RESULTS PRESENTATION for the year ended 29 February 2016 SARS - - PowerPoint PPT Presentation

RESULTS PRESENTATION

for the year ended 29 February 2016

SANDILE NOMVETE

INTRODUCTION

SARS Randburg

3

INTRODUCTION TO DELTA

• Dsds

› asdasdas

Sovereign underpinned JSE listed REIT

74%

• f revenue from

sovereign tenants Dominant in

Durban & Pretoria CBDs

Diversifying $ investment

26.3%

in Mara Delta * Average property value of

R101.3m

Assets under management of

R10.5bn

by 100% black-owned asset manager Market capitalisation# of

R4.7bn

up from R3.5bn at 29 Feb 2016

* % holding as at 30 April 2016

4

HIGHLIGHTS SINCE LISTING

March 2010 The company is founded - inaugural acquisition is the Forum Building in Pretoria November 2012 Delta lists on the JSE main board with a portfolio value of R2.1 billion May 2013 Successful capital raise of R1 billion through rights issue for acquisitions July 2013 Launches R2 billion Domestic medium Term Note Programme (“DMTN Programme”) February 2014 Achieves growth aspiration target of a of R7 billion asset portfolio by February 2014. REIT Status approved June 2014 Launches and lists Delta International (rebranded to Mara Delta), the first specialist pan-African (excl. South Africa) property fund to be listed on JSE March 2015 Successful capital raise of R680 million, allowing Delta to pay down bridging facilities and to conclude acquisitions September 2015 Restructures asset management company and is the first in the industry to ensure no “poison pill” carried forward in contract, and asset manager 100% owned by black employees February 2016 Achieves third consecutive year of inflation-beating growth in distributions. Investment portfolio exceeds R10 billion. November 2012 July 2013 May 2013 February 2014 June 2014 March 2015 March 2010 September 2015 February 2016

5

29 February 2016 28 February 2015

Shares in issue 533,097,436 458,409,836 Market capitalisation R3.47 billion R4.08 billion Share price (closing) R6.50 R8.90 NAV per share R10.61 R10.02

• No. of properties

100 82 Valuation of property portfolio R10.1 billion R8.4 billion Average value per property R101.3 million R102.4 million Gross lettable area 813,505 m² 703,103 m² Tenant Sectorial profile (GLA) Office - Sovereign: 67.5% Office - Sovereign: 63.2% Office - Other: 21.4% Office - Other: 26.2% Industrial: 3.9% Industrial: 5.7% Retail: 7.2% Retail: 4.9% Occupancy rate 91.02% 92.9% Weighted average net rent (per m2) R 102.89 R 95.84 Weighted average escalation 7.84% 7.97% Loan to value # 47.2% 49.9% Fixed : Floating (excluding revolvers) 83% 78% * Weighted Average Cost of Debt 8.75% 8.10%

*Restated with revolver facilities excluded

SNAPSHOT

Listing date: 02 November 2012 JSE classification: Real Estate Holdings & Development Asset manager: Delta Property Asset Management (Pty) Ltd JSE code: DLT Asset management fee: 0.35% of enterprise value

SANDILE NOMVETE

HIGHLIGHTS

Auditor General Polokwane

7

HIGHLIGHTS OF FY2016

Distribution growth of

8%

Fourth consecutive period of growth in half-year distribution Successfully concluded

R1.76bn

Redefine and Free State portfolio acquisitions Industry leading

Level 2 B-BBEE

rating Reaffirmed

A2(za)

short term GCR credit rating Gearing reduced to

42.3%

at May 2016, from 47.2% at Feb 2016 Tenant retention =

80%

• f expiring GLA *

* % of GLA due for expiry in FY2016 as at Feb 2015 that was successfully renewed or continuing on month to month basis

SANDILE NOMVETE

PRIORITIES AND STRATEGY REVIEW

CMH Building

9

PRIORITIES - FEEDBACK

Priorities Status Detail

Replacement of CFO Complete Shaneel Maharaj appointed Dec 2015 Dispose non-core assets Ongoing Concluded R659m Strengthening of balance sheet

• Gearing
• Improve credit rating

Ongoing Gearing reduced to 42.3% at May 2016, Increase in unencumbered assets Focused asset management Ongoing CAPEX projects underway, stabilise acquired portfolios Inner city focus Ongoing Commitment to inner city nodes CAPEX and improvements underway Focus on Sovereign Underpin Ongoing Dominant sovereign specialist International diversification Ongoing Holding in $ based Mara Delta

SHANEEL MAHARAJ

FINANCIAL REVIEW

88 Field Street

11

FINANCIAL HIGHLIGHTS OF FY2016

• Dsds

› asdasdas

Growth in assets of

R1.6bn

assets under management > R10.5bn, R11.8bn at May 2016 Gearing reduced to

42.3%

at May 2016 from 47.2% at Feb 2016 (Feb 2015: 49.8%) Weighted average cost of debt

8.75%

Fixed debt % of

83%

compared to 78% at Feb 2015 Disposals of

R659m

R108m transferred, R551m under sale agreement Extended ave. fix period to

2.13

years, up from 1.91 at Aug 2015

12

FOUR YEAR REVIEW

29 Feb 2016 28 Feb 2015 28 Feb 2014 28 Feb 2013

Revenue (R’000) 1,247,582 1,009,207 654,023 139,949 Net property income (R’000) 925,531 764,884 502,503 112,396 Finance costs (R’000) (412,713) (316,380) (151,149) (55,446) Cost to income ratio (net / gross) 12.2% /26.4% 10.2% / 26.0% 10.8% / 25.5% 14.1% / 23.6% Investment property (R’000) 10,095,181 8,420,400 6,965,730 2,119,112 Listed securities (R’000) 472,546 502,986 333,637

• Borrowings (R’000)

5,094,310 4,508,565 3,197,742 866,442 Gearing level 47.2% 49.9% 47.5% 38.7% Weighted average interest rate 8.75% 8.10% 7.50% 8.90% Average debt expiry period (years) 2.3 2.4 2.8 2.9 Average debt fix expiry period (years) 2.13 2.4 3.0 2.8 Fixed % * 83% 78% 36% 96% Net asset value per share (excl deferred tax) R10.61 R10.02 R9.28 R7.89

* Figures restated to exclude revolver facilities

13

GROWTH IN DISTRIBUTIONS

Cents / share

Historic distribution per share

20.00 23.69 32.51 40.18 72.69 40.01 44.05 84.06 42.89 47.90 90.79 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 Nov-12 (Listing) FY2013 HY Aug-13 HY Feb-14 FY2014 HY Aug-14 HY Feb-15 FY2015 HY Aug-15 HY Feb-16 FY2016 15.6% 9.63% 23.07% 7.2% 8.74% 8.0%

14

DISTRIBUTABLE INCOME STATEMENT

R’000 FY2016 FY2015 Change % Net property income (excl. straight line accrual) 898,581 696,300 29.05% Administration expenses (82,744) (51,008) 62.00% Realised foreign exchange loss (39)

• Net finance costs

(386,120) (312,415) 23.59% Dividend received from Mara Delta 36,779 18,247 101.56% Accrued distribution from other listed investments

• 11,905
• Sundry income

7,266 13,590 (46.53%) Add back of debt structuring fees 6,141

• Antecedent interest

9,010 3,425 163.07% Taxation

• 2,381
• Retained distributable earnings

(912)

• Distributable income for the period

487,962 382,425 27.60% Number of shares in issue 533,097,436 458,409,836 16.29% Distribution per share / linked unit (cents) 90.79 84.07 7.99%

15

STATEMENT OF FINANCIAL POSITION

R’000 29 Feb 2016 28 Feb 2015 Change %

Assets Non-Current assets 9,085,759 8,396,823 8.20% Investment property 8,684,700 8,393,900 3.46% Fair value of property portfolio 8,500,183 8,213,035 3.50% Straight line rental income accrual 184,517 180,865 2.02% Investment in associate 383,327

• Other non-current assets

17,732 2,923 506.64% Current assets 519,113 345,919 50.07% Assets classified as held for sale

• 2,110,030
• Non-current assets held for sale and assets of disposal group

1,410,481 26,500 5,222% Total assets 11,015,353 10,879,272 1.25% Equity and liabilities Total Equity 5,656,629 5,074,171 11.48% Equity 5,656,629 4,620,981 22.41% Non-controlling interests

• 453,190
• Liabilities

5,358,724 4,632,758 15.67% Non-current liabilities 3,610,815 3,673,309 (1.70%) Current liabilities 1,747,909 959,449 82.18% Liabilities associated with disposal group held for sale

• 1,172,343
• Total equity and liabilities

11,015,353 10,879,272 1.25%

16

DEBT SUMMARY

As at 29 February 2016

Facility Type

R’ m Weighted Ave. Rate

Floating bank facilities 2,493 8.38% Fixed bank facilities 976 8.68% Revolving bank facilities 805 9.12% Total bank facilities 4,274 8.59% DMTN programme - floating 651 8.58% DMTN programme - fixed 100 8.01% Vendor loans 15 9.25% Total borrowings, net of accrued interest 5,040 8.58% Accrued interest 53 N/A TOTAL 5,093 Total fixed bank and DMTN facilities 1,076 8.62% Interest rate swap contracts 2,222 7.88% Cross currency swap 225 Libor + 2.89% Total fixed 3,523 Fixed % and total WACC 70% 8.75% Fixed % excluding revolving bank facilities 83%

17

DEBT EXPIRY PROFILE

R’m

• 200

400 600 800 1,000 28-Feb-17 28-Feb-18 28-Feb-19 29-Feb-20 28-Feb-21 28-Feb-22 DMTN Programme Fixed Bank Facilities Floating Bank Facilities Revolving Bank Facilities Vendor Loans Swap Contracts

18

PRO-FORMA STATEMENT OF FINANCIAL POSITION

R’000 29 Feb 2016 16 May 2016 28 Feb 2017

Assets Non-Current assets 9,085,759 10,334,647 11,080,900 Investment property 8,684,700 9,933,588 10,679,841 Investment in associate 383,327 383,327 383,327 Other non-current assets 17,732 17,732 17,732 Current assets 519,113 510,826 520,826 Non-current assets held for sale and assets of disposal group 1,410,481 1,410,481

• Total assets

11,015,353 12,255,954 11,601,725 Equity and liabilities Total Equity 5,656,629 6,884,509 6,606,289 Liabilities 5,358,724 5,371,445 4,995,436 Interest bearing liabilities 5,175,919 5,107,031 4,731,022 Current liabilities 182,805 264,414 264,414 Total equity and liabilities 11,015,353 12,255,954 11,601,725 Interest bearing borrowings less cash balances 4,988,557 4,986,278 4,545,269 Income producing assets 10,567,727 11,792,749 11,128,521 Loan to value ratio 47.21% 42.28% 40.84%

SANDILE NOMVETE

PORTFOLIO REVIEW

142 - 144 4th Street Parkmore

20

PORTFOLIO BREAKDOWN

By Building Sector unless stated other ways

Office - Sovereign * Office - General Industrial Retail Total

Number of properties

74 20 3 3 100

Gross lettable area (m2)

540 558 204 872 39 955 28 120 813 505

Vacancy (%)

5.9% 13.7% 28.5% 5.4% 9.0%

Value

R7.39bn R2.13bn R0.18bn R0.40bn R10.10bn

Average rental (R/m2)

112.08 85.45 46.02 104.29 102.89

Weighted ave. escalation (%)

7.9% 7.7% 7.9% 7.3% 7.8%

Weighted ave. lease expiry (by revenue) - by building type

2.12 years 1.76 years 3.04 years 8.24 years 2.30 years

Weighted ave. lease expiry (by revenue) - tenant specific#

2.03 years 2.06 years 3.04 years 5.01 years 2.30 years

Cost to income ratio (net)

10.45% 17.99% 12.13% 7.12% 12.15%

Cost to income ratio (gross)

22.70% 35.53% 31.02% 35.35% 26.37%

* Multi-tenant buildings are classified according to majority tenant type. Office - General buildings therefore contain a minority element of Sovereign tenants

21

ACQUISITIONS

Property Sector Location Purchase Price Yield GLA Effective Date WALE

Tembisa Retail Tembisa, Midrand 230,316,000 9.40% 14,025 2015-03-02 10.45 ABSA Florida Office - Sovereign Johannesburg 77,000,000 11.00% 6,531 2015-03-10 6.82 142 - 144 4th Street Office - Sovereign Johannesburg 84,000,000 10.29% 2,954 2015-04-29 3 Veritas Building Office - Sovereign Pretoria 101,000,000 10.29% 8,272 2015-04-29 5.59 Free State portfolio Office - Sovereign Free State 507,000,000 11.4% 77,829 2015-06-01 0.5 54 & 56 Barrack Street Office - Sovereign Cape Town 64,000,000 10.60% 4,309 2015-08-01 4.9 Chambers of Change Office - Other Johannesburg 79,985,000 11.00% 5,944 2015-12-18 4 Total / Aggregate: 1,143,301,000 10.72% 119,864

• Final asset of Free State portfolio transferred in April 2016
• 4 of 15 Redefine assets transferred to date, remainder expected by end of June 2016

22

DISPOSALS

Property Sector Location GLA Sales price (R) Transfer Date

Transferred Richmond Forum Office - Other Johannesburg 3,968 22,500,000 2015-05-14 SAPS - Bell Street Office - Sovereign Nelspruit 590 5,070,000 2015-12-04 Yarona Shopping Centre Retail Tembisa, Midrand 5,979 80,000,000 2015-11-02 107,570,00 Sale agreements concluded 6 Assets Various Various 49,453 551,318,416 2016-07-31 * 59,990 658,888,416

* Anticipated disposal date

23

SECTORAL SPLIT

GLA - by building

Office - Sovereign (66.4%) Office - Other (25.2%) Industrial (4.9%) Retail (3.5%)

GLA - by tenant *

Office - Sovereign (67.5%) Office - General (21.4%) Retail (7.2%) Industrial (3.9%)

Rental - by building

Office - Sovereign (74.8%) Office - Other (19.8%) Retail (3.7%) Industrial (1.7%)

Rental - by tenant

Office - Sovereign (73.9%) Office - General (16.5%) Retail (7.9%) Industrial (1.7%)

24

DETAILED TENANT BREAKDOWN

National Government (27.2%) Provincial Government (25.9%) State-Owned Enterprise (14.0%) Local Government (0.4%)

67.5%

Tenant Profile - GLA

National Government (29.1%) Provincial Government (30.7%) State-Owned Enterprise (13.7%) Local Government (0.4%)

73.9%

Tenant Profile - Rental

25

GEOGRAPHICAL AND GRADE SPLIT

GLA - by building

Gauteng (36.5%) Kwazulu-Natal (31.2%) Free State (10.5%) Limpopo (5.5%) Northern Cape (4.9%) Western Cape (4.7%) Mpumalanga (3.1%) Eastern Cape (2.9%) North West (0.7%)

Rental - by building

Gauteng (38.0%) Kwazulu-Natal (24.9%) Limpopo (10.8%) Free State (8.4%) Northern Cape (5.3%) Western Cape (5.1%) Eastern Cape (3.5%) Mpumalanga (3.4%) North West (0.6%)

Office grade - rental

A (31%) B (69%)

Office grade - by GLA

A (25%) B (75%)

26

LEASE EXPIRY PROFILE

Total portfolio - by GLA

vacant (9.0%) 28 Feb 17 (34.6%) 28 Feb 18 (20.1%) 28 Feb 19 (11.1%) 29 Feb 20 (7.3%) 28 Feb 21 (11.1%) Beyond 28 Feb 2021 (6.8%)

Total portfolio - by rental

28 Feb 17 (39.1%) 28 Feb 18 (18.8%) 28 Feb 19 (14.7%) 29 Feb 20 (7.6%) 28 Feb 21 (12.4%) Beyond 28 Feb 2021 (7.4%)

27

LEASING

Total leases concluded since 1 March 2015

No of Leases Total Area Weighted Ave. Rate / m2 Weighted Ave. Escalation Renewals 115 62,515 m2 (50.3%1) R 115.10 7.52%2 Historic exit rentals R113.09 New leases 61 11,515 m2 (23.1%3) R 90.27 7.49%

Of the 124,282 m2 up for renewal as at 28 February 2015, 79.8% of tenants either renewed or remain on month-to-month leases

Top 5 leases signed by area

Property Tenant Type Total Area Term Rate / m2 Escalation Beacon Hill Provincial DPW Renewal 13,648 60 129.00 7.0% 101 De Korte Metropolitan Health Renewal 6,610 24 99.24 7.0% Samora Department of Human Settlements Renewal 5,950 12 96.00 0.0% 1 & 3 Ferreira St Nedbank Renewal 3,033 12 158.38 0.0% Delta Towers Ithala Soc Limited Renewal 3021 36 60.00 8%

28

UPDATE ON GOVERNMENT

27.2% 25.9% 14.0% 0.4% 32.5%

Delta tenant breakdown - GLA

National Government Provincial Government State-Owned Enterprise Local Government Other

• National Government (NDPW)

› 2nd Treasury directive - renewals between 1 - 3 years, max. esc. of 6%. Over 3 years - tender › NDPW engagement › Rode report as

• guideline. Renewed leases at

market rentals › New system automated payments › Tender - 500,000 sqm in Pretoria CBD

29

UPDATE ON GOVERNMENT

• Local Government

› Governed by Municipal Finance Management Act › Redefine acquisition - increasing exposure › Renewed Shell House 10 years, 8% escalation › Pay rentals on time

27.2% 25.9% 14.0% 0.4% 32.5%

Delta tenant breakdown - GLA

National Government Provincial Government State-Owned Enterprise Local Government Other

• Provincial Government

› Operates independently › Secure long term leases › Pay rentals on time

30

UPDATE ON GOVERNMENT

27.2% 25.9% 14.0% 0.4% 32.5%

Delta tenant breakdown - GLA

National Government Provincial Government State-Owned Enterprise Local Government Other

• State-owned enterprises

› SARS, Eskom, DTI and various Chapter 9 institutions. › Not governed by Treasury directive › Own lease negotiations › Concluded 3 - 5 years at market related rates and escalations › These tenants pay rentals on time › Favoured tenant

• Overall

› Actively relationship - internal DPW Task Team › Focusses on lease negotiations, timeous payments › The team made significant inroads

31

Property

(All figures in Rands)

CMH Dealership 88 Field Commission House Embassy Building The Forum Total Approved budget 156,000,000 85,000,000 28,250,000# 21,843,000

• 291,093,000

Spent in FY2015 37,976,214

• 37,976,214

Spent in FY2016 117,357,082 37,037,624

• 1,591,698
• 155,986,404

Budget for FY2017

• 52,462,376

28,250,000 20,251,302 30,000,000* 130,963,678 Description Development

• f new

dealership showroom and parking facility. Complete Internal refurbishment

• f tenanted

floors for DPW Internal refurbishment

line with tenant driven project

Façade Upgrade Façade Upgrade

* pending approval

CAPEX - EXISTING PORTFOLIO

32

REDEVELOPMENT STRATEGY

• Delta to deploy CAPEX into existing portfolio and Redefine assets

› Enhancing earnings and value uplift › Securing long term stable returns

• Spend of approximately R250m for FY2017 (including projects on previous

slide)

• Appointed Head of Capital Projects to oversee all Delta capital expenditure

› Andries Schoeman › Identify assets where greatest value can be added, through value enhancing developments, renewal of long term leases and activation of under-utilised area or available bulk

33

REDEVELOPMENT STRATEGY - REDEFINE

• SENS announcement on 03 December 2015, anticipated spend of

› R600m over 3 years › To be committed on the back of long term lease renewals

• First tranche of projects

› Pine Parkade › Approximately R38m to upgrade façade, retail offering and structural refurbishments › Target return accretive at > 11% › Shell House › 10 year renewal to be concluded. Project will upgrade lifts and aircon and provide tenant installation › Target return accretive at > 11% › Isivuno House › R45m upgrade to façade and tenant installations, 10 year lease renewal › Target return accretive at > 11%

34

MARA DELTA

• Shareholding 26.34% at 30 April 2016

› Valued at R472.5m at Feb 2016

• Interim dividend (July - Dec 2015) received of US$6.17c / share

› Equates to R22.8m for Delta › Total FY2016 earnings of R36.8m for Delta

• Highlights *

› Total investment property US$257m › Capital raised of US$138.3m › NAV of US$1.75 per share

(excluding FCTR movements)

› Approval of Pivotal Merger › On track to meet full year distribution

* Per latest Mara Delta results presentation

SANDILE NOMVETE

LOOKING FORWARD

Phamoko Towers

36

Risks / Challenges Mitigants / Response

• Sovereign downgrade &

economic headwinds › Increased cost of debt › Liquidity › Government spending

• Cost of debt

› 83% of debt fixed › Multi-banked › Debt mix (Short & long term; banks & DCM) › Optimal use of assets through flexible security structures

• Government spending

› Invested in nodes critical to government › Renewals / new leases at market rentals › Curtailment of tenant expenses

• Investment strategy

› Pressure on B-Grade

• ffices

› Uncertainty around government policies

• Pressure on B-Grade offices

› Sovereign underpin - greater tenant retention › Invested in nodes critical to government

• Uncertainty around government policies

› Working with government to guide leasing policies (long term leases; market rentals) that support B-BBEE DPW Task Team well established and operational › Sector-leading B-BBEE Level 2 rating

KEY FOCUS AREAS

37

Risks / Challenges Mitigants / Response

• Capital management

› Gearing levels › Large redevelopment strategy › Sustainable returns

• Gearing levels

› Consolidation approach moving forward, limited acquisitions expected › Disposals of non-core assets and pay-down of debt › Intensive asset management to support portfolio values

• Redevelopment strategy

› CAPEX to be spent in line with lease renewals (affordability) › Value enhancing activities targeted › Appointment of appropriate staff

• Sustainable returns

› Efficiencies obtained through critical mass › Redevelopments › Obtain long term leases

• Staffing & skills
• Appointments

› Replacement COO for Bronwyn Corbett underway › Appointment of Andries Schoeman as Head of Capital Projects

• Share price

› Gearing reduction plan › Working on providing clarity around government › Earnings enhancing Free State and Redefine acquisitions

KEY FOCUS AREAS

38

CONCLUSION

• Distribution target met and significant inroads made in strengthening balance sheet
• Delta will continue to focus on its sovereign underpin

› Further entrench - dominant player in National and Provincial government and parastatal tenants › Leverage excellent empowerment credentials and understanding of government to secure long term leases › Disposal of non-core assets › Long term gradual international diversification

• Sustainable growth in distributions and NAV

› Prudent capital management › Intensive asset and property management

Distribution guidance for FY2017: 7% to 8% growth

THANK YOU

Q & A

Hallmark Building

ANNEXURES

LexisNexis

41

ANNEXURES

› Board of directors › Shareholder profile › Top 10 properties by value › Mara Delta investment timeline › GLA and vacancy reconciliation › Income and expense components › Property operating expenses breakdown › Admin expenses breakdown › Profitability ratios › Municipal expense ratios › Lease expiry profiles by sector

42

BOARD OF DIRECTORS - EXECUTIVE MANAGEMENT

Sandile Nomvete

Chief Executive Officer Exec Dep. & Prop Dev. Prog. (Wits & UCT Business Schools)

Bronwyn Corbett

Chief Investment Officer & Chief Operating Officer BCom (Acc) (Hons) (Univ. of Natal), CA(SA)

Executive Directors

Shaneel Maharaj

Chief Financial Officer (appointed 1 December 2015) BCom (Acc) (Hons) (Univ. of Natal), HDipTax, CA(SA)

Sandile co-founded Motseng Investment Holdings which eventually became the empowerment partner to Marriot Property

• Group. A series of mergers and acquisitions

within the sector provided the opportunity for Motseng to become the largest 100% black-

• wned

property management company in South Africa. Sandile serves as a director on a number of

• ther listed entities, including KAP Limited. He

has nearly a decade and a half of experience in executive and non-executive positions. Sandile is a graduate

• f

the Property Development Programme from the University of Cape town Graduate School of Business, and holds an Executive Development Programme and Finance for non-financial managers Diploma from the University of Witwatersrand Graduate School of Business. Bronwyn has over ten years experience in the property sector with a specific focus on property

• wnership. Prior to joining Motseng in April 2009

as the CFO, Bronwyn was the Financial Director and joint founder of Universal Retail Construction Company and also the Financial and Operations Director for Universal Property Professionals, a development and property ownership company with a portfolio in excess of R12 billion. Bronwyn was integral in the establishment of Delta Property Fund Ltd (“Delta”) and built the property portfolio to over R2 billion, ultimately leading to the listing of Delta on the JSE. Bronwyn has the ability to secure essential finance and seller relationships which has been paramount to the success of Delta Property

• Fund. She holds a Bachelor of Commerce in

Accounting from the University of Natal and is a member of the Institute of Chartered Accountants. Bronwyn is also a registered auditor. Shaneel is a Chartered Accountant with over fifteen years work experience. He graduated from the University of Natal and completed his articles at Deloitte and Touche. He started his career in 2002 with Imperial Fleet Services head

• ffice and progressed to Financial Manager of

its Government Business Unit. Shaneel then joined Cargo Carriers Limited in 2006 as Group Financial Manager and played an integral role in the restructure and growth within the business. He was appointed to the board of Cargo Carriers as Financial Director in 2009. Shaneel joined Delta Property Fund in December 2015, bringing with him a wealth of experience and excellent track record

• f

stakeholder engagement, relationship building, effectively managing the treasury function and implementing new systems.

43

BOARD OF DIRECTORS - CONTINUED

JB Magwaza Independent Non-Executive Chairman Committees: NRC*, SETC Jorge Da Costa Independent Non-Executive Director Committees: IC*, NRC Nooraya Khan Lead Independent Non-Executive Director Committees: IC, ARC*, NRC Paul Simpson Independent Non-Executive Director Committees: IC

Non-Executive directors

Dumo Motua Independent Non-Executive Director Committees: NRC, SETC* Ian Macleod Independent Non-Executive Director Committees: IC, ARC Marelise de Lange Independent Non-Executive Director Appointed 2 November 2015 Committees: ARC Board Committees IC = Investment Committee, ARC = Audit, Risk and Compliance Committee, NRC = Nomination and Remuneration Committee, SETC = Social, Ethics & Transformation Committee * Denotes chairperson Nombuso Afolayan Independent Non-Executive Director Appointed 29 February 2016 Andrew Konig Non-Executive Director Appointed 01 April 2016

44

SHAREHOLDER PROFILE

As at Feb 2016 Units held Holding Coronation Fund Managers 81 791 864 15.34% Public Investment Corporation 73 305 126 13.75% Stanlib Asset Management 67 001 005 12.57% Grindrod Asset Management 54 427 714 10.21% Sanlam Investment Management 47 613 150 8.93% Kagiso Asset Management 28 160 125 5.28%

Directors Holdings 26 361 945 4.95%

Investec Asset Management 19 109 427 3.58% Prudential Investment Managers 10 258 934 1.92% Subtotal 408 029 290 76.54% Other 125 067 786 23.46% Total 533 097 076 100.00%

45

SHAREHOLDER PROFILE - CONTINUED

As at April 2016 Units held Holding Redefine 155 230 521 22.55% Coronation Fund Managers 80 933 628 11.76% Stanlib Asset Management 62 231 417 9.04% Grindrod Asset Management 56 821 767 8.26% Public Investment Corporation 53 364 482 7.75% Sanlam Investment Management 50 995 135 7.41% Kagiso Asset Management 35 313 135 5.13% Directors' Holdings 26 361 945 3.83% Investec Asset Management 23 466 923 3.41% Prudential Investment Managers 7 050 867 1.02% Subtotal 551,769,820 80.16% Other 136,558,127 19.84% Total 688 327 947 100.00%

46

TOP 10 PROPERTIES (BY VALUE)

Forum Building Hallmark Building Liberty Towers Delta Towers

Location Pretoria Location Pretoria Location Durban Location Durban Sector Office - Sovereign Sector Office - Sovereign Sector Office - Other Sector Office - Other GLA 41,003 m2 GLA 26,255 m2 GLA 40,095 m2 GLA 40,993m2 Vacancy Nil Vacancy Nil Vacancy 1.49% Vacancy 29.39% Valuation R660 mil Valuation R410 mil Valuation R395 mil Valuation R358 mil

47

TOP 10 PROPERTIES - CONTINUED

Hensa Towers Embassy Building The Marine Delta Heights

Location Polokwane Location Durban Location Durban Location Pretoria Sector Office - Sovereign Sector Office - Sovereign Sector Office - Other Sector Office - Sovereign GLA 13,675 m2 GLA 32,788 m2 GLA 24,591 m2 GLA 19,122 m2 Vacancy Nil Vacancy 25.72% Vacancy 19.54% Vacancy 1.78% Valuation R343 mil Valuation R325 mil Valuation R304 mil Valuation R275 mil

48

TOP 10 PROPERTIES - CONTINUED

Phomoko Towers Beacon Hill

Location Polokwane Location King Williams Town Sector Office - Sovereign Sector Office - Sovereign GLA 13,058 m2 GLA 13,648 m2 Vacancy Nil Vacancy 0% Valuation R262mil Valuation R228 mil

49

DELTA AFRICA / MARA DELTA INVESTMENT TIMELINE

May 2014 Shares in shell company acquired July 2014 Delta International lists on AltX and Bermuda Stock Exchange. By end of July, Delta owns 53.32% of share capital at total cost of R501m December 2014 Delta International declares maiden dividend of US$6.63c / share February 2015 Delta receives dividends from Delta International of R18.2m for it’s FY2015 period March 2015 Listing of Delta International migrates to JSE Main Board and to Stock Exchange of Mauritius, maintaining 2 primary listings March - April 2015 Delta accounts for Delta International investment as a subsidiary held for sale, as 52.41% shares held at February 2015, however capital raise conclude on 22 April 2015 dilutes Delta’s holding to 31.78% (loss of control for accounting purposes). Accounted for investment in associate from this point forward July - October 2015 Leon van de Moortele appointed CFO in July 2015 and Bronwyn Corbett appointed as CEO in August 2015. Rebranded to Delta Africa to be more aligned with investment strategy of pan-African investment fund in October 2015 November 2015 Merger with Mara and Pivotal announced. Name to be changed to Mara Delta on conclusion of merger and once approved by shareholders December 2015 Delta Africa declares dividend of US$6.17c / share for 6 months ended December 2015 February - April 2016 Delta owns 29.34% of Mara Delta valued at R472.5m (R19.80 / share) at end of FY2016, and earns R36.8m dividends for the

• period. Mara Delta issues additional shares in April 2016, Delta is subsequently diluted to 26.34%

July 2014 February 2015 December 2014 March - April 2015 July - October 2015 November 2015 May 2014 February 2016 April 2016

50

GLA AND VACANCY RECONCILIATION

Total GLA m2 Vacant GLA m2 Vacancy % As at 28 February 2015 703,103 49,856 7.09% Disposals (10,536) (2,738) Acquisitions 119,864 7,881 Leases terminated

• 30,334

Head leases 5,249 Regular leases 25,085 New letting of vacant space

• (11,515)

Adjustments 1,074 (801) As at 29 February 2016 813,505 73,016 8.98%

51

INCOME AND EXPENSE COMPONENTS

Income

Contractual rental income - R1.22 bn Fair value adjustments - R259.1m Share of profit in associate - R33.5m Straight line rental income accrual - R27.0m Interest income - R26.6m Other income - R7.3m

Expense

Finance costs - R412.7m Property operating expenses - R322.1m Administration expenses - R82.7m Loss on foreign exchange differences - R57.8m Loss from discontinued operations - R38.1 Cancellation fee - R11.5 Share of loss in joint venture - R2m

52

PROPERTY OPERATING EXPENSES

213,169 34,722 22,542 10,350 10,001 8,274 7,232 5,346 4,395 2,925 1,939 1,012

(R'000s) Municipal expenses (66.22%) Service contracts (10.79%) Property Management fees (7.00%) Repairs and maintenance (3.22%) Sundry property manager expenses (3.11%) Staff costs - onsite (2.57%) Rental paid - Parking rental (2.25%) Insurance (1.66%) Provision for doubtful debts (1.36%) Other property expenses (0.91%) Consumables (0.60%) Sundry & admin expenses (0.31%)

53

ADMIN EXPENSES

31,270 13,107 10,000 7,161 4,604 2,958 2,954 2,267 1,721 1,495 1,434 1,159 1,132 711 482 289

(R'000s) Asset Management fees (37.8%) Directors fees (15.8%) Reversal of prior year accrual (12.1%) Professional fees (8.6%) Rental paid Head office (5.6%) Travel and entertainment (3.6%) Audit fees, reporting and announcements (3.6%) Depreciation (2.7%) Administration & sundry expenses (2.1%) Corporate social responsibility (1.8%) Bank charges (1.7%) Share based payment expense (1.4%) Sponsorship and donations (1.4%) Insurance (0.9%) Compliance and regulatory (0.6%) Market data (0.3%)

54

PROFITABILITY METRICS

10% 18% 7% 12% 12%

23% 36% 35% 31% 26%

80% 80% 93% 85% 81%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Office - Sovereign Office - Other Retail Industrial Total

Profitability per sector

Cost to Income Ratio (Net) Cost to Income Ratio (Gross) Municipal Recovery Ratio 43% 85% 82% 79% 23% 81% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Municipal recoveries

Rates Electricity Water & Effluent Refuse Levies, meter reading and other Total

55

MUNICIPAL RECOVERIES BY SECTOR

48% 34% 64% 20% 110% 53% 105% 28% 100% 56% 104% 70% 93% 66% 48% 32% 18% 40% 19% 0% 80% 80% 93% 85%

0% 20% 40% 60% 80% 100% 120% Office - Sovereign Office - Other Retail Industrial Rates Electricity Water & effluent Refuse Levies, meter reading and other Total

56

LEASE EXPIRY PROFILE BY BUILDING SECTOR

GLA - Office Sovereign

vacant (5.9%) 28 Feb 17 (40.5%) 28 Feb 18 (19.0%) 28 Feb 19 (9.4%) 29 Feb 20 (6.2%) 28 Feb 21 (12.7%) Beyond 28 Feb 2021 (6.3%)

Rental - Office Sovereign

28 Feb 17 (41.5%) 28 Feb 18 (17.2%) 28 Feb 19 (13.7%) 29 Feb 20 (5.5%) 28 Feb 21 (14.9%) Beyond 28 Feb 2021 (7.2%)

Rental - Office Other

28 Feb 17 (38.3%) 28 Feb 18 (22.9%) 28 Feb 19 (20.8%) 29 Feb 20 (12.2%) 28 Feb 21 (2.5%) Beyond 28 Feb 2021 (3.3%)

GLA - Office Other

vacant (13.7%) 28 Feb 17 (27.9%) 28 Feb 18 (23.3%) 28 Feb 19 (18.7%) 29 Feb 20 (9.1%) 28 Feb 21 (2.4%) Beyond 28 Feb 2021 (4.9%)

57

LEASE EXPIRY PROFILE BY BUILDING SECTOR

GLA - Retail

vacant (5.4%) 28 Feb 17 (13.7%) 28 Feb 18 (5.9%) 28 Feb 19 (5.9%) 29 Feb 20 (25.8%) 28 Feb 21 (1.3%) Beyond 28 Feb 2021 (42.0%)

Rental - Retail

28 Feb 17 (11.4%) 28 Feb 18 (9.4%) 28 Feb 19 (8.2%) 29 Feb 20 (31.2%) 28 Feb 21 (1.5%) Beyond 28 Feb 2021 (38.3%)

Rental - Industrial

28 Feb 17 (1.9%) 28 Feb 18 (56.3%) 28 Feb 19 (0.0%) 29 Feb 20 (0.0%) 28 Feb 21 (41.8%) Beyond 28 Feb 2021 (0.0%)

GLA - Industrial

vacant (28.5%) 28 Feb 17 (3.1%) 28 Feb 18 (29.0%) 28 Feb 19 (0.0%) 29 Feb 20 (0.0%) 28 Feb 21 (39.4%) Beyond 28 Feb 2021 (0.0%)

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LEASE EXPIRY PROFILE BY TENANT SECTOR

GLA - Office Sovereign

28 Feb 17 (44.0%) 28 Feb 18 (21.7%) 28 Feb 19 (9.0%) 29 Feb 20 (6.4%) 28 Feb 21 (12.8%) Beyond 28 Feb 2021 (6.1%)

Rental - Office Sovereign

28 Feb 17 (42.9%) 28 Feb 18 (18.1%) 28 Feb 19 (13.0%) 29 Feb 20 (5.4%) 28 Feb 21 (13.9%) Beyond 28 Feb 2021 (6.7%)

Rental - Office General

28 Feb 17 (32.7%) 28 Feb 18 (20.1%) 28 Feb 19 (24.6%) 29 Feb 20 (12.3%) 28 Feb 21 (6.1%) Beyond 28 Feb 2021 (4.2%)

GLA - Office General

28 Feb 17 (28.9%) 28 Feb 18 (23.2%) 28 Feb 19 (25.4%) 29 Feb 20 (11.2%) 28 Feb 21 (4.9%) Beyond 28 Feb 2021 (6.4%)

59

LEASE EXPIRY PROFILE BY TENANT SECTOR

GLA - Retail

28 Feb 17 (26.8%) 28 Feb 18 (12.5%) 28 Feb 19 (9.7%) 29 Feb 20 (18.1%) 28 Feb 21 (4.9%) Beyond 28 Feb 2021 (28.0%)

Rental - Retail

28 Feb 17 (24.6%) 28 Feb 18 (14.4%) 28 Feb 19 (12.9%) 29 Feb 20 (20.8%) 28 Feb 21 (4.9%) Beyond 28 Feb 2021 (22.4%)

Rental - Industrial

28 Feb 17 (1.9%) 28 Feb 18 (56.3%) 28 Feb 19 (0.0%) 29 Feb 20 (0.0%) 28 Feb 21 (41.8%) Beyond 28 Feb 2021 (0.0%)

GLA - Industrial

28 Feb 17 (4.3%) 28 Feb 18 (40.6%) 28 Feb 19 (0.0%) 29 Feb 20 (0.0%) 28 Feb 21 (55.1%) Beyond 28 Feb 2021 (0.0%)