate fluctuations, or to the

extent that such hedging is inaccurate or otherwise ineffective, such exposure could have a

material adverse effect on the Enlarged Group’s business, financial condition, results of

operations, future prospects or the price of the Ordinary Shares.

1.8 If the Enlarged Group suffers uninsured losses, it may lose the value of the damagedasset altogetherThe Company believes it maintains insurance against all risks commonly insured against by

persons carrying on similar businesses to its business and believes it insures against all risks

against which it might reasonably be expected to insure its assets and property in the particular

circumstances of the business carried on by it. Inability to obtain such insurance on comparable

terms in the future may result in a material adverse effect on the business of the Enlarged Group.

For example, the availability or cost of such insurance may be affected by an act or acts of

terrorism. In addition, there can be no guarantee that current insurance coverage will not be

cancelled or become unavailable to the Enlarged Group on economically reasonable terms. If the

Enlarged Group were to suffer damage to an asset for which it was uninsured, it may lose the

20


value of the damaged asset altogether, which could have a material adverse effect on the

Enlarged Group’s business, financial condition, results of operations, future prospects or the

price of the Ordinary Shares.

There is a risk of accidents involving the public at hotels, shopping centres and other premises

owned by the Enlarged Group. Should an accident attract publicity or be of a size and/or nature

that is not adequately covered by insurance, the resulting publicity and costs could have an

adverse impact on the Enlarged Group’s reputation, business, financial condition and results of

operation. In such instance, the Enlarged Group’s ability to put in place public liability insurance

cover in the future may also be adversely affected.

1.9 The Enlarged Group’s debt facilities contain restrictions on the business of the EnlargedGroupAt 31 August 2015, the Enlarged Group had £540.9 million of net external debt outstanding.

Covenants contained in the Enlarged Group’s debt facilities may restrict its ability to engage in

certain businesses or to implement certain business strategies. For example, the Enlarged Group

may be required to seek the relevant lenders’ consent before incurring additional indebtedness

or creating further security interests over, or disposing of all or a substantial part of, its property

assets. If such consent is withheld, this may hinder the Enlarged Group’s ability to plan for or

react to market conditions or otherwise restrict the Enlarged Group’s business plans and

adversely affect the Enlarged Group’s ability to finance future strategic acquisitions, investments

and development projects.

1.10 A non-renewal by a major tenant could result in a significant loss of letting income, voidcosts, a reduction in asset value, increased capital expenditure, unoccupied propertyliabilities and increased bad debtsNon-renewal, in particular by one of the Enlarged Group’s principal tenants (such as Redefine

BDL, The First Secretary of State (UK Government), Tesco, VBG or Edeka), could result in a loss

of rental income, void costs, an increase in bad debts, and decrease the value of the relevant

properties. In the event of non-renewal by tenants, the Enlarged Group may be unable to find

new tenants quickly or at all or at rents equal to those under the expiring leases or on equally or

more favourable terms. Existing and potential tenants may seek to reduce their rental payments,

and/or reduce the length of time before they can break, and/or increase their rent-free periods

and/or demand a higher grade of fit-out. While properties remain vacant they may incur empty

rates liabilities. In the event that any of the above occurs, there could be a material adverse effect

on the Enlarged Group’s business, results of operations, financial condition, future prospects

and/or the price of the Ordinary Shares.

1.11 Reputational riskThe Company may also be subject to reputational risk from adverse publicity associated with

particular properties or tenants. The Enlarged Group relies on its reputation for attracting new

business partners, investors and maintaining credibility with key stakeholders. For example,

relationships with joint venture partners such as Redefine Properties and other professional

organisations such as Savills (UK) Limited are important to the delivery of the Enlarged Group’s

business strategy. Any reputational damage suffered by the Enlarged Group could have an

adverse effect on the Enlarged Group’s business prospects and results of operations.

1.12 The Enlarged Group may not be able to maintain or increase the rental rates for itsproperties, which may, in the longer term, have a material adverse impact on the value ofthe Enlarged Group’s properties, as well as the Enlarged Group’s turnoverThe value of the Enlarged Group’s property portfolio, and its turnover, will be dependent on the

rental rates that can be achieved from the properties. The ability of the Enlarged Group to

maintain or increase the rental rates for those properties generally may be adversely affected by

general economic conditions in the UK and Germany. In addition, there may be other factors that

depress rents or restrict the Enlarged Group’s ability to increase rental rates, including local

factors relating to particular properties or locations, such as increased competition. Any failure to

maintain or increase the rental rates for the properties in the Enlarged Group’s portfolio generally

may have a material adverse effect on the Company’s profitability, net asset value, the price of

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the Ordinary Shares and the Enlarged Group’s ability to meet interest and capital repayments on

any debt facilities.

1.13 The difficult macroeconomic and property market conditions in many of the markets inwhich the Enlarged Group operates may have a negative impact on its businessThe Enlarged Group operates in a highly competitive market for investment opportunities.

Heightened competition in the real estate investment market in the countries in which the

Enlarged Group invests may reduce investment opportunities and increase prices of real estate.

Some competitors and potential competitors may have advantages over the Company, including

greater name recognition, longer operating histories, pre-existing relationships with current or

potential tenants, greater flexibility as to movement of clients between properties, greater

financial, marketing and other resources and better access to capital, which would allow them to

respond more quickly to new or changing opportunities.

The Enlarged Group competes for tenants for its properties with real estate investment funds,

developers, owners and operators of commercial real estate businesses in the regions where the

Enlarged Group’s properties are located. If competitors offer property at rental rates below the

rates charged to the Enlarged Group’s tenants or below market rates, the Enlarged Group may

lose existing tenants and be unable to attract new tenants. If, as a result of competition or lack

of demand, the Enlarged Group is required to reduce rental rates or to offer more substantial rent

abatements, tenant improvements, early termination rights or below-market renewal options to

retain existing or to attract new tenants, the Enlarged Group’s cash flow and operating results

could be adversely affected.

The Enlarged Group’s net asset value may be reduced by downward property valuations, which

may occur, for example, as a result of prevailing economic conditions allowing for a tapering of

global government asset purchase programmes, decreased demand for commercial and/or

government occupied office space, adverse change in retail economic conditions and/or decline

in the hotel industry. This may affect the Enlarged Group’s ability in the longer term to refinance

debt when required or to pay dividends.

1.14 The Company has increased its exposure to the UK as a result of the Acquisition. As such,any future property market recession or significant increase in interest rates in the UK ina short period of time could materially adversely affect the value of the Enlarged Group’sreal estate assets.If the Placing proceeds and if the Company is not required to implement the Disposal, following

completion of the acquisition of the Tranche 2 Properties, UK real estate is expected to account

for approximately 80 per cent. of the market value of the Enlarged Group’s property portfolio as

at 1 March 2016.

The market value of the Enlarged Group’s UK real estate assets may be adversely affected by a

number of the following factors:

• the overall economic conditions in the UK such as growth or contraction in gross domestic

product, employment trends, consumer sentiment and the level of inflation and interest

rates;

• local real estate conditions, such as the level of demand for and supply of commercial and

retail space; and

• external factors including major world events such as war or acts of nature such as floods.

Significant reductions in the value of the Enlarged Group’s UK real estate assets could have a

material adverse effect on the business prospects and results of operations of the Enlarged

Group.

1.15 Benefits in relation to the Acquisition set out in this document may not be achieved or theAUK Portfolio may not perform as expectedThere is a risk that the benefits of the Acquisition, such as (i) exposure to a high quality diversified

UK portfolio where the Company expects to capture rental growth as the UK economy continues

to improve, (ii) enhancing the Company’s ability to sell assets and re-invest sale proceeds in

22


other properties and (iii) further enhancing the overall yield on the Enlarged Group’s portfolio, fail

to materialise, that they are materially less than have been estimated, take longer or cost more

to achieve, or that the AUK Portfolio will fail to perform as expected. If the Enlarged Group is

unable to realise the expected benefits or these expected benefits take longer to achieve or the

AUK Portfolio fails to perform as expected, this could have a significant impact on the business

prospects and results of operations of the Enlarged Group.

1.16 Construction of the Enlarged Group’s developments may be subject to delays ordisruptions that are outside of the Enlarged Group’s controlThe Enlarged Group will depend on skilled third party contractors for the timely construction of

its developments in accordance with applicable standards of quality and safety. The process of

construction may be delayed or disrupted by a number of factors, such as inclement weather or

acts of nature, industrial accidents and defective building methods or materials. Any of these

factors, alone or in combination, could delay or disrupt the construction process by halting the

construction process or damaging materials or the development itself. In addition, the costs of

construction depend primarily on the costs of materials and labour, which may be subject to

significant unforeseen increases. In the event that a contractor fails to deliver and/or ceases to

be financially viable, the timetable of the relevant development or scheme may be delayed, the

Enlarged Group may need to provide additional resources to the development (financial or

otherwise) and/or may incur financial liabilities. Any of these factors could have a material

adverse effect on the Enlarged Group’s business prospects and results of operations.

1.17 The Enlarged Group’s development projects will be subject to the hazards and risksnormally associated with the construction and development of commercial real estateThe Enlarged Group’s development projects will be subject to the hazards and risks normally

associated with the construction and development of commercial real estate, including

unforeseen capital expenditure, personal injury and property damage. The Enlarged Group has

approved health and safety policies and procedures applicable to all its locations. In addition, the

Enlarged Group has public liability insurance in place, which the Directors consider provides an

adequate level of protection against third party claims. Should an accident attract publicity or be

of a size or nature that is not adequately covered by insurance, the Enlarged Group could face

significant costs, and the Enlarged Group’s ability to put in place public liability insurance cover

in the future may also be adversely affected.

The occurrence of any of these events could result in significantly increased operating costs,

reputational damage, fines, legal fees, or criminal prosecution of the companies within the

Enlarged Group, and their directors or management, all of which could have a material adverse

effect on the Enlarged Group’s business prospects and results of operations.

1.18 External events beyond the control of the Group may have a negative impact on demandat the Group’s hotels and/or shopping centres and therefore demand for, and the value of,the Group’s propertiesDemand at the Group’s hotels is dependent on the travel industry and demand at the Group’s

shopping centres is affected by customer footfall. Any declines in, or disruptions to, the travel

industry or declines in customer footfall at the Group’s shopping centres may therefore adversely

affect demand for, and the value of, the Group’s properties. For example, the occurrence of

events such as adverse weather, an outbreak of an infectious disease, such as avian or swine

flu, or any other serious public health concern, could result in a reduction of demand at the

Group’s hotels and/or customer footfall at the Group’s shopping centres. In addition, accidents,

system failures or other similar external events could raise questions as to the safety and security

of the Group’s hotels and/or shopping centres and result in reputational damage and/or impact

the Group’s business, financial condition and/or results of operations.

Furthermore, terrorist attacks or war could damage infrastructure or associated transport

infrastructure or otherwise inhibit or prevent access to the Group’s hotels and/or shopping

centres or harm the demand for, and the value of, the Group’s properties. Terrorist attacks could

also discourage consumers from travelling to, and staying in, places where the Group’s hotels

are located or shopping in public places including the Group’s shopping centres. While the Group

does have insurance in place in respect of certain ris

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