Unaudited group resultsfor the six months ended 30 September 2012

AgendaAgenda

• Highlights Laurence Rapp

• Strategy Laurence Rapp

• Financial performance Mike Potts

• Portfolio performance and overview Ina Lopionp p

• East Rand Mall overview Laurence Rapp

• Prospects and plans Laurence Rapp• Prospects and plans Laurence Rapp

• Acknowledgements Laurence Rapp

• Questions Team

2

Highlights, Vision, Values and Strategy

LAURENCE RAPPHighlights, Vision, Values and Strategy

3

HighlightsHighlights• Distribution for the six months is 5.0% higher than the comparable period.

• Overall cost of funding reduced from 9.36% at 31 March 2012 to 8.60% per annum, inclusive of margins and costs.

Ranked Top Property Fund and first in the industrial and office sectors by• Ranked Top Property Fund and first in the industrial and office sectors by IPD for best total return over a three year period.

• Continued strong operational performance of the property portfolio.

• Improving quality of the portfolio:– Acquired R1.48 billion quality office and retail portfolio;

– Offer accepted for acquisition of 50% of East Rand Mall for R1.1 billion;

– Realised R225 million on sales of higher risk properties;

Identified further non core properties for sale of R427 million; and– Identified further non-core properties for sale of R427 million; and

– Further acquisitions of c.R500 million in pipeline.

4

StrategyStrategy

Grow the fund to c R10 billion in assetsGrow the fund to c.R10 billion in assets

Overweight retail

Constantly looking to improve the quality of the portfolio

• Broaden our shareholding base and enhance market perception of an independent Vukile

y g p q y p

• Building sustainable partnerships• Improved customer and tenant focus• Optimise long and short-term returns for unitholdersOptimise long and short term returns for unitholders• Minimise funding cost and refinance risk• Invest in our people by engaging our people, building competence and

capacitycapacity• Transformation

5

Financial performance

MIKE POTTSFinancial performance

6

Distribution historyDistribution history140.0

1

117.6

124.8

120.0

88.3

97.9

107.9

80.0

100.0

linke

d un

it

50

54.3

57.0

4

53.8

60.9

67.1

70.5

68.5

76.8

60.0

Cen

ts p

er

32.5

35.8

40.3

44.1

47.0

0.5

36.0

41.0

48.0

820.0

40.0

0.02006 2007 2008 2009 2010 2011 2012 2013

Interim Final Total

7

Interim Final Total

Growth in distributionGrowth in distribution

1

18.0

14.3

13.9

17.1

1

15.014.0

16.0

10.0

12.6

9.

9

12.1

13.2

10. 2

11.4

12.0 10.9 10. 2

10.0

12.0

enta

ge

8.3

0 6

6.6

7.5

7.5

22

9.0

6.1

6.0

8.0

Per

ce5.0

5.1

2.0

4.0

0.02006 2007 2008 2009 2010 2011 2012 2013

Interim Final Total

8

Group income and expenditure (R000)Group income and expenditure (R000)

Income (R641 9 million) Expenditure (R373.4 million)

Asset management income

Interest incomeR8 096

1%

Income (R641.9 million)

Assetmanagement

expensesR14 387

Rates and taxesR39 007

pe d tu e ( 3 3 o )

incomeR59 682

9%Rates and taxes

recoveredR30 346

5%

R14 3874% Corporate admin

R14 5104%

Electricity and

R39 00710%

Electricity and water servicesR90 299

14%Rental Income and other

R453 49471%

Finance costsR100,356

27%

Property Expenses and

th

Electricity and water costsR107,008

29%

TaxR16 031

otherR56 089

15%

Property and management fees

R25 995

Distributable Income R268.5 million

R16 0314%

R25 9957%

9

Simplified income statementSimplified income statement

Sept 2012Rm

Sept 2011Rm

Variance%

Group net rental income 346.0 276.2 25p

Income from asset management business 59.7 23.0 160

Asset management expenditure (14.4) (13.9) 4g p ( ) ( )

Net finance costs (92.3) (74.9) 23

Corporate administration costs (14.5) (10.7) 36 p ( ) ( )

Taxation (16.0) (6.7) 139

Available for distribution 268.5 193.0 39

10

Financial Bad debt and arrears analysisFinancial - Bad debt and arrears analysis

• Tenant arrears R22.8 million (March 2012: R20.3 million).

• Impairment allowance increased from R10.0 million to R11.7 million.

R000

• Impairment allowance 1 April 2012 10 028

• Allowance for receivable impairment for the six months

• Receivables written off as uncollectable

2 528

(829)

• Impairment allowance 30 September 2012 11 727

Bad debt write-off and impairment allowance provided per the statement of comprehensive income 4 492income 4 492

11

Group balance sheetGroup balance sheet Sep-12 Sep-11

7 27 000

8 000

288

5 596

5 525 000

6 000

68

4 136

3 000

4 000

milli

on

427

37

615

3 5 25

364

1 000

2 000

Rm

7 655 53 4

0

nves

tmen

t pr

oper

ties

For s

ale

nves

tmen

t pr

oper

ties

ent a

sset

s

on-c

urre

nt

iabi

litie

s

t lia

bilit

ies

12

In p In p

Cur

re No l

Cur

rent

Group debt structureGroup debt structureMaturity and interest rate profile of interest bearing debt at 30 September 2012

164

240

9.0%

8.8%

April 2017

May 2017

Fixed interest rate

580

163

200

8.6%

8.6%

8.5%

May 2015

April 2016

May 2016

399

140

163

8.7%

7.7%

8.0%

August 2014

March 2015

April 2015

150

51 6.8%

7.7%

August 2014

March 2014

Variable interest rate

0 150 300 450 600 750

V i bl t d bt Fi d t d bt

13

Variable rate debt Fixed rate debt

Group net cash flowGroup net cash flow

5 94

7

8 54

7

6 02

2

4 18

8

539

466)

291)

316)

260)

5 91

01000 000

215

398

556

224

861

(247

(1 5

91

(9

(92

315

400 000

600 000

800 000

(200 000)

0

200 00012 es gs et

s its on ts

ets

sts 12

R00

0

(600 000)

(400 000)

(200 000)

Bal

ance

1 A

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Bor

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/fixe

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set

r-sal

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anci

al a

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Net

fina

nce

cos

e 30

Sep

tem

ber 2

01

(1200 000)

(1000 000)

(800 000)

Cas

h fro

ale

of in

vest

men

t pr

Acq

uisi

tion/

imin

vest

men

t pro

per

tion

of a

vaila

ble-

for

Bal

ance

(1600 000)

(1400 000)

( )

Pro

ceed

s on

sa

Acq

uisi

14

NAV bridgeNAV bridge

Cents

(160)71 37 210 (14)

67

(57)1 000

1 250

1 500

1 109 1 263

250

500

750

April

nits

and

and

nits

tion

tion

tion

12)

AV B

alan

ce (1

A20

12)

ditio

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refu

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of d

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at

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Adju

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for a

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Rev

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net o o I s

Inte

rest

rate

Net

reve

nue

Clo

sing

NA

V (3

0

A R C

NAV Contribution to NAV

15

Linked unit price and trading volumesLinked unit price and trading volumes

V l (000)P i ( t ) Chart Title

14 000

16 000

1 900

2 000

Volumes (000)Price (cents) Chart Title

10 000

12 000

1 700

1 800

4 000

6 000

8 000

1 400

1 500

1 600

0

2 000

4 000

1 200

1 300

1 400

A M J J l A S O t N D J F b M A M J J l A S

2011 2012

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Volume Share Price

16

Linked unit price and trading volumesLinked unit price and trading volumes

160

170

Linked unit price-index performance (36 months)

130

140

150

100

110

120

80

90

100

VUKILE Property Loan Stock

17

Property portfolio performance and overview

INA LOPIONProperty portfolio performance and overview

18

OverviewOverview

N b f i 82• Number of properties 82

• GLA 1 054 323m²

• Valuation– Total portfolio R7.698 billion

51.4% of portfolio valued51.4% of portfolio valued externally, values in line with internal values

– Average value per property R94 millionAverage value per property R94 million– Average discount rate 14.6%– Average exit capitalisation rate 10.0%

19

10 largest properties10 largest properties

Area ValueArea m²

Value Rm % of total

Durban Phoenix Plaza 24 348 521.2 6.8 Cape Town Bellville Louis Leipoldt 22 311 299.9 3.9 Jhb Isle of Houghton 28 068 244.7 3.2 Soweto Dobsonville Shopping Centre 23 177 242.5 3.2 pp gOshakati Shopping Centre 24 628 219.9 2.9 Pinetown Pine Crest (50%) 20 101 210.5 2.8 Cape Town Bellville Tijger Park 20 225 198 8 2 6Cape Town Bellville Tijger Park 20 225 198.8 2.6 Durban Embassy 32 367 198.6 2.6 Randburg Square 50 769 185.7 2.4 Roodepoort Hillfox Power Centre 38 068 183.4 2.4

284 062 2 505.2 32.8

20

Sectoral profileSectoral profile

Industrial

Market value (Rm) GLA (m²)

Retail48%

Industrial14%

Retail44%

Industrial24%

Offices38% Offices

32%

Market Value (R/m²)7 457 7 911

3 952

6 5917 910

8 774

4 185

7 291

2 0004 0006 0008 000

10 000

R/m

²

02 000

Retail Offices Industrial Average

March 2012 September 2012

21

DisposalsDisposals

GLA Yi ld S lProperty Sector

GLAm²

Yield%

Sales price R000 Transfer date

Pretoria VWL Building Offices 16 933 12.5 103 000 August 2012

Mid d 179 15th R d (S B ildi ) * I d t i l 11 001 8 1 57 000 O t b 2012Midrand 179 15th Road (Sony Building) * Industrial 11 001 8.1 57 000 October 2012

Truworths Building Jhb Retail 6 919 7.8

44 128 July 2012

Glencairn Building Eloff Street Offices 13 378 23 520 July 2012g 23 520 July 2012

Nelspruit Prorom Offices 6 178 12.5 38 000 August 2012

Johannesburg John Griffen Industrial 9 774 16 500 May 2012

Rundu Ellerines Retail 1 283 14.7 2 800 August 2012

Total 65 466 284 948

* Transferred after 30 September 2012 Transferred after 30 September 2012

22

Properties held for saleProperties held for sale

Sales

Property SectorGLA

m²Yield

%

Sales price R000 Status

Durban Embassy Offices 32 367 tbc No sale yety y

Jhb Bassonia Office Park Offices 1 597 13.4 8 300 CPs fulfilledKatima Mulilo Pep Stores Retail 2 472 11.7 18 000 CPs fulfilledLichtenburg Shopping Centre Retail 8 423 tbc No sale yetg pp g yMidrand Allandale Land (Halfway House Ext 64)

Commercial land 20 700 CPs outstanding

Midrand Allandale Land (Halfway House Ext 65)

Commercial land 21 850 CPs outstandingHouse Ext 65) land

Midtown Building Offices 8 087 tbc No sale yetPretoria Hatfield 1166 Francis Baard Street (DLV Building) Offices 2 871 tbc No sale yet

Randburg Cresta Eva Park Offices 10 911 tbc No sale yetRandburg Triangle Offices 3 047 10.5 13 500 CPs outstanding

CP = Conditions precedent

23

Geographic profile (GLA m²)Geographic profile (GLA m²)

Free StateLimpopo

3%

Mpumalanga2%

Northwest2% Northern Cape

1% Eastern Cape1%

GautengNamibia

Western Cape8%

ee S a e4%

Gauteng55%

KwaZulu-Natal18%

Namibia6%

Top 4 regions account for 87% of exposure

24

Tenant profile (GLA m²)Tenant profile (GLA m²)

Large national and listed tenants and major franchises

48%38%

franchises

National and listed tenants, franchised and medium to large48%

9%5%

medium to large professional firms

Government

Other

25

Weighted average base rentals R/m² (excluding recoveries)(excluding recoveries)

82 51 81 45

6.1% 8.7%8.9%90

100

77.79 74.96 65.73

82.51 81.45 71.59

4.0%60

70

80

90

36.77 38.23

30

40

50

-

10

20

Retail Offices Industrial Total

March 2012 September 2012

26

Weighted average base rental R/m² -(excluding recoveries): Retail(excluding recoveries): Retail

Durban WorkshopDurban Qualbert Centre

Durban Phoenix Plaza

Oshikango Spar CentrePinetown Pine Crest (50%)

Windhoek 269 Independence AvenueCape Town Kenilworth Motor Showrooms (Barlows …

Sandton Bryanston Grosvenor Shopping Centre Mbombela Truworths Centre (Truworths Centre …

Durban Workshop

Malamulele Plaza (Mala Plaza)Katutura Shoprite Centre

Pietermaritzburg The Victoria CentreSoweto Dobsonville Shopping Centre

Daveyton Shopping CentreOshikango Spar Centre

Monsterlus Moratiwa Crossing (94.50%)Giyani Plaza

Cape Town Bellville BaronsPiet Retief Shopping CentreOndangwa Shoprite CentreOshakati Shopping Centre

Mbombela Shoprite Centre (Nelspruit Sanlam Centre)Bloemfontein Plaza

Kokstad Game CentreGiyani Spar Centre (Masingita Spar Centre)

Katima Mulilo Pep StoresRustenburg Edgars Building

20 00 40 00 60 00 80 00 100 00 120 00 140 00 160 00 180 00 200 00

Germiston Meadowdale MallLichtenburg Shopping Centre

Roodepoort Hillfox Power CentreRandburg Square

Kimberley Kim ParkMbombela Shoprite Centre (Nelspruit Sanlam Centre)

Weighted average R82.51/m²

27

- 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 200.00

Weighted average base rental R/m² -(excluding recoveries): Offices(excluding recoveries): Offices

Sandton Rivonia 36 Homestead Road (Barlow Place Rivonia)Cape Town Bellville Suntyger (Santyger)

Sandton Hyde Park 50 Sixth Road

Cape Town Parow De Tijger Office ParkPretoria Lynnwood Excel Park (Wymark)

Jhb Bassonia Office ParkPretoria Hatfield 1166 Francis Baard Street (DLV Building)

Jhb Houghton 1 West Street (Jhb Houghton 2446)Pretoria Lynnwood Sanlynn

Sandton Bryanston St Andrews ComplexSandton Rivonia Tuscany

Jhb Parktown OakhurstCape Town Bellville Tijger Park

Centurion 259 West StreetMidrand Ulwazi Building (Arivia.Kom Building)

Pretoria Lynnwood Sunwood Park (Sanwood Park)

Durban Westville Surrey ParkEast London Vincent Office Park (Oos London Sanlam Centre)

Midrand IBGSandton Sunninghill Place

Cape Town Bellville Louis LeipoldtSandton Sunninghill Sunhill Park (Sanhill Park)

Sandton Bryanston St Andrews Complex

Jhb Isle of Houghton (Johannesburg Houghton)Pretoria Arcadia Suncardia (Sancardia)

Randburg Cresta Eva ParkCape Town Pinelands Pinepark

Pretoria Hatfield Festival Street Offices (Hatfield Sanlam …Jhb Parktown 55 Empire Road (Johannesburg Empire Road …

20 00 40 00 60 00 80 00 100 00 120 00 140 00 160 00 180 00

Pretoria High Court ChambersJhb Bedfordview 1 Kramer Road (Bedfordview GIS)

Randburg TriangleMidtown Building

Sandton Bryanston Ascot OfficesDurban Embassy

Weighted average R81.45/m²

28

- 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00

Weighted average base rental R/m² -(excluding recoveries): Industrial(excluding recoveries): Industrial

Centurion Samrand N1

Kempton Park Spartan Warehouse (Hellman International)

Sandton Linbro Galaxy Drive Showroom (Supra Hino)

Pi t Ri h d I d t i l P k (Ri h d P k)

Midrand Sanitary City

Midrand Allandale Industrial Park

Randburg Tungsten Industrial Park

Pinetown Westmead Kyalami Industrial Park

Randburg Trevallyn Industrial Park

Germiston Meadowdale R24

Pinetown Richmond Industrial Park (Richmond Park)

Durban Valley View Industrial Park

Roodepoort Robertville Industrial Park

Jhb Rosettenville Village Main Industrial Park

Pretoria Rosslyn Warehouse

Weighted average

- 10.00 20.00 30.00 40.00 50.00 60.00 70.00

Cape Town Parow Industrial ParkR38.23/m²

29

Lease renewals % escalation on expiry rentalsLease renewals - % escalation on expiry rentals

7 5%

9.2%

8.0% 8.3%8.0%

9.0%

10.0%

7.5%

5 0%

6.0%

7.0%

8.0%

3.0%

4.0%

5.0%

0.0%

1.0%

2.0%

Retail Offices Industrial AverageRetail Offices Industrial Average

30

New leases concludedNew leases concludedRatio of rental concluded against budget i.e. market related rentals

102%

102%

103%

100%100%

101%

102%

97%

98%

97%

98%

99%

95%

96%

97%

94%Retail Offices Industrial Average

31

Contracted rental escalation profileContracted rental escalation profile

8.9%

8.8%

9.0%

8.4%

8.6%

8.1% 8.1%8.2%

8.0%

8.2%

7.6%

7.8%

7.6%Retail Offices Industrial Total

32

Group lease expiryGroup lease expiry100%

80%

40%

60%

20%

40%

Vacant Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Beyond March 2017

0%

GLA 7.6% 18.4% 27% 17% 11% 9% 10%Cumulative 7.6% 26% 53% 70% 81% 90% 100%

33

New leases and renewalsNew leases and renewals • For the six months ended 30 September 2012 leases were concluded with a:p

– Total contract value R480.5 million

– Total rentable area 136 685m²

• Largest contracts concludedContract

valueLease

duration Tenant Property Sector Rm yearsPretoria Society Of Advocates Pretoria High Court Chambers Offices 121.1 10OK Bazaars Randburg Square Retail 17.0 5Road Accident Fund Durban Embassy Offices 16.0 2Clicks Durban Phoenix Plaza Retail 14.0 10Clicks Oshakati Shopping Centre Retail 11.5 10

• Tenant retention 67%

34

Vacancy profile % of gross rentalVacancy profile - % of gross rental

11.6%12%

14%

8.6%

9.7%

6 8%7.4% 7.3%8%

10%

5.0%

6.8%

4.0%4%

6%

2%

0%Retail Offices Industrial Total

March 2012 September 2012

35

Vacancy profile % of gross rentalVacancy profile - % of gross rental

Stable portfolio

5.0%9.3% 8.7% 6.8%

4 2%

11.8%

6.2% 6.6%10%

15%

Stable portfolio (excluding sales and acquisitions)

5.0% 4.2%

0%

5%

Retail Offices Industrial Total

31 March 2012 30 September 201231 March 2012 30 September 2012

24 1%30%

Total portfolio (excluding sales)

4.21%11.76%

6.19% 6.59%0.9%

11.3%

24.1%

10.1%4.0%

11.6%7.4% 7.3%

0%

10%

20%

30%

%Retail Offices Industrial Total

Stable portfolio Acquisitions Total portfolio excluding sales

36

Individual properties vacancy profileIndividual properties vacancy profile(% of GLA) (vacancy > 1 000m²)

St bl tf li ( l di l d i iti )

Germiston Meadowdale R24 (10%)Midrand Allandale Industrial Park (17%)

Randburg Cresta Eva Park (54%)Durban Embassy (24%)

Stable portfolio (excluding sales and acquisitions)

Roodepoort Hillfox Power Centre (7%)Sandton Bryanston St Andrews Complex (28%)

Pretoria Lynnwood Sunwood Park (Sanwood Park) (46%)Randburg Trevallyn Industrial Park (9%)

Randburg Square (7%)

Jhb Bedfordview 1 Kramer Road (Bedfordview GIS) (17%)Windhoek 269 Independence Avenue (10%)

Centurion 259 West Street (36%)Randburg Tungsten Industrial Park (19%)

Sandton Sunninghill Place (22%)

Sandton Bryanston Grosvenor Shopping Centre (4%)Soweto Dobsonville Shopping Centre (1%)

Roodepoort Robertville Industrial Park (3%)Cape Town Parow De Tijger Office Park (20%)

Bloemfontein Plaza (3%)( ) ( )

-2 000m² 500m² 3 000m² 5 500m² 8 000m²

Cape Town Parow Industrial Park (0%)Durban Phoenix Plaza (1%)

y pp g ( )

Vacant area 31 March 2012 Vacant area 30 September 2012

37

Individual properties vacancy profileIndividual properties vacancy profile(% of GLA)

Acquisitions

Cape Town Bellville Tijger Park (14%)

Bloemfontein Bree Street Warehouse (Trador Cash & Carry) (100%)

Pretoria Arcadia Suncardia (Sancardia) (30%)

Acquisitions

Midrand IBG (14%)

Sandton Rivonia Tuscany (16%)

Cape Town Bellville Tijger Park (14%)

Cape Town Bellville Suntyger (Santyger) (12%)

Jhb Parktown 55 Empire Road (Jhb Empire Road Offices) (14%)

Jhb Isle of Houghton (Johannesburg Houghton) (4%)

Jhb Bassonia Office Park (10%)

Durban Workshop (1%)

Durban Westville Surrey Park (22%)

0m² 2 500m² 5 000m² 7 500m² 10 000m²

Vacant area at transaction approval Vacant area 30 September 2012

38

Ratio of gross recurring cost to property revenue total portfolio (excluding sales)revenue – total portfolio (excluding sales)

31 3%33.1% 33.3%

35.5%38.5%

35%

40%

45%

31.3% 30.5% 30.8%

25%

30%

15.7% 15.6% 14.8% 15.4% 14.7% 14.7%16.5%

10%

15%

20%

0%

5%

10%

M 07 M /08 M /09 M /10 M /11 M /12 S /12Mar-07 Mar/08 Mar/09 Mar/10 Mar/11 Mar/12 Sep/12

All recurring expenses All recurring expenses excluding rates and taxes and government services

39

Recurring expense categoriesRecurring expense categories

Maintenance

Sundry expenses

5%

Asset management

fee4%

Insurance premiums

3% Bad debt2%

GovernmentProperty

management

Maintenance contracts

6%

Government services

46%

Rates and taxes17%

Cleaning & security

10%

gfee7%

17%

80% of costs from top 4 categories

40

Re developments / upgradesRe-developments / upgradesAdditional

Projects completed Capital Rm

GLA m²

Year 1 yield

Completion date Note

Randburg Square Maintenance and upgrade: Phase 1 80.8 - - 30 June 2012 (1)

Oshakati Shopping Centre Standard Bank redevelopment 22.9 2 312 10.7% 31 July 2012pp g p y

Roodepoort Hillfox Power Centre Phase 2 of façade and mall upgrade 4.0 - - 31 March 2012 (1)

Total 107.7

Additi lProjects approved Capital

Rm

Additional GLA

m²Year 1

yieldCompletion

date NoteRandburg Square Maintenance and upgrade: Phase 2 126.7 - - 30 April 2013 (1)

Cape Town Bellville Tijger Park Offices upgrade and parking deck 49.8 - - 30 June 2013 (1)

Cape Town Bellville Louis Leipoldt Upgrade 33.5 - - 30 April 2013 (2)

Cape Town Bellville Barons Upgrade 17 5 9 4% 30 September 2013Cape Town Bellville Barons Upgrade 17.5 - 9.4% 30 September 2013

Total 227.5

Note (1): Post the upgrade/revamps higher rentals on renewals and reduced vacancies can be expected.Note (2): This capex was agreed as part of a new 15 year lease

41

Note (2): This capex was agreed as part of a new 15 year lease.

Randburg Square upgradeRandburg Square upgrade

Phase 1 of the upgrade completed June 2012• Phase 1 of the upgrade completed June 2012• Phase 2 of the upgrade progressing well• Construction work stopped to allow unobstructed trade during the festive season; will

commence mid January 2013 with completion at the end of April 2013commence mid January 2013 with completion at the end of April 2013• After completion 16 new brands will be added including the Foschini and Truworths

groups• Edgars and Woolworths, two of the anchor tenants, will be fully upgradedEdgars and Woolworths, two of the anchor tenants, will be fully upgraded• Mr Price, Clicks, Pep, Fashion World and Markham will also be upgraded and

expanded to cater for increased demand• Shoppers will enjoy an enhanced shopping experience offering a:pp j y pp g p g

modernised centrededicated food courtbanking malllarge variety of fashion retailerslarge variety of fashion retailersnumber of furniture and home ware storesservices like Telkom, Post office, Postnet and cell phone stores

42

Randburg Square upgradeRandburg Square upgrade

43

Potential acquisitions and developmentsPotential acquisitions and developments

Value Rm

GLA m²

Initial yield

%

Expected completion / transfer date

Boksburg East Rand Mall (50%) Acquisition 1 115 31 223 6.7 April 2013

Edendale Mall (50%) Acquisition 205 15 850 8.3 April 2013( ) q p

Hammarsdale Retail Development Development 194 19 138 9.5 June 2012

Li b P k Mi i F t i D l t 120 15 000 10 0 N b 2013Linbro Park Mini Factories Development 120 15 000 10.0 November 2013

McCormick JV Properties Acquisition 346 35 000 9 2013 / 2014

Total 1 980 116 211

44

Prospects, plans, acknowledgements and closing

LAURENCE RAPPProspects, plans, acknowledgements and closing

45

Overview of East Rand MallOverview of East Rand Mall

46

Overview of East Rand Mall Strategic rationaleOverview of East Rand Mall – Strategic rationale

• East Rand Mall (“ERM” or the “Property”) has been a core part of Sanlam’s portfolio for a• East Rand Mall ( ERM or the Property ) has been a core part of Sanlam s portfolio for a number of years

– Due to concentration risk Sanlam has decided to sell the Property

• Vukile is Sanlam’s property asset manager and knows the Property wellp p y g p y– Vukile team has managed the Property since acquisition

• Vukile has a pre-emptive right over the Sanlam property portfolio

• Sanlam recently elicited offers for the PropertySanlam recently elicited offers for the Property– The offers received were within a very narrow range

• Redefine was the successful bidder with a purchase consideration, post due diligence, of R2.23 billion

• Pursuant to Vukile’s pre-emptive right, Vukile has acquired a 50% undivided share from Redefine for R1.115 billion (excluding transaction costs)

• ERM will be Vukile’s flagship mall and is a strong regional shopping centre with good fundamentals and upside potential including c 10 000m² additional bulkfundamentals and upside potential including c.10 000m² additional bulk

• Consistent with stated strategy of building a fund of at least R10 billion, overweight the retail sector and with a view to always improving the quality of the portfolio

47

Overview of East Rand Mall Key statisticsOverview of East Rand Mall – Key statistics

• Purchase price (50%) R1.115 billion

• External Market Value (as at 31 May 2013) (50%) R1.09bn (98% of purchase price)

GLA 62 446 ²• GLA 62 446m²

• Number of Tenants 177

• Current vacancy 505m² (0 8%)Current vacancy 505m (0.8%)

• Historical average vacancy 1.6%

• Average annual growth rate previous 3 years– Recurring Net Income 5.8%

– Gross Income 9.9%

– Recurring expenses 20.9%

• Annualised property yield on adjusted purchase consideration 6.72%

48

Overview of East Rand Mall Centre layoutOverview of East Rand Mall – Centre layout

Largest Tenants (% of GLA)

Edgars Consolidated Stores 20.7%

Mr Price Group 9 0%

8 141m²3 031m²

Mr Price Group 9.0%

Woolworths 8.7%

Foschini Retail Group 7.3%

Ster Kinekor Films 5 3%Ster Kinekor Films 5.3%

Truworths International 5.2%

Pepkor Holdings 3.4%

New Clicks 1.9%7 635m²

e C c s 9%

Banks 4.1%

65.6%

3 302m² 1 974m²1 592m²

1 974m

49

Financing structure and financial effectsFinancing structure and financial effects

Off i R1 115 illi (50% f th P t )• Offer price : R1.115 million (50% of the Property)• Total purchase price is estimated to be R1.111 million (based on a 1 April 2013 transfer date including

price adjustment and transaction costs)• c R350 million funded by way of issuing new Vukile equityc.R350 million funded by way of issuing new Vukile equity• c.R225 million funded out of cash proceeds received from property sales• c.R537 million funded by way of DMTN short-term commercial paper & long term notes or bank term

funding as follows:g– c.R75 million - 6 months commercial paper– c.R75 million - 12 months commercial paper– c.R194 million - 3 year notes / 3 year term funding

c R193 million 5 year notes / 5 year term funding– c.R193 million - 5 year notes / 5 year term funding

• Overall cost of funds: – Year 1 = 7.18%

• Forecast yield - year one 6.72%Forecast yield year one 6.72%• Forecast yield - year two 7.18%• Anticipated as slightly dilutionary in year one: <1 cent and earnings enhancing from year two onwards

50

Management of the mallManagement of the mall

Shareholder principles and co o nership considerationsShareholder principles and co-ownership considerations• Co-ownership agreement

There will be equal representation by Vukile and Redefine on the– There will be equal representation by Vukile and Redefine on the Manco

– Each party will have equal voting rights • All decisions will be made within the framework of the existing

authority matrix for Vukile and Redefine– There will be three levels of escalation with defined mechanisms toThere will be three levels of escalation with defined mechanisms to

resolve deadlocks if need be• Agreement is based on common industry practice to co-

manage assetsmanage assets– Both Vukile and Redefine have experience in this regard

51

Portfolio construction post the dealPortfolio construction post the dealPre-acquisition as at 30 September 2012 Post acquisition Change

• Number of properties : 82 : 83 +1.2%

• Rentable area (GLA) : 1 054 323m² : 1 085 546m² +3.0%

• Portfolio value (directors’ valuation) : R7 698 million : R8 702 million +13.0%

• Loan to value : 29.2% : 33.6% 15%

• Vacancies : 7.6% of GLA : 7.4% of GLA -3.0%

Vukile portfolio pre acquisition Vukile portfolio post acquisition

alue

Industrial 14%

Industrial 12%

Mar

ket v

a

Retail 48%

Offices 38%

Industrial

Retail 54%Offices

34%

Industrial

GLA

(m²) Retail

44%

Offices

24%

Retail 46%

Offices

Industrial 23%

52

Offices 32%

Offices 31%

Positive impact on key metricsR10 000/m²

Market value (R/m²)19.4%

9.9%

Vacancy on GLA as at 30 September 2012

Positive impact on key metrics

R7

910/

m²

R8

774/

m²

85/m

²

7 29

1/m

²

R9

448/

m²

R8

774/

m²

85/m

²

R8

013/

m²

R4 000/m²

R6 000/m²

R8 000/m²

13.4

%

% %

13.4

%

% %

10.0%

15.0%

R

R4

18 R7

R4

18

R 0/m²

R2 000/m²

Retail Offices Industrial Total

Excluding East Rand Mall Including East Rand Mall

3.1% 8.

2%

7.6%

3.0% 8.

2 %

7.4%

0.0%

5.0%

Retail Offices Industrial TotalExcluding East Rand Mall Including East Rand Mallg g

40 0%

50.0%

Expense ratio

R100.00/m²

Average contractual base rent (R/m²)9.8%

5.8%

40.9

%

36.7

%

32.6

%

38.5

%

38.5

%

36.7

%

32.6

%

37.4

%

10 0%

20.0%

30.0%

40.0%

R82

.51/

m²

R81

.45/

m²

38.2

3/m

²

R71

.59/

m²

R90

.56/

m²

R81

.45/

m²

38.2

3/m

²

R75

.77/

m²

R20.00/m²

R40.00/m²

R60.00/m²

R80.00/m²

0.0%

10.0%

Retail Offices Industrial Total

Excluding East Rand Mall Including East Rand Mall

R3 R

R3

R0.00/m²Retail Offices Industrial Total

Excluding East Rand Mall Including East Rand Mall

53

Acquisition of ERM improves all Vukile operating indicators

Treatment of sales commissionTreatment of sales commission

N d d th l i f i d t th• Numerous concerns expressed around the lumpiness of earnings due to the sales commission generated on the Sanlam portfolio

• Tends to distort the solid underlying portfolio performancee ds o d s o e so d u de y g po o o pe o a ce

• Explored various options but not capable of successful implementation– REIT Structure

– Annuitise the sales commission income

• Evaluated two optionsS thi th i– Smoothing the income

– Pay as a special distribution when earned

• Decided on paying out abnormal sales commission as a special p y g pdistribution starting with the East Rand Mall commission

54

Rationale for special distribution

R t i t i f d

Rationale for special distribution

• Removes uncertainty going forward

• From F2014, distribution will only be from predictable income streams being property revenue, asset management fees, interest income

• A special distribution of c.R67 million arising from the sales commission earned on the sale of East Rand Mall will be paid in the financial year in which it is earned

– Still uncertain at this stage if it will be F2013 or F2014Still uncertain at this stage if it will be F2013 or F2014

– Will update on SENS, all hinges on date of Competition Commission approval

• In essence F2014 will be a year of slightly lower rebased earnings which will be more than offset by a significant special distributionthan offset by a significant special distribution

• Will provide earnings guidance at year end for F2014

• From 2015 expect a normalised growth trajectory on predictable earningsp g j y p g

• Consistent treatment of abnormal sales commission as a special distribution going forward

55

ProspectsProspects

E i f il b th l ll d b d• Economy remains fragile both locally and abroad

• Retail is still performing well

I d i d t i l ti it• Increased industrial activity

• Offices remain challenging and subdued

O ll th tf li i f i ll• Overall the portfolio is performing well

• Strong focus on operational efficiencies

C ti d i i th t t• Continue driving our core growth strategy

• Growth in distribution for F2013 expected to be in the range of 4 – 6% excluding any special distribution in respect of sales commission arising onexcluding any special distribution in respect of sales commission arising on the sale of East Rand Mall

56

AcknowledgementsAcknowledgements

B d• Board

• Property managers

S• Service providers

• Brokers and developers

• Tenants

• Investors

• Funders

• Team Vukile!

57

Questions and answers

CLOSINGQuestions and answers

58