INTERIM RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020 - - PowerPoint PPT Presentation

S u s t a i n a b l e P r o p e r t y R e t u r n s

INTERIM RESULTS

FOR THE SIX MONTHS ENDED 29 FEBRUARY 2020

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

DISCLAIMER

Certain statements contained in this document constitute forward-looking information. Forward-looking information may relate to Dipula Income Fund Limited (“the Company”) future outlook and anticipated events or results and may include statements regarding the financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes, plans and objectives of or involving the Company. Statements regarding future, performance, achievements, prospects or opportunities for the Company

• r the real estate industry are forward-looking statements. The Company has based these forward-looking statements on factors and assumptions about future events and

financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs, including that the South African economy will remain stable over the next 12 months, that inflation will remain relatively low, that interest rates will remain stable, that tax laws remain unchanged, that conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate, that the South African capital markets will provide the Company with access to equity and/or debt at reasonable rate when required. Although the forward-looking statements contained in this document are based upon assumptions that management of the Company beliefs are reasonable based on information currently available to management, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond the Company’s control, that may cause the Company’s or the industry’s actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. The forward-looking statements made in this presentation relate only to events or information as of the date on which the statements are made in this document. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. These forward-looking statements are made as of 18 May 2020 and Dipula Income Fund Limited assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

AGENDA

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R E V I E W

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F O R W A R D

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R E V I E W FINANCIAL WAY BUSINESS

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

JSE sector Real Estate Investment and Services: Diversified REITS Date listed 17 August 2011 Closing price (29 Feb 2020) DIA R8.85 | DIB R2.05

KEY CORPORATE INFORMATION

R10.18

NAV per share

79%

Interest rate hedge level

R2.9 billion

Market capitalisation

9.24%

Weighted average interest rate

R8.9 billion

Portfolio size

In-house

Asset & property management

40%

Gearing

A & B shares

(different risk appetites) Equity capital structure

R3.6 billion

Debt

BBB (ZA) long term A3 (ZA) short term

Credit rating

04

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

GEOGRAPHIC SPREAD BY SECTOR

Western Cape Northern Cape Limpopo KwaZulu-Natal Gauteng Eastern Cape North West Mpumalanga 15 3 3 2 5 3 2 1 5 4 63 29 33 6 9 125 18 7 8 1 4 12 Retail 103 Office 34 Industrial 53 7 1 1 Free State 1 1 2 7 2 TOTAL OF 190 PROPERTIES

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FY 2020 P R O G R E S S P O R T F O L I O LI QUIDITY & V A L U A T I O N C O V I D - 1 9

01

REVIEW

IZAK PETERSEN CEO

BUSINESS

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

Distributable earnings substantially in line with objectives ▪ Work in progress ▪ Negatively impacted by SA negative economic growth and COVID-19 ▪ Additional staff employed ▪ Improved asset management systems Growth in dividends per share Improvement of share liquidity Solidify management SAPY inclusion Gearing improved to 40% Maintain gearing at FY2019 levels ▪ Work in progress ▪ Setbacks due to prevailing market conditions

FY 2020 PROGRESS

Objective: Progress:

07

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REVIEW

IZAK PETERSEN CEO

FY 2020 P R O G R E S S P O R T F O L I O LI QUIDITY & V A L U A T I O N C O V I D - 1 9

BUSINESS

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

TOTAL PORTFOLIO ‒ KEY INDICATORS

SECTORAL SPLIT BY GROSS INCOME

* Excluding NCI and land

Average property size

916 593m²

Total GLA

R8.5 bn *

Portfolio value

2019: R8.3bn 2019: 928 580m² 2019: 4 666m²

R45m

Average property value Average value per m² by GLA

R9 311

Weighted average escalation by GLA / income

2019: R42m 2019: R8 946 2019: 7.4% / 7.5%

Vacancy

5.8% 80% R95.14 / R137.69

Weighted average gross rental by GLA (R/m²) / income

2019: R131.38 / R90.90 2019: 82% 2019: 8%

4 824m²

28%

Tenant retention

3.5 / 2.9 years

WALE by GLA / income

09

Retail Office Industrial Gauteng 64% Limpopo 10% Eastern Cape 9% KwaZulu-Natal 8% North West 3% Western Cape 3% Mpumalanga 2% Free State 1% Northern Cape <1%

GEOGRAPHIC SPLIT BY GROSS INCOME 7.4% / 7.4%

2019: 3.8 years by GLA

66% 20% 14%

Feb 2019 Feb 2019 Feb 2020 Feb 2020

65% 20% 15% Gauteng 64% Limpopo 10% Eastern Cape 8% KwaZulu-Natal 8% North West 3% Western Cape 3% Mpumalanga 2% Free State 2% Northern Cape <1%

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

NEW LEASES

TOTAL PORTFOLIO ‒ LEASING

Number of leases 78 Value of leases R94m Total GLA (m²) 20 822 Weighted average gross rental (R/m²) 93.49 Weighted average escalation 7.4% WALE 3.3 years Number of leases 112 Value of leases R276m Total GLA (m²) 58 529 Weighted average expiry gross rental (R/m²) 88.18 Weighted average renewal gross rental (R/m²) 87.42 Weighted average escalation 6.5% Average renewal rate decrease

• 0.9%

WALE 2.8 years

LEASE ACTIVITY (1 SEP 2019 – 29 Feb 2020)

RENEWALS

LEASE EXPIRY PROFILE

GLA (000 m²) Rental (Rm) GLA (000 m²) Average monthly gross rental (Rm)

010

52 103 148 167 89 349 11 17 18 10 25

• 10

10 20 30

• 100

200 300 400 Vacant 2020 2021 2022 2023 After 2023

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

RETAIL PORTFOLIO ‒ KEY INDICATORS

* Excluding NCI and land

11

7.2%

Weighted average escalation by GLA 2019: 7.3%

130.28

Weighted average gross rental by GLA (R/m²) 2019: 123.77 Vacancy

7.6%

2019: 8.0%

7.4%

Weighted average escalations by income 2019: 7.5%

154.35

Weighted average gross rentals by income (R/m²) 2019: 145.31 Tenant retention 2019: 84%

74%

2019: 4 163m²

4 359m²

Average property size

448 946m²

2019: 462 048m² Total GLA

R5.5 bn

2019: R5.4bn Portfolio value*

R53m

Average property value 2019: R48m Average value per m² by GLA

R12 154

2019: R11 621

3.0 / 2.9 years

WALE by GLA / income 2019: 3.4 years by GLA

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

34 50 77 89 60 132 6 10 11 7 18

• 20
• 10

10 20

• 50

100 150 200 Vacant 2020 2021 2022 2023 After 2023

RETAIL PORTFOLIO ‒ LEASING

Number of leases 66 Value of leases R80m Total GLA (m²) 16 594 Weighted average gross rental (R/m²) 92.74 Weighted average escalation 7.3% WALE 3.5 years Number of leases 90 Value of leases R168m Total GLA (m²) 24 617 Weighted average expiry gross rental (R/m²) 126.92 Weighted average renewal gross rental (R/m²) 129.68 Weighted average escalation 6.8% Average renewal rate increase 2.2% WALE 3.2 years

LEASE ACTIVITY (1 SEP 2019 – 29 FEB 2020) LEASE EXPIRY PROFILE

NEW LEASES RENEWALS

GLA (000 m²) Rental (Rm)

12

GLA (000 m²) Average monthly gross rental (Rm)

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

OFFICE PORTFOLIO ‒ KEY INDICATORS

* Excluding NCI and land

13

129 245m²

Total GLA 2019: 131 010m² Average value per m² by GLA

R14 102

2019: R13 110

7.4%

Weighted average escalation by GLA 2019: 7.4% Average property size 2019: 3 743m² Tenant retention 2019: 89%

3 801m² 147.44

Weighted average gross rentals by income (R/m²) 2019: 140.37

92% R1.8 bn

Portfolio value* 2019: R1.7bn

R54m

Average property value 2019: R49m

7.4%

Weighted average escalations by income 2019: 7.3%

134.40

Weighted average gross rental by GLA (R/m²) 2019: 126.75 Vacancy

7.2%

2019: 7.9%

2.0 / 2.1 years

WALE by GLA / income 2019: 2.0 years by GLA

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

9 22 30 35 18 14 3 4 5 2 2

• 6
• 4
• 2

2 4 6

• 10

20 30 40 50 60 Vacant 2020 2021 2022 2023 After 2023

OFFICE PORTFOLIO ‒ LEASING

Number of leases 9 Value of leases R8m Total GLA (m²) 1 446 Weighted average gross rental (R/m²) 146.39 Weighted average escalation 8.3% WALE 2.5 years Number of leases 12 Value of leases R80m Total GLA (m²) 14 031 Weighted average expiry gross rental (R/m²) 142.83 Weighted average renewal gross rental (R/m²) 135.75 Weighted average escalation 6.3% Average renewal rate decrease

• 5.0%

WALE 2.5 years

NEW LEASES RENEWALS

LEASE ACTIVITY (1 SEP 2019 – 29 FEB 2020) LEASE EXPIRY PROFILE

GLA (000 m²) Average monthly gross rental (Rm) GLA (000 m²) Rental (Rm)

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

INDUSTRIAL PORTFOLIO ‒ KEY INDICATORS

Average property size

338 401m²

Total GLA

R1.3 bn

Portfolio value 2019: R1.2bn 2019: 335 522m² 2019: 6 331m² Average value per m² by GLA

R3 710

2019: R3 636

7.6%

Weighted average escalation by GLA 2019: 7.5% Tenant retention

37.36

Weighted average gross rental by GLA (R/m²) 2019: 34.98 2019: 70%

6 385m²

Vacancy

2.8%

2019: 8.0%

7.5%

Weighted average escalations by income 2019: 7.7%

53.79

Weighted average gross rentals by income (R/m²) 2019: 52.06

82%

Average property value

R24m

2019: R23m

4.7 / 3.5 years

WALE by GLA / income 2019: 4 years by GLA

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

10 32 41 43 11 202 2 3 2 1 5

• 4
• 2

2 4 6

• 50

100 150 200 250 Vacant 2020 2021 2022 2023 After 2023

INDUSTRIAL PORTFOLIO ‒ LEASING

Number of leases 3 Value of leases R6m Total GLA (m²) 2 782 Weighted average gross rental (R/m²) 52.03 Weighted average escalation 7.3% WALE 2.5 years Number of leases 10 Value of leases R27m Total GLA (m²) 19 881 Weighted average expiry gross rental (R/m²) 50.29 Weighted average renewal gross rental (R/m²) 50.44 Weighted average escalation 6.0% Average renewal rate increase 0.3% WALE 1.8 years

LEASE ACTIVITY (1 SEP 2019 – 29 FEB 2020) LEASE EXPIRY PROFILE

NEW LEASES RENEWALS

GLA (000 m²) Rental (Rm)

16

GLA (000 m²) Average monthly gross rental (Rm)

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

RESIDENTIAL PORTFOLIO

Update on turnkey development

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COSMO CITY

▪ 428 units ▪ Substantially let ▪ 12-month rental guarantee ▪ Transfer expected in July 2020 ▪ Well located with strong leasing fundamentals

FY 2020 P R O G R E S S P O R T F O L I O LI QUIDITY & V A L U A T I O N C O V I D - 1 9

01

REVIEW

IZAK PETERSEN CEO

BUSINESS

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

LIQUIDITY ANALYSIS

% Decrease Decrease Rm Value Rm Debt Rm LTV Borrowing Capacity Rm Assumed NOI Rm Yield NOI Decrease Rm Yield sensitivity Current 8 952 3 600 40% 429 895 10% 10.0%

• 2.0%
• 179

8 773 3 600 41% 348 877 10% 18 10.2%

• 5.5%
• 492

8 459 3 600 43% 207 846 10% 49 10.6%

• 8.0%
• 716

8 236 3 600 44% 106 824 10% 72 10.9%

• 10.6%
• 949

8 003 3 600 45%

• 800

10% 95 11.2%

3 600 4 028 4 476 4 923 429 876 1 324 30 68 113

1 000 2 000 3 000 4 000 5 000 40% 45% 50% 55% 45% 50% 55%

Debt Capacity (Rm) Additional Interest p.a (Rm)

7.0% 7.7% 8.5%

Rm LTV

Assumed interest rate

19

DEBT CAPACITY VALUATION STRESS TEST: IMPACT ON LTV ICR Net income reduction of R220 million for ICR to drop to 2 times

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

VALUATION BENCHMARKING

12 060 20 593 21 596 11 990 13 003 16 887 16 890 15 529 40 590 13 551 41 819 21 245 10,2% 7,5% 8,2% 9,2% 8,9% 7,7% 8,2% 7,0% 0% 11,4% 6,8% 8,3%

• 10%
• 5%

0% 5% 10% 15%

• 10 000

20 000 30 000 40 000 50 000 Dipula 1 2 3 4 5 6 7 8 9 10 11 Average Avg Value R/m² Yield 14 280 20 335 18 917 13 003 20 762 15 292 9 959 30 439 13 189 41 819 20 413 9,2% 7,6% 8,1% 11,3% 6,5% 10,8% 7,8% 0% 10,7% 6,8% 8,7%

• 10%
• 5%

0% 5% 10% 15%

• 10 000

20 000 30 000 40 000 50 000 Dipula 1 2 3 4 5 6 7 8 9 10 Average Avg Value R/m² Yield 4 339 7 579 6 048 4 120 5 643 5 093 6 517 5 833 9,6% 8,1% 8,3% 9,6% 9,5% 8,5% 10,1% 9,0%

• 10%
• 5%

0% 5% 10% 15%

• 2 000

4 000 6 000 8 000 10 000 Dipula 1 2 3 4 5 6 Average Avg Value R/m² Yield

RETAIL OFFICE INDUSTRIAL

20

R/m² R/m² R/m² Company Company Average Average Average

Source: Company AFS

Dipula Dipula Dipula

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

PRICE TO NAV ANALYSIS

Decrease in property valuation required for market comparable NAV discount

• 16%

Combined forward yield

27%

Forward yield DIA

22%

Forward yield DIB

40%

* Share price at 12 May 2020 ** Source: Catalyst, 12 May 2020

Combined share price (cents)

729.00*

DIA share price (cents)

530.00*

DIB share price (cents)

199.00*

Current discount / NAV SAPY

• 49.93%**

Current discount / NAV Combined

• 64%

Current discount / NAV DIA

• 48%

Current discount / NAV DIB

• 80%

Current discount / NAV ALPI

• 50.58%**

21

IZAK PETERSEN CEO

1

FY 2020 P R O G R E S S P O R T F O L I O LI QUIDITY & V A L U A T I O N C O V I D - 1 9

01

REVIEW BUSINESS

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

COVID-19 RENTAL EXPOSURE ANALYSIS

44% 4% 20% 12% 8% 12% Essential SOE/Government Non-essential Large Non-essential medium SMME highly impacted SMME medium impacted 47% 48% 5% Government Other A and B grade tenants C grade tenants 94% 6% A and B grade tenants C grade tenants

RETAIL OFFICE INDUSTRIAL TOTAL

Portfolio annualised annual gross rental exposure (Rm) 668 209 167 1 044 Base case losses by gross rental (Rm) 24 1 5 30 Moderate case losses by gross rental (Rm) 33 2 9 44 Worst case losses by gross rental (Rm) 55 4 15 74 Base case incremental vacancy by GLA 3.9% 0.6% 2.8% 3.3% Moderate case incremental vacancy by GLA 4.3% 1.2% 3.4% 3.5% Worst case incremental vacancy by GLA 8.7% 2.3% 4.3% 6.2% Current vacancy GLA 7.6% 7.2% 2.8% 5.8% Base case post Covid-19 vacancy by GLA 11.5% 7.8% 5.7% 9.1% Moderate case post Covid-19 vacancy by GLA 11.9% 8.4% 6.2% 9.3% Worst case post Covid-19 vacancy by GLA 16.3% 9.5% 7.2% 12.0%

COVID-19 SCENARIO ANALYSIS RETAIL BY GROSS RENTAL OFFICE BY GROSS RENTAL INDUSTRIAL BY GROSS RENTAL

23

* All amounts based on annualised April 2020 billing excluding recoveries.

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

OPERATIONS

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Full access to IT systems Operational staff all on duty No significant savings expected in operating expenditure due to additional compliance burden Continuously updating operation procedures in-line with regulations Smooth remote operating platform Collected 66% for May to date Collected 73% rental for April Community-based CSI activities ongoing SMME business viability biggest concern No municipal relief to date

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

TENANT RENT REMISSIONS

25

Property Industry Group facilitating dialogue No deal yet following many proposals and counter proposals Tenants split into categories based on size and whether essential or non-essential Office and Industrial tenants excluded Legal position complex for both landlord and tenant

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

Ongoing discussions Good co-operation between the parties Key discussion points involve Valuations, Covenants and Cashflow Framework for bilateral discussions between parties

BANKERS

26

Dipula Bankers BASA Feedback

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

REIT REGULATION RELAXATION

27

All submissions to be processed on a case by case basis JSE not to grant blanket dispensation Compliance with LR to be observed Good cooperation from JSE National Treasury feedback awaited JSE indicated that solvency and liquidity are the ultimate tests for Directors to apply in making dividend declaration decisions JSE is still to canvas the attitude of asset managers Deviations to be published on SENS

RIDWAAN ASMAL CFO

02

FINANCIAL REVIEW

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

FINANCIAL HIGHLIGHTS

LTV 40% ICR 2.74

Maturing debt refinanced and covenants within acceptable levels

21.1%

Net cost to income ratio maintained at

29

DISTRIBUTABLE EARNINGS PER SHARE

Due to the current market conditions as a result of the COVID-19 pandemic, the Company has deferred its decision regarding whether or not to declare a dividend in respect of the interim six month period ended 29 February 2020 (“interim dividend”). A decision on whether or not to declare an interim dividend and, if one is declared, the quantum of the interim dividend, will be made no later than the time of publication of the financial results for the year ending 31 August 2020.

Combined

(1.4%)

DIA

4.6%

DIB

(9.1%)

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

48,24 50,65 52,67 54,83 57,36 38,78 41,84 44,08 42,50 38,61 87,02 92,49 96,75 97,33 95,97 20 40 60 80 100 120 Feb 2016 Feb 2017 Feb 2018 Feb 2019 Feb 2020 A- share B- share Total

DISTRIBUTABLE EARNINGS PER SHARE HISTORY

cps

30

5.0% 7.9% 6.3% 4.0% 5.4% 4.6% 4.6% 4.1% (9.2%) (1.4%) (3.6%) 0.6%

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

5-YEAR COMBINED MARKET PRICE TO NAV

cents

1 792 2 245 2 090 1 921 1 090 713 1 882 2 014 2 024 1 976 2 036 2 036

• 5%

12% 3%

• 3%
• 47%
• 65%
• 550%
• 450%
• 350%
• 250%
• 150%
• 50%

50% 500 1 000 1 500 2 000 2 500 3 000 Feb 2016 Feb 2017 Feb 2018 Feb 2019 Feb 2020 Current 15 May 2020

Market price NAV Premium / Discount

31

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

5-YEAR MARKET PRICE

32

cents 1002 1050 1020 1112 885 513 790 1195 1070 809 205 200

200 400 600 800 1000 1200 1400 Feb 2016 Feb 2017 Feb 2018 Feb 2019 Feb 2020 Current 15 May 2020

DIA DIB

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

STATEMENT OF COMPREHENSIVE INCOME (EXTRACTS)

29 Feb 2020 R 000 28 Feb 2019 R 000 Variance Revenue 661 404 652 397 1.4% Property expenses (219 096) (210 988) 3.8% Net property income 442 308 441 391 0.2% Administration and corporate costs (21 322) (18 805) 13.4% Net operating profit 420 986 422 586

• 0.4%

Net finance cost (153 456) (152 619) 0.5% Non-controlling interests (13 551) (12 372) 9.5% Distributable earnings 253 979 257 595

• 1.4%

Distributable earnings per A-share (cents) 57.36 54.83 4.6% Distributable earnings per B-share (cents) 38.61 42.50

• 9.2%

Combined distributable earnings (cents) 95.97 97.33

• 1.4%

Property cost to income ratio (gross basis) 33.1% 32.3% 2.4% Property cost to income ratio (net basis) 17.1% 17.5%

• 2.4%

Total cost to income (gross basis) 36.3% 35.2% 3.2% Total cost to income (net basis) 21.1% 21.1%

• 0.1%

33

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

SECTORAL PERFORMANCE

FEB 2019 FEB 2020 66% 19% 15%

RENTAL INCOME & RECOVERIES PROPERTY EXPENSES NET PROPERTY INCOME

72% 19% 9% FEB 2020 62% 19% 18% FEB 2020 FEB 2019 FEB 2019 67% 19% 14% 72% 19% 9% 65% 20% 15%

34

Retail Office Industrial

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

STATEMENT OF FINANCIAL POSITION (EXTRACTS)

29 Feb 2020 R 000 28 Feb 2019 R 000 Variance Investment property and held-for-sale 8 953 135 8 665 421 3.3% Trade and other receivables 169 578 202 164

• 16.1%

Loan receivable 204 356 195 290 4.6% Goodwill / Intangible assets 56 250 93 750

• 40.0%

Cash and cash equivalents 69 580 49 631 40.2% Other assets 70 132 8 409 734.0% Total assets 9 523 031 9 214 665 3.3% Interest-bearing liabilities 3 599 602 3 585 504 0.4% Non-controlling interest and related loans 234 057 206 803 13.2% Trade and other payables 165 636 159 829 3.6% Lease liability (IFRS) 86 566

• 100%

Bank overdraft

• 20 000

100% Derivative liability 48 184 10 403 363.2% Total liabilities 4 134 045 3 982 539 3.8% Net assets 5 388 986 5 232 126 3.0% Loan to Value (LTV) 40.0% 41.6%

• 3.8%

Net Asset Value (NAV) per A-share R 10.18 R 9.89 2.9% Net Asset Value (NAV) per B-share R 10.18 R 9.89 2.9%

35

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

CASH FLOW ‒ Rm

Opening balance Cash generated from operations Net finance cost Dividend paid Acquisitions and capex Repayment of lease liability Closing balance Disposals Debt funding (repaid) / raised Non-controlling interest Repayments of loans advanced

1 SEPTEMBER 2019 TO 29 FEBRUARY 2020 1 SEPTEMBER 2018 TO 28 FEBRUARY 2019

70

• 57
• 3
• 3
• 0.04

49

• 34
• 266
• 153

419 119

• 400 -300 -200 -100

100 200 300 400 500

36

30 63

• 1
• 0.1

8

• 80
• 300
• 153

424 69

• 400 -300 -200 -100

100 200 300 400 500

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

DEBT PROFILE

3,0% 26,0% 20,5% 25,2% 25,3% 9,9% 22,0% 19,3% 8,3% 19,9% 0% 10% 20% 30% FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Debt expiry Hedge expiry

79%

Interest hedged Feb 2019: 80%

9.24%

Weighted average cost of debt Feb 2019: 9.24% All-in rate Weighted average debt expiry

2.3 years

Feb 2019: 2.9 years

2.0 years

Weighted average hedge expiry Feb 2019: 2.2 years

37

03

WAY FORWARD

IZAK PETERSEN CEO

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

WAY FORWARD

39

Adapt business to post-COVID-19 environment (e-commerce, flexible space - Residential & Office) Enhance defensive nature of portfolio (improved by 3%, A&B tenants now 89% of income) Balance sheet strength critical for long-term sustainability Survive COVID-19

04

QUESTIONS & ANSWERS

IZAK PETERSEN CEO

05

A N N EXURES

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

SA focused ▪ Geographically diversified ▪ Economically active locations ▪ Sectorally diversified Diversified ▪ Predominantly retail (convenience, rural & township) ▪ Increase industrial exposure ▪ Selective office ▪ Affordable residential rental Portfolio

• ptimisation

▪ Non-core disposals ▪ Capital recycling ▪ Acquisitions, developments, redevelopments and conversions Tenant centric ▪ Credit quality ▪ Manage concentration risk ▪ Enhance tenant experience Human capital ▪ Value our people ▪ Talent attraction and retention ▪ Teamwork above all ▪ Resourcefulness Sustainability ▪ Compliance ▪ Efficiency ▪ CSI & BEE ▪ Social, economic & environmental

STRATEGY

SHAREHOLDER VALUE CREATION

Managing brilliantly Remaining disciplined Buying well

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R

OUR VALUE PROPOSITION

▪ A diversified REIT that is growing, improving and de-risking its portfolio through employing a range of value-add strategies including leasing, conversions, extensions, redevelopments, partnerships and development. ▪ We are focused on our chosen property market segments and continuously reposition our portfolio in-line with changing market dynamics.

OUR TOOLS

Research and analysis Good capital allocation Balance sheet manage- ment Focus A competent core team

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

STRATEGIC CAPITAL ALLOCATION TO DE-RISK PORTFOLIO

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▪ Allocation of capital into areas of core competency ▪ Build capacity for operational excellence ▪ Tactically going underweight offices ▪ Increasing retail and industrial exposure ▪ Chosen retail segment defensive and resilient through different cycles ▪ Industrial assets that are relevant to market needs ▪ Entering affordable residential rental market ▪ Residential portfolio to be capped at 20% ▪ Shift towards well-located residential in response to demand driven by a changing SA culture, low savings, falling disposable income, upfront acquisition cost and urbanisation ▪ Strategic value-add revamps and expansions mainly funded through recycled capital ▪ Portfolio significantly de-risked in terms of:

• Tenant quality
• Quality of assets
• Quality management
• Portfolio & asset size

AT LISTING CURRENT FUTURE

54% 29% 17% 65% 20% 15% 60% 10% 20% 10%

Retail Office Industrial Residential Reduce cost of capital

By income By income By income

Build strong human capital capacity Continuous portfolio improvement

STRATEGIC GROWTH DRIVERS

SA economic rebound Sensible corporate action and strategic tie-ups

I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020 C O N S I S T E N T D I S C I P L I N E D S T A B L E D I V E R S I F I E D R E S O U R C E F U L

HUMAN CAPITAL: • LEAD • CO-OPERATE • WIN

Total no. of employees at head office and in the regions Internships 6 students Multi-skilled individuals make a stronger team Ongoing training and development

• f staff

Exceptional tenant service Asset managers with entrepre- neurial flair Deal making skills Focus

• n
• perational

competence Teamwork above all Our service is our differentiator

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S U S T A I N A B L E

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

GEOGRAPHIC PROFILE – TOTAL PORTFOLIO

GLA m² No of Properties Average Value Rm Value Rm Gauteng 523 877 125 43 5 351 Limpopo 92 845 18 49 886 Eastern Cape 105 985 9 82 740 KwaZulu-Natal 84 497 12 56 674 Western Cape 27 033 4 77 308 North West 31 561 8 33 261 Mpumalanga 28 791 7 26 180 Free State 19 906 6 21 127 Northern Cape 2 097 1 8 8 Total 916 593 190 45 8 534

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

GEOGRAPHIC PROFILE – RETAIL

GLA m² No of Properties Average Value Rm Value Rm Gauteng 244 479 63 50 3 134 Limpopo 58 478 15 44 662 KwaZulu-Natal 42 204 5 119 596 Eastern Cape 48 509 5 112 561 North West 26 155 7 36 253 Mpumalanga 11 175 3 43 129 Free State 13 164 3 31 92 Western Cape 2 685 1 22 22 Northern Cape 2 097 1 8 8 Total 448 946 103 53 5 457

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

GEOGRAPHIC PROFILE – OFFICE

GLA m² No of Properties Average Value Rm Value Rm Gauteng 112 756 29 55 1 594 Western Cape 8 370 1 174 174 Mpumalanga 4 244 2 16 31 Free State 3 875 2 12 23 Total 129 245 34 54 1 822

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

GEOGRAPHIC PROFILE – INDUSTRIAL

GLA m² No of Properties Average Value Rm Value Rm Gauteng 166 641 33 19 624 Limpopo 34 368 3 75 224 Eastern Cape 57 476 4 45 178 Western Cape 15 978 2 56 112 KwaZulu-Natal 42 293 7 11 79 Mpumalanga 13 372 2 10 20 Free State 2 866 1 12 12 North West 5 407 1 7 7 Total 338 401 53 24 1 256

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

TOP TEN PROPERTIES

Retail Office Industrial Building name Region GLA m² Value Rm Value R/m² SAPS VIP Gauteng 21 478 385.0 17 925 Gillwell Taxi Retail Park Eastern Cape 22 090 339.5 15 369 Chilli Lane Gauteng 13 607 285.6 20 989 Umzimkhulu Mall KwaZulu-Natal 15 865 235.0 14 812 Woolworths Johannesburg Gauteng 9 147 231.8 25 342 Nquthu Plaza KwaZulu-Natal 14 912 222.8 14 941 Gezina Galleries Gauteng 16 707 217.5 13 047 Kopanong Kudube Shopping Centre Gauteng 10 737 208.8 19 393 Corporate Park II Polokwane Limpopo 28 058 190.2 6 778 Bochum Plaza Limpopo 12 081 190.0 15 728 Top Ten Properties 164 682 2 506.2 15 218 Total Portfolio 916 593 8 534.0 9 311 Percentage of Total Portfolio 18% 29%

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

TOP TEN RETAIL PROPERTIES

Building name Region GLA m² Value Rm Value R/m² Gillwell Taxi Retail Park Eastern Cape 22 090 339.5 15 369 Chilli Lane Gauteng 13 607 285.6 20 989 Umzimkhulu Mall KwaZulu-Natal 15 866 235.0 14 812 Woolworths Johannesburg Gauteng 9 147 231.8 25 342 Nquthu Plaza KwaZulu-Natal 14 912 222.8 14 941 Gezina Galleries Gauteng 16 707 217.5 13 047 Kopanong Kudube Shopping Centre Gauteng 10 737 208.8 19 393 Bochum Plaza Limpopo 12 081 190.0 15 728 Woodmead Super Value Mall Gauteng 7 200 143.1 19 875 Tower Mall North West 15 425 139.9 9 059 Top Ten Retail 137 772 2 214.0 16 070 Total Retail Portfolio 448 946 5 456.0 12 154 Percentage of Total Retail Portfolio 31% 41%

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

TOP TEN OFFICE PROPERTIES

Building name Region GLA m² Value Rm Value R/m² SAPS VIP Gauteng 21 478 385.0 17 925 Avanti Office Park Western Cape 8 370 174.3 20 824 SAPS IJS Gauteng 7 874 133.7 16 980 Firestation Rosebank Gauteng 4 259 123.4 28 974 Carnation Place Gauteng 4 541 105.8 23 299 Valley View Office Park Gauteng 6 793 103.4 15 222 Steve Biko Corner Gauteng 5 048 83.0 16 442 Nemisa Office Building Gauteng 5 085 77.4 15 222 50 Hamilton Street Gauteng 4 500 59.1 13 142 Sanburn Building Benoni Gauteng 6 757 51.6 7 642 Top Ten Office 74 705 1 296.7 17 359 Total Office Portfolio 129 245 1 822.6 14 102 Percentage of Total Office Portfolio 58% 71%

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

TOP TEN INDUSTRIAL PROPERTIES

Building name Region GLA m² Value Rm Value R/m² Corporate Park II Polokwane Limpopo 28 058 190.2 6 778 New Brighton PE Eastern Cape 24 516 129.4 5 278 Range Road Blackheath Western Cape 12 905 96.1 7 447 Renaissance Park (Crownwood Place) Gauteng 10 680 66.7 6 245 Sterkolite Building Gauteng 12 782 65.7 5 140 Tedstone Park Wadeville Gauteng 6 940 48.3 6 967 Vana Road Germiston Gauteng 8 195 44.9 5 479 SIFON Park Gauteng 9 298 36.0 3 872 Jasco Eastgate Ext. Sandton Gauteng 5 014 30.6 6 103 Bernie Street Gauteng 6 342 29.7 4 683 Top Ten Industrial 124 730 737.6 5 914 Total Industrial Portfolio 338 401 1 255.3 3 710 Percentage of Total Industrial Portfolio 37% 59%

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I N T E R I M R E S U L T S FOR T HE SIX MONT HS ENDED 29 FEBRUA R Y 2020

TOP 10 TENANTS BY INCOME TENANT GRADING

TENANT PROFILE

By income By GLA

69% 20% 11%

A B C

70% 17% 13% DPW and Government 9% Shoprite Group 8% Woolworths 4% Pepkor Group 4% Local Government 3% Reclamation Holdings 3% Pick 'n Pay 2% Massmart 2% Cashbuild 2% Spar Group 1% Total 38%

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