SA Corporate December 2018 Results Presentation March 2019 - - PowerPoint PPT Presentation

INDUSTRIAL | RETAIL | OFFICE | RESIDENTIAL | REST OF AFRICA

SA Corporate December 2018 Results Presentation

March 2019

Agenda

• Highlights

Rory Mackey

• Financial Performance

Antoinette Basson

• Portfolio Review

Rory Mackey

• Unlocking Value in the Retail Portfolio

Rory Mackey

• Improving the Industrial Portfolio & Reducing

Commercial Exposure Rory Mackey

• Building the Afhco Business

Rory Mackey

• Strategy & Prospects

Rory Mackey

• Acknowledgements

Rory Mackey

• Questions

Team

2

HIGHLIGHTS RORY MACKEY

3

High Level Review

Distribution Themes

• Full year distribution 6.0% lower than 2017
• Total NPI growth of 4.3%; LFL increased by 1.0%
• Afhco portfolio NPI growth of 25.4% underpinned by a LFL NPI growth of 5.9% and

greater contributions from acquisitions and developments

• Retail portfolio LFL NPI growth of 2.9%; retentions of 87.1; positive reversions of 1.8%

(excluding a national retailer’s negative reversion at East Point) and weighted average escalations of 7.6%

• Industrial portfolio LFL NPI retracted by 2.7%

Investment Strategy

• Executed acquisitions and pipeline totalling R1.06bn
• Executed & contracted disposals of R817m
• Committed developments to be completed in 2019 and 2020 with a total project cost of

R637m Capital Structure

• LTV of 34.6%
• 73.1% of debt fixed through a combination of fixed rate debt and interest rate swaps for

a period of 2.5 years

4

FINANCIAL PERFORMANCE ANTOINETTE BASSON

5

Distribution

6 * Cents per share

• 5.00

10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 2013 2014 2015 2016 2017 2018 16.28 17.68 19.66 21.44 22.38 21.70 16.47 18.02 19.91 21.58 22.54 20.52

History (CPS*)

Interim Final

• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2013 2014 2015 2016 2017 2018 8.6% 9.0% 10.8% 8.7% 4.4%

• 6.0%

GROWTH (%)

Distribution at a Glance

7

Dec 2018 Dec 2017 % Rm Rm Variance Net Property Income - Like for Like

945.168 936.192 1.0

Net Property Income - Developments

296.675 277.661 6.8

Net Property Income - Acquisitions

132.330 67.805 95.2

Net Property Income - Buildings sold

55.168 88.858 (37.9)

Net Property Income

1,429.341 1,370.516 4.3

Investment in Joint Ventures

61.668 58.960 4.6

Distribution related income

• 11.631

(100.0)

Net finance costs

(391.958) (308.443) (27.1)

Dividends from investments in listed shares

13.954 23.783 (41.3)

Distribution related expenses

(44.789) (45.766) 2.1

Antecedent distribution

• 26.029

(100.0)

Distributable earnings

1,068.216 1,136.710 (6.0)

Investment Properties Growth Analysis

Portfolio growth underpinned by acquisitions, development expenditure and upward revaluation 8

16,833 17,801 442 1,271 ( 677 ) ( 68 ) 15,500 16,000 16,500 17,000 17,500 18,000 18,500 19,000 19,500 Investment Properties December 2017 Acquisitions Improvements / Development costs Disposals Fair value adjustment Investment Properties December 2018

Growth in Assets and Market Capitalisation

R’bn

cents

9 100 200 300 400 500 600 0.0 5.0 10.0 15.0 20.0 25.0 2012 2013 2014 2015 2016 2017 2018 Total Assets (Rbn) Market Cap (Rbn) NAV per share (cents) Share Price (cents)

Net Asset Value

10

514.1 (3.2) 0.8 (1.4) (0.1) (44.2) 42.2 508.2 300.0 325.0 350.0 375.0 400.0 425.0 450.0 475.0 500.0 525.0

Opening NAV 1 January 2018 Revaluation

• f

Investment Properties, Shares and Interest Rate Swaps Net exposure to Zambian JV Other Non- distributable income statement items NCI Distributions paid December 2017 Distributable earnings June 2018 Closing NAV 30 June 2018

Capital Structure

Sources of Capital

Debt finance sources are diversified between banks and institutional borrowings.

11 12.0% 10.7% 2.8% 2.8% 1.0% Absa Standard Bank Investec Nedbank State Bank of India

Equity 67.1% Standard Bank

• Calgro JV

0.5% Institutional and DFI Debts 3.1% Syndicated Loans 29.3%

Equity Standard Bank - Calgro JV Institutional and DFI Debts Syndicated Loans

Group Debt Structure – at 31 Dec 2018 (excl. fixes)

WAR of 8.4%, WAM of 1.7% and weighted average tenor of 1.8 years, 2.5 years excluding 2019 expiring debt

* AFD Fixed rate debt # SA Corporate’s 51% portion of Afhco Consortium Joint Initiative funding

12 425 200 270 30

• -

848 500 950 387 500 500 550

• 132

143 120 1,000

• 120

143 94 325

• 200

300

• Revolving Credit, 8.65%

Term Loan, 8.72% Term Loan, 8.67% Term Loan, 8.67% Revolving Credit, 8.60% Revolving Credit, 8.72% Term Loan (Syndication), 8.95% Term Loan (Syndication), 8.85% Term Loan (Syndication), 8.93% Term Loan (US$), 4.39% Term Loan (Syndication), 8.97% Term Loan (Syndication), 9.10% Term Loan (Syndication), 9.00% Cross Currency (ZAR), -9.16% Cross Currency (US$), 3.98% # Term Loan, 9.50% Term Loan (Syndication), 9.16% Cross Currency (ZAR), -9.03% Cross Currency (US$), 4.36% * Amortising, 6.88%

• 200

400 600 800 1,000 1,200 Feb 2019 Feb 2019 Feb 2019 Feb 2019 Mar 2019 Nov 2019 Dec 2019 Jan 2020 Jun 2020 Nov 2020 Dec 2020 Dec 2021 Dec 2021 Sep 2022 Sep 2022 Nov 2022 Dec 2022 Jan 2023 Jan 2023 Apr 2024 Amount Drawn (Rm) Amount Available (Rm)

Group Debt Structure – at 31 Dec 2018 (incl. fixes)

Maturity and interest rate profile of interest-bearing debt – WAR inclusive of fixes of 8.6%. Current LTV 34.6%

* AFD Fixed rate debt # SA Corporate’s 51% portion of Afhco Consortium Joint Initiative funding

13 425 200 270 30

• 848

500 950 387 500 500 550

• 132

143 120 1,000

• 120

143 94 325

• 200

300

• Revolving Credit, 8.89%

Term Loan, 8.95% Term Loan, 8.90% Term Loan, 8.90% Revolving credit, 8.84% Revolving credit, 8.96% Term Loan (Syndication), 9.19% Term Loan (Syndication), 9.09% Term Loan (Syndication), 9.17% Term Loan (US$), 3.59% Term Loan (Syndicaion), 9.21% Term Loan (Syndication), 9.34% Term Loan (Syndication), 9.24% Cross Currency (ZAR), -9.40% Cross Currency (US$), 3.98% # Term Loan, 9.74% Term Loan (Syndication), 9.40% Cross Currency (ZAR), -9.26% Cross Currency (US$), 4.36% * Amortising, 6.88%

• 200

400 600 800 1,000 1,200 Feb 2019 Feb 2019 Feb 2019 Feb 2019 Mar 2019 Nov 2019 Dec 2019 Jan 2020 Jun 2020 Nov 2020 Dec 2020 Dec 2021 Dec 2021 Sep 2022 Sep 2022 Nov 2022 Dec 2022 Jan 2023 Jan 2023 Apr 2024 Amount Drawn (Rm) Amount Available (Rm)

Group Interest Rate Swap Profile –

31 Dec 2018

Rate of 6.88% (weighted swap margin 0.24%) and weighted average tenor of 2.5

• years. 72.9% of variable rate debt hedged by interest rate swaps. 73.1% of debt

drawn is fixed (incl fixed rate debt)

* Includes $27m swap at 1.79% (based on US LIBOR) 14

2023 2022 2021 2020 2019

540 1,234 800 1,492 240 7.86% 7.45% 7.62% 5.75% * 6.35%

Swap amount (Rm), weighted average rate

Group Net Cash Flow

15 (2,000) (1,500) (1,000) (500)

• 500

1,000 1,500 2,000 Balance 31 December 2017 Cash generated from operations net

• f finance cost and taxation

Distributions paid Acquisitions and Improvements to Investment Properties and Property, Plant and Equipment Disposal of investment properties Other financial assets Loans to developers Investments in Joint Ventures Letting commissions and tenant installations Treasury buy back of shares NCI shareholder loan Net movement on local borrowings Repayment of foreign borrowings Balance 31 December 2018 275 1,024 (1,119) (1,719) 669 48 173 44 (17) (2) 162 686 (17) 207 Rm

PORTFOLIO REVIEW RORY MACKEY

16

Overview – Sectoral Analysis (excl. Rest of Africa JV)

Sectoral Profile (% of GLA) Sectoral Profile (% of Market Value)

SA Corporate excluding Zambian JV

• 191 Properties
• Total GLA 1,517,885m2
• Total Portfolio R17.0bn

(Dec-17: R16.4bn)

• Excludes development

bulk comprising of 9 properties and valued at R0.4bn. Zambian JV

• 3 Properties
• GLA 62,269m2
• Portfolio Value R1.0bn

(Dec-17: R875.0m) Like for Like Portfolio:

• Weighted Average

discount rate 15.3%

• Weighted average

capitalisation rate 9.6%

17 45% 24% 4% 25% 2%

Dec 2018

48% 23% 4% 23% 2% Industrial Retail Commercial AFHCO Storage

Dec 2017

29% 43% 6% 21% 1% Industrial Retail Commercial AFHCO Storage

Dec 2017

28% 43% 5% 23% 1%

Dec 2018

• 10,000

20,000 Industrial Retail Commercial Storage AFHCO Average 6,231 18,047 15,798

• 10,559

10,511 6,453 19,679 16,532 3,304 9,606 10,643 6,922 19,967 15,917 2,403 10,565 11,208

Market Value per m²

December 2016 December 2017 December 2018

Like for like NPI growth

18

2018 Portfolio Growth Retail 2.9% Commercial 1.7% Industrial

• 2.7%

Afhco 5.9% SA Portfolio Total 1.0%

Executed Acquisitions

19

1 – Represents 51% ownership in the joint initiative 2 – The cancellation of the acquisition of units at Fleurhof and Scottsdene from Calgro M3

Developments is under negotiation

Property Sector Forward Yield % Purchase price (R000) Transfer date Northgate Heights Phases 1 & 2, Northgate Residential 10.0 24,685 Jan-18 - Dec-18 Calgro M3 Developments - South Hills 1 Residential 10.0 176,960 Feb-18 - Nov-18 The Oaks, Ermelo Retail 10.7 105,000 Mar-18 African City Mall Final Phase, Johannesburg CBD Retail 11.6 32,873 Apr-18 - Jun-18 Calgro M3 Developments - Jabulani Lifestyle Phases 1 - 6, Soweto 1 Residential 10.0 54,989 Apr-18 - Sept-18 M&T Development - Etude Phase 4, Midrand Residential 10.0 47,795 Dec-18 Total 10.3 442,302

Contracted and Unconditional Acquisitions

1 - Transferred 2 - Represents 60% ownership in the joint initiative 3 - SA Corporate has also secured an option to participate in phases 2 & 3 of the development,

with an estimated value of R793m and R529m respectively (based on 2020 pricing)

20

Property Sector Forward Yield % Purchase price (R000) Expected transfer Northgate Heights Phase 2, Northgate Residential 10.0 3,083

1 Jan-19

M&T Development - Etude Phases 5 & 6, Midrand Residential 10.0 117,496 Mar-19 – May-19 M&T Development - Founders Hill Phases 1-6, Founders Hill 2 Residential 9.5 285,907 Mar-19 - Jun-20 M&T Development - Menlyn East End Development, Menlyn 2/3 Residential 10.0 211,614 Jun-21 Total 9.8 618,100

Executed Disposals

1 - Exit yield in year 2 is 6.8% due to a negative reversion

21

Property Sector Exit Yield % Gross price (R000) Transfer date Atterbury Décor, Pretoria Retail 8.5 86,786 Jan-18 Rhodesdene Shopping Centre, Kimberley Retail 8.8 52,000 Mar-18 22 Voortrekker Road, Vredenburg Commercial 8.8 78,500 May-18 Lebombo Road, Garsfontein (Portion) Commercial 6.2 12,000 Jun-18 21 Pomona Road, Pomona Industrial 8.0 18,250 Jun-18 9/15 Lanner Road, New Germany Industrial 7.9 36,000 Jul-18 1/5 Stockville Road, Westmead Industrial 7.7 53,600 Sep-18 28 Durham Street, Mthatha Commercial 8.8 86,500 Sep-18 11 Coconut Grove, Shakashead Industrial 7.6 2,400 Oct-18 6 Cedarfield Close, Springfield Park Industrial 12.11 57,000 Oct-18 Burgundy Estate, Centurion (Portion) Residential 8.0 4,883 Oct-18 - Dec-18 24 Westmead Road, Westmead Industrial 6.7 26,000 Nov-18 1 Marconi Street, Montague Gardens Industrial 8.2 45,000 Dec-18 Table Bay Industrial Park, Paarden Eiland Industrial 8.3 118,450 Dec-18 Total 8.6 677,369

Contracted Disposals

1 - Transferred 2 - Exit yield based on head lease rental

22

Unconditional Property Sector Exit Yield % Gross price (R000) Expected transfer 14/24 Mahoganyfield Way, Springfield Park Industrial 8.0 36,000

1 Jan-19

40 Electron Avenue, Isando Industrial 9.0 59,672

1 Jan-19

Lebombo Road, Garsfontein (Remaining portion) Commercial 9.3 27,100 Mar-19 The Mall, Vanderbijl Park Afhco Retail 10.02 13,600 Mar-20 Total 8.9 136,372 Conditional Property Sector Exit Yield % Gross price (R000) Expected transfer Hotel at Cullinan Jewel Shopping Centre, Pretoria Retail 9.0 2,700 Nov-19 Total 9.0 2,700

Lease renewals - % Rental Reversions

* Retail excluding renewal of a national retailer at East Point Shopping Centre No retentions and reversions have been disclosed for the Residential and Storage sectors due to the short term nature of their leases 23

• 13.5%
• 4.6%

1.8%

• 1.5%
• 9.1%

7.7%

• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% Industrial Retail Retail * Commercial Total (excl. AFHCO) AFHCO Retail / Commercial

Contracted Rental Escalation Profile

24

7.8% 7.6% 8.0% 7.7% 8.9% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5% Industrial Retail Commercial Total (excl AFHCO) AFHCO Retail / Commercial

Afhco residential increases ~ 4%

Group Lease Expiry – Traditional Portfolio

25

Vacancies Monthly 2019 2020 2021 2022 2023+ % of GLA 2.1% 6.5% 16.7% 15.0% 23.0% 9.9% 26.8% Cumulative 2.1% 8.6% 25.3% 40.3% 63.3% 73.2% 100.0% 2.1% 6.5% 16.7% 15.0% 23.0% 9.9% 26.8% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% % of GLA

Group Lease Expiry – Afhco Retail / Commercial

26

Vacancies Monthly 2019 2020 2021 2022 2023+ % of GLA 4.8% 6.0% 16.0% 24.8% 13.6% 7.3% 27.5% Cumulative 4.8% 10.8% 26.8% 51.6% 65.2% 72.5% 100.0% 4.8% 6.0% 16.0% 24.8% 13.6% 7.3% 27.5% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% % of GLA

Traditional Vacancy Profile

(% of GLA)

27

1.1% 4.5% 8.8% 2.7% 1.5% 3.1% 6.4% 2.3% 0.6% 4.1% 6.2% 2.1% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% Industrial Retail Commercial Total December 2016 December 2017 December 2018

Traditional Vacancy Profile

(% of gross rental)

28

0.9% 3.3% 5.4% 2.5% 1.0% 3.0% 6.0% 2.4% 0.4% 4.2% 5.5% 2.9% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% Industrial Retail Commercial Total December 2016 December 2017 December 2018

Afhco Vacancy Profile

(Residential % of Units / Retail & Commercial % of GLA)

29

3.4% 2.1% 4.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Retail / Commercial

December 2016 December 2017 December 2018 10.4% 5.7% 7.1% 1.6% 6.3% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% December 2016 December 2017 December 2018 Existing Residential Calgro M3 JV units in tenanting-up phase 7.3% 13.4%

Arrears

Tenant receivables as a % of rolling 12 months income

30

2.8% 3.6% 3.9% 3.8% 4.3% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Dec-16 Jun-17 Dec-17 Jun-18 Dec-18

UNLOCKING VALUE IN THE RETAIL PORTFOLIO RORY MACKEY

31

32

Repositioning Retail Portfolio for Sustainable Growth

• East Point
• 2,060m² of Food Court to be converted into

a 2,500m² value sports apparel. Migration from a struggling sit down food to value sports apparel offering

• Morning Glen Shopping Centre
• Introduction of a 3rd Grocer - 1,500m² Food

Lovers Market - exposure to Kelvin and Bowling Roads.

• Upgrade of the existing Pick n Pay
• New value apparel offering
• Relocation & expansion of the Clicks, with

pharmacy offering

• New drive-through

Migration to Convenience Shopping

Umlazi Mega City – Mega Summer Campaign

33

KPI 2017 2018 Growth Foot Count 1,723,083 1,834,043 +6.4% Turnover R110,209,465 R131,965,410 +20.0% Spend per head R63.96 R71.95 +12.4% Cassper Nyovest Celebrity Partnership Mega Spend & Win R115,000 in prizes. DJ Sox Celebrity Event Mega Shape – Fitness Event with Mabliza

December Comparison

Retail Solar Installations (ZAR Saved & KWH Generated)

34 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21

R Savings

SA Corporate Solar PV Monthly Rand and kWh Savings

kWh "Rand" "Rand Forecast" kWh Forecast

kWh savings

Solar PV plants in progress and Solar PV installed as at Dec 2018 to be installed as at Dec 2019

35

Retail Solar Installations (ZAR Saved & KWH Generated)

Site System Size (kWp) Comaro Crossing 380 Midway Mews 200 Montana Crossing 910 Willow Way 390 Coachmans Crossing 193 East Point 1,008 Celtis Ridge 199 Total 3,280 Site System Size (kWp) Stellenbosch Square 642 Town Square 290 Davenport 180 Musgrave 280 Hayfields 420 Umlazi 1,200 Bluff 1,200 Cambridge Crossing 195 Cullinan Jewel 325 Kempton Park Shoprite 594 Morning Glen 900 Springfield 1,000 Total 7,226

Jhb Inner City Retail - Growth from Residential Densification

• Grocer Trading Density – R2,982 pm² to R4,541 pm²
• Line shop rentals – R40 pm² to R2,420 pm²

36

GLA Vacancy Escalation Renewal Reversion 88,422m² 4.5% 8.2% 7.7% Property Acquisition/Development Completion Date GLA Total Cost Yield (%) African City July 2017 / December 2017 5,426m² R 88,579,814 11.6% Jeppe Street Post Office Retail May 2019 15,224m² R 132,630,688 11.5% 51 Pritchard Acquisition – 20 March 2017 Redevelopment – 31 March 2020 15,054m² R 175,000,000 R 85,337,475 10.7% 8.5%

Jhb Inner City Retail – Uniquely Positioned to Capture Cross Border Trading

Cross Border Trade study conducted by Dr. Tanya Zack in 2017:

• Cross Border trade in the inner city estimated at R10bn annually
• Shoppers spend on average R14,364 per trip
• The area known as “Jeppe” includes Afhco / SAC properties – African City, Jeppe Street Post

Office, Maxwell, Moray, Normandie and Small Street Mall

• Mainly focused on low cost value clothing, shoes and homeware

37

38

Zambian JV Performance Update

Property Vacancy 31 Dec 2017 Vacancy 30 Jun 2018 Vacancy 31 Dec 2018 Comments

EPM 0.4% 0.5% 0.4% Consistent low vacancy due to high demand for increasingly dominant retail node Acacia 10.6% 8.6% 1.1% FNB extended existing lease to incorporate majority

• f vacant GLA

Jacaranda 6.4% (16% - June 2017) 8.8% 6.8% Consistent leasing of Edcon vacated space

Property Retention Rate 31 Dec 2017 Retention Rate 30 Jun 2018 Retention Rate 31 Dec 2018 Comments

EPM 100% 100% 72% Single lease of 467m2 not retained Acacia 41% 100% 100% Improved retention in 2018 as a consequence of competitive rentals Jacaranda 100% 100% 100% Improved tenant mix contributing to strong tenant retention

Property Renewal Reversion 31 Dec 2017 Renewal Reversion 30 Jun 2018 Renewal Reversion 31 Dec 2018 Comments

EPM 3% 0.8%

• 9%

Excluding single large over let lease renewal reversion on other leases was +3% Acacia 3% 0%

• 24%
• ve renewal reversion primarily in respect of further

GLA let to FNB Jacaranda 0% 5% 10% High renewal reversion achieved on two leases as a consequence of improved tenant mix

IMPROVING THE INDUSTRIAL PORTFOLIO & REDUCING COMMERCIAL EXPOSURE RORY MACKEY

39

40

Industrial and Commercial

Year Contracted Escalation Expiries Renewal Reversion

2018 7.8% 26.3%

• 13.5%

1

2019 7.8% 17.6%

• 6.6%

2

2020 7.8% 12.6% 1.8%

2

Reduction in Commercial Exposure Industrial Portfolio Rebased

• Current exposure by market value = 5.0%
• End 2019 target exposure by market value ~ 3.0%

• Expiries and Renewal Reversions
• Imperial Logistics Health Sciences

R391m re-development @ 8.0% yield based on -40.0% rental reversion to market on

• ld rental. New rental from 1 October 2018 for 9 years escalates at 7.0% to 8.0%.

BUILDING THE AFHCO BUSINESS

RORY MACKEY

41

• Appointed Operations Director
• Replaced Suburban Leasing Manager
• Substantial increase in leasing team
• Selective 3rd party broker relationships with area knowledge
• Increased marketing knowledge and capacity
• Online IP

42

Improved Leasing Capability

250 500 750 1000 1250 1500 1750 2000 Jan-17 Jan-18 Jan-19 100 200 300 400 500 600 Leases Leads

Afhco Jhb Inner City Development Pipeline

2018 Completed – R201m @ 10.8% forecast yield

• End Street Precinct

Resi 206 units Retail 549 m2

• Jeppe Post Office

Resi 89 units Retail 2,455 m2 2019 Committed – R460m @ 10.8% forecast yield

• End Street Precinct

Student accommodation 976 beds Retail 4,636 m2

• Jeppe Post Office

Resi 382 units Retail 3,254 m2

43

Jeppe Post Office Mpumelelo 120 End Street

Refocussed Residential Acquisitions Pipeline

Pipeline criteria refined to include:

• Area has proven track record
• Assured social stability
• Local authority commitment including bulk services
• Conservative exposure to mitigate overtrading

Restructuring of Calgro M3 relationship under negotiation

• Exclusion of Fleurhof, Belhar, Scottsdene and South Hills free-standing houses
• Addition of 49% of South Hills and Jabulani apartments to existing 51%
• Restructuring to achieve robust sustainable NPI growth from initial guaranteed 10% yield

Reduction of suburban exposure

• Etude phases 1, 2 & 3 acquisition cancelled but retaining phases 4, 5 & 6. Acquisition value

reduced from R252m to R165m

• Sale of Northgate Heights

Revised pipeline

44 2018 2019 2020 2021+ Units Acquired (to be) / Developed (to be) in Period 1,014 1,139 200 144 Reduction / Increase to that previously planned

• 45.3%
• 13.0%

0% 0% Total Units 8,743 9,882 10,082 10,226

STRATEGY & PROSPECTS RORY MACKEY

45

Overview of 2019 distribution forecast

46

% Contribution to distribution growth 2.8% Like for like NPI growth 2.7 Impact of IHS redevelopment

• 2.2

Increased interest expense

• 0.5

2019 Forecast distribution growth 0.0

Strategy & Prospects

47

Establish platform for sustainable distribution growth by:

• Refreshing & re-tenanting shopping centres (Food Court at East Point, Morning

Glen Shopping Centre and 51 Pritchard St)

and concentrating retail portfolio on food services & convenience

• Consolidating a quality industrial property portfolio (recycle from low growth

properties to providing superior logistics space to tenants with covenant strength)

• Divesting from remaining commercial properties
• Establishing quality residential rental portfolio - offering diversification to
• ther

property sectors. Pipeline

• f

development acquisitions to be restructured to focus on investments generating robust income growth

2019 performance:

• Negative impact from substantial negative reversions in renewal of long

leases to blue chip logistics tenants in latter part of 2018 albeit strong industrial NPI growth post 2019

• Board anticipates flat 2019 distribution

ACKNOWLEDGEMENTS

48

QUESTIONS

49

ADDITIONAL SLIDES

50

Trading Volumes and Liquidity

SAC: closing price v monthly volume traded Value traded as % of market capital

51

• 50,000,000

100,000,000 150,000,000 200,000,000 250,000,000 100 200 300 400 500 600 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Volume Traded Closing Price ( c ) FFB

EMI

GRT RES VKE FFA HYP SAC IPF RDF 0% 20% 40% 60% 80% 100% 120% 140%

• 20,000 40,000 60,000 80,000 100,000

Overview – Geographical Analysis (excl. Rest of Africa JV)

Geographical Profile (% of GLA) Geographical Profile (% of Market Value)

52 65% 29% 3% 3%

Dec 2018

66% 25% 3% 6% 63% 26% 5% 6% Gauteng KwaZulu Natal Western Cape Other Dec 2017

Dec 2018

62% 30% 5% 3% Gauteng KwaZulu Natal Western Cape Other Dec 2017

Overview – Sectoral Analysis (Afhco)

62 Properties GLA 381,907m2 Market Value R4.0bn Weighted average capitalisation rate 10.5% Afhco also owns residential bulk of 86,040m2 to be redeveloped

53

Residential 81% (Dec 2017 76%) Retail / Commercial 19% (Dec 2017 24%)

By GLA

Overview – Tenant Grading by GLA – Traditional Portfolio

"A": large national tenants, large listed tenants, government and major franchisees "B": national tenants, listed tenants, franchisees, large regional tenants, medium to large professional firms "C": other

54 63% 56% 55% 24% 58% 28% 28% 15% 13% 27% 9% 16% 30% 63% 15%

0% 10% 20% 30% 40% 50% 60% 70% Industrial Retail Commercial Afhco TOTAL

Per Sector

A B C 58% 27% 15%

Total Portfolio