domestic medium term note conference call...domestic medium term note conference call 14 september...

www.vukile.co.za

Domestic Medium Term Note Conference Call14 September 2017

Profile & Strategic Direction01

Update on Group Debt02

Proposed Amendments to DMTN Programme03

Q&A04

Appendix05

AGENDA

Domestic Medium Term Note Conference Call 14 September 2017 3

High quality, low risk, RETAIL REIT

Strong OPERATIONAL focus

Core competence in ACTIVE ASSET MANAGEMENT

Prudent FINANCIAL MANAGEMENT and strong CAPITAL MARKETS EXPERTISE

ENTREPRENEURIAL APPROACH to deal making

Strong focus on GOVERNANCE and LEADERSHIP

History of strong compounded growth and SHAREHOLDER RETURNS

Growing INTERNATIONAL EXPOSURE focused on UK and Spain

Listings on the JSE AND NSX

ProfileWho we are


Strategic direction – New horizonsA platform for growth - building on an exceptional core retail portfolio

Focus on defensive retailsector in-line with our high-quality low risk portfolio

Continue to invest in ourportfolio through expansionsand upgrades

Continue to invest in oursystems and team to add valuethrough our data-driven assetmanagement approach

Looking for accretiveacquisitions, developmentsand corporate opportunities

Continued South African

retail asset strategy

Disciplined and conservativefinancial management withstable LTV target around 35%

Prudent interest rate policy tohedge at least 75% of debt

Foreign exchange hedgingpolicy to minimise adverseforeign exchange fluctuationsby hedging forward on average75% of foreign dividends byway of forward currencyswaps over a 3 year period

Conservative balance sheet management

Developed markets – Spain &United Kingdom

Predominately focused onretail but will evaluate othersectors

Looking to invest into a holisticproperty strategy and createcapacity on the ground withlocal market knowledge

Atlantic Leaf platform forgrowth in United Kingdom

Castellana platform for growthin Spain

International expansion

Domestic Medium Term Note Conference Call 14 September 2017

52%48%Retail

Other

5

-

5,000

10,000

15,000

20,000

Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

Property Sold Stable Portfolio Acquisitions since 2005 Average

Strong operational focus on asset management

Total Portfolio Market Value per m²

Consistently repositioning and proactively enhancing our portfolio

R2 949/m² R5 817/m² R13 994/m²

R3.1 Bn R5.4 Bn R13.1 Bn

R35m / prop R72m / prop R196m / prop

GAV

Value/m²

Ave value/prop

2005 53%47%

Retail

Other 91%

9%

Retail

Other2011 2017


Analysis of group debt (as at 31 July 2017)Well hedged with low risk expiry profile

* Excluding development loans and Corporate Paper

Maturities

Hedging strategy

Target bank versus debt capital market funding ratio

Multi-banked approach

LTV policy

Proposed LTV Ratio

DMTN Secured Portfolio

No more than 25% of total interest bearing debt to mature within any one financial year

Achieved and constantly managed

75% of interest bearing debt to be hedged 92.6% *

Diversified sources of funding28% DMTN debt

45% South African Bank debt27% Foreign Bank debt

Hold various facilities with multiple banks and lenders

Currently 11 funders + DMTN programme

Internal Management: Maximum LTV level of 40%

Group LTV 36.2% (Current DMTN Definition)Southern Africa LTV 33.2%, Spain LTV 47.7%

Group LTV 32.2% (Proposed DMTN Definition)Southern Africa LTV 28.8%, Spain LTV 47.7%

DMTN Secured Note LTV 30.95%

Properties in the Vukile Group Property Portfolio, on a consolidated basis + the market

value of equity accounted investments

Policy Actual


Analysis of group debt (as at 31 July 2017) (cont.)Well hedged with low risk expiry profile

Total cost of finance

Fixed rate (swap) maturity profile

Commercial Paper undertaking

Rating

Minimise while maintaining hedging andLTV policy

Group 5.52% (ZAR 9.08%)

Endeavour to allocate fixed rate debt to mature between 3 years and 5 years

3.0 years

Fully backed by the committed revolvingcredit facilities

Achieved

Long term rating A (Rating outlook Positive) and Short term rating A1

Secured long term rating AA+

Maintain “A” rating for Company and “AA” in respect of secured notes

Policy Actual

Market value of equity accounted investments R2.1 Billion

To include investments in:Atlantic Leaf (R763 mil); Gemgrow A (R46 mil); Gemgrow B (R815 mil); and Fairvest (R478 mil)

Value of unsecured assetsMoruleng Mall (80%) and

Tzaneen Maake Plaza (70%)

R477.3 million (R1.7 Billion of potential secured assets to be

release from Bank Security)


Foreign exchange hedging policiesContinuing to maintain a conservative balance sheet

Prudent approach

Reduce currency risk

Currency hedging strategy

Interest rate hedging on foreign debt

Minimise adverse foreign exchange fluctuations on Vukile’s earnings, assets and liabilities

On average 75% of foreign dividends to be hedged by way of forward currency swaps over a3 year period

75% of interest on foreign loans raised by Vukile to finance offshore acquisitions to be hedged

Acquisition of foreign assets to be funded with foreign loans in same currency

Policy


2 9

11

2 7

69

50

0

6 1

80

0.0 0%

1.0 0%

2.0 0%

3.0 0%

4.0 0%

5.0 0%

6.0 0%

7.0 0%

8.0 0%

9.0 0%

10. 00%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

ZAR EUR # GBP Total

Debt Total cost of Debt (%)

31%Standard Bank

29%ABSA

19%Investec

15%RMB

4% Nedbank3% SCM

66%Secured

34%Unsecured

55%Banco

Santander & Caixabank

19%BBVA

14% Bankia

13% Banco Popular

Foreign Funders # DMTN Local Funders *

2 7

72

1 7

49

1 6

59

Group Debt by Currency Sources of Group Debt

Group debt profile (as at 31 July 2017)Diversified sources of funding

* Debt from local funders includes loans of GBP28.7m and EUR71.2m# Debt from foreign funders is consolidated debt from Castellana, which in non-recourse to Vukile

9.08% 2.22% 3.10% 5.52%

# Debt in EUR includes consolidated debt from Castellana of EUR 106.4mil , which in non-recourse to Vukile


2018 2019 2020 2021 2022 2023 2024 2027 2029 Total

Loan Profile R'm 177 1,445 1,039 1,105 1,709 122 150 44 389 6,180

Swap Profile R'm 182 652 586 1,517 1,956 523 - - - 5,417

2.9

%

23

.4%

16

.8%

17

.9% 2

7.7

%

2.0

%

2.4

%

0.7

% 6.3

%

3.4

% 12

.0%

10

.8%

28

.0% 36

.1%

9.7

%

0.0

%

0.0

%

0.0

%

Fixed rate (swap) maturity profile 3.0 years

Analysis of loan repayment and swap expiry profile (as at 31 July 2017)

Loan and Swap Expiry Profile

Well hedged with low risk expiry profile

92.6% of interest bearing

debt hedged

Note: Loan Profile includes R77m Commercial Paper issued to Vukile subsidiary in Nambia


Proposed Amendments to Vukile DMTN ProgrammeTo align with Industry – while maintaining same low risk profile without unnecessary restrictions

Group LTV Definition

CURRENT PROPOSED AMENDMENT

Loan to Valuation Ratio means at any time, in respect of theNotes, the ratio as expressed as follows:

Loan to Valuation Ratio = L divided by V

Where:

L = means any secured or unsecured indebtedness of the VukileGroup (whether principal, premium, interest or other amounts)for or in respect of (i) monies borrowed, or (ii) liabilities underany acceptance or acceptance credit, or (iii) any bonds, notes,debentures, loan stock or other debt securities, or (iv) anyguarantees or indemnities given, whether present or future,actual or contingent; and

V = the amount of the most recent Open Market Valuation ofall the Properties in the Vukile Group Property Portfolio;

Group LTV threshold 45% 50%

Secured Portfolio LTV threshold

40% 45%

Loan to Valuation Ratio means at any time, in respect of theNotes, the ratio as expressed as follows:

Loan to Valuation Ratio = L divided by V

Where:

L = means any secured or unsecured indebtedness of the VukileGroup (whether principal, premium, interest or other amounts)for or in respect of (i) monies borrowed, or (ii) liabilities underany acceptance or acceptance credit, or (iii) any bonds, notes,debentures, loan stock or other debt securities, or (iv) anyguarantees or indemnities given, whether present or future,actual or contingent; and

V = the sum of (i) the amount of the most recent OpenMarket Valuation of all the Properties in the Vukile GroupProperty Portfolio, on a consolidated basis and (ii) the marketvalue of equity accounted investments

www.vukile.co.za

Q&A

12


Contact Details

Name Designation EmailContact Numbers

Vukile Property Fund

Laurence Rapp Chief Executive Officer [email protected](011) 288 1002

(083) 266 3011

Mike PottsChief Financial Officer [email protected]

(011) 288 1003

(083) 357 1111

Maurice ShapiroSenior Manager: Treasury & Investments

[email protected](011) 288 1001

(083) 577 6184

Rand Merchant Bank

Delia Patterson Distribution [email protected](011) 282 4162

(083) 676 9595

Leigh Cunningham-Scott Origination [email protected](011) 282 8559

(084) 569 6611

Domestic Medium Term Note Conference Call 14 September 2017

Laurence RappCEO

Laurence has been the driving force behind Vukile’s transformation and growth since his appointment in 2011. Prior to joining Vukile,Laurence was a director of Standard Bank and head of the insurance and asset management division and his experience spans the areas ofinvestment banking, private equity, retail banking and insurance and asset management. He currently serves as the chairman of SA REIT, anindustry body driving listed property interests, as well as non-executive director of Atlantic Leaf Properties Limited.

Michael PottsFinancial Director

Michael is a founding director of Vukile and, prior to joining Vukile, was an independent adviser to the Bridge Capital Group on propertytransactions, property portfolio assembly, financial structuring and capital raising. Prior to that, he was managing and financial director ofthe South African group that forms part of the UK-based Hanover Acceptances Group and a non-executive director of Hanover AcceptancesLimited and Outspan International.

Hermina (Ina) LopionExecutive Director: Asset Management

Ina has 24 years’ property experience and six years’ life insurance experience within the Sanlam Group. She is responsible for the assetmanagement of the Vukile property portfolio. Ina is also a director of the South African Council of Shopping Centres (SACSC).

Sedise MosenekeExecutive Director

Sedise is responsible for Vukile’s for jointly driving Vukile’s overall portfolio growth and transformation objectives. He was chief executive ofEncha Properties from 2004 up until Vukile’s acquisition of a portfolio of government tenanted properties from Encha in 2013. He is a pastpresident of the South African Property Owners Association (SAPOA) and is the non executive chairman of Encha Property Services. He is amember of the South African Institute of Black Property Practitioners (SAIBPP).

Johann NeethlingDirector: Corporate Services/Group Company Secretary

Johann has 15 years' experience in the areas of assurance, general and corporate finance, governance and company secretariat. He joinedVukile in August 2010, after holding various positions within the property division of Sanlam, where he spent 7 years. He serves as a directorand senior vice-president of Chartered Secretaries Southern Africa.

Rob HawtonExecutive: Finance

Rob joined Vukile in May 2015 and held the position of Financial Director of Synergy Income Fund and was instrumental in its repositioninginto Gemgro Properties. Prior to joining Vukile, Rob was previously the Head: Finance and Support for the Real Estate Investment Divisionwithin the Corporate and Investment Bank of the Standard Bank Group, where he spent 8 years. Prior to that, he held various financepositions within Investec Bank, Barclays Africa, Tourvest Retail Travel and Credit Suisse (London). Rob holds a B.Com and B.Com (Hons)degrees in accounting and a Master’s degree in Financial Management from the University of Johannesburg and is a Chartered Accountant.He completed his articles with PricewaterhouseCoopers.

Itumeleng MothibeliExecutive: Asset Management

Itumeleng’s real estate experience spans investment appraisal, retail developments and asset management both in the unlisted and listedreal estate environments over the past 10 years. He was previously part of the Old Mutual Property Unlisted Fund and later the SACorporate Real Estate Fund management teams prior to joining Vukile in August 2012. He is a member of South African Institute of BlackProperty Practitioners (SAIBPP), sits on the Gauteng Chapter Committee of the SACSC as well as on the SAPOA Awards Committee.

14

Executive TeamStrong blend of property and financial skills


Non-executive DirectorsStrong blend of property and financial skills

Anton Botha• Non-executive director of the JSE Limited (Johannesburg Securities Exchange)• Non-executive director African Rainbow Minerals• Non-executive director Sanlam Limited (one of South Africa's largest life insurers)

Steve Booysen

• Former group chief executive of Absa Group Limited (Top 4 South African Retail Bank)• Non-executive director and chairman of the audit committee of Steinhoff International Holdings Limited (Multi-billion Euro South African-based

international retail holding company listed in Johannesburg and Frankfurt)• Non-executive director Clover Industries, JD Group Limited and Senwes Limited

Renosi Mokate

• Former executive director of the World Bank• Former deputy governor of the South African Reserve Bank.• Renosi currently serves on the board of Bidvest Bank• Chairman of the Government Employees Pension Fund (GEPF)

Peter Moyanga• Peter held a senior management position with McDonald’s Corporation for 10 years• He is the largest owner-operator franchisee of McDonald's restaurants in South Africa• He is the Vice Chairman of Reach For a Dream NPO

Nigel Payne

• Former partner at KPMG• Former Head of Internal Audit at Transnet (South Africa's largest rail, port and pipeline company) • Serves as a member of the King Committee on Corporate Governance• Chairman of Mr Price Group Limited, a leading, multi-billion Euro South African fashion retailer• Serves on the boards of Bidvest Group Limited (a listed South African conglomerate that owns over 300 companies), JSE Limited and BSi Steel

Group Limited • Chairman of Bidvest Bank

Hatla Ntene

• Executive chairman of Mvua Property Partners, a commercial property investment firm• Non-executive director of AECOM South Africa • Non-executive director of Calgro M3 (One of the leading residential development companies in South Africa)• Non-executive director of the Don Hotel Group

Mervyn Serebro

• Former chief executive officer of Vusani Property Investments• Former managing director of OK Bazaars Group (taken over by Shoprite Holdings which is Africa's largest food retailer and employs over 136 000

people)• He is also Chairman of the Reach For a Dream NPO.


High quality retail assetsTop 10 assets

GAV R1 277m R791m R786m R513m R480m

Region Gauteng KwaZulu-Natal KwaZulu-Natal Gauteng Western Cape

Gross Lettable Area 69 424m2 24 351m2 40 087m2 23 236m2 25 322m2

Monthly Rental R250/m2 R242/m2 R152/m2 R133/m2 R143/m2

National Tenant exposure 89% 80% 92% 87% 90%

VukileOwnership 50% 100% 100% 100% 100%

Approx.Footfall 11.1 million 9.4 million 11.2 million 9.8 million 10.5 million

Vacancy 3.8% 1.5% 2.3% * Fully Let * Fully Let

* Excluding development vacancy as at 31 Mar 17

East Rand Mall Pine CrestPhoenix Plaza Gugulethu SquareDobsonville

Shopping Centre


High quality retail assetsTop 10 assets (cont.)

GAV R421m R394m R390m R385m R380m

Region Eastern Cape North West Namibia Free State Gauteng

Gross Lettable Area 28 147m2 31 421m2 24 632m2 21 538m2 40 767m2

Monthly Rental R119/m2 R111/m2 R124/m2 R125/m2 R95/m2

National Tenant exposure 96% 83% 94% 97% 85%

VukileOwnership 100% 80% 100% 100% 100%

Approx.Footfall 7.0 million 3.6 million Open Mall Open Mall 7.1 million

Vacancy 1.0% 2.3% 0.3% Fully Let * 6.9%

* Excluding development vacancy as at 31 Mar 17

Nonesi MallOshakati Shopping

CentreMoruleng Mall Randburg SquareSetsing Crescent


Nationals78%

Other22%

8.0%

6.1%

5.9%

5.1%

4.7%

4.1%

3.4%

3.2%

3.2%

2.3%

Steinhoff

Shoprite

Edcon

Foschini

Pick n PayStores

Spar

Mr Price

Truworths

Massmart

First RandGroup

Tenant Profile - by Contractual Rent Top 10 Tenants by Rent

Retail tenant exposureLow risk with c.80% national tenants

Top 10 Tenants

46%of Retail

Rent

Diversified across 1105 tenants

2.9% Pep Stores2.4% Ackermans

2.5% Jet2.0% Edgars

Note: Portfolio as at 31 Mar 17 – Excluding Thohoyandou Thavhani Mall


24 2418 10

24

24

48

66

76

100

Mar-18 Mar-19 Mar-20 Mar-21 Beyond Mar-21

% of Contractual Rent Cumulative

Retail tenant expiry profile52% of contractual rent expiring in 2020 and beyond (WALE 3.6 years)

For the 12 months ended 31 March 2017 Retail leases were concluded with:

Total contract value R1 150 million

Total rentable area 142 118m²

Retail Tenant Retention 84% with almost all tenant vacancies being replaced with new tenants

domestic medium term note conference call...domestic medium term note conference call 14 september...

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