THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

The definitions and interpretations commencing on page 6 of this Circular apply mutatis mutandis to this cover.

ACTION REQUIRED BY SHAREHOLDERS

• This entire Circular is important and should be read with particular attention to the section titled “Action required by Shareholders” on page 4. If you are in any doubt as to what action you should take, you should consult your CSDP, broker, banker, legal advisor, accountant or other professional advisor immediately.

• If you have disposed of all or any of your Shares, please forward this Circular, together with the Voting Form and form of proxy, to the purchaser of such Shares or the broker, CSDP, banker or agent through whom you disposed of such Shares.

• Transcend does not accept responsibility and will not be held liable for any failure on the part of the CSDP or broker of any holder of Dematerialised Shares to notify such Shareholder of the transactions and actions set out in this Circular.

Transcend Residential Property Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2016/277183/06)(JSE Share Code: TPF ISIN ZAE000227765)

(Approved as a REIT by the JSE)(“Transcend” or “the Company”)

CIRCULAR TO SHAREHOLDERS

Relating to:• the proposed acquisition of 1,983 residential Units from IHS Res 1 – a related party to Transcend, for a total purchase

consideration of R1.21 billion, which constitutes a related party transaction and a reverse take-over for Transcend in terms of the Listings Requirements;

• the proposed acquisition of 176 residential Units from Sunnyshore, for a total purchase consideration of R60 million; and

• the approval from Shareholders for the authority to issue Shares in terms of section 41(3) of the Act and Transcend’s Memorandum of Incorporation.

And incorporating:• Revised Listing Particulars in respect of the Company;• the Resolutions to be adopted as written resolutions in terms of section 60 of the Companies Act;• a Voting Form; and• a form of proxy (yellow), only for use by Certificated Shareholders and Dematerialised Shareholders with “own-name”

registration.

Corporate Advisor and Bookrunner Independent Reporting Accountants and Auditors

Legal and Competition Law Advisor

Designated Advisor and Transaction Designated Advisor

Independent Property Valuer

Date of issue: Thursday, 22 November 2018Copies of this Circular are available in English only and may, from the date of issue of this Circular, up to the Publication Date, be obtained from the registered office of the Company and from Tenurey BSM, during normal business hours at the addresses set out in the “Corporate Information and Advisors” section of this Circular. A copy of this Circular will also be available on the Company’s website (www.transcendproperty.co.za).

CORPORATE INFORMATION AND ADVISORS

Registered OfficeTranscend Residential Property Fund Limited(Registration number 2016/277183/06)54 Peter Place Block C, Cardiff HousePeter Place Office ParkBryanstonJohannesburg, 2191(PO Box 1686, Randburg, 2125)

Directors of the CompanyRobert Emslie# (Chairman)Rob Wesselo (Chief Executive Officer)Solly Mboweni (Chief Operating Officer)Myles Kritzinger (Chief Financial Officer)Faith Khanyile# (Non-executive)Michael Aitken# (Non-executive)Cathal Conaty (Non-executive)Mike Falcone (Non-executive)# Independent

Company SecretaryCorpstat Governance Services Proprietary Limited(Registration Number 2004/001556/07)Hurlingham Office, HurlinghamOffice Park, Block C,59 Woodlands Avenue,Hurlingham, 2196(PO Box 724, Melville, 2109)

Corporate Advisor and BookrunnerTenurey BSM Proprietary Limited(Registration number 2016/371558/07)Ground Floor, Jindal Africa Building22 Kildoon RoadBryanstonJohannesburg, 2191

Asset ManagerIHS Asset Management Proprietary Limited(Registration number 2016/399895/07)54 Peter PlaceBlock C, Cardiff HousePeter Place Office ParkBryanston, 2191(PO Box 1686, Randburg, 2125)

Place and date of incorporationIncorporated in the Republic of South Africa on 8 July 2016

Transfer SecretariesLink Market Services South Africa Proprietary Limited(Registration number 2000/007239/07)19 Ameshoff Street13th FloorBraamfonteinJohannesburg, 2001(PO Box 4844, Johannesburg, 2000)

Legal and Competition Law AdvisorCliffe Dekker Hofmeyr(Registration number 2008/018923/21)1 Protea Place,Sandton,Johannesburg, 2196South Africa

Transaction Designated AdvisorQuestco Proprietary Limited(Registration number 2006/005780/07)1st Floor, Yellowwood HouseBallywoods Office Park33 Ballyclare DriveBryanston, 2191

Designated AdvisorQuestco Corporate Advisory Proprietary Limited(Registration number 2011/106751/07)1st Floor, Yellowwood HouseBallywoods Office Park33 Ballyclare DriveBryanston, 2191

Independent Reporting Accountants and AuditorsKPMG Inc.(Registration number 1999/021543/21)85 Empire Road, ParktownJohannesburg, 2193(Private Bag 9, Parkview, 2122)

Independent Property ValuerReal Insight Proprietary Limited (Registration number 2012/101775/07)5th Floor, North WingHyde Park Corner, Hyde ParkSandtonJohannesburg, 2191

BankersThe Standard Bank of South Africa Limited(Registration number 1962/000738/06)2nd Floor, Rosebank Corner191 Jan Smuts AvenueParktown NorthJohannesburg, 2193(PO Box 8786, Johannesburg, 2000)

Nedbank Limited(Registration number 1951/000009/06)4th Floor, Block I Nedbank135 Rivonia Campus135 Rivonia Road, SandownSandton, 2196(PO Box 1144, Johannesburg, 2000, South Africa)

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TABLE OF CONTENTS

Page

Action required by Shareholders 4

Salient dates and times 5

Definitions and interpretations 6

Circular to Shareholders 15

1. Introduction and purpose of this Circular 15

2. Details of the Proposed Transactions 16

3. Related party transactions 23

4. Financial information 24

5. Capital structure 25

6. Major Shareholders 25

7. Irrevocable commitment to vote in favour of Proposed Transactions 26

8. Background and overview of Transcend Residential Property Fund 26

9. Information relating to the Directors 29

10. General information 32

11. Working capital statement 33

12. Litigation statement 33

13. Acquisitions 33

14. Expenses 33

15. Directors’ recommendation 34

16. Advisors’ consents 34

17. Directors’ responsibility statement 34

18. Information incorporated by reference 34

19. Documents available for inspection 35

Revised listing particulars 37

1. Incorporation, history and nature of business 40

2. Purpose of the revised listing particulars 40

3. Directors, other office holders or material third parties 40

4. Information on share capital 41

5. Properties, assets and business undertakings acquired or to be acquired 41

6. REIT requirements 41

7. Rental revenue 42

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Page

Annexure 1 Company structure 43

Annexure 2 Information on the Directors, management, material third parties and the Asset Manager 44

Annexure 3 Details of the Property Portfolio 47

Annexure 4 Independent Property Valuer’s summary valuation report on the Property Portfolio 50

Annexure 5 Material contracts 62

Annexure 6 Forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties and Protea Glen and the combined IHS RES 1 Properties and Protea Glen 64

Annexure 7 Independent Reporting Accountant’s report on the forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen 69

Annexure 8 Pro forma statement of financial position of Transcend 72

Annexure 9 Independent Reporting Accountant’s report on the compilation of the pro forma statement of financial position of Transcend 75

Annexure 10 Report of the pro forma statement of profit or loss and other comprehensive income for Transcend for the six months ended 30 June 2018 77

Annexure 11 Independent Reporting Accountant’s report on the compilation of the pro forma statement of profit or loss and other comprehensive income for Transcend for the six months ended 30 June 2018 79

Annexure 12 Report of the pro forma statement of profit or loss and other comprehensive income for Transcend for the year ended 31 December 2017 81

Annexure 13 Independent Reporting Accountant’s report on the compilation of the pro forma statement of profit or loss and other comprehensive income for Transcend for the year ended 31 December 2017 83

Annexure 14 Report of interim special purpose carve-out historical financial information of the IHS Res 1 Properties for the six months ended 30 June 2018 85

Annexure 15 Independent Reporting Accountant’s report on the interim special purpose carve-out historical financial information of the IHS Res 1 Properties for the six months ended 30 June 2018 94

Annexure 16 Report of special purpose carve-out historical financial information of the IHS Res 1 Properties for the three years ended 31 December 2017, 2016 and 2015 96

Annexure 17 Independent Reporting Accountant’s report on the special purpose carve-out historical financial information of the IHS Res 1 Properties for the years ended and as at 31 December 2017, 31 December 2016 and 31 December 2015 106

Annexure 18 Written resolution of Shareholders 110

Annexure 19 Voting form Attached

Form of Proxy (yellow) Attached

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FORWARD-LOOKING STATEMENT DISCLAIMER

The definitions and interpretations commencing on page 6 of this Circular apply mutatis mutandis to this forward-looking statement disclaimer. This Circular contains statements about Transcend that are or may be forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. These forward-looking statements are not based on historical facts, but rather reflect current expectations concerning future results and events and generally may be identified by the use of forward-looking words or phrases such as “believe”, “aim”, “expect”, “anticipate”, “intend”, “foresee”, “forecast”, “likely”, “should”, “planned”, “may”, “will”, “outlook”, “project”, “estimated”, “potential” or similar words and phrases.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Transcend cautions that forward-looking statements are not guarantees of future performance. Actual results, financial and operating conditions, liquidity and the developments within the industry in which Transcend operates may differ materially from those made in, or suggested by, the forward-looking statements contained in this Circular.

All these forward-looking statements are based on estimates and assumptions made by Transcend, as communicated in publicly available documents by Transcend, all of which estimates and assumptions, although Transcend believes them to be reasonable, are inherently uncertain. Such estimates, assumptions or statements may not eventuate. Factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in those statements or assumptions include other matters not yet known to Transcend or not currently considered material by Transcend.

Shareholders should keep in mind that any forward-looking statement made in this Circular or elsewhere is applicable only at the date on which such forward-looking statement is made. New factors that could cause the business of Transcend not to develop as expected may emerge from time to time and it is not possible to predict all such factors. Further, the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement are not known. Transcend has no duty to, and does not intend to, update or revise the forward-looking statements contained in this Circular after the date of this Circular, except as may be required by law.

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ACTION REQUIRED BY SHAREHOLDERS

The definitions and interpretations commencing on page 6 of this Circular apply, mutatis mutandis, to the following action required by Shareholders.

If you are in any doubt about what action you should take, please consult your broker, CSDP, legal advisor, banker, financial advisor, accountant or other professional advisor immediately.

If you have disposed of all your Shares in Transcend, please forward this document to the purchaser of such Shares or broker, banker or other agent through whom you disposed of such Shares.

The Directors have resolved to submit, pursuant to section 60 of the Companies Act, ordinary and special Resolutions to be considered and voted on in writing by Shareholders of the Company as set out in detail in Annexure 18 to this Circular.

Dematerialised Shareholders who have not elected own-name registration

1. Shareholders who hold Dematerialised Shares, other than in their own-name, must furnish their CSDP or broker with their instructions for voting in respect of the Resolutions. Such Shareholders must not lodge the Voting Form. Unless such Shareholders advise their CSDP or broker, as the case may be, by the cut-off time stipulated in terms of any agreement between the Shareholder and the CSDP or broker, that the Shareholder wishes to give or withhold consent in respect of the Resolutions, or to appoint a proxy to give or withhold such consent on their behalf, and the CSDP or broker will provide instructions as per the custody agreement between the CSDP or broker and the relevant Shareholder.

Certificated Shareholders and Dematerialised Shareholders with own-name registration

2. Shareholders who hold Dematerialised Shares in their own-name, or who hold Certificated Shares, may indicate on the Voting Form the manner in which they wish to cast their vote in respect of the Resolutions.

3. The Voting Form must be completed and signed in accordance with the instructions therein, and must be received by the Transfer Secretaries, at any of the following addresses:(a) Physical address: 19 Ameshoff Street, 13th Floor, Braamfontein, Johannesburg, 2001(b) Postal address: PO Box 4844, Johannesburg, 2000(c) Tel: +27 (0)86 140 0110/ +27(0)11 029 0253(d) Email: investorenquiries@linkmarketservices.co.za

within 20 (twenty) business days of the Deemed Date (excluding the Deemed Date and including the last day of the 20 (twenty) business day period, being Wednesday, 2 January 2019), contemplated herein.

4. Shareholders holding Dematerialised Shares in their own-name, or holding Shares, and who may wish to appoint a proxy for the purposes of voting in respect of the Resolutions, must ensure that the relevant form of proxy attached to the notice is received by the Transfer Secretaries within the 20 (twenty) business day period prescribed above in respect of the Voting Form.

Deemed receipt

5. Where a Shareholder has received this Circular by means of the post, such Shareholder is deemed to have received this Circular on the Deemed Date, notwithstanding the date of actual receipt hereof.

5

SALIENT DATES AND TIMES

The definitions and interpretations commencing on page 6 of this Circular apply mutatis mutandis to this section:

Record date for determining which Shareholders will be entitled to receive this Notice and to vote on the Resolutions Friday, 9 November 2018

Circular and notice of Resolutions posted to Shareholders and released on SENS on Thursday, 22 November 2018

Deemed Date Thursday, 29 November 2018

Proposed Transactions expected to be implemented on3 Saturday, 1 December 2018

Deadline for the exercise of voting rights by Shareholders on the Resolutions by 17:00 on Wednesday, 2 January 2019

Notes:

1. All of the above dates and times are subject to change. Any changes made will be notified to Shareholders by release on SENS. 2. All times given in the Circular are local times in South Africa.3. The effective date of the Proposed Transactions is the first day of the month following the month in which the conditions precedent as set out in

paragraph 2.5.3 of the Circular are fulfilled or waived. The remaining conditions precedent to the Proposed Transactions are approval of the Resolutions from Transcend Shareholders, approval from the shareholders of IHS Res 1 of all resolutions necessary to implement the IHS Res 1 Transactions (“IHS Res 1 CP”) and debt funding agreements becoming unconditional (“Debt CP”). Transcend has received irrevocable commitments from Shareholders to vote in favour of the Resolutions, therefore in terms of Section 60(2) of the Act it is anticipated that Transcend will receive the requisite number of Shareholder votes to pass all the Resolutions by Friday, 30 November 2018. Furthermore, Transcend expects the IHS Res 1 CP and Debt CP to be fulfilled by 30 November 2018.

6

DEFINITIONS AND INTERPRETATIONS

In this Circular and annexures hereto, unless the context indicates otherwise, a word or an expression which denotes any gender includes the other genders, a natural person includes a juristic person and vice versa, the singular includes the plural and vice versa and the following words and expressions bear the meanings assigned to them below:

“AltX” means the Alternative Exchange operated by the JSE;

“Acacia Place” means the property located in Duvha, eMalahleni (Witbank), Mpumalanga, comprising of 325 units;

“Acacia Place Transaction” means the disposal of all 325 units comprising Acacia Place by Transcend to Instratin Properties Proprietary Limited, together with the rental enterprise carried on by Transcend in respect of Acacia Place, for a cash price of R392 308 per unit, amounting to a total cash price of R127.5 million, the proceeds of which will be used to reduce interest-bearing liabilities until required for new acquisitions, the effective date of which is estimated to be 30 April 2019;

“Advance Date” means the date on which Emira advances the Funding Facility to Transcend;

“Antecedent Divestiture” means that portion of the distribution to be paid by Emira in addition to the Emira Subscription Price as described in paragraph 2.2;

“Asset Management Agreement” means the agreement entered into between IHS Asset Management and the Company on 1 November 2016, available for inspection as set out in paragraph 19;

“Asset Manager” or “IHS Asset Management” or “Management Company”

means IHS Asset Management Proprietary Limited, registration number 2016/399895/07, a private company duly registered and incorporated in accordance with the laws of South Africa and a subsidiary of IHS;

“average lease period” means the average length of time that a tenant remains in a unit in a particular property, calculated for the period between the date of occupation of the unit to the date of vacating the unit. This analysis is based on historical lease information for each property;

“Birchwood Village” means the property and Units forming part of the IHS Res 1 Properties, situated on Erf 92 Chartwell Extension 14 & Erf 93 Chartwell Extension 15, located at the corner of Cedar Road & 3rd Street, Chartwell, Johannesburg, comprising of 360 Units, further described in paragraph 2.3.1 of this Circular;

“ Birchwood Village Sale Agreement”

means the agreement entered into between IHS Res 1 and the Company on 4 October 2018 in respect of the acquisition by the Company of Birchwood Village, for an aggregate consideration of approximately R266 million and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“Board” or “Directors” or “Board of Transcend”

means the board of directors of Transcend as set out paragraph 9 of this Circular;

“Buildings” means the buildings and other improvements situated on the IHS Res 1 Properties and Protea Glen as described in the Sale Agreements;

“business day” means any day other than a Saturday, Sunday or official public holiday in South Africa;

“CEO” means the Chief Executive Officer;

“Certificated Shareholders” means the Transcend shareholders who hold Certificated Shares;

“Certificated Shares” means the Transcend Shares which have not yet been dematerialised into the Strate system, title to which is represented by share certificates or other physical documents of title;

“CFO” means the Chief Financial Officer;

7

“CIPC” means the Companies and Intellectual Property Commission under the Companies Act;

“Circular” means this circular to Shareholders, dated Thursday, 22 November 2018, including the annexures hereto and incorporating the Notice to Shareholders, Form of Proxy and Voting Form;

“Closing Date” means 1 December 2018 should the Conditions Precedent as set out in paragraph 2.5.3 of this Circular be fulfilled or waived by not later than 23 November 2018; or14 December 2018 should the Conditions Precedent as set out in paragraph 2.5.3 of this Circular be fulfilled or waived between 24 November 2018 and 30 November 2018; or31 January 2019 should the Conditions Precedent as set out in paragraph 2.5.3 of this Circular be fulfilled or waived between 1 December 2018 and 14 December 2018;

“Companies Act” or “the Act” the Companies Act, No 71 of 2008;

“Company Secretary” means Corpstat Governance Services Proprietary Limited, registration number 2004/001556/07, a limited liability private company duly registered and incorporated in the Republic of South Africa, full details of which are set out in the “Corporate information and Advisors” section;

“Competition Act” means the Competition Act, No 89 of 1998;

“Competition Authorities” means the commission established pursuant to Chapter 4, Part A of the Competition Act and/or the tribunal established pursuant to Chapter 4, Part B of the Competition Act and/or the appeal court established pursuant to Chapter 4, Part C of the Competition Act, as the case may be;

“COO” means the Chief Operating Officer;

“CSDP” means a Central Securities Depository Participant in South Africa appointed by a shareholder for purposes of, and in regard to, dematerialisation and to hold and administer securities or an interest in securities on behalf of a shareholder;

“Deemed Date” means seven days subsequent to the posting of this Circular;

“dematerialisation” means the process whereby Certificated Shares are converted to an electronic form as Dematerialised Shares and recorded in the sub-register of Shareholders maintained by a CSDP or broker in South Africa;

“Dematerialised Shareholders” means the Transcend Shareholders who hold Dematerialised Shares;

“Dematerialised Shares” means the Transcend Shares which have been incorporated into the Strate system, title to which is no longer represented by share certificates or other physical documents of title;

“De Velde” the property and Units forming part of the IHS Res 1 Properties, known as Sectional Schemes De Velde 1, 2, 4 and 5, located on Portions 128, 131, 132 and 134 of the Farm 794 Stellenbosch RD, with the complex comprising of 310 Units, further described in paragraph 2.3.1 of this Circular, and acquired by the Company in terms of the De Velde Sale Agreement;

“De Velde Sale Agreement” means the agreement entered into between IHS Res 1 and the Company on 4 October 2018 in respect of the acquisition by the Company of De Velde, for an aggregate consideration of approximately R289 million and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“documents of title” means the share certificates, certified transfer instruments, balance receipts and any other documents of title to Transcend Shares acceptable to the Board;

“Effective Date” means the first day of the month following the month in which the conditions precedent as set out in paragraph 2.5.3 are fulfilled or waived or such other date as the parties may agree in writing, which date is anticipated to be 1 December 2018;

8

“Emira” means Emira Property Fund Limited, registration number 2014/130842/06, a limited liability public company duly registered and incorporated in the Republic of South Africa and a real estate investment trust listed on the Main Board of the JSE, which, as at the Last Practicable Date, held 9.9% of Transcend Shares;

“Emira Funding Commitment” means a maximum aggregate amount not exceeding R105 million, in the form of the Funding Facility provided by Emira to Transcend;

“Emira Subscription Price” means the aggregate price to be paid by Emira for the Subscription Shares, which in respect of each Subscription Share will be the amount of R6.29 (six rand and twenty-nine cents) per Subscription Share plus the Antecedent Divestiture;

“Equity Amount” means the portion of the Purchase Consideration which will be discharged using capital raised by the Company pursuant to the Private Placement;

“Exchange Control Regulations” means the Exchange Control Regulations of South Africa issued under the Currency and Exchanges Act, No 9 of 1933;

“Existing Portfolio” Transcend’s property portfolio excluding the IHS Res 1 Properties and Other Transactions;

“Final Repayment Date” means the date on which the Funding Facility must be finally repaid, being 18 months after Emira advances the Funding Facility to Transcend;

“Financial Markets Act” means the Financial Markets Act, No 19 of 2012;

“Funding Facility” means the shareholder loan facility as described in paragraph 2.2;

“GLA” means the gross lettable area, being the total area of a property that can be rented to a tenant;

“government” means the government of South Africa;

“GR” means the gross revenue on the properties collected from rentals;

“IFRS” means the International Financial Reporting Standards;

“IHS” means International Housing Solutions (RF) Proprietary Limited, registration number 2006/003913/07, a private company duly registered and incorporated in accordance with the laws of South Africa, who is 100% owned by IHS S.à.r.l;

“IHS Funds” means collectively the private equity funds managed by IHS, consisting of SAWHF SA 1, SAWHF Fund II SA, SAWHF Fund II SSA and IHS Res 1;

“IHS S.à.r.l” means IHS S.à.r.l (Luxembourg Co), registration number B110474, 100% owned by MMA Financial International LLC;

“IHS Res 1” means International Housing Solutions Residential Partners 1 (RF) Proprietary Limited, registration number 2013/153427/07, a limited liability private company duly incorporated in the Republic of South Africa;

“IHS Res 1 Leases” means the lease agreements IHS Res 1 concluded with the tenants in respect of the apartments in the Buildings which comprise the IHS Res 1 Units as part of the IHS Res 1 Properties;

“IHS Res 1 Properties” means 1  983 Units spread across the seven properties acquired from IHS Res 1, comprising of Midrand Village, De Velde, Birchwood Village, Southgate Ridge, Urban Ridge (West), Urban Ridge (East) and Urban Ridge (South);

9

“IHS Res 1 Sale Agreements” means, collectively, the Birchwood Village Sale Agreement, De Velde Sale Agreement, Midrand Village Sale Agreement, Southgate Ridge Sale Agreement, Urban Ridge (East) Sale Agreement, Urban Ridge (South) Sale Agreement and Urban Ridge (West) Sale Agreement, entered into between IHS Res 1 and the Company in respect of the acquisition by the Company of the IHS Res 1 Properties, as well as certain real rights of extension in terms of section 25 of the Sectional Titles Act, No 95 of 1986, all as divisible sales, for an aggregate consideration of approximately R1.21 billion and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“IHS Res 1 Transactions” means the acquisition of 1  983 Units from IHS Res 1 for an aggregate Purchase Consideration of R1.21 billion as agreed in the IHS Res 1 Sale Agreements;

“IHS Res 1 Units” means each of the sectional title Units and erven to be acquired by Transcend in terms of the IHS Res 1 Sale Agreements;

“Income Tax Act” means the Income Tax Act, No 58 of 1962;

“Independent Property Valuer” or “Real Insight”

means the independent property valuer of the Company, being Real Insight Proprietary Limited, registration number 2012/101775/07, a private company duly registered and incorporated in accordance with the laws of South Africa, further details of which are set out in the “Corporate Information and Advisors” section;

“ Independent Reporting Accountants and Auditors” or

“ Independent Reporting Accountants” or “KPMG”

means KPMG Inc., registration number 1999/021543/21, a personal liability company duly registered and incorporated in accordance with the laws of South Africa, full details of which are set out in the “Corporate Information and Advisors” section;

“Interim Period” means the period of time between the Signature Date and the Effective Date;

“Irrevocable Undertaking” means the irrevocable undertaking by Emira to subscribe for the Subscription Shares at the Emira Subscription Price, when notified to do so by Transcend, and if required by Transcend, to make additional funding available to the Company pursuant to the Funding Facility as described in paragraph 2.2, whereby Emira shall, pursuant to the Private Placement, be given a right of first refusal to subscribe for and irrevocably undertake to subscribe for, upon request that number of Ordinary Shares, which together with any Ordinary Shares issued to Emira in terms of prior subscriptions, will result in Emira holding as a minimum, 25.1% and as a maximum, 34.9% of all Ordinary Shares in issue on completion of the Private Placement;

“JSE” means the Johannesburg Stock Exchange, being the exchange operated by the JSE Limited (Registration number 2005/022939/06), licensed as an exchange under the Financial Markets Act and a public company registered and incorporated in accordance with the laws of South Africa;

“King IV” means the Code of Corporate Practices and Conduct in South Africa representing principals of good corporate governance as laid out in the King Report, as amended from time to time;

“Last Practical Date” means the last practical date before the finalisation of this Circular, being Wednesday, 21 November 2018;

“Listings Requirements” means the Listings Requirements, as issued by the JSE from time to time;

“LTV” means loan to value, being equal to loans divided by the carrying value of properties and listed investments;

“m2” means square metres;

“Main Board” means the Main Board of the JSE, Real Estate Investment Trusts – Residential REITS Section;

“Meago” means Meago Capital Proprietary Limited, registration number 2013/040787/07, a private company duly registered and incorporated in accordance with the laws of South Africa, being a 25.1% shareholder of the Asset Manager;

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“MMA Financial” or “MMA” means MMA Financial International LLC, a Maryland limited liability company duly incorporated in the State of Maryland, with Maryland ID number W10824639, a  related party to Transcend in terms of sections 10.1(b)(v) and 10.1(b)(vi) of the Listings Requirements;

“MMA Subscription Price” means the subscription price to be paid by MMA for the Subscription Shares, which in respect of each Subscription Share will be the amount of R6.29 (ex-dividend) per Subscription Share;

“MMA Underwriting Agreement” means the agreement entered into between the Company and MMA on 8 October 2018, whereby MMA provides a commitment to the Company for a maximum amount of R105 million in respect of such portion of the Equity Amount to be raised in the Private Placement;

“Midrand Village” means the property and Units forming part of the IHS Res 1 Properties, situated on Erven 4472 to 4812 Clayville Extension 46, Porcelain Road, Clayville, Gauteng and comprising of 225 Units, further described in paragraph 2.3.1 of this Circular;

“Midrand Village Sale Agreement” means the agreement entered into between IHS Res 1 and the Company on 4 October 2018 in respect of the acquisition by the Company of Midrand Village, for an aggregate consideration of approximately R139 million and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“MOI” means the memorandum of incorporation of the Company, which is available for inspection as set out in paragraph 19;

“Nedbank” means the Nedbank Group Limited, registration number 1962/000738/06, a limited liability public company duly registered and incorporated in accordance with the laws of South Africa and registered as a bank in terms of the Banks Act, No 94 of 1990;

“NOI” means net operating income;

“Notice to Shareholders” or “Notice”

means the notice submitted to Shareholders entitled to exercise voting rights in relation to the Resolutions contained therein, for consideration and to be voted on in writing by such Shareholders in terms of section 60(1) of the Companies Act, within 20  (twenty)  business days of the Deemed Date, as set out in Annexure 18 of this Circular;

“Other Transactions” means collectively the Vanguard Transaction, Silverleaf Transaction and Acacia Place Transaction;

“ own-name dematerialised shareholders”

means dematerialised Transcend Shareholders who/which have elected own-name registration;

“Private Placement” or “Vendor Placement”

means the placement of Shares and the subsequent subscription for and issue of Shares in the Company by means of a vendor consideration placement, in order to settle the Equity Amount, to a select group of investors (including but not limited to the Underwriters), to be identified at a later stage by the Company in accordance with the Listings Requirements, and executed in accordance with the Closing Date;

“Property Management Agreement” means the agreement entered into between IHSPM and Transcend dated 21 October 2016, in terms of which IHSPM’s functions as Property Manager include, inter alia, managing, letting and lease agreements, collection of income, credit control, electricity and water accounts, all repairs and maintenance, security, cleaning services, as well as instigating legal proceedings with prior written consent of Transcend, preparing draft budgets, financial reporting, appointing staff and dealing with local authorities, which agreement is available for inspection in terms of paragraph 19;

“Property Manager” or “IHSPM”

means IHS Property Management Proprietary Limited, registration number 2015/009733/07, a private company duly registered and incorporated in accordance with the laws of South Africa, further details of which are set out in paragraph 8.5.1;

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“Property Portfolio” or “Portfolio” means Transcend’s property portfolio post the implementation of the Proposed Transactions and Other Transactions, comprising the properties set out in Annexure 3;

“Proposed Transactions” or “Acquisition”

means the acquisition of 1  983 Units from IHS Res 1 for an aggregate Purchase Consideration of R1.21 billion and the acquisition of 176 Units from Sunnyshore for an aggregate Purchase Consideration of R60 million as agreed in the Sale Agreements;

“Prospectus” means the document dated 16 November 2016 relating to the listing of the Company on the AltX, which document was prepared in compliance with the Companies Act and the JSE Listings Requirements;

“Protea Glen Leases” means the lease agreements Protea Glen concluded with the tenants in respect of the apartments in the buildings which comprise the Protea Glen Units;

“Protea Glen” means the 176 sectional title Units acquired from Sunnyshore as set out in the Protea Glen Sale Agreement;

“Protea Glen Sale Agreement” means the agreement entered into between Sunnyshore and the Company on 4 October 2018, in terms of which the Company will acquire 176 sectional title Units in the scheme known as Protea Glen situated on Erven 8487 and 8488 Protea Glen Extension 11 Township, Soweto as divisible sales for an aggregate purchase consideration of R60 million;

“Protea Glen Transaction” means the acquisition of 176 sectional title Units in Protea Glen for R60 million as agreed in the Protea Glen Sale Agreement;

“Protea Glen Units” means each of the sectional title Units and erven to be acquired by Transcend in terms of the Protea Glen Sale Agreement;

“PSP” means the Public Sector Pension Investment Board, a Canadian crown corporation established by an act of parliament in September 1999, located in Ottawa, Ontario and which owns 95% of the IHS Res 1 Properties;

“Publication Date” the date of publication of the results of the Resolutions on SENS, which will be the earlier of i) the business day following receipt of Voting Forms from Shareholders representing more than 50% and 75% of the total votes exercisable on the Resolutions for ordinary and special resolutions respectively or ii) the business day following the deadline for Shareholders to exercise their voting rights, as set out in the “Salient Dates and Times” section of this Circular;

“Purchase Consideration” means the purchase consideration specified under the IHS Res 1 Sale Agreements for the IHS Res 1 Properties and Protea Glen Sale Agreement for Protea Glen amounting to R1.21 billion and R60 million respectively, excluding acquisition and transaction costs, which Purchase Consideration will be settled using both debt and equity as described in further detail in paragraph 2.2 of the Circular;

“R” or “Rand” or “ZAR” means the South African Rand, the lawful currency of South Africa;

“Resolutions” means the ordinary and special resolutions to be put to Shareholder vote, further details of which are set out in Annexure 18;

“Revised Listing Particulars” means the statement required to be issued by the Company in terms of the Listings Requirements, detailing updated listing particulars for the Company, which is issued together with this Circular;

“Sale Agreements” means, the IHS Res 1 Sale Agreements and Protea Glen Sale Agreement;

“SA LP 1” means South Africa Workforce Housing Fund SA I, a South African limited partnership;

“SARB” means South African Reserve Bank;

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“SAWHF” means South African Workforce Housing Fund (SA GP) (RF) Proprietary Limited, registration number 2008/000511/07, a ring-fenced private company duly registered and incorporated in accordance with the laws of South Africa, acting on behalf of SA LP 1 and SAWHF PVE (SA);

“SAWHF PVE (SA)” means South Africa Workforce Housing Fund PVE (SA), a South African limited partnership and a material Shareholder of Transcend;

“Sellers” means IHS Res 1 and Sunnyshore;

“SENS” means Stock Exchange News Service of the JSE;

“Shares” or “Ordinary Shares” or “Transcend Shares”

means ordinary no par value shares in the capital of the Company;

“Shareholders” or “Transcend shareholders”

means holders of Transcend Shares, as recorded in the securities register of the Company;

“Signature Date” means the date of signature of the Sale Agreements by the party last signing;

“Silverleaf Sale Agreement” means the agreement entered into between De Facto Investments 264 Proprietary Limited and the Company on 28 March 2018, in terms of which the Company will acquire 76 sectional title Units in the scheme known as Silverleaf located at 649 Krige Street, Silverton, Pretoria from De Facto Investments 264 Proprietary Limited as divisible sales for an aggregate purchase consideration of R44.5 million;

“Silverleaf Transaction” means the acquisition of 76 sectional title Units as divisible sales for an aggregate purchase consideration of R44.5 million as agreed in the Silverleaf Sale Agreement;

“Silverleaf” means the 76 sectional title Units acquired from De Facto Investments 264 Proprietary Limited as set out in the Silverleaf Sale Agreement;

“Southgate Ridge” means the property and Units to be acquired as part of the IHS Res 1 Properties, situated on Erven 3030 and 3031 Naturena Extension 16, 5 Duin Place, Naturena, Gauteng and comprising of 412 Units, further described in paragraph 2.3.1 of this Circular;

“Southgate Ridge Sale Agreement” means the agreement entered into between IHS Res 1 and the Company on 4 October 2018 in respect of the acquisition by the Company of Southgate Ridge, for an aggregate consideration of approximately R170 million and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“Subscription Shares” means the Ordinary Shares committed to and underwritten by the Underwriters as specified in paragraph 2.2 of this Circular;

“Sunnyshore” means Sunnyshore Trade and Invest 105 Proprietary Limited, registration number 2007/015445/07, a limited liability private company duly registered and incorporated in the Republic of South Africa and wholly owned by SAWHF;

“Standard Bank” means The Standard Bank of South Africa Limited, registration number 1962/000738/06, a limited liability public company duly registered and incorporated in accordance with the laws of South Africa and registered as a bank in terms of the Banks Act, No 94 of 1990;

“Strate” means Strate Proprietary Limited, registration number 1998/022242/07, a private company duly registered and incorporated in accordance with the laws of South Africa and registered in terms of the Financial Markets Act, responsible for the electronic settlement system of the JSE;

“Transcend” or “the Company” or “TPF”

means Transcend Residential Property Fund Limited, registration number 2016/277183/06, a public company duly registered and incorporated in accordance with the laws of South Africa and a real estate investment trust listed on the AltX;

“TPF Annual Report” means the 2017 Transcend Integrated Annual Report, available for inspection as set out in paragraphs 18 and paragraph 19;

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“transfer” means the registration of transfer of the relevant immovable property into the name of Transcend in the relevant deeds registry office;

“Transfer Date” means the date of registration of transfer of ownership of the IHS Res 1 Properties into the name of Transcend free of any mortgage bonds in favour of the Sellers or other encumbrances not specifically recorded herein;

“Transfer Secretaries” or “Link”

means Link Market Services South Africa Proprietary Limited, registration number 2000/007239/07, a private company duly registered and incorporated in accordance with the laws of South Africa, full details of which are set out in the “Corporate Information and Advisors” section and the transfer secretaries to Transcend;

“Units” means each of the sectional title units and erven to be acquired by Transcend in terms of the Sale Agreements;

“Urban Ridge (East)” means the property and Units to be acquired as part of the IHS Res 1 Properties, situated on Erf 1397 Halfway Gardens Extension 79, 77 Fifth Road, Midrand, Gauteng, with the complex comprising of 184 Units, further described in paragraph 2.3.1 of this Circular;

“ Urban Ridge (East) Sale Agreement”

means the agreement entered into between IHS Res 1 and the Company on 4 October 2018 in respect of the acquisition by the Company of Urban Ridge (East), for an aggregate consideration of approximately R99 million and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“Urban Ridge (South)” means the property and Units to be acquired as part of the IHS Res 1 Properties, situated on Erf 1386 Halfway Gardens Extension 54, at the corner of Smuts and 3rd  Road, Midrand, Gauteng, with the complex comprising of 232 Units, further described in paragraph 2.3.1 of this Circular;

“ Urban Ridge (South) Sale Agreement”

means the agreement entered into between IHS Res 1 and the Company on 4 October 2018 in respect of the acquisition by the Company of Urban Ridge (South), for an aggregate consideration of approximately R118 million and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“Urban Ridge (West)” means the property and Units to be acquired as part of the IHS Res 1 Properties, situated on Erf 1399 Halfway Gardens Extension 35, 81 Fifth Road, Midrand, Gauteng, with the complex comprising of 260 Units, further described in paragraph 2.3.1 of this Circular;

“ Urban Ridge (West) Sale Agreement”

means the agreement entered into between IHS Res 1 and the Company on 4 October 2018 in respect of the acquisition by the Company of Urban Ridge (West), for an aggregate consideration of approximately R128 million and otherwise on terms and conditions agreed to by the Company in terms of such agreements and includes any addenda thereto;

“Underwriters” means Emira and MMA;

“Underwriting Commitment” means the commitment in which MMA undertakes to underwrite the Private Placement for up to 16 693 164 Shares in the Company at the MMA Subscription Price, representing a maximum underwriting commitment of R105 million;

“Vanguard” means the 60 sectional title Units acquired from SAWHF SA Rental 4 Trust on 23 August 2018 as set out in the Vanguard Sale agreement;

“Vanguard Sale Agreement” means the agreement entered into between SAWHF SA Rental 4 Trust (as seller) and the Company (as purchaser) on 12 June 2018, in terms of which the Company acquired 60 sectional title Units in the scheme known as Vanguard Residential Village 3 situated on 29 Jade Street off Klipfontein Road, Heideveld, Cape Town from SAWHF SA Rental 4 Trust as divisible sales for an aggregate purchase consideration of R33.3 million;

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“Vanguard Transaction” means the acquisition of 60 sectional title Units as divisible sales for an aggregate purchase consideration of R33.3 million as agreed in terms of the Vanguard Sale Agreement;

“VAT” means value added tax as defined in the Value Added Tax Act, No 89 of 1991, as amended;

“Voting Form” means the voting form attached as Annexure 19 to this Circular.

“VWAP” means volume weighted average price; and

“yield” or “distribution yield” means the distribution available to a holder of a share in any 12-month period or any financial year, as the case may be, divided by the market price of that share.

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Transcend Residential Property Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2016/277183/06)(JSE Share Code: TPF ISIN ZAE000227765)

(Approved as a REIT by the JSE)(“Transcend” or “the Company”)

DirectorsExecutiveMr. Rob Wesselo (Chief Executive Officer)Mr. Solly Mboweni (Chief Operating Officer)Mr. Myles Kritzinger (Chief Financial Officer)Non-executiveMr. Robert Emslie# (Chairman)Ms. Faith Khanyile#

Mr. Michael Aitken#

Mr. Cathal Conaty!Mr. Mike Falcone*#Independent! Resident of the Republic of Ireland*Resident of the United States of America

CIRCULAR TO SHAREHOLDERS

1. INTRODUCTION AND PURPOSE OF THIS CIRCULAR

1.1 Introduction

Shareholders are referred to the announcement released by Transcend on SENS on Monday, 8 October 2018, regarding the Sale Agreements entered into with the Sellers for the acquisition of 1 983 Units spread across a portfolio of 7 properties from IHS Res 1, a related party, for an aggregate consideration of approximately R1.21 billion at a weighted average yield of 9.76% and the acquisition of 176 Units from Sunnyshore for an aggregate consideration of approximately R60 million at a weighted average yield of 10.33%, based on the 12-month forecast NOI from 1 December 2018 to 30 November 2019.

The Proposed Transactions constitute a related party transaction and a reverse take-over in terms of the Listings Requirements and which, accordingly, requires Shareholder approval.

1.2 Purpose

The purpose of this Circular is to:• provide Shareholders with information relating to the Proposed Transactions in accordance with the Listings

Requirements and provide Shareholders with the opportunity to consider and, if deemed appropriate, pass with or without modification, the Resolutions required to implement the Proposed Transactions in terms of the Listings Requirements and section 41(3) of the Companies Act, in writing in terms of section 60 of the Companies Act; and

• Highlight Transcend’s intention to migrate from the AltX to the Main Board of the JSE, post-implementation of the Proposed Transactions.

1.3 Approval requirements

In relation to the Proposed Transactions, the Company requires the approval by more than 50% of the total votes validly exercised by Shareholders (excluding related parties and their associates) in writing, as the Proposed Transactions are classified in aggregate as a related party transaction and a reverse take-over in terms of the Listings Requirements.

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In relation to the Vendor Placement, the Company requires approval of Shareholders by way of a special resolution in terms of section 41(3) of the Companies Act, requiring the approval of at least 75% of the total votes exercisable by Shareholders in writing, given that Transcend will be required to issue up to 82.45 million additional Shares at a price of R6.29 per share plus the Antecedent Divestiture pursuant to the Proposed Transactions, which will exceed 30% of the Shares currently in issue.

2. DETAILS OF THE PROPOSED TRANSACTIONS

2.1 Background to the Proposed Transactions

Transcend listed on the AltX on 1 December 2016. The Company’s business activities are primarily concerned with acquiring and managing income-generating residential properties, focusing on housing opportunities that are affordable, lifestyle enhancing and located in high growth urban areas. Transcend currently owns a portfolio of 14 properties (comprising 2 532 units) located across South Africa (Gauteng, Mpumalanga and Western Cape). Transcend aims to achieve consistent dividend growth by optimising the performance of its Existing Portfolio and growing the Existing Portfolio with new property acquisitions.

The Existing Portfolio services the affordable housing market across South Africa. Strategically, Transcend targets sectional title rental units located in secure complexes to optimise the operational cost of the assets and to create tenant demand for well-run and well-maintained complexes.

Transcend has identified 2 159 Units (spread across a portfolio of eight properties) that it would like to acquire, which are stabilised and well-located assets at competitive prices, that will allow the Company to increase its NOI through escalations and operational efficiencies.

The implementation of the Proposed Transactions will result in immediate scale, more than double the size of Transcend’s Existing Portfolio and significantly increase its market capitalisation, providing it with a solid platform to grow the Company further and increase its shareholder base and liquidity. The Company’s rationale for the Proposed Transactions is further set out below:

Rationale for the Proposed Transactions:• align with the Transcend growth strategy;• offer stable and secure income streams and further diversifies Transcend’s Existing Portfolio, with 86% of the

Units being located in Gauteng and 14% in the Western Cape;• will increase the NOI through escalations and operational efficiencies based on an increased demand for and

significant under-supply of residential rental units in the affordable market;• are in respect of properties that are situated near commercial and industrial work opportunities as well as

infrastructure and transportation corridors, which support high rental demand; and• assist Transcend with an immediate migration to the Main Board, providing the Company with access to

future capital requirements and assist in unlocking Transcend’s attractive pipeline of property acquisitions.

Other recent transactions:

Shareholders are referred to the announcements released on SENS on 3 April 2018, 12 June 2018, 17 September 2018 and 8 October 2018 relating to the conclusion of agreements to:

• acquire Silverleaf (a rental enterprise comprising 76 sectional title units, located at Erf 2151, Silverton Township, City of Tshwane for R44.5 million);

• acquire Vanguard (a rental enterprise comprising 60 sectional title units, located at 29 Jade Street, off Klipfontein Road, Heideveld, Cape Town for R33.3 million); and

• dispose of Acacia Place (a rental enterprise comprising 325 units together, located in Duvha, eMalahleni (Witbank), Mpumalanga for R127.5 million).

The Vanguard Transaction has been successfully concluded, with Vanguard transferring to Transcend on 23 August 2018.

It was initially anticipated that Silverleaf would transfer on or around 30 April 2018, but due to delays in the finalisation of town-planning amendments, the transfer has not yet been effected. It is expected that Silverleaf should transfer to Transcend by 1 December 2018.

The effective date of the Acacia Place Transaction is expected to be on or about 30 April 2019.

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2.2 Funding of the Proposed Transactions

The total Purchase Consideration of the Proposed Transactions of R1.27 billion, together with transaction costs estimated at c. R26.6 million, will be settled in cash, to be funded through a combination of debt and equity as follows:

• Debt• Transcend will raise borrowings in respect of the IHS Res 1 Properties and Protea Glen of approximately

60% of the Purchase Consideration, which equates to gearing of c. R778 million. Following the implementation of the Proposed Transactions and Other Transactions, Transcend will have an LTV ratio of c. 46%, with the intention to reduce the LTV to a market average of 30% to 40% post-implementation of Transcend’s pipeline acquisitions.

• It is anticipated that the debt will be funded equally through the securing of new debt facilities from Standard Bank and Nedbank for the IHS Res 1 Transactions, from which can be paid down and drawn against in future at Transcend’s discretion, with new debt facilities for the Protea Glen Transactions to be funded by Standard Bank only.

• EquityTranscend intends to settle the balance of the Purchase Consideration by raising approximately R519 million of new equity by way of a Vendor Placement of 82.45 million Shares at a price of R6.29 per Share (ex-dividend).It is not expected that any Shares will be issued to the Asset Manager or the Property Manager. The Vendor Placement will facilitate the vendors of the IHS Res 1 Properties, receiving a cash consideration.

Underwriting and irrevocable commitments:

Transcend has procured the following support for the funding to be raised to settle the Equity Amount of the Purchase Consideration:• Emira, which is currently a 9.9% shareholder, has provided an irrevocable commitment to subscribe for such

additional Transcend shares as will ensure that following the implementation of the Private Placement, Emira will hold a minimum 25.1% of Transcend Shares and up to a maximum of 34.9% of the Transcend Shares in issue post-implementation of the Proposed Transactions and Other Transactions at a price of R6.29 per share plus the Antecedent Divestiture (the cum distribution that has been accrued from the last ex-dividend date up until the date of issuance of the new shares), being a total maximum of c. R327 million;

• MMA has undertaken in terms of the MMA Underwriting Agreement to underwrite the Private Placement for up to 16 693 164 Shares in the Company at the MMA Subscription Price, representing a maximum Underwriting Commitment of R105 million. MMA will be paid an underwriting fee in an amount equal to 1.5% of the Underwriting Commitment payable in U.S. Dollars using the same USD:ZAR exchange rate as utilised by MMA in its payment of the MMA Subscription Price. Given that MMA is a related party to the Company, the independent non-executive directors of the Company have passed a resolution confirming that the MMA underwriting fee is not greater than current market-related fees payable in this regard; and

• Emira has also agreed to make available the Funding Facility to the extent that there is a shortfall of the Private Placement in respect of the Proposed Transactions, up to a maximum amount of R105 million. Emira will be paid an underwriting fee in an amount equal to 1.5% of the Funding Facility.

2.3 The IHS Res 1 Properties

The IHS Res 1 Properties comprise 1 983 Units spread across seven residential properties, primarily located in Gauteng and the Western Cape, South Africa. The properties are situated in areas where the Directors and the Asset Manager expect the properties to benefit from low vacancies, consistent growth in rental prices and high rental demand.

The IHS Res 1 Properties were valued at R1 397 400 000 as at 1 October 2018 by Real Insight. Details of the IHS Res 1 Properties and the summary valuation report are set out in Annexure 3 and Annexure 4 respectively.

2.3.1 IHS Res 1 Properties

MIDRAND VILLAGE (CLAYVILLE, EKURHULENI):Situated on Erven 4472 to 4809 Clayville Extension 46, Porcelain Road, Clayville, Gauteng. Transcend is acquiring 225 Units which vary from two-bedroomed Units with one bathroom, measuring 55m² to three-bedroomed Units with two bathrooms, measuring 80m².New lettings currently range from monthly gross rentals of R6 500 for the two-bedroomed Units up to R7 900 for the three-bedroomed Units.

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DE VELDE (SOMERSET WEST, CAPE TOWN):The Sectional Schemes known as De Velde 1, 2, 4 and 5, are situated on Portions 128, 131, 132 and 134 of the Farm 794 Stellenbosch RD, De Velde, Western Cape. The complex comprises 310 Units which vary from one-bedroomed Units with one bathroom, measuring 38m², to three-bedroomed Units with two bathrooms, measuring 104m².New lettings currently range from monthly gross rentals of R6 600 for the one-bedroomed Units up to R12 000 for the three-bedroomed Units.

BIRCHWOOD VILLAGE (CHARTWELL, JOHANNESBURG):Situated on Erf 92 Chartwell Extension 14 & Erf 93 Chartwell Extension 15, located at the corner of Cedar Road & 3rd Street, Chartwell, Johannesburg.The complex comprises 360 Units (consisting of 108 one-bedroomed Units, 224 two-bedroomed Units and 28 three-bedroomed Units), with an average size of 73m² and monthly gross rentals ranging from R6 200 to R11 000 per Unit.

SOUTHGATE RIDGE (SOUTHGATE, JOHANNESBURG):Situated on Erven 3030 and 3031 Naturena Extension 16, 5 Duin Place, Naturena, Gauteng. The complex comprises 412 Units, all of them being two-bedroomed Units with one bathroom, measuring approximately 53m². The Units are accommodated in 62 two-storey blocks, all of them of which are north facing.New lettings currently range from monthly gross rentals of R5 400 for first floor Units to R5 600 for ground floor Units.

URBAN RIDGE (WEST) (MIDRAND, JOHANNESBURG):Situated on Erf 1399 Halfway Gardens Extension 35, 81 Fifth Road, Midrand, Gauteng. The complex comprises 260 Units, all of them being two-bedroomed Units with one bathroom, measuring approximately 57m². The Units are accommodated in 4 four-storey blocks, all of them north facing.New lettings currently range from monthly gross rentals of 6 100 for first floor Units to R6 300 for ground floor Units.

URBAN RIDGE (EAST) (MIDRAND, JOHANNESBURG):Situated on Erf 1397 Halfway Gardens Extension 79, 77 Fifth Road, Midrand, Gauteng. The complex comprises 184 Units, consisting of 170 two-bedroomed Units with one bathroom and measuring approximately 53m², and 14 three bed-bedroomed Units with two bathrooms measuring approximately 77m². The Units are accommodated in 13 four-storey blocks, all of them north facing.New lettings currently range from monthly gross rentals of R6 300 for the one-bedroomed Units to R6 700 for the two-bedroomed Units.

URBAN RIDGE (SOUTH) (MIDRAND, JOHANNESBURG):Situated on Erf 1386 Halfway Gardens Extension 54, at the corner of Smuts and 3rd Road, Midrand, Gauteng. The complex comprises 232 Units, all of them being two-bedroomed Units with one bathroom, measuring approximately 54m². The Units are accommodated in 8 four-storey blocks, all of them north facing.New lettings currently range from monthly gross rentals of R6 300 for the upper floor Units to R6 500 for the ground floor Units.

2.4 Protea Glen

Protea Glen is a residential complex comprising of two sectional schemes namely Protea Park and Protea Park 2 situated on Erven 8487 and 8488 Protea Glen Ext 11, along Kganwe Street in Protea Glen, Gauteng (South West of Soweto). There are 176 sections with Units varying in size from 44m² to 58m². The complex consists of several double storey walk-up buildings with ground and first floor flats.

There are 156 two-bedroomed flats and 20 three-bedroomed flats in the complex with monthly gross rentals ranging between R4 000 and R5 100 per Unit.

Protea Glen was valued at R61 290 000 as at 1 October 2018 by Real Insight. Details of Protea Glen and the summary valuation report are set out in Annexure 3 and Annexure 4 respectively.

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2.4.1 Analysis of the IHS Res 1 Properties and Protea Glen

Summarised details of the IHS Res 1 Properties are set out below:

Property name Location

Gross lettable

area (m²)Number of Units

Weighted average

rental per m²

as at 30 November

2019

Average gross

rental income

per Unit as at

30 November 2019

Midrand VillageClayville, Ekurhuleni 14 280 225 115 7 313

De VeldeDe Velde, Somerset West 29 330 310 112 10 555

Birchwood Village Chartwell, JHB 26 232 360 109 7 950Southgate Ridge Southgate, JHB 21 972 412 110 5 874Urban Ridge (West) Midrand, JHB 14 907 260 114 6 546Urban Ridge (East) Midrand, JHB 10 140 184 129 7 084Urban Ridge (South) Midrand, JHB 12 472 232 124 6 642

Total IHS Res 1 Properties   129 333 1 983 114 7 436

Protea Glen

Kganwe Street, Protea Glen, Soweto 8 480 176 97 4 675

Total including Protea Glen 137 813 2 159 113 7 211

Property nameCapitalisation

ratePurchase

ConsiderationAvg price per Unit

Valuation per property as at

1 October 2018

Midrand Village 8.99% 139 295 212 619 090 153 300 000De Velde 8.19% 289 144 251 932 723 337 700 000Birchwood Village 9.71% 266 463 076 740 175 288 300 000Southgate Ridge 11.59% 170 420 202 413 641 216 600 000Urban Ridge (West) 10.72% 127 516 812 490 449 153 100 000Urban Ridge (East) 10.52% 98 783 206 536 865 109 600 000Urban Ridge (South) 10.33% 118 277 360 509 816 138 800 000

Total IHS Res 1 Properties 9.76% 1 209 900 119 610 136 1 397 400 000

Protea Glen 10.33% 60 000 000 340 909 61 290 000

Total including Protea Glen 9.78% 1 269 900 119 588 189 1 458 690 000

An analysis of the IHS Res 1 Properties and Protea Glen in respect of sectoral, geographic, tenant, vacancy and lease expiry profiles over the forecast period ending 30 November 2019 is provided in the tables below.

2.4.2 Sectoral profile

The IHS Res 1 Properties and Protea Glen comprise 2 159 Units, with a combined GLA of 137 813m2

and are classified as being residential property.

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2.4.3 Geographic profile

ProvinceBy number

of UnitsBy GLA

(m²)By GR

(%)

Gauteng 1 849 108 483 79%Western Cape 310 29 330 21%

Total 2 159 137 813 100%

2.4.4 Tenant profile

IHS Res 1 Properties tenant profile:

The entire tenant profile is classified as “C” (other tenants as defined in section 13 of the Listings Requirements), comprising 1 739 individual tenants as at 30 September 2018. These tenants have an average occupancy period of approximately 15 months across the IHS Res 1 Properties.

Protea Glen tenant profile:

The entire tenant profile is classified as “C” (other tenants as defined in section 13 of the Listings Requirements), comprising 147 individual tenants as at 30 September 2018. These tenants have an average occupancy period of approximately 27 months across Protea Glen.

2.4.5 Lease expiry profile

Due to the nature and quantum of the residential leases, Transcend enters into leases with tenants that are standard across its Existing Portfolio, and the portfolio of properties managed by the Asset Manager (including the IHS Res 1 Properties). Historically, leases have been entered into for an initial period of 12 months, after which leases convert into a month-to-month lease capable of termination by either Transcend or the tenant. However, recently Transcend has made a commercial decision to migrate to month-to-month leases from inception of the lease.

The rationale for this is that a 12-month lease is, by law (and specifically in terms of the National Credit Act, No 34 of 2005), capable of termination by tenants with one month’s notice in any event and therefore does not provide Transcend with any more security or certainty than a month-to-month lease. However, the eviction of non-compliant tenants under a 12-month lease is much more onerous than merely allowing a month-to-month lease to terminate in accordance with its terms.

Residential – lease expiryNumber of Units

Units (%)

GLA (%)

GR (%)

Vacancy 273 13% 13% 13%Monthly 915 42% 43% 42%31 December 2018 252 12% 12% 12%31 December 2019 614 28% 28% 28%31 December 2020 91 4% 4% 4%31 December 2021 14 1% – –

Total 2 159 100% 100% 100%

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2.4.6 Vacancy profile

Based on historic information of the IHS Res 1 Properties and Protea Glen over the past 4 years, tenants will, on average, remain in Units for approximately 15 months and 27 months respectively. Units are usually re-leased within one month of termination of an existing lease, resulting in an average vacancy rate of 7 to 8% across the IHS Res 1 Properties and Protea Glen at any point in time.

Unit typeNumber of

vacant Units % of Units % of GLA

One Bedroom + One Bathroom 10 0.5% 0.3%Two Bedroom + One Bathroom 162 7.5% 6.8%Two Bedroom + Two Bathrooms 40 1.9% 2.5%Three Bedroom + One Bathroom 5 0.2% 0.2%Three Bedroom + Two Bathroom 56 2.6% 3.8%

Portfolio vacancy 273 12.7% 13.6%

2.4.7 Weighted average rental and escalations

2.4.7.1 Weighted average rental

The weighted average rental per Unit of the IHS Res 1 Properties and Protea Glen for the 12 months to 30 November 2019 is presented in the table below:

Sector R/m2 R/unit

Residential 113 7 211

2.4.7.2 Weighted average escalation

The weighted average escalation for the IHS Res 1 Properties and Protea Glen, based on existing leases at 30 June 2018, is 3.89%. The following escalations have been assumed in the forecast statement of profit or loss and other comprehensive income set out in Annexure 6 to this Circular:

– Midrand Village: 4.63%;– De Velde: 3.52%– Birchwoord: 5.36%– Southgate Ridge: 3.83%.– Urban Ridge (West): 3.01%;– Urban Ridge (East): 4.12%;– Urban Ridge (South): 3.50%; and– Protea Glen: 1.40%.

2.4.7.3 Average annualised property yield

The average annualised property yield of the IHS Res 1 Properties and Protea Glen for the 12 months ending 30 November 2019 is 9.79%.

2.4.8 Valuation reports

The IHS Res 1 Properties and Protea Glen were valued by Johan Liebenberg and Theuns Behrens of Real Insight, who are independent external registered professional valuers in terms of the Property Valuers Profession Act, No 47 of 2000.

Detailed valuation reports have been prepared in respect of each of the IHS Res 1 Properties and Protea Glen and are available for inspection in terms of paragraph 19 to this Circular. The summaries of the valuation reports in respect of each of the IHS Res 1 Properties and Protea Glen have been included in Annexure 4.

As at the Last Practicable Date, the Independent Property Valuer confirmed that there had been no material changes to their reports issued on 1 October 2018.

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The value of the IHS Res 1 Properties in terms of the Independent Valuer’s report exceeds the Purchase Consideration by c. R187.5 million after the deduction of any capitalised costs, as detailed in paragraph 3.4 of this Circular.

The value of Protea Glen in terms of the Independent Valuer’s report exceeds the Purchase Consideration by c. R1.3 million, as detailed in paragraph 3.4 of this Circular.

2.5 Terms of the Proposed Transactions

2.5.1 The Purchase Consideration

The Purchase Consideration will be settled as detailed in paragraph 2.2 above, payable on the Closing Date.

2.5.2 Warranties and indemnities

IHS Res 1 has warranted that:• they are the sole and beneficial owners of the Units comprising the IHS Res 1 Properties;• no person has any right (including any option or right of first refusal) to acquire any interest in or

to the IHS Res 1 Units (as the case may be) other than Transcend in terms of the Sale Agreements;• other than the IHS Res 1 Leases, Buildings and/or the IHS Res 1 Units (as the case may be) will not

be let or be subject to occupation or any right of occupation by any person natural or corporate; and• on the Transfer Date IHS Res 1 will give Transcend full, free and unencumbered ownership of the

Buildings and/or the IHS Res 1 Units (as the case may be).

Sunnyshore has provided warranties and indemnities to Transcend that are standard for transactions of this nature.

Subject to the above warranties and the specific provisions of the Sale Agreements, the sales of the IHS Res 1 Units and Protea Glen Units comprising the IHS Res 1 Properties and Protea Glen are voetstoots.

IHS Res 1 and Sunnyshore have not furnished additional warranties to Transcend whatsoever regarding the Units and Transcend purchases same voetstoots and subject to all such conditions and servitudes as may be recorded in the title deeds of the properties or the sectional plan.

2.5.3 Conditions Precedent

The Proposed Transactions are subject to fulfilment of the following conditions precedent as set out in the Sale Agreements:

Conditions precedent in respect of IHS Res 1:• Approval from Transcend’s shareholders of all resolutions necessary to implement the IHS Res 1

Transactions by 30 November 2018;• Approval from the shareholders of IHS Res 1 of all resolutions necessary to implement the IHS Res

1 Transactions by 7 December 2018;• Finalisation and acceptance by Transcend of the bank debt funding agreements for a nominal amount

of not less than R740 million on terms acceptable to Transcend in its sole discretion, and such debt funding agreements becoming unconditional in accordance with their terms by 28 November 2018; and

• Transcend raising the Equity Amount of R491 million by 14 December 2018;

Approval from the Competition Authorities was obtained unconditionally on Wednesday, 14 November 2018 and therefore, this condition precedent has been fulfilled.

Conditions precedent in respect of Protea Glen:• All conditions precedent, except shareholder approval, have been fulfilled as at 31 October 2018.

2.5.4 Effective Date of the Proposed Transactions

IHS Res 1:• The Effective Date will be the first day of the month following the month in which the conditions

precedent as set out in paragraph 2.5.3 are fulfilled or waived or such other date as may be agreed in writing, which date is anticipated to be 1 December 2018.

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Protea Glen:• The effective date of the Protea Glen Transaction will be the date on which the Units are transferred

from Sunnyshore to Transcend, from which date the ownership of the Units (and all risk and benefits in respect of the Units) will pass to Transcend. It is estimated that the effective date will be on or about 1 December 2018.

2.5.5 Other terms and conditions

Other terms and conditions contained in the Sale Agreements are normal for a transaction of this nature.

3. RELATED PARTY TRANSACTIONS

3.1 The Proposed Transactions are classified as related party transactions for Transcend given that:• IHS Res 1 is 95% held by PSP, 4.25% effectively held by IHS S.a.r.l, and 0.75% effectively held by three

Transcend Directors (0.25% by Rob Wesselo, 0.25% by Robert Emslie and 0.25% by Cathal Conaty);• PSP currently has a 45% shareholding in SAWHF PVE (SA), which has an 80% shareholding in Transcend;

and• IHS Res 1 is managed by IHS, a majority shareholder of the Asset Manager;

3.2 Accordingly, SAWHF is a Related Party as defined in the Listings Requirements and therefore they (and their respective “associates” as defined in the Listings Requirements) are precluded from voting on the Proposed Transactions Resolution as set out in Annexure 18.

3.3 As set out in paragraph 13.20 and 13.31 of the Listings Requirements, a fairness opinion is not required given that:• A valuation report has been prepared by the Independent Property Valuer for the IHS Res 1 Properties and

Protea Glen Units being acquired;• The Independent Valuation exceeds the Purchase Consideration; and• The Purchase Consideration will be settled in cash.

3.4 The total value of the IHS Res 1 Properties and Protea Glen being acquired, valuation of the properties and total cash consideration paid are detailed in the table below:

Purchase Consideration Valuation

Valuation amount

exceeding cash portion

Midrand Village 139 295 212 153 300 000 14 004 153De Velde 289 144 251 337 700 000 48 555 749Birchwood Village 266 463 076 288 300 000 21 836 924Southgate Ridge 170 420 202 216 600 000 46 179 798Urban Ridge (West) 127 516 812 153 100 000 25 583 188Urban Ridge (East) 98 783 206 109 600 000 10 816 794Urban Ridge (South) 118 277 360 138 800 000 20 522 640

Total 1 209 900 119 1 397 400 000 187 499 881

Protea Glen 60 000 000 61 290 000 1 290 000

Total including Protea Glen 1 269 900 119 1 458 690 000 188 789 881

3.5 The discount of R188.8 million to the valuation amount is mainly due to the fact that PSP has recently made a decision to exit all investments held in the African market in the short-term. By taking this decision, it would need to divest of its 95% interest in the IHS Res 1 business which facilitated the sale of the IHS Res 1 Properties. These properties were placed on the market and Transcend made an offer of R1.21 billion to IHS Res 1 in respect of the IHS Res 1 Properties. This is below the independent property valuation values of R1.397 billion (an offer accepted by IHS Res 1 as the Purchase Consideration). The discount of price to valuation amount is a direct result of PSP seeking an immediate exit from its investments in Africa and represents a fair selling price between a willing buyer and willing seller.

3.6 The Proposed Transactions are classified as a reverse take-over in terms of the Listings Requirements and are therefore subject to the approval by a simple majority of Transcend Shareholders voting on the Proposed Transactions, excluding the related parties and their associates as mentioned above.

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4. FINANCIAL INFORMATION

4.1 Forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen

The forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen is presented in Annexure 6. The Reporting Accountants’ report on the forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen is presented in Annexure 7.

4.2 Pro forma financial information of Transcend after the Proposed Transactions

The pro forma net asset value, net tangible asset value per Share after the Proposed Transactions (“pro forma financial effects”), as set out in the table below, are the responsibility of the Directors. The pro forma financial effects have been prepared in accordance with Transcend’s accounting policies which comply with IFRS. The pro forma financial effects have been presented for illustrative purposes only and, because of their nature, may not fairly present Transcend’s financial position post the implementation of the Proposed Transactions.

The pro forma financial effects set out below should be read in conjunction with the pro forma statement of financial position of Transcend as set out in Annexure 8.

The Reporting Accountants’ reports on the pro forma financial effects are set out in Annexure 9 and Annexure 11 respectively, to this Circular.

The table below sets out the pro forma financial effects of the Proposed Transactions based on the published interim financial results of Transcend for the six-month period ending 30 June 2018 and, on the assumption, that the Proposed Transactions were implemented on 30 June 2018 for statement of financial position purposes.

Pro forma statement of financial position of Transcend after the Proposed Transactions

 

Results for the period

ended as at 30 June 2018

Pro forma results after

the Proposed Transactions Change

Net asset value per Ordinary Share 10.38 9.20 (11%)Net tangible asset value per Ordinary Share 10.38 9.20 (11%)Number of Shares in issue (000) 66 305 148 755 82 449

Notes and assumptions:

1. The “Results for the period ended as at 30 June 2018” column was extracted from the published statement of financial position of the Company as at 30 June 2018.

2. The “Pro forma results after the Proposed Transactions” column represents the net asset value per Share and net tangible asset value per Share after the Proposed Transactions. It includes the effect of the acquisition and transfer of the IHS Res 1 Properties and Protea Glen for a total Purchase Consideration of R1.27 billion and the revaluation of the IHS Res 1 Properties to fair value on 30 June 2018 in terms of IAS 40: Investment Property.

3. Refer to Annexure 8 for detailed notes and assumptions related to the pro forma statement of financial position.

Pro forma statement of profit or loss and other comprehensive income of Transcend after the acquisition of the IHS Res 1 Properties

The pro forma basic and diluted basic earnings per Share and headline earnings and diluted headline earnings per Share for the six months ended 30 June 2018 (“pro forma EPS and HEPS”), as set out in the table below, are the responsibility of the Directors. The pro forma EPS and HEPS have been prepared in accordance with Transcend’s accounting policies which comply with IFRS. The pro forma financial effects have been presented for illustrative purposes only and, because of their nature, may not fairly present Transcend’s results of operations post the implementation of the IHS Res 1 Properties.

The pro forma EPS and HEPS set out below should be read in conjunction with the pro forma statement of profit or loss and other comprehensive income of Transcend for the six months ended 30 June 2018 as set out in Annexure 8.

The Reporting Accountants’ reports on the pro forma EPS and HEPS is set out in Annexure 11 to this Circular.

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The table below sets out the pro forma EPS and HEPS based on the published interim financial results of Transcend for the six-month period ending 30 June 2018 and, on the assumption, that the acquisition of the IHS Res 1 Properties was implemented on 1 January 2018 for statement of profit or loss and other comprehensive income purposes.

  Before After Change

Earnings and diluted earnings per Share (in cents) 32.89 32.25 (2%)Headline and diluted headline earnings per Share (in cents) 32.89 22.32 (32%)Weighted average number of Shares in issue (000) 66 305 144 860 78 554

Notes and assumptions:

1. The “Before” Column sets out the published statement of profit or loss and other comprehensive income of Transcend for the six months ended 30 June 2018 extracted, without adjustment, from the published interim financial statements of Transcend for the six months ended and as at 30 June 2018.

2. The “After” Column illustrates the pro forma statement of profit or loss and other comprehensive income of Transcend after the acquisition of the IHS Res 1 Properties and the exclusion of the historical interest expense and inclusion of a notional interest expense.

3. Refer to Annexure 10 for detailed notes and assumptions related to the pro forma statement of profit or loss and other comprehensive income.

5. CAPITAL STRUCTURE

The authorised and issued share capital of the Company as at the Last Practical Date was as follows:

Number of Shares R’000

Authorised share capitalOrdinary Shares of no par value 3 500 000 000 –Issued share capitalStated capital – ordinary Shares of no par value 73 605 662 678 193

Total 73 605 662 678 193

The authorised and issued share capital of the Company, after the implementation of the Proposed Transactions based on the assumption that the Private Placement is fully subscribed with no Funding Facility advanced to Transcend, is expected to be as follows:

 Number of shares R’000

Authorised share capitalOrdinary Shares of no par value 3 500 000 000 –Issued share capitalStated capital – ordinary Shares of no par value 148 755 126 1 140 048

Total 148 755 126 1 140 048

6. MAJOR SHAREHOLDERS

Shareholders with a beneficial interest of 5% or more in the Shares of Transcend at the Last Practicable Date are as follows:

Shareholder

Direct (Number of Shares)

Indirect (Number of Shares)

Percentage held (%)

SAWHF 59 046 443 – 80.2%Emira 7 300 000 – 9.9%SA Corporate Real Estate Limited 6 600 000 – 9.0%

As at the Last Practical Date, SAWHF was the controlling shareholder of the Company with an 80.2% shareholding. Following implementation of the Proposed Transactions (and depending on the allocation of Shares pursuant to the Vendor Placement), SAWHF may no longer be a controlling shareholder of Transcend.

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7. IRREVOCABLE COMMITMENT TO VOTE IN FAVOUR OF PROPOSED TRANSACTIONS

The Company has obtained irrevocable undertakings from Emira and SA Corporate Real Estate Limited representing approximately 95.5% of the Company’s Shareholders (entitled to vote) to vote in favour of the Proposed Transactions.

8. BACKGROUND AND OVERVIEW OF TRANSCEND RESIDENTIAL PROPERTY FUND

8.1 Background

The history and background of Transcend are set out in paragraph 2.1.

8.2 Transcend’s offering and strategy

Unlike conventional inner-city residential housing, the Company’s Existing Portfolio consists predominantly of two-and three-storey walk-up apartments, strategically located in desirable neighbourhoods, which are often equipped with lifestyle-enhancing amenities. As most properties are under six years old, they tend to have a high underlying capital value. As a result, performance is at lower rental yields than inner-city properties, and in the view of the Board, has greater potential for capital appreciation. The Company has majority ownership of the units in the Existing Portfolio.

The international residential REIT market is fairly sophisticated, as residential assets have tended to be less volatile over time relative to other classes of real estate. In South Africa, Transcend’s strategy is to invest in the affordable housing market, one of the few market segments where demand exceeds supply. It is anticipated that this undersupply will continue well into the future, due to the increasing trend towards urbanisation in South Africa. It therefore follows that Transcend offers investors exposure to a defensive asset class, that delivers housing to a heavily under-serviced portion of the real estate market.

Transcend aims to achieve consistent growth in dividends by maximising the performance of its property portfolio through inflation-linked rental escalations, and efficiencies in property and asset management.

8.3 Prospects

Transcend provides investors with exposure to a geographically diverse, well-managed and well-maintained portfolio of properties, while also providing investors with the security of well-located, quality underlying capital assets which are expected to appreciate in value over time. Residential housing is a unique defensive investment which has the potential to act as an inflation hedge over the long term, returning real growth in distributions.

Transcend is focused on “value add” initiatives to improve performance on the Existing Portfolio, with the aim of:• attracting and retaining quality tenants;• improving recoveries on properties;• securing strategic capex investment for better long-term performance; and• ensuring effective cost management.

The selection of stabilised and quality rental assets is expected to support meaningful capital growth and regular income in the form of a monthly rental from the property portfolio. Efficient property management and the acquisition of new properties are also expected to help enhance performance of the Company’s portfolio over time.

Transcend’s portfolio is externally managed by IHS Asset Management, a wholly-owned subsidiary of IHS, and leverages off IHS’ extensive experience in the residential rental markets.

Transcend’s objective is to grow the portfolio with good quality properties that are well located in high growth, high demand areas. Supported by a robust product pipeline, the aim is to grow the Shareholder base to create more liquidity. Dividend growth for 2018 was projected at levels between 6% to 8%, however, at 30 June 2018 this dividend growth forecast was revised to flat growth for 2018 largely as a result of high vacancies at Acacia Place. Excluding Acacia Place, dividend growth for 2018 would be approximately 4% to 5%. These projections exclude the effect of the Proposed Transactions.

Transcend aims to grow the Existing Portfolio base of 13 (excluding Acacia Place) properties through further acquisitions of rental properties, create a broader shareholder/investor spread and implement a migration to the Main Board of the JSE post-implementation of the Proposed Transactions.

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8.4 Property portfolio

The details of the Existing Portfolio as at 31 December 2017 are set out in the Transcend Annual Report, as incorporated by reference in paragraph 19 below.

8.5 Relationship information

8.5.1 Property management

A Property Management Agreement was entered into by Transcend and IHSPM on 16 October 2016. The property management function of the Company is outsourced on market-related terms to IHSPM. The Property Management Agreement is available for inspection in terms of paragraph 19.

8.5.1.1 Details of the Property Manager

IHSPM’s Directors are Rob Wesselo, Stephanie Jessica Botha, Grant Robert Harris and Solly Mboweni.

IHSPM’s business address and registered address is 54 Peter Place, Block C, Cardiff House, Bryanston, 2191, Gauteng, South Africa.

IHSPM is 100% owned by MMA.

IHSPM does not have a direct beneficial interest in the securities to be issued by the Company in order to finance the acquisition of the IHS Res 1 Properties.

IHSPM’s functions as Property Manager include, inter alia, managing, letting and lease agreements, collection of income, credit control, electricity and water accounts, all repairs and maintenance, security, cleaning services, as well as instigating legal proceedings with prior written consent of Transcend, preparing draft budgets, financial reporting, appointing staff and dealing with local authorities.

8.5.1.2 Fees payable to the Property Manager

Transcend pays IHSPM property management fees, calculated at between 6% and 7% (excl. VAT) of the gross cash collected from tenants on a monthly basis, including rent and recoveries.

8.5.2 Asset management

The asset management of the Existing Portfolio is undertaken by IHS Asset Management. The Asset Management Agreement is available for inspection as set out in paragraph 19.

Details of the Asset Manager

The business address of the Asset Manager is 54 Peter Place, Block C, Cardiff House, Bryanston, 2191, Gauteng, South Africa.

As set out in Annexure 1, the Asset Manager is owned 74.9% by IHS and 25.1% by Meago.

The Asset Manager does not provide asset management services to any other listed entity.

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8.5.2.1 Directors of the Asset Manager

Name and Age Robert Nicolaas Wesselo (Rob) (53)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification LLB (University of Witwatersrand)Position DirectorExperience Rob is responsible for the South African operations of International

Housing Solutions, a post he has held since 2010. In this role, he is responsible for sourcing investments, structuring, and negotiating deals with developers and managing the operations of IHS in South Africa. Rob is also a member of the IHS Investment Committee. Before joining IHS, Rob was the Head of Commercial Property Finance (Property Investments) at ABSA Business Bank. He has held other property-focused positions such as Commercial Director at Pangbourne Properties and Head of Listed Property Funding at Rand Merchant Bank.

Name and Age Johannes Hendrik Erasmus (Hennie) (36)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification Postgraduate Diploma in Tax (domestic and international); Bcom (Hons); CA(SA)

Position DirectorExperience Hennie joined IHS in 2010. Prior to joining IHS, Hennie worked for

KPMG where he completed his articles as a trainee and then became a manager in Audit. Managing a team of up to eight people, he managed the audits of several large holding companies as well as a number of smaller firms in a number of sectors. Hennie obtained his BCom (CA), Postgraduate Diploma in Accounting (Honours), and a Postgraduate Diploma in Tax (domestic and international) from North West University (SA).

Name and Age Herbert Tlaoleng Ramushu (47)

Business address 73 Oxford Road, Saxonwold, 2196Qualification BCom, Masters (Real Estate)Position DirectorExperience 20 years’ experience in Fund Management.

Name and Age Mohammed Sharif Hoosen (Sharif) (45)

Business address 73 Oxford Rd, Saxonwold, 2196Qualification Bsc (Pharmacy); Bcom (Hons) CA(SA)Position DirectorExperience 20 years’ experience in business and Fund Management.

8.5.2.2 Fees payable to the Manager

Detail of the fees payable to the Manager are incorporated in the Asset Management Agreement available for inspection as detailed in paragraph 19 below.

No changes have been affected in respect of the fees payable to the Manager since the publication of the Prospectus on 16 November 2016.

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8.5.3 Beneficial interest in properties

Other than as disclosed in paragraphs 3, 8.5.1 and 8.5.2 above, none of the Directors, the Asset Manager, or directors of the Asset Manager or of its holding companies or its subsidiaries have any direct or indirect beneficial interest in any property held by Transcend, or in any of the IHS Res 1 Properties (including as a result of contracting to become a tenant).

8.5.4 Conflicts of Interest

There are no relationships between any Director, the Asset Manager, directors of the Asset Manager or of its holding companies or its subsidiaries any other person, of which the Board is aware, that would impact on the duties of the aforementioned individuals towards the Company.

9. INFORMATION RELATING TO THE DIRECTORS

9.1 Directors of the Company

Curricula vitae of the Directors are set out in the TPF Annual Report, as incorporated by reference in paragraph 19 of this Circular.

Myles Kritzinger was appointed as the Company CFO with effect from 9 March 2018.

Rob Wesselo’s curriculum vitae is set out in paragraph 8.5.2.1 above. The rest of the Directors’ full names, ages, business addresses, qualifications, positions and experience are outlined below:

Name and age Myles Kritzinger (Myles) (34)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification BCom(Acc)(Hons); CA(SA); Diploma in Insolvency Law (SARIPA)Position Chief Financial OfficerExperience Myles was appointed as CFO for Transcend on 9 March 2018. He has experience in the

affordable housing market and new fund development as former Dealmaker at IHS. He was a former Manager at Deloitte & Touche, former Financial Analyst at Absa Capital and Absa Retail banks and former Consultant at Nimble Risk Services.

Name and age Solly Mboweni (Solly) (48)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification BCom and Postgraduate Diploma in Property Studies from University of WitwatersrandPosition Chief Operating OfficerExperience Since 2014, Solly has been head of housing operations at IHS, with direct responsibility for

the activities of new business and the asset management of the rental portfolio. Prior to joining IHS, Solly was the head of ABSA DEVCO, the development company of ABSA bank, where he was responsible for managing the operations of the entity that is responsible for Sustainable Integrated Housing Developments (SID), with assets under management of R2 billion. He was at ABSA for four years in a number of senior positions, with responsibility for assets totalling approximately R15 billion. He has also managed the asset management and property development departments at Liberty Properties Limited. Solly recently served as the vice president of SAIBPP (South African Institute of Black Property Practitioners). Solly was appointed as a director of Transcend on 1 October 2016.

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Name and age Michael Louis Falcone (Mike) (56)

Business address 3600 O’Donnell St #600, Baltimore, MD 21224, USAQualification BA (Economics) from Dartmouth College and MBA from Harvard Business SchoolPosition Non-executive directorExperience Mike is the chief executive officer and president of MMA Capital, a position he has held

since 1 January 2005. Prior to that, he served as chief operating officer of MMA Capital from 1997. MMA Capital is a diverse real estate finance company specialising in the affordable multi-family housing segment and is the sole shareholder of IHS. In his current position, Mike is responsible for all aspects of the general management of the company, focusing on strategic planning, risk management, business development and oversight of the performance of the company. Prior to his involvement with MMA Capital Management, Mike served as senior vice president and partner at the Shelter Group, a USA-based real estate development and property management firm. Mike is the chairman of the board of IHS. Mike was appointed as a director of the Company on 10 August 2016.

Name and age Cathal Padraig Conaty (Cathal) (53)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification BA from the University College (Dublin, Ireland) and an MBA from IESE (Barcelona, Spain)

Position Non-executive directorExperience Cathal serves as an executive director of IHS. He is responsible for portfolio management

and is chairman of the investment and asset management committees, which approve and manage all IHS investments, including the R1.9 billion South African Workforce Housing Fund. Cathal brings extensive experience in residential property investment, spanning portfolio management, deal structuring and negotiation, financial engineering and the management of major renovation projects. In various positions in the past 15 years, he has set up and managed private investment funds, served as a Regional Vice President of property management specialising in the turn-around of troubled properties, and represented investors’ interests in a variety of market-rate and subsidised properties. Cathal was appointed as a director of the Company on 10 August 2016.

Name and age Robert Reinhardt Emslie (Robert) (60)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification BCom (Law), BCom Hons (Acc), CA(SA) from Rand Afrikaans University (RAU)Position Chairman, independent non-executive directorExperience Robert is currently the independent chair of three listed companies namely Transcend,

SilverBridge Holdings Ltd and NEPI Rockcastle plc. He also serves on the boards of a small number of unlisted companies. Robert was appointed as a director of the company on 10  August 2016. Robert previously served as an independent non-executive director at Vunani Property Investment Fund Limited, Ambit Properties Limited, Paramount Property Fund Limited, deputy chairman at Blue Financial Services Limited, and independent non-executive chairman of African Dawn Capital Limited.

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Name and age Faith Nondumiso Khanyile (Faith) (50)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification BA (Economics) Wheaton College, USA, MBA (Finance) Bentley Graduate School of Business, USA

Position Independent non-executive directorExperience Faith is the CEO of WDB Investment Holdings (WDBIH) and has been associated with

WDBIH for over 18 years as one of its founding members. Faith has extensive experience in financial services, corporate, and investment banking, strategy development and leadership. She spent 12 years with Standard Bank, Corporate & Investment Bank (“CIB”) from 2001 to 2013 in various senior management and executive roles, including being the Head of Corporate Banking (2008 – 2013). From 2006 to 2013, Faith was a member of the CIB Executive Committee, Credit Committee and CIB Transformation Steering Committee. Prior to joining Standard Bank, she was with Brait Private Equity from 1995 to 2000. Faith was appointed as a director of the Company on 10 August 2016.

Name and age Michael Simpson Aitken (Michael) (61)

Business address 54 Peter Place, Peter Place Office Park, Block C, Cardiff House, Ground Floor, Bryanston 2191, Gauteng, South Africa

Qualification BA, LLBPosition Independent non-executive directorExperience Michael has over 20 years’ experience in property-related activities, with specific expertise

in asset and fund management related to directly held and listed property vehicles. Michael has been a non-executive director of Strategic Real Estate Managers Proprietary Limited and Emira Property Fund Limited since April 16, 2007. He is also currently a director of St  Albans Property Investments Proprietary Limited and is the sole director of Advest Capital Managers. He served as an executive director of Standard Bank Properties, Freestone Property Holdings Limited, Corovest Property Group Limited and as a director of Sycom Property Fund Managers Limited as well as the Manager of Sycom Property Fund. Michael also served as a non-executive director of Hyprop Investments Limited from August 2000 to June 2013, acting as chairman from August 2007 to June 2013. Michael was appointed as a director of the Company on 10 August 2016.

The MOI as well as the relevant provisions of the MOI relating to the qualification, remuneration, borrowing powers and appointment of Directors are available for inspection as set out in paragraph 19 of this Circular. The borrowing powers of Directors have never been exceeded.

9.2 Directors of major subsidiaries

The Company does not have any subsidiaries and all the properties are directly owned by the Company.

9.3 Transcend advisors and Company Secretary

The names and business addresses of the Company’s advisors are set out in the “Corporate Information and Advisors” section.

Karen Waldeck-Kruger (Admitted attorney, LLB (UJ)), who is an executive of CorpStat Governance Services Proprietary Limited, whose business address is set out in the “Corporate Information and Advisors” section, fulfils the role of Company Secretary.

The Board reviews the Company Secretary’s performance at least annually and the Board is satisfied that the Company Secretary maintains an arms-length relationship with the Board and is sufficiently qualified and experienced to execute her required duties.

The Company Secretary has, in addition to her statutory duties, fulfilled the duties of the Company Secretary as contemplated in King IV.

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Prior to her appointment, the Audit and Risk Committee considered her appointment and was satisfied that she has the appropriate competence, qualifications and experience to be appointed in such capacity. The Directors are of the opinion that Ms Waldeck-Kruger maintains an arm’s length relationship with the Board and the individual Directors as envisaged by the Listings Requirements.

The Company’s advisors and the Company Secretary do not have any interest in Transcend’s Shares.

9.4 Additional information related to the Directors

• Annexure 2 contains the following additional information on the Directors:– emoluments;– borrowing powers of the Company exercisable by the Directors;– interests in Shares and transactions;– interests of Directors and promoters;– declarations; and– details of the Property Manager.

• The executive Directors have not entered into service contracts with the Company. The executive Directors have been seconded to the Company in terms of the Asset Management Agreement available for inspection as set out in paragraph 19.

• The provisions of the MOI with regard to the following are available for inspection as set out in paragraph 19:– terms of office of Directors;– qualification of Directors;– remuneration of Directors;– any power enabling the Directors to vote on remuneration to themselves or any member of the Board;– the borrowing powers exercisable by the Directors and how such borrowing powers can be varied; and– retirement or non-retirement of Directors under an age limit.

10. GENERAL INFORMATION

10.1 Material contracts

No material contracts have been entered into, either verbally or in writing by Transcend, or any of its subsidiaries, being restrictive funding arrangements or a contract entered into otherwise than in the ordinary course of business, within the two years preceding the date of this Circular or a contract entered into at any time containing an obligation or settlement that is material to Transcend as at the date of this Circular, save for the following agreements, which are available for inspection in terms of paragraph 19 hereto:• The Asset Management Agreement, dated 1 November 2016 between IHS Asset Management and the

Company, whereby IHS Asset Management was appointed to provide asset management and related services to Transcend;

• The Property Management Agreement, dated 1 November 2016 between IHSPM and the Company, where the Property Manager shall conduct services and functions as set out in paragraph 8.5.1 of this Circular;

• The agreement in respect of the Acacia Place Transaction;• The agreement in respect of the Vanguard Transaction;• The agreement in respect of the Protea Glen Transaction; and• The IHS Res 1 Sale Agreements.

Details of the above transactions are set out in paragraph 2.1 of this Circular.

None of the Directors, or directors of the Asset Manager or the Property Manager have been directly or indirectly beneficially interested in any acquisitions or disposals of properties by the Company during the two years prior to the date of this Circular.

10.2 Material changes

Save for the Proposed Transactions and Other Transactions described in paragraph 1.1 of this Circular, the Directors confirm that there has been no material change in the financial or trading position of Transcend since its interim results for the period ending 30 June 2018.

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10.3 Material commitments, lease payments and contingent liabilities

As at the Last Practicable Date, Transcend had no material commitments, lease payments or contingent liabilities save that Transcend has an obligation to settle the Purchase Consideration relating to the Proposed Transactions, subject to the conditions precedent of the Proposed Transactions, which obligation Transcend intends settling by way of raising debt and from the proceeds of the Private Placement to be conducted prior to year-end.

10.4 Loans and borrowing powers

Details of the material loans and borrowings advanced to the Company, including the funding obtained in relation to the Proposed Transactions, as at the Last Practicable Date are available for inspection as set out in paragraph 18 of this Circular.

As at the Last Practicable Date, the Company did not have any material loans receivable, nor did it furnish any loan for the benefit of any Director or manager or any associate of any Director or manager.

As at the Last Practicable Date, the Company has not undertaken any off-balance sheet financing.

11. WORKING CAPITAL STATEMENT

The Directors are of the opinion that the working capital available to Transcend is sufficient for Transcend’s present working capital requirements and will, post-implementation of the Proposed Transactions and assuming the Resolutions regarding the issue of Shares are adopted, be adequate for at least 12 (twelve) months from the date of issue of this Circular.

12. LITIGATION STATEMENT

There are no legal or arbitration proceedings, including any proceedings that are pending or threatened, of which Transcend is aware, that may have or have had in the recent past, being the previous 12 months, a material effect on the Company’s financial position.

13. ACQUISITIONS

The properties in the process of being acquired are set out in paragraph 2.4.1, Annexure 4 and Annexure 6 of this Circular.

14. EXPENSES

The estimated costs of preparing and distributing this Circular and all its annexures and implementing the Proposed Transactions, including the fees payable to professional advisors, are approximately R26.6 million (including Value Added Tax) and include the following:

Expense Recipient R (incl VAT)

Corporate Advisor and Bookrunner Tenurey BSM 5 750 000Capital placement fee Tenurey BSM 2 932 500*Legal Advisor Cliffe Dekker Hofmeyr 1 725 000Transfer costs Cliffe Dekker Hofmeyr 7 128 160Bond registration costs Cliffe Dekker Hofmeyr 1 789 244JSE Designated Advisor Questco 575 000Independent Property Valuer Real Insight 146 050Reporting Accountants KPMG 1 316 750Printing, publication and distribution costs Ince 128 800JSE documentation and inspection fee JSE 86 256JSE listing fee JSE 311 244Strate Strate 48 700Transfer Secretaries Link Market Services 57 500Underwriting fee MMA 1 811 250Underwriting fee Emira 1 811 250Contingency   1 000 000

Total 26 617 704

* Assuming fee of 1.5% on R200 million of equity raised and/or placed from third parties.

34

15. DIRECTORS’ RECOMMENDATION

With regard to the Proposed Transactions, which are in the ordinary course of business of the Company, the Board is of the opinion that the terms and conditions of the Proposed Transactions are fair and that the implementation of the Proposed Transactions will add to and enhance the quality, stability and defensiveness of Transcend’s earnings by introducing a portfolio of high-quality and well-tenanted properties into the Existing Portfolio, which will be to the long-term benefit of Shareholders. An independent valuation on the IHS Res 1 Properties and Protea Glen is included in Annexure 4 to the Circular.

Accordingly, the Board recommends that Shareholders vote in favour of the Resolutions relating to the Proposed Transactions and intend to vote in favour of the Proposed Transactions in respect of Shares held by them, except to the extent they are precluded from voting as detailed in paragraph 3 of this Circular.

16. ADVISORS’ CONSENTS

The parties referred to in the “Corporate Information and Advisors” section of this Circular have consented in writing to act in the capacities stated and to their names being stated in the Circular and, in the case of the Independent Reporting Accountants and Independent Property Valuer, have consented to the inclusion of their reports, and to the references to their reports, in the form and context in which they appear, and have not withdrawn their consents prior to the publication of the Circular.

17. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors, whose names are given in the “Corporate Information and Advisors” section of this Circular, collectively and individually accept full responsibility for the accuracy of the information furnished relating to Transcend and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made, and that this Circular contains all information required by law and the Listings Requirements.

18. INFORMATION INCORPORATED BY REFERENCE

The information included by reference in this Circular, as detailed below, is available for inspection by Shareholders and prospective investors at the registered office of the Company, at no charge, during business hours from the date of issue of this Circular up to the date of the Publication Date.

Information incorporated by reference

Circular paragraph number Source document

Document reference

Property Portfolio 8.4; 13 TPF Annual Report 2017 (http://transcendproperty.co.za/wp-content/uploads/2018/04/Transcend-IAR2017.pdf)

Pages 87 – 89

Details of all other immovable properties and/or fixed assets and or securities and/or business undertakings that have been acquired within the past two years

13 TPF Annual Report 2017 (http://transcendproperty.co.za/wp-content/uploads/2018/04/Transcend-IAR2017.pdf)

Page 20 – “Portfolio Growth” paragraph;Page 66 – Note 8 to the financial statements “Investment Properties”

Terms of the Asset and Property Management Agreements

8.5.1; 8.5.2 Pre-Listing Statement (Prospectus) (https://transcendproperty.co.za/wp-content/uploads/2016/11/JOB011849-TRANSCEND.pdf)

Asset management services

8.5.2 Pre-Listing Statement (Prospectus) (https://transcendproperty.co.za/wp-content/uploads/2016/11/JOB011849-TRANSCEND.pdf)

Paragraph 4.4

35

Property management services

8.5.1 Pre-Listing Statement (Prospectus) (https://transcendproperty.co.za/wp-content/uploads/2016/11/JOB011849-TRANSCEND.pdf)

Paragraph 4.5

Asset management fees 8.5.2 Pre-Listing Statement (Prospectus) (https://transcendproperty.co.za/wp-content/uploads/2016/11/JOB011849-TRANSCEND.pdf) TPF Annual Report 2017 (http://transcendproperty.co.za/wp-content/uploads/2018/04/Transcend-IAR2017.pdf)

Paragraph 9

Page 6

Property management fees

8.5.1 Pre-Listing Statement (Prospectus) (https://transcendproperty.co.za/wp-content/uploads/2016/11/JOB011849-TRANSCEND.pdf) TPF Annual Report 2017 (http://transcendproperty.co.za/wp-content/uploads/2018/04/Transcend-IAR2017.pdf)

Paragraph 9

Page 6

Details of Directors 9.1 Pre-Listing Statement (Prospectus) (https://transcendproperty.co.za/wp-content/uploads/2016/11/JOB011849-TRANSCEND.pdf) TPF Annual Report 2017 (http://transcendproperty.co.za/wp-content/uploads/2018/04/Transcend-IAR2017.pdf)

Pages 15 – 17

Pages 16 – 18

Directors’ emoluments and incentives

9.4 TPF Annual Report 2017 (http://transcendproperty.co.za/wp-content/uploads/2018/04/Transcend-IAR2017.pdf)

Pages 84 – 86

Loans and borrowings 10.4 TPF Annual Report 2017 (http://transcendproperty.co.za/wp-content/uploads/2018/04/Transcend-IAR2017.pdf)

Pages 68 – 69

19. DOCUMENTS AVAILABLE FOR INSPECTION

The following documents, or copies thereof, will be available for inspection by Shareholders during normal business hours at Transcend’s registered office, the details of which are provided in the “Corporate Information and Advisors” section of this Circular, during business hours from the date of issue of this Circular up to the Publication Date:

19.1 the MOI of Transcend;

19.2 the IHS Res 1 Sale Agreements and Protea Glen Sale Agreement;

19.3 the Asset and Property Management Agreements;

19.4 the material contracts as referred to in paragraph 10.1 of this Circular

19.5 the Reporting Accountant’s report on the pro forma statement of financial position of Transcend before and after the Proposed Transactions, as set out in Annexure 9 of the Circular;

19.6 the Independent Reporting Accountant’s report on the compilation of the pro forma statement of profit or loss and other comprehensive income of Transcend for the six months ended 30 June 2018, as set out in Annexure 9 of the Circular;

36

19.7 the Independent Reporting Accountant’s report on the compilation of the pro forma statement of profit or loss and other comprehensive income of Transcend for the year ended 31 December 2017, as set out in Annexure 9 of the Circular;

19.8 the Independent Reporting Accountant’s report on the forecast statement of profit or loss and other comprehensive income of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen as set out in Annexure 6 and Annexure 7 of this Circular;

19.9 the Independent Reporting Accountant’s report on the interim special purpose carve-out historical financial information of the IHS Res 1 Properties for the six months ended 30 June 2018;

19.10 the Independent Reporting Accountant’s report on the special purpose carve-out historical financial information of the IHS Res 1 Properties for the three years ended 31 December 2017, 2016 and 2015;

19.11 the Independent Property Valuer’s valuation reports on the IHS Res 1 Properties and Protea Glen, a summary of which is attached as Annexure 4 to this Circular;

19.12 the audited annual financial statements of Transcend for the years ended 31 December 2016 and 31 December 2017 and interim financial statements of Transcend for the periods ending 30 June 2017 and 30 June 2018, as incorporated and referenced in paragraph 18;

19.13 the written consent letters by experts and advisors as referred to in paragraph 16 of the Circular;

19.14 the documents listed in paragraph 18 of this Circular;

19.15 the irrevocable undertakings referred to in paragraph 7 of the Circular; and

19.16 a copy of this Circular and all applicable annexures.

SIGNED ON BEHALF OF ALL THE DIRECTORS OF TRANSCEND, AS LISTED BELOW, IN TERMS OF THE ROUND ROBIN RESOLUTIONS SIGNED BY SUCH DIRECTORS.

___________________Rob WesseloChief Executive Officer

Thursday, 22 November 2018

37

Transcend Residential Property Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2016/277183/06)(JSE Share Code: TPF ISIN ZAE000227765)

(Approved as a REIT by the JSE)(“Transcend” or “the Company”)

DirectorsExecutiveMr. Rob Wesselo (Chief Executive Officer)Mr. Solly Mboweni (Chief Operating Officer)Mr. Myles Kritzinger (Chief Financial Officer)Non-executiveMr. Robert Emslie# (Chairman)Ms. Faith Khanyile#

Mr. Michael Aitken#

Mr. Cathal Conaty!Mr. Mike Falcone*#Independent! Resident of the Republic of Ireland*Resident of the United States of America

REVISED LISTING PARTICULARS PREPARED IN TERMS OF THE LISTINGS REQUIREMENTS

• The definitions and interpretations section commencing on page 6 of this Circular of which the Revised Listing Particulars form part applies, mutatis mutandis, throughout these Revised Listing Particulars, including this cover page.

• Shareholders are referred to the Circular for information relating to the Company. These Revised Listing Particulars are not an invitation to the public to subscribe for Shares but are issued in compliance with the Listings Requirements for the purpose of providing information to the public and Shareholders with regard to the Company and is issued in respect of:

– the proposed acquisition of the IHS Res 1 Properties from IHS Res 1 – a related party to Transcend, for a total Purchase Consideration of R1.21 billion, which constitutes a related party and reverse take-over for Transcend in terms of the Listings Requirements;

– the proposed acquisition of Protea Glen from Sunnyshore, for a total Purchase Consideration of R60 million; and

– a Share issuance to raise up to approximately R519 million by way of a Private Placement for up to approximately 82 449 464 Shares in the share capital of Transcend at an issue price, in accordance to the vendor consideration placing rules as per paragraph 5.62 of the Listings Requirements, to be determined by demand and for which an indicative issue price of R6.29 per share (ex dividend) has been used in this Revised Listing Particulars.

• The Shares to be issued pursuant to the Private Placement will rank pari passu with all other Shares issued by Transcend. There are no convertibility or redemption provisions relating to any of the Private Placement Shares offered in terms of the Private Placement. The Private Placement Shares will only be issued in dematerialised form. No certificated Private Placement Shares will be issued. There will be no fractions of Private Placement Shares offered or issued in terms of the Private Placement. The Private Placement will be underwritten in full. The proceeds of the Private Placement will be used by Transcend to partly settle the Proposed Transactions.

• Immediately prior to the Private Placement –– the authorised share capital of the Company comprised 3 500 000 000 Shares of no par value;– the issued share capital of the Company comprised 73 605 662 Shares of no par value; and– the Company had no treasury Shares in issue.

38

Assuming that the Private Placement is fully subscribed, immediately after the Private Placement and the migration to the Main Board:– the authorised share capital of the Company will comprise 3 500 000 000 Shares of no par value;– the issued share capital of the Company will comprise 148 755 126 Shares of no par value; and– the Company will have no treasury Shares in issue.

At the date of migration to the Main Board, assuming the Private Placement is fully subscribed, the anticipated market capitalisation of the Company will be approximately R931 million.

The JSE has granted Transcend a migration to the Main Board of up to approximately 148  755  126 Shares in the “Residential REITs” sector of the JSE under the abbreviated name: “Transcend”, JSE share code: “TPF” and ISIN: ZAE000227765, with effect from the commencement of trade on the Closing Date, subject to the Company having satisfied the Listings Requirements regarding the spread of public shareholders.

• These Revised Listing Particulars have been prepared on the assumption that the Resolutions proposed in the Notice to Shareholders forming part of this Circular to which the Revised Listing Particulars are attached will be voted on in writing by Shareholders within 20 (twenty) business days after the Resolutions were submitted to them.

• The Directors, whose names appear on the cover of these Revised Listing Particulars, collectively and individually, accept full responsibility for the accuracy of the information given herein and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, that all reasonable enquiries to ascertain such facts have been made, and that these Revised Listing Particulars contain all information required by law and the Listings Requirements.

• All advisors whose names and/or reports are contained in these Revised Listing Particulars have consented in writing to act in the capacity stated and to their names being included in these Revised Listing Particulars and, if applicable, to the inclusion of their respective reports in these Revised Listing Particulars in the form and context in which they appear and have not withdrawn their written consents prior to publication hereof.

Corporate Advisor and Bookrunner Independent Reporting Accountants and Auditors

Legal and Competition Law Advisor

Designated Advisor and Transaction Designated Advisor

Independent Property Valuer

Date of issue: Thursday, 22 November 2018Copies of this Circular of which these Revised Listing Particulars form part are available in English only and may, from the date of issue of this Revised Listing Particulars, up to the Publication Date, to be obtained from the registered office of the Company and from Tenurey BSM, during normal business hours at the addresses set out in the “Corporate Information and Advisors” section of this Circular. A copy of this Circular will also be available on the Company’s website (www.transcendproperty.co.za).

39

TABLE OF CONTENTS

Page

Revised listing particulars 37

1. Incorporation, history and nature of business 40

2. Purpose of the revised listing particulars 40

3. Directors, other office holders or material third parties 40

4. Information on share capital 41

5. Properties, assets and business undertakings acquired or to be acquired 41

6. REIT requirements 41

7. Rental revenue 42

Annexure 1 Company structure 43

Annexure 2 Information on the Directors, management, material third parties and the Asset Manager 44

Annexure 3 Details of the Property Portfolio 47

Annexure 4 Independent Property Valuer’s summary valuation report on the Property Portfolio 50

Annexure 5 Material contracts 62

Annexure 6 Forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties and Protea Glen and the combined IHS RES 1 Properties and Protea Glen 64

Annexure 7 Independent Reporting Accountant’s report on the forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen 69

Annexure 8 Pro forma statement of financial position of Transcend 72

Annexure 9 Independent Reporting Accountant’s report on the compilation of the pro forma statement of financial position of Transcend 75

Annexure 10 Report of the pro forma statement of profit or loss and other comprehensive income for Transcend for the six months ended 30 June 2018 77

Annexure 11 Independent Reporting Accountant’s report on the compilation of the pro forma statement of profit or loss and other comprehensive income for Transcend for the six months ended 30 June 2018 79

Annexure 12 Report of the pro forma statement of profit or loss and other comprehensive income for Transcend for the year ended 31 December 2017 81

Annexure 13 Independent Reporting Accountant’s report on the compilation of the pro forma statement of profit or loss and other comprehensive income for Transcend for the year ended 31 December 2017 83

Annexure 14 Report of interim special purpose carve-out historical financial information of the IHS Res 1 Properties for the six months ended 30 June 2018 85

Annexure 15 Independent Reporting Accountant’s report on the interim special purpose carve-out historical financial information of the IHS Res 1 Properties for the six months ended 30 June 2018 94

Annexure 16 Report of special purpose carve-out historical financial information of the IHS Res 1 Properties for the three years ended 31 December 2017, 2016 and 2015 96

Annexure 17 Independent Reporting Accountant’s report on the special purpose carve-out historical financial information of the IHS Res 1 Properties for the years ended and as at 31 December 2017, 31 December 2016 and 31 December 2015 106

Annexure 18 Written resolution of Shareholders 110

Annexure 19 Voting form Attached

Form of Proxy (yellow) Attached

40

REVISED LISTING PARTICULARS

INFORMATION ON TRANSCEND

1. INCORPORATION, HISTORY AND NATURE OF BUSINESS

1.1 Background and prospects

The history and prospects of Transcend are set out in paragraph 8.1 and 8.3 of this Circular. Transcend’s financial year-end is 31 December.

Details of the registered office of Transcend, the transfer office, date and place of incorporation and date of registration are included in the “Corporate Information and Advisors” section of this Circular. Details of the Company Secretary, Independent Reporting Accountants, Legal Advisor, Independent Property Valuer, Corporate Advisor and Bookrunner and Designated Advisor are set out in the “Corporate Information and Advisors” section of this Circular.

2. PURPOSE OF THE REVISED LISTING PARTICULARS

Transcend Residential Property Fund has entered into an agreement with IHS Res 1 to acquire a portfolio of 1 983 Units, as detailed in paragraph 1.1 of this Circular. The Revised Listing Particulars are required in terms of the Listings Requirements, due to the Proposed Transactions being classified as a reverse take-over, being an acquisition by a listed company of assets where the percentage ratio is 100% or more of the company’s market capitalisation as detailed in paragraph 2.1 and paragraph 2.2 of this Circular.

3. DIRECTORS, OTHER OFFICE HOLDERS OR MATERIAL THIRD PARTIES

3.1 Directors of the Fund

Curricula vitae of the Directors are set out in the TPF Annual Report, as incorporated by reference in paragraph 18 and paragraph 9.1 of this Circular.

The remuneration receivable by any of the Directors of Transcend will not be varied as a consequence of the implementation of the Proposed Transactions.

3.2 Directors’ interests in Transcend Shares

The table below sets out the Directors’ (and their associates), including Directors who have resigned during the 18 months prior to the Last Practicable Date, direct or indirect beneficial interests and holdings within Transcend as at the Last Practical Date:

Director

Beneficially held –

directly %

Total Number of

Shares Beneficially

held – directly

Beneficially held –

indirectly %

Total Number of

Shares Beneficially

held – indirectly

Total %

Total Number of

Shares

C Conaty – – 0.0021 1 405 0.0021 1 405M Falcone – – 0.0808 53 583 0.0808 53 583R Emslie 0.0005 300 0.2909 192 887 0.2914 193 187R Wesselo 0.0036 2 400 – – 0.0036 2 400

0.0041 2 700 0.3738 247 875 0.3779 250 575

3.3 Interests of Directors and promoters

Transcend has not entered into any promoters’ agreements and thus no amounts have been paid or have accrued as payable within the preceding two years, nor have any amounts been proposed to be paid to any promoter.

41

There have been no commissions paid or accrued as payable within the preceding three years as commission to any person, including commission so paid or payable to any sub-underwriter. There have been no commissions, discounts, brokerages or other special terms granted in connection with the issue or sale of any securities, Shares in the capital of the Company, where this has not been disclosed in the audited annual financial statements.

Other than in respect of the Directors, whose interests in Shares are disclosed in paragraph 3.1 of these Revised Listings Particulars, there are no other promoters which have had any material beneficial interest, direct or indirect, in the promotion of the Company or in any property acquired or proposed to be acquired by Transcend or otherwise in the two years preceding the Last Practicable Date and no amount has been paid during this period, or is proposed to be paid to any other promoters.

Directors’ interests in transactions are disclosed in paragraph 3.4 of this Revised Listings Particulars.

No Director, promoter, Asset Manager, trustee or custodian of the Company currently has or has had any material beneficial interest, either direct or indirect, in relation to any property held by Transcend or to be acquired by Transcend, including but not limited to, where any of those persons is, or has contracted to become a tenant of any part of the property.

3.4 Directors’ and Directors of the Asset Manager interests in transactions

Save in relation to the Directors’ and the Directors of the Asset Manager’s interests as detailed in paragraph 3.1 of this Revised Listings Particulars, none of the Directors have or have had a material beneficial interest, direct or indirect, in transactions that were effected by Transcend since its listing which remain in any respect outstanding or underperformed.

Details of additional information related to Directors of Transcend are detailed in Annexure 2 of this Circular.

4. INFORMATION ON SHARE CAPITAL

4.1 Capital structure

The issued Share capital of Transcend before and after the Proposed Transactions is set out in paragraph 5 of this Circular.

5. PROPERTIES, ASSETS AND BUSINESS UNDERTAKINGS ACQUIRED OR TO BE ACQUIRED

5.1 Properties acquired or to be acquired

Set out in Annexure 3 and Annexure 4 of this Circular, are details of all other immovable properties and/or fixed assets and or securities and/or business undertakings that have been acquired within the past two years or that are in the process of being, or are proposed to be acquired by Transcend, including the IHS Res 1 Properties, Protea Glen, Vanguard and Silverleaf.

No material immovable properties and/or fixed assets or securities and/or business undertakings are proposed to be acquired by Transcend, other than those contemplated in this Circular.

5.2 Properties disposed of or to be disposed

Save for the Acacia Place Transaction as detailed in paragraph 2.1 of this Circular, no material immovable properties and/or fixed assets and/or securities and/or business undertakings have been disposed of in the two years preceding these Revised Listing Particulars, or are to be disposed of within the first six months after the Last Practicable Date.

6. REIT REQUIREMENTS

The Board of directors confirm that Transcend meets the REIT requirements in that:• it has gross assets which exceed R300 million as reflected in the pro forma statement of financial position contained

in Annexure 8.• Transcend is a property entity as defined by the JSE Listings Requirements;• at least 75% of the revenue as reflected in the statement of comprehensive income set out in Annexure 6 and

Annexure 10 is derived from rental revenue;

42

• the total consolidated liabilities of Transcend, is not more than 60% of the total consolidated assets as reflected in the pro forma statement of financial position contained in Annexure 8;

• Transcend will, to the best of the knowledge of the Board of directors (after making all reasonable enquiries to ascertain such facts), qualify for a tax deduction of distributions under section 25BB(2) of the Income Tax Act for the current or future financial year end;

• the Company has established an audit and risk committee, which is responsible for adopting and implementing the Company’s risk management policy, which policy is in accordance with industry practice and specifically prohibits Transcend from entering into any derivative transactions that are not in the normal course of the Company’s business.

7. RENTAL REVENUE

The rental revenue of Transcend (after the Proposed Transactions) will consist of short-term rental revenue, as defined in the Listings Requirements. In accordance with paragraph 13.3(b) of the Listings Requirements, the Directors confirm that Transcend (after the Proposed Transactions) will have generated rental revenue in the preceding two financial years, the last of which generated in excess of R15 million profit before tax, after taking into account headline earnings adjustments on a pre-tax basis, as per the pro forma statement of comprehensive income contained in Annexure 12.

43

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44

Annexure 2

INFORMATION ON THE DIRECTORS, MANAGEMENT, MATERIAL THIRD PARTIES AND THE ASSET MANAGER

1. DIRECTORS’ EMOLUMENTS

1.1 The emoluments of the Directors paid for the period from 1 January 2017 to 31 December 2017 are set out in the table below:

Basic salaries

Directors’ fees

Bonuses and other

performance payments Total

Director R R R R

Executive DirectorsRob Wesselo1 4 993 – 1 956 6 949Dave Lange2 1 084 – 381 1 466Solly Mboweni3 2 510 – 714 3 224Non-executive DirectorsRobert Emslie – 205 – 205Cathal Conaty4 5 559 – 1 663 7 221Mike Falcone5 7 382 – 15 611 22 993Faith Khanyile – 180 – 180Michael Aitken – 180 – 180

Total 21 528 565 20 325 42 418

1. Rob Wesselo received remuneration of R6.9 million in 2017 (2016: R7.5 million) from IHS for his services as Managing Director of IHS. Rob does not receive any additional remuneration for his services as CEO of Transcend and it is estimated that he spends roughly 25% of his time on Transcend, which would have equated to R1.7 million (2016: R1.9 million) of his total remuneration received from IHS.

2. Dave Lange received remuneration of R1.5 million in 2017 from IHS for his services as CFO of Transcend. During 2016 Dave received R1.3 million from IHS for his services as Portfolio Manager of IHS. However, it should be noted that Dave became the full-time CFO of Transcend from 1 October 2016, therefore a portion of the remuneration received in 2016 relates to his services to Transcend as CFO from that date. Dave resigned as Company CFO with effect from 8 March 2018. Myles Kritzinger was appointed as Company CFO with effect 9 March 2018.

3. Solly Mboweni received remuneration of R3.2 million in 2017 (2016: R3 million) from IHS for his services as Head of Housing Operations of IHS. Solly does not receive any additional remuneration for his services as COO of Transcend and it is estimated that he spends roughly 25% of his time on Transcend, which would have equated to R0.81 million (2016: R0.76 million) of his total remuneration received from IHS.

4. Cathal Conaty received remuneration of R7.2 million in 2017 (2016: R7.5 million) from IHS S.à.r.l for his services as director of IHS S.a.r.l. Cathal does not receive a fee for his services as a non-executive director of Transcend. It is estimated that he spends approximately 5% of his time on Transcend, which would have equated to R0.36 million (2016: R0.38 million) of his total remuneration received from IHS S.a.r.l.

5. Mike Falcone received remuneration of R23.0 million in 2017 (2016: R25.5 million) from MMA for his services as CEO of MMA. Mike does not receive a fee for his services as non-executive director of Transcend. It is estimated that he spends approximately 5% of his time on Transcend, which would have equated to R1.2 million (2016: R1.3 million) of his total remuneration received from MMA.

1.2 Save as specified in the tables above, the Directors of the Company did not receive any emoluments in the form of:

1.2.1 fees for services as a Director;

1.2.2 management, consulting, technical or other fees paid for such services rendered, directly or indirectly, including payments to management companies, a part of which is then paid to a director of the Company;

1.2.3 basic salaries;

1.2.4 bonuses and performance-related payments;

1.2.5 sums paid by way of expense allowance;

45

1.2.6 any other material benefits received;

1.2.7 contributions paid under any pension scheme; or

1.2.8 any commission gain or profit-sharing arrangements.

1.3 Rob Wesselo, Solly Mboweni and Myles Kritzinger are employees of IHS and are seconded to Transcend in terms of the Asset Management Agreement, available for inspection as referenced in paragraph 19. The remuneration and benefits paid to Rob Wesselo, Solly Mboweni and Myles Kritzinger for their services as Directors of Transcend will be borne by IHS and will form part of the fees payable by Transcend to the Asset Manager for asset management services provided and do not accrue to them in their personal capacity. Even though Myles  Kritzinger is seconded to Transcend by the Asset Manager, he is a full-time Director of Transcend. Cathal Conaty and Mike Falcone are representatives of IHS S.à r.l and MMA Capital Management, respectively, and are not paid Director’s fees.

1.4 No share options or any other right has been given to a Director of the Company in respect of providing a right to subscribe for Shares in the Company.

1.5 No Shares have been issued and allotted in terms of a share purchase or share option scheme for any of the employees.

1.6 Save as provided in paragraph 1.4 above, all of the Directors of Transcend will be remunerated by Transcend. The Directors did not receive any remuneration or benefit in any form from any subsidiary, joint venture or other third-party management or advisory company for their services as Directors of Transcend.

1.7 The Company has not paid any other fees or incurred any fees that are payable to a third party in lieu of Directors’ fees.

1.8 The remuneration received by any of the Directors will not be varied as a consequence of any transactions.

1.9 Other than as detailed in paragraphs 3 of this Revised Listing Particulars, the business of the Company, or any part thereof, is not managed or proposed to be managed by any third party under contract or arrangement.

2. BORROWING POWERS

2.1 The borrowing powers of the Company may not be varied unless a special resolution has been passed by Shareholders with the support of 75% of voting rights exercised.

2.2 The borrowing powers have not been exceeded during the period from the date of incorporation of the Company to the Last Practical Date. There is no exchange control or other restrictions on the borrowing powers of the Company.

3. DIRECTORS’ INTERESTS

3.1 Directors of the Asset Manager interests in Transcend Shares

3.1.1 Save in relation to Rob Wesselo’s interest in Transcend set out in paragraph 3.1 above, none of the Directors of the Asset Manager are directly or indirectly beneficially interested in Transcend Shares in issue as at the Last Practical Date.

3.1.2 Save in relation to Rob Wesselo’s interest in Transcend set out in paragraph 3.1 above, it is anticipated that none of the Directors of the Asset Manager will be directly or indirectly beneficially interested in Transcend Shares in issue post the Private Placement.

3.2 Retirement of Directors

The Board undertakes the role of a Nominations Committee and the selection, appointment and approval of new Directors is therefore undertaken by the Board as a whole, in a formal and transparent manner, free from any dominance of any one particular Shareholder.

46

Any new appointees are required to possess the necessary skills to contribute meaningfully to Board deliberations and to enhance Board composition in accordance with recommendations, legislation, regulations and best practice. The Company Secretary assists the Board and ensures that the procedure for the appointment of Directors is properly carried out. No Director is appointed for life or for an indefinite period. Any Director appointed during the year is required to have the appointment confirmed by Shareholders at the next annual general meeting.

At each annual general meeting, one-third of the Directors, or if their number is not three or a multiple of three, the number nearest to one-third, but not less than one-third, retires from office, provided also that at least one-third of the non-executive directors, or if their number is not three or a multiple of three, the nearest to one-third, but not less than one-third, will retire from office.

The appointment of executive Directors shall be terminable by way of a Board resolution.

3.3 Board committees

The Board committees are set out in the TPF Annual Report, as detailed in paragraph 18 of these Revised Listings Particulars.

4. DIRECTORS’ DECLARATIONS

4.1 None of the Directors have been involved in:

4.1.1 any bankruptcies, insolvencies or individual voluntary compromise arrangements of such person;

4.1.2 any business rescue plans and/or resolution proposed by any entity to commence business rescue proceedings, application having been made for any entity to begin business rescue proceedings, notices having been delivered in terms of Section 129(7) of the Act, receiverships, compulsory liquidations, creditors’ voluntary liquidations, administrations, company voluntary arrangements or any compromise or arrangement with creditors generally or any class of creditors of any company; where such person is or was a director, with an executive function within such company at the time of, or within the 12 months preceding, any such event(s);

4.1.3 any compulsory liquidations, administrations or partnership voluntary arrangements of any partnerships where such person is or was a partner at the time of or within the 12 months preceding such event(s);

4.1.4 receiverships of any asset(s) of such person or of a partnership of which the person is or was a partner at the time of, or within the 12 months preceding, such event;

4.1.5 any public criticisms of such person by statutory or regulatory authorities, including recognised professional bodies, and whether such person has ever been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company;

4.1.6 any offence involving dishonesty committed by such person;

4.1.7 a removal from an office of trust, on the grounds of misconduct and involving dishonesty; and

4.1.8 any court order declaring such person delinquent or placing him under probation in terms of Section 162 of the Companies Act and/or Section 47 of the Close Corporations Act, No 69 of 1984 or disqualifying him to act as a director in terms of Section 69 of the Companies Act.

4.2 Rob Wesselo and Robert Emslie have attended the Directors’ AltX Induction Programme. With the assistance of the Board, the Chairman and the Company Secretary ensure that all Directors are appropriately made aware of their responsibilities through a tailored induction programme, and ensure that a formal programme of continuing professional education is adopted by the Board.

47

Ann

exur

e 3

DE

TAIL

S O

F T

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PR

OPE

RT

Y P

OR

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48

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valu

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t P

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er R

’000

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it

per

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es:

1.

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pro

pert

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re a

cqui

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at th

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alua

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re is

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n am

ount

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ts o

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IHS

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1 P

rope

rtie

s wer

e va

lued

at 1

Oct

ober

201

8 by

the

Inde

pend

ent P

rope

rty

Valu

er.

3.

All

the

prop

ertie

s com

prisi

ng th

e pr

oper

ty p

ortf

olio

are

in th

e re

siden

tial s

ecto

r.4.

Fi

gure

s ref

lect

100

% o

wne

rshi

p of

the

prop

ertie

s.5.

T

he v

acan

cies

are

cal

cula

ted

base

d on

the

rent

roll

as a

t 30

Sept

embe

r 201

8.6.

To

tal G

LA h

as b

een

stat

ed b

ased

on

the

unit

stoc

k sh

eet a

nd se

ctio

nal t

itle

diag

ram

s and

may

var

y sli

ghtly

from

the

sche

dule

s pre

sent

ed b

y th

e In

depe

nden

t Pro

pert

y Va

luer

.7.

H

igh

vaca

ncy

is du

e to

kee

ping

Uni

ts a

vaila

ble

for s

ale.

49

8.

De

Veld

e va

canc

ies a

re c

yclic

al, w

ith N

ovem

ber a

nd D

ecem

ber g

ener

ally

bei

ng th

e pe

ak p

erio

ds. A

ded

icat

ed le

asin

g ag

ent s

tart

ed 1

Oct

ober

201

8, th

eref

ore

vaca

ncie

s are

exp

ecte

d to

impr

ove.

9.

Hig

h va

canc

y a

resu

lt of

Sou

th D

eep

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dmin

e, a

bul

k le

ase,

that

gav

e no

tice

on so

me

of th

e U

nits

they

leas

e. T

he le

ase

up is

slow

, how

ever

pro

gres

s is b

eing

mad

e w

ith 1

7 ne

w le

ases

that

wer

e sig

ned

on 1

Oct

ober

201

8.

Net

ren

tal r

even

ue in

res

pect

of P

rote

a G

len

is un

derw

ritte

n by

a 1

00%

ren

tal g

uara

ntee

fro

m t

he E

ffect

ive

Dat

e fo

r a

perio

d of

12

mon

ths

(i.e.

1 D

ecem

ber

2018

to

30 N

ovem

ber

2019

). T

his

guar

ante

e ef

fect

ivel

y un

derw

rites

the

gros

s ren

tal i

ncom

e ne

t of a

vac

ancy

pro

visio

n of

7.5

%.

10.

Hig

h va

canc

y ra

te w

as a

tim

ing

issue

. With

occ

upan

cy im

prov

ing,

Van

guar

d is

98.5

% o

ccup

ied

as fr

om 1

Oct

ober

201

8.11

. Fo

reca

sted

201

9 w

eigh

ted

aver

age

rent

al p

er u

nit p

er m

onth

.12

. Es

timat

ed e

ffect

ive

date

.13

. A

caci

a Pl

ace i

s not

incl

uded

, as t

he a

bove

tabl

e rep

rese

nt th

e por

tfol

io p

ost t

he im

plem

enta

tion

of th

e Pro

pose

d Tr

ansa

ctio

ns a

nd O

ther

Tra

nsac

tions

. Tra

nsce

nd e

nter

ed in

to a

sale

agr

eem

ent d

ated

14

Sept

embe

r 201

8 an

d an

agr

eem

ent o

f occ

upan

cy d

ated

14

Sept

embe

r 201

8 in

term

s of w

hich

Tra

nsce

nd w

ill d

ispos

e of

all

325

Uni

ts c

ompr

ising

Aca

cia

Plac

e to

Inst

ratin

, tog

ethe

r with

the

rent

al e

nter

prise

con

duct

ed b

y Tr

ansc

end

in re

spec

t of

eac

h un

it in

Aca

cia

Plac

e fo

r R12

7.5 m

illio

n. It

’s an

ticip

ated

that

the

Aca

cia

Plac

e D

ispos

al w

ill b

e ef

fect

ive

from

30

Apr

il 20

19.

50

Annexure 4

INDEPENDENT PROPERTY VALUER’S SUMMARY VALUATION REPORT ON THE PROPERTY PORTFOLIO

“2 October 2018The DirectorsTranscend Residential Property Fund Limited54 Peter Place, Peter Place Office ParkFirst Floor, Block C, Cardiff HouseBryanston2191

Dear Sirs

RE: INDEPENDENT PROPERTY VALUERS’ REPORT OF THE PROPERTY PORTFOLIO FOR TRANSCEND RESIDENTIAL PROPERTY FUND LIMITED (“TRANSCEND”) AS DETAILED IN THE SUMMARY SCHEDULE ATTACHED AND FOR WHICH THERE ARE DETAILED VALUATION REPORTS HELD BY TRANSCEND

In accordance with your instruction of 12 July 2018, I confirm that we have visited and inspected the seven properties listed in the attached schedule (“the properties”) during July and August 2018 (Section 13.23 (a) (iii)) and have received all necessary details required to perform a valuation in order to provide you with my opinion of the properties’ market values as at 1 October 2018 (Section 13.23 (c))

1. INTRODUCTION

The valuation of the properties has been carried out by the valuer who has carefully considered all aspects of all the properties. These properties each have a detailed valuation report which has been given to the management of Transcend. The detailed reports include commentary on the current economy, nature of the properties, locality, tenancy, risk profile, forward rent and earning capability and exposure to future expenses and property risk. All these aspects have been considered in the individual valuation reports of the properties. The detailed reports have further addressed the tenancy income capability and expenditure for each property and tenant. Historic expenditure profile as well as future expenditure increases have been considered. The value thus indicates the fair market value for each property which is detailed in the detailed report and which has been summarised on a summary schedule, attached hereto, for each property. There are seven properties and the important aspects of the detailed valuation report including the market value for all of the properties have been summarised in the attached schedule.

2. BASIS OF VALUATION

The valuation is based on market value.

Market value means the best price, at which the sale of an interest in a property may reasonably be expected to have been completed, unconditionally for a cash consideration on the date of valuation, assuming:

2.1 a willing seller and a willing buyer in a market;

2.2 that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the property, for the agreement of price and terms and for the completion of the sale; and

2.3 that the state of the market, level of values and other circumstances are, on any earlier assumed date of exchange of contracts, the same as on the date of the valuation.

3. VALUE CALCULATION

The calculation of the market value of these properties has been based on income capitalisation. This is the fundamental basis on which commercial income producing properties are traded on the market in South Africa. This is also due to there being strong supporting evidence of open market rental rates and capitalisation rates which are evidenced by sales in the market. (Section 13.23 (d)).

51

Properties traded in the current market reflect a yield rate relationship between revenue and capital value. This rate is an accurate determinant of the capitalisation rate.

The considerations for the capitalised valuations are as follows:

3.1 calculating the forward cash flow of all contractual and other income from the properties;

3.2 calculating the forward contractual and other expenditure as well as provisions for various expenses in order to provide for void or future capital expenditure to which the property may be exposed;

3.3 the area vacancy as at 1 June 2018 as a percentage of the property portfolio was approximately 6.96%. In order to apply a conservative approach, we have deducted approximately between 4% and 10% of the gross income as a provision for rental that may not be collected as a consequence of vacancy, tenant failure or tenant refitting during the course of the coming year. The current vacancies are market related. The void provisions used in the valuations are therefore adequate. (Section 13.23 (f) (i));

3.4 there is no loss of rental due to renovations or refurbishments currently being carried out on the buildings. There is, however, ongoing external and internal maintenance work and repairs currently in progress. There is currently no loss of rental as a result of these activities. Potential future loss of rental due to refurbishments carried out for new tenants has been taken into account in the valuation report. (Section 13.23 (f) (ii));

3.5 generally the rentals are market-related. This has been determined by comparing similar buildings in comparable areas to the properties valued, in terms of rental per square metre and/or per unit. The rental rates have also been checked against various published indices including the Rode Report. There are no properties that are over- rented, or that cannot be re-rented at the same or higher rental rate should such property become vacant. There is therefore minimal potential for rental flow reversion. There is, however, a positive upside potential for real growth in rental, given the low base off which the average rentals flow. This is provided that the economy remains in a slow recovery pattern as currently being experienced as that there are no major economic fluctuations which may upset the economy. (Section 13.23 (f) (iii));

3.6 capitalising the net contractual income derived from the properties for a period of one year in advance, calculated from 1 October 2018;

3.7 the valuation has considered published market statistics regarding rental rates and expenditure for the different types of properties. It is also considered numerous other portfolios of similar properties in order to determine if any properties are over-rented or have excessive expenditure; and

3.8 various provisions for capital contingencies were deducted from the capitalised value.

4. SPARE LAND

Erf 3031 Naturena Extension 16 forms part of the Southgate Ridge Property. The erf is freestanding and separated from the main complex. It is zoned “Residential 3” with a bulk of 869m² and has been valued at R1 200 000 as at the 1st of October 2018.

5. BRIEF DESCRIPTION

The properties comprise of residential complexes. Please refer to the summary of properties below:

Building Name AddressNumber of Units Property Description

Birchwood Corner of Cedar Road and 3rd Street, Chartwell

360 Freehold Residential Complex

De Velde Along De Beers Avenue, De Velde, Somerset West

310 Sectional Title Residential Complex

Midrand Village Along Porcelain Road, Clayville 225 Freehold Residential Complex

Southgate Ridge At 5 Duin Place, Naturena 412 Freehold Residential Complex

Urban Ridge At 81 Fifth Road, Midrand 260 Freehold Residential Complex

Urban Ridge East At 77 Fifth Road, Midrand 184 Freehold Residential Complex

Urban Ridge South At the corner of Smuts Drive and 3rd Road, Midrand

232 Freehold Residential Complex

Total  1 983

52

The properties have been well constructed, generally have acceptable architectural merit, aesthetic appeal, sufficient parking facilities and are virtually fully tenanted. The leases tend to be of a general short-term contractual rental nature with provision for the recovery of utility services consumed by the lessees. Escalations are market-related, but are high enough to ensure a more than positive growth rate is ensured without creating an over rent potential in the medium term. The properties are generally highly visible and dominate their environment.

In respect of the properties, the current net annual rental and the estimated future net annual rentals at specified dates and for specified periods are included in each individual detailed property valuation report.

6. VALUATION QUALIFICATIONS

Qualifications are usually detailed as a consequence of: leases under negotiation that have not yet been formalised; leases of a large nature where the premises are difficult to re-let; specialised properties; large exposure to a single tenant; potential tenant failure due to over-rent; expenses required for major repairs; maintenance or other exposure to maintain the lettability of the building; contingent expropriations or servitudes that may be enforced; poor lease recordals whereby the lease may be disputed or rendered invalid.

We have, to the best of our knowledge, considered all of these aspects in the valuation of all the properties. There are no properties that are prejudiced in value by the influence of the above factors.

The valuer is, however, not responsible for the competent daily management of these properties that will ensure that this status is maintained, or for the change of any laws, services by local authority or economic circumstances that may adversely impact on the integrity of the buildings or the tenant profile.

7. OPTIONS OR BENEFIT/DETRIMENT OF CONTRACTUAL ARRANGEMENTS

To my knowledge there are no contractual arrangements on the properties other than the leases as detailed in the report that have a major benefit or are detrimental to the fundamental value base of the properties. (Section 13.23 (g)).

To the best of my knowledge, there are no options in favour of any parties for any purchase of any of the properties. (Section 13.23 (h)).

8. INTRA-GROUP OR RELATED PARTY LEASES (SECTION 13.23 (A) (XI))

Having inspected all the tenant schedules it is noted that there are no intra-group or related party leases.

9. CURRENT STATE OF DEVELOPMENT

Currently no properties are under construction. (Section 13.24 and 13.25).

10. RENTALS USED IN VALUATIONS

Note that all these properties are generally rented out. The current annual rental and future annual rentals have been determined based on actual achieved rentals with adjustments to market where needed. It is noted that there are no material rental reversions and that the rentals for all the properties increase on average by approximately 5% compounded per annum. The weighted average escalation for rentals on properties in the portfolio is from 4.0% to 7.0%.

11. EXTERNAL PROPERTY

None of the properties are situated outside the Republic of South Africa. (Section 13.28).

12. OTHER GENERAL MATTERS AND VALUATION SUMMARY (SECTIONS 13.30 AND 13.31)

A full valuation report is available on a property by property basis detailing tenancy, town planning, valuer’s commentary, expenditure and other details. This has been given to the directors of Transcend.

13. ALTERNATIVE USE FOR A PROPERTY (13.27)

The properties have been valued in accordance with their existing use which represents their market value. No alternative use for the properties has been considered in determining their value.

53

14. OTHER COMMENTS

Our valuation excludes any amounts of Value-added Tax, transfer duty, or securities transfer duty.

15. CAVEATS

15.1 Source of information and verification (Section 13.23 (a) (xiii))

Information on the properties regarding rental income, recoveries and other income detail has been provided to us by the current owners and their managing agents.

We have further compared certain expenditures given to us, to the market norms of similar properties. This has also been compared to historic expenditure levels of the properties themselves. Historical contractual expenditures and municipal utility services were compared to the past performance of the properties in order to assess potential expenditure going forward. The municipal values on the properties are very low. At the current transaction values there is some potential for the municipal value to increase by a considerable amount, should the municipality revalue these properties, in which event the rates could increase to three or four times their current amount.

15.2 Full disclosure

This valuation has been prepared on the basis that full disclosures of all information and factors that may affect the valuation have been made to me.

We have to the best of our ability researched the market as well as taken the steps detailed in paragraph 15.3 below.

15.3 Leases (Section 13.23 (a) (ix))

Our valuation has been based on a review of actual tenants’ leases (which includes material terms such as repairing obligations, escalations, break options) and other pertinent details supplied to us by the managing agents and by Transcend. All recovery details in respect of the existing leases e.g. utility cost and other recoveries as provided for in the leases have been disclosed by way of the monthly tenant invoices and lease summary schedules supplied to us. Option terms and other lease information have been supplied to us by the owners and managing agents and we are familiar with such documents. We inspected approximately 50% of the standardised lease agreements applicable to the portfolio. The lease agreements are predominately for an initial period of 12 months after which the lease agreements convert to month-to-month lease agreements that continue until such time as the rental agreement is terminated on notice by the tenant or Transcend.

15.4 Lessee’s credibility

In arriving at our valuation, cognisance has been taken of the lessee’s security and rating. In some cases this has influenced the capitalisation rate by way of a risk consideration.

15.5 Mortgage bonds, loans, etc.

The properties have been valued as if wholly-owned with no account being taken of any outstanding monies due in respect of mortgage bonds, loans and other charges. No deductions have been made in our valuation for costs of acquisition.

The valuation is detailed in a completed state and no deductions have been made for retention or any other set-off or deduction for any purposes which may be made at the discretion of the purchaser when purchasing the properties.

15.6 Calculation of areas

All areas quoted within the detailed valuation reports are those stated in the information furnished and verified where plans were available. To the extent that plans were not available, reliance was placed on the information submitted by the managing agents. Updated plans were not available for all the properties in respect of internal configuration. The properties generally appear to have the stated square meterage which could only be more accurately determined if remeasured by a professional. The reported square meterage is therefore considered as correct as possible without full a remeasurement exercise being undertaken.

54

15.7 Structural condition

The properties have been valued in their existing state. We have not carried out any structural surveys, nor inspected those areas that are unexposed or inaccessible, neither have we arranged for the testing of any electrical or other services.

15.8 Contamination

The valuation assumes that a formal environmental assessment is not required and further that none of the properties are environmentally impaired or contaminated, unless otherwise stated in our report.

15.9 Town planning (Section 13.23 (a) (vi) and (vii))

Full town planning details and title deeds have been supplied in the detailed valuation reports including conditions and restrictions and the properties have been checked against such conditions. This is to ensure that they comply with town planning regulations and title deeds. There do not appear to be any infringements of local authority regulations or deeds by any of the properties other than that mentioned in the valuation reports.

The valuation has assumed that the improvements have been erected in accordance with the relevant Building and Town Planning Regulations and on inspection it would appear that the improvements are in accordance with the relevant town planning regulations for these properties. There might have been an infringement of the zoning restrictions on the Ekhaya Jabulani property. We have highlighted the potential conflict to the client who has provided copies of subsequently municipal approved building plans of the as-built structures. For the purpose of the valuation we have thus assumed that the structures are compliant. We are of the opinion that there is no negative impact on value as a result of this potential zoning infringement.

16. MARKET VALUE

I am of the opinion that the aggregate market value of the properties as at 1 October 2018 is R1 397 400 000 (excluding VAT). A summary of the individual valuations and details of each of the properties are attached.

To the best of our knowledge and belief there have been no material changes in circumstances between the date of the valuation and the date of the valuation report which would materially affect the valuation.

I have more than 25 years’ experience in the valuation of all nature of property and I am qualified to express an opinion on the fair market value of the properties.

I trust that I have carried out all instructions to your satisfaction and thank you for the opportunity of undertaking this valuation on your behalf.

Yours faithfully,

for Real Insight (Pty) Ltd

Theunis Lodewyk Johannes Behrens

National Diploma Property Valuation

Registered Professional Associated Valuer (No. 3206)(Registered without restriction in terms of the Property Valuers Act, No 47 of 2000)1st Floor York House, Tybalt Place, Treur CloseWaterfall Office ParkMidrand1682”

55

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56

“26 October 2018The DirectorsTranscend Residential Property Fund Limited54 Peter Place, Peter Place Office ParkFirst Floor, Block C, Cardiff HouseBryanston2191

Dear Sirs

RE: INDEPENDENT PROPERTY VALUERS’ REPORT OF THE PROTEA GLEN PROPERTY FOR TRANSCEND RESIDENTIAL PROPERTY FUND LIMITED (“TRANSCEND”) AS DETAILED IN THE SUMMARY SCHEDULE ATTACHED AND FOR WHICH THERE IS A DETAILED VALUATION REPORT HELD BY TRANSCEND

In accordance with your instruction on 29 June 2018, I confirm that we have visited and inspected the property known as Protea Glen consisting of SS Protea Park No 188/2009 and SS Protea Park 2 No 20/2010 listed in the attached schedule during October 2018 (Section 13.23 (a) (iii)) and have received all necessary details required to perform a valuation in order to provide you with my opinion of the property’s market value as at 1 August 2018 (Section 13.23 (c)).

1. INTRODUCTION

The valuation of the property has been carried out by the valuer who has carefully considered all aspects of the property. This property has a detailed valuation report which has been given to the management of Transcend. The detailed report include commentary on the current economy, nature of the property, locality, tenancy, risk profile, forward rent and earning capability and exposure to future expenses and property risk. All these aspects have been considered in the valuation report of the property. The detailed report has further addressed the tenancy income capability and expenditure for each property and tenant. Historic expenditure profile as well as future expenditure increases have been considered. The value thus indicates the fair market value for each property which is detailed in the detailed report and which has been summarised on a summary schedule, attached hereto, for each property. There is one property and the important aspects of the detailed valuation report including the market value for the property have been summarised in the attached schedule.

2. BASIS OF VALUATION

The valuation is based on market value.

Market value means the best price, at which the sale of an interest in a property may reasonably be expected to have been completed, unconditionally for a cash consideration on the date of valuation, assuming:

2.1 a willing seller and a willing buyer in a market;

2.2 that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the property, for the agreement of price and terms and for the completion of the sale; and

2.3 that the state of the market, level of values and other circumstances are, on any earlier assumed date of exchange of contracts, the same as on the date of the valuation.

3. VALUE CALCULATION

The calculation of the market value of this property has been based on income capitalisation. This is the fundamental basis on which commercial income producing properties are traded on the market in South Africa. This is also due to there being strong supporting evidence of open market rental rates and capitalisation rates which are evidenced by sales in the market. (Section 13.23 (d)).

Properties traded in the current market reflect a yield rate relationship between revenue and capital value. This rate is an accurate determinant of the capitalisation rate.

The considerations for the capitalised valuations are as follows:

3.1 calculating the forward cash flow of all contractual and other income from the property;

3.2 calculating the forward contractual and other expenditure as well as provisions for various expenses in order to provide for void or future capital expenditure to which the property may be exposed;

57

3.3 the area vacancy as at 1 May 2018 as a percentage of the property portfolio was approximately 14%. In order to apply a conservative approach, we have deducted 7.5% of the gross residential income and 40% of the gross parking income as a provision for rental that may not be collected as a consequence of vacancy, tenant failure or tenant refitting during the course of the coming year. The current vacancy is abnormal as Goldfields, who previously occupied 54 units, has reduced their number of units to 37 units. The void provisions used in the valuations are therefore a normalised vacancy. (Section 13.23 (f) (i));

3.4 there is no loss of rental due to renovations or refurbishments currently being carried out on the buildings. There is, however, ongoing external and internal maintenance work and repairs currently in progress. There is currently no loss of rental as a result of these activities. Potential future loss of rental due to refurbishments carried out for new tenants has been taken into account in the valuation report. (Section 13.23 (f) (ii));

3.5 the majority of the rentals are market-related. Only those units being rented by Goldfields are over let and will in most likelihood revert downwards to market once the lease expires. We have allowed for a market-related rental for all the Goldfield units in our valuation calculation. The market rentals have been determined by comparing similar buildings in comparable areas to the property valued, in terms of rental per square metre and/or per unit. The rental rates have also been checked against various published indices including the Rode Report. There is, however, a positive upside potential for real growth in rental. This is provided that the economy remains in a slow recovery pattern as currently being experienced and that there are no major economic fluctuations which may upset the economy. (Section 13.23 (f) (iii));

3.6 capitalising the net contractual income derived from the property for a period of one year in advance, calculated from 1 August 2018;

3.7 the valuation has considered published market statistics regarding rental rates and expenditure for the different types of properties. It is also considered numerous other portfolios of similar properties in order to determine if the property is over-rented or have excessive expenditure; and

3.8 various provisions for capital contingencies were deducted from the capitalised value.

4. SPARE LAND

As far as could be established, there are no large tracts of vacant zoned and serviced spare land.

5. BRIEF DESCRIPTION

The properties comprise of residential complexes. Please refer to the summary of properties below:

Building Name AddressNumber of Units Property Description

Protea GlenSited on Kganwe Street, Protea Glen, Soweto, Gauteng Province 176 Sectional Title Residential Complex

Total  176

The property is well constructed, generally have acceptable architectural merit, aesthetic appeal, sufficient parking facilities. The leases tend to be of a general short-term contractual rental nature with provision for the recovery of utility services consumed by the lessees. Escalations are market-relate,d but are high enough to ensure a more than positive growth rate is ensured without creating an over rent potential in the medium term. The property is generally highly visible and dominate its environment.

In respect of the property, the current net annual rental and the estimated future net annual rentals at specified dates and for specified periods are included in the detailed property valuation report.

6. VALUATION QUALIFICATIONS

Qualifications are usually detailed as a consequence of: leases under negotiation that have not yet been formalised; leases of a large nature where the premises are difficult to re-let; specialised properties; large exposure to a single tenant; potential tenant failure due to over-rent; expenses required for major repairs; maintenance or other exposure to maintain the lettability of the building; contingent expropriations or servitudes that may be enforced; poor lease recordals whereby the lease may be disputed or rendered invalid.

58

We have, to the best of our knowledge, considered all of these aspects in the valuation of the property. It does have a large exposure to Goldfields who currently occupies 37 units or 21% of the property. Their rent is above market and will have a large impact if they do not renew their lease. A provision was made by allowing for a market-related rental for all Goldfields units and for a vacancy of 7.5% of the gross residential income and 40% of the gross parking income.

The valuer is, however, not responsible for the competent daily management of this property that will ensure that this status is maintained, or for the change of any laws, services by local authority or economic circumstances that may adversely impact on the integrity of the buildings or the tenant profile.

7. OPTIONS OR BENEFIT/DETRIMENT OF CONTRACTUAL ARRANGEMENTS

To my knowledge there are no contractual arrangements on the property other than the leases as detailed in the report that have a major benefit or are detrimental to the fundamental value base of the property. (Section 13.23 (g)).

To the best of my knowledge, there are no options in favour of any parties for the purchase of the property. (Section 13.23 (h)).

8. INTRA-GROUP OR RELATED PARTY LEASES (SECTION 13.23 (A) (XI))

Having inspected all the tenant schedules it is noted that there are no intra-group or related party leases.

9. CURRENT STATE OF DEVELOPMENT

The property is not currently under construction. (Section 13.24 and 13.25).

10. RENTALS USED IN VALUATIONS

Note that the property is generally rented out. The current annual rental and future annual rentals have been determined based on actual achieved rentals with adjustments to market where needed. It is noted that there are no material rental reversions and that the rentals for the property increase on average by approximately 3% compounded per annum.

11. EXTERNAL PROPERTY

The property are not situated outside the Republic of South Africa. (Section 13.28).

12. OTHER GENERAL MATTERS AND VALUATION SUMMARY (SECTIONS 13.30 AND 13.31)

A full valuation report is available on a property detailing tenancy, town planning, valuer’s commentary, expenditure and other details. This has been given to the directors of Transcend.

13. ALTERNATIVE USE FOR A PROPERTY (13.27)

The property has been valued in accordance with their existing use which represents their market value. No alternative use for the property has been considered in determining its value.

14. OTHER COMMENTS

Our valuation excludes any amounts of Value-added Tax, transfer duty, or securities transfer duty.

15. CAVEATS

15.1 Source of information and verification (Section 13.23 (a) (xiii))

Information on the property regarding rental income, recoveries and other income detail has been provided to us by the current owners and their managing agents.

We have further compared certain expenditures given to us, to the market norms of similar properties. This has also been compared to historic expenditure levels of the property itself. Historical contractual expenditures and municipal utility services were compared to the past performance of the property in order to assess potential expenditure going forward. The municipal values on the sectional title units are considered to be high. At current transaction values, there is potential for the municipal value to be objected against and reduced. Should the municipality re-value these sectional title units, the rates could potentially decrease.

59

15.2 Full disclosure

This valuation has been prepared on the basis that full disclosures of all information and factors that may affect the valuation have been made to me.

We have to the best of our ability researched the market as well as taken the steps detailed in paragraph 15.3 below.

15.3 Leases (Section 13.23 (a) (ix))

Our valuation has been based on a review of actual tenants’ leases (which includes material terms such as repairing obligations, escalations, break options) and other pertinent details supplied to us by the managing agents and by Transcend. All recovery details in respect of the existing leases e.g. utility cost and other recoveries as provided for in the leases have been disclosed by way of the monthly tenant invoices and lease summary schedules supplied to us. Option terms and other lease information have been supplied to us by the owners and managing agents and we are familiar with such documents. We inspected approximately 50% of the standardised lease agreements applicable to the portfolio. The lease agreements are predominately for an initial period of 12 months after which the lease agreements convert to month-to-month lease agreements that continue until such time as the rental agreement is terminated on notice by the tenant or Transcend.

15.4 Lessee’s credibility

In arriving at our valuation, cognisance has been taken of the lessee’s security and rating. In some cases this has influenced the capitalisation rate by way of a risk consideration.

15.5 Mortgage bonds, loans, etc.

The property have been valued as if wholly-owned with no account being taken of any outstanding monies due in respect of mortgage bonds, loans and other charges. No deductions have been made in our valuation for costs of acquisition.

The valuation is detailed in a completed state and no deductions have been made for retention or any other set- off or deduction for any purposes which may be made at the discretion of the purchaser when purchasing the property.

15.6 Calculation of areas

All areas quoted within the detailed valuation reports are those stated in the information furnished and verified where plans were available. To the extent that plans were not available, reliance was placed on the information submitted by the managing agents. Updated plans were not available for the property in respect of internal configuration. The property generally appears to have the stated square meterage which could only be more accurately determined if remeasured by a professional. The reported square meterage is therefore considered as correct as possible without a full remeasurement exercise being undertaken.

15.7 Structural condition

The property has been valued in their existing state. We have not carried out any structural surveys, nor inspected those areas that are unexposed or inaccessible, neither have we arranged for the testing of any electrical or other services.

15.8 Contamination

The valuation assumes that a formal environmental assessment is not required and further that the property is not environmentally impaired or contaminated, unless otherwise stated in our report.

15.9 Town planning (Section 13.23 (a) (vi) and (vii))

Full town planning details and title deeds have been supplied in the detailed valuation reports including conditions and restrictions and the property have been checked against such conditions. This is to ensure that they comply with town planning regulations and title deeds. There do not appear to be any infringements of local authority regulations or deeds by the property other than that mentioned in the valuation reports.

The valuation has assumed that the improvements have been erected in accordance with the relevant Building and Town Planning Regulations and on inspection it would appear that the improvements are in accordance with the relevant town planning regulations.

60

16. MARKET VALUE

I am of the opinion that the market value of the property as at 1 August 2018 is R61 290 000 (excluding VAT). A summary is attached.

To the best of our knowledge and belief there have been no material changes in circumstances between the date of the valuation and the date of the valuation report which would materially affect the valuation.

I have more than 25 years’ experience in the valuation of all nature of property and I am qualified to express an opinion on the fair market value of the properties.

I trust that I have carried out all instructions to your satisfaction and thank you for the opportunity of undertaking this valuation on your behalf.

Yours faithfully,

for Real Insight (Pty) Ltd

Theunis Lodewyk Johannes Behrens

National Diploma Property Valuation

Registered Professional Associated Valuer (No. 3206)(Registered without restriction in terms of the Property Valuers Act, No 47 of 2000)1st Floor York House, Tybalt Place, Treur CloseWaterfall Office ParkMidrand1682”

61

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62

Annexure 5

MATERIAL CONTRACTS

In addition to the Asset Management and Property Management Agreements available for inspection as set out in paragraph 18 and paragraph 19, the following are details of material contracts, being (i) contracts entered into otherwise than in the ordinary course of business, within the two years prior to the date of these Revised Listings Particulars or at any time containing an obligation or settlement that is or may be material to the Company at the Last Practical Date; and (ii) contracts that are otherwise considered material by the Company (10% of Market Capitalisation):

1. AGREEMENTS CONCLUDED REGARDING THE OTHER TRANSACTIONS

Salient details of the Other Transactions concluded by Transcend are set out below:

1.1 Silverleaf Acquisition

Transcend concluded a legal agreement to acquire a rental enterprise comprising 76 sectional title Units in the scheme known as Silverleaf located at Erf 2151 Silverton Township, City of Tshwane from Defacto Investments 264 Proprietary Limited for an aggregate purchase consideration of R44.5 million. Due to delays in the finalisation of town-planning amendments, the transfer has not yet been effected, but it is anticipated that transfer will occur by 1 December 2018.

1.2 Vanguard Acquisition

Transcend concluded a legal agreement to acquire a stabilised and fully-let rental enterprise comprising 60 sectional title units, being Sections No. 148 – 207 (inclusive) ST273/2015 (148) to (207) in the scheme known as Vanguard, located at 29 Jade Street, off Klipfontein Road, Heideveld, Cape Town from SAWHF SA Rental 4 Trust for an aggregate purchase consideration of R33.3 million. The Vanguard Transaction has been successfully concluded, with Vanguard transferring to Transcend on 23 August 2018.

1.3 Acacia Place Disposal

Transcend entered into a sale agreement dated 14 September 2018 and an agreement of occupancy dated 14 September 2018 with Instratin Properties Proprietary Limited (“Instratin”) in respect of the Company’s Acacia Place property, located in Duvha, eMalahleni (Witbank), Mpumalanga, in terms of which Transcend will dispose of all 325 Units comprising Acacia Place to Instratin, together with the rental enterprise conducted by Transcend in respect of each unit in Acacia Place for R127.5 million. It’s anticipated that the Acacia Place Disposal will be effective from 30 April 2019.

2. MMA UNDERWRITE

Details of the MMA Underwriting Agreement are set out below:

2.1 MMA undertakes to underwrite the Private Placement for up to 16 693 164 Shares in the Company at the MMA Subscription Price, representing a maximum Underwriting Commitment of R105 million.

2.2 MMA will be paid an underwriting fee in an amount equal to 1.5% of the Underwriting Commitment payable in U.S. Dollars using the same USD:ZAR exchange rate as utilized by MMA in its payment of the MMA Subscription Price.

2.3 The MMA Underwriting Agreement is subject to the following conditions precedent:

2.3.1 by not later than 5 October 2018, the Company receives firm commitments from Emira, in respect of the Emira Irrevocable Undertaking and the Funding Facility;

2.3.2 by not later than 21 November 2018, the JSE grants its formal written approval to the Circular to be issued to the Company’s shareholders;

2.3.3 by not later than 28 November 2018, the Company has obtained in writing unconditional debt finance, on terms acceptable to it, in the amount which is approximately R736 million;

63

2.3.4 by not later than 30 November 2018, the Board and Shareholders of the Company, as applicable, shall have passed such ordinary and special Resolutions as may be required in terms of the Companies Act or the Listings Requirements or any of the agreements entered into between the Company and Emira and/or the Management Company or in order to give effect to the Private Placement;

2.3.5 by not later than 7 December 2018, the acquisitions contemplated by the terms of the Sale Agreements are approved unconditionally by the Competition Authorities in terms of the Competition Act (or  alternatively, is approved upon such terms and conditions as are reasonably acceptable to the Company, in its sole discretion);

2.3.6 by not later than 14 December 2018, the Company raises no less than R491 million of the equity portion of the Purchase Consideration;

2.3.7 by not later than 14 December 2018, the Company shall have filed all forms and made all filings covering the registration of the sale of the Underwriting Shares under the Companies Act or the Listings Requirements and that such registration will be effective and no stop order or suspension of effectiveness or any post-effective amendment thereto shall have been issued;

2.3.8 by no later than the 14 December 2018, the Underwriting Shares shall have been approved for listing on the JSE; and

2.3.9 by not later than 14 December 2018, that all the Sale Agreements become unconditional in accordance with their terms, save for any terms requiring that the underwrite agreement be entered into and become unconditional.

3. EMIRA IRREVOCABLE UNDERTAKING AND FUNDING FACILITY

Details of the Emira Irrevocable Undertaking and Funding Facility are set out below:

3.1 Emira, which is already a 9.9% Shareholder, has provided an irrevocable commitment to subscribe for such additional Transcend Shares as will ensure that following the implementation of the Private Placement, Emira will hold a minimum 25.1% of Transcend Shares and up to a maximum of 34.9% of the Transcend Shares in issue at a price of R6.29 per share plus the Antecedent Divestiture, being a total maximum of c. R327 million.

3.2 Furthermore, Emira shall have the right to and has provided an irrevocable commitment to Transcend, that for a period of 18 months from the day of the Private Placement it shall, subscribe (in one or more transactions) for such number of Shares as would result in Emira’s shareholding in the Company, after each such subscription, being not less than 25.1% but not more than 34.9%, at a price equal to the 30-day volume weighted average price up to the relevant subscription date;

3.3 It is anticipated that a director of Emira will be nominated for approval to be appointed to the Transcend Board subsequent to the implementation of the Proposed Transactions;

3.4 Emira has underwritten R105 million of the Proposed Transactions of the remaining Equity Amount (through a Funding Facility) to the extent that there is a shortfall of the Private Placement in respect of the Proposed Transactions, the salient details of which include inter alia the following:• Transcend has the option to draw down on the Funding Facility post the Private Placement and will pay

interest at JIBAR plus 3.5% until the Funding Facility has been repaid;• The Funding Facility will be repayable within 18 months from the Advance Date;• Emira will be paid an underwriting fee in an amount equal to 1.5% of the Emira Funding Commitment.

64

Annexure 6

FORECAST STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF THE IHS RES 1 PROPERTIES AND PROTEA GLEN AND THE COMBINED IHS RES 1 PROPERTIES AND PROTEA GLEN

Set out below are the separate forecast statements of profit or loss and other comprehensive income of the IHS Res 1 Properties (“IHS Res 1 Properties Forecasts”) and Protea Glen (“Protea Glen Forecasts”) (collectively “Forecasts”) on stand-alone basis’ for the one-month ending 31 December 2018 and the 12 months ending 31 December 2019 (collectively the “Forecast Periods”).

The Forecasts have been prepared in terms of the following over riding assumptions:1. The conditions precedent specified in the Sale Agreements will have been met by the Effective Date, being 1 December

2018, and therefore, the risks and rewards of ownership will have transferred to Transcend by this date. As a result, Transcend will be able to recognise 100% of the income and expenditure from the IHS Res 1 Properties and Protea Glen, including all IHS Res 1 and Protea Glen Units, to be transferred from the Effective Date.

2. The 82 449 464 Subscription Shares will rank for dividends with effect from 1 December 2018.3. An amount of R518 607 129 is raised through the issue of the 82 449 464 Subscription Shares at the issue price.

The Forecasts, including the assumptions on which they are based and the financial information from which they are prepared, are the responsibility of the Directors. The IHS Res 1 Properties Forecasts, Protea Glen Forecasts and collectively the Forecasts must be read in conjunction with the Independent Reporting Accountant’s report thereon which is attached as Annexure 7.

The IHS Res 1 Properties Forecasts, Protea Glen Forecasts and collectively the Forecasts have been prepared on the following basis:• in accordance with Transcend’s accounting policies which are compliant with IFRS;• in relation to each of the IHS Res 1 Properties and Protea Glen and collectively the IHS Res 1 Properties and the Protea

Glen only;• all of the properties in the IHS Res 1 Properties and Protea Glen are revenue generating and are held as investment

properties; and• the gross rental income, net of a 7.5% vacancy provision, in respect of Protea Glen is underwritten in terms of the Protea

Glen Sale Agreement.

The IHS Res 1 Properties Forecasts, Protea Glen Forecasts and collectively the Forecasts have been prepared in accordance with paragraph 21.3(f) of the Listings Requirements. An inspection of 70% of the contracted lease agreements has not been undertaken by the Independent Reporting Accountant in respect of the IHS Res 1 Properties Forecasts as the leases are all generic in nature and are short-term as detailed in points 1 and 2 below. The audit work has focused on analyses of the historical financial information of the IHS Res 1 Properties. The Report of Special Purpose Carve-Out Historical Financial Information of the IHS Res 1 Properties is set out in Annexure 16 to this Circular and the Report of Special Purpose Carve-Out Interim Historical Financial Information of the IHS Res 1 Properties is set out in Annexure 14. The net rental income in respect of Protea Glen is 100% underwritten in terms of the Protea Glen Sale Agreement for the period 1 December 2018 to 30 November 2019 and, therefore, no inspection of the contracted lease agreements is required for this period. Recoveries for the full Forecast Periods and rental income for the one month from 1 to 31 December 2018 is not guaranteed in terms of the Protea Glen Sales Agreement but, as this rental income contributes less than 1% of the total forecast revenue per the combined forecast for the 12 months ended 31 December 2019, it is considered to be immaterial and no inspection of Protea Glen Leases has been performed.

Basis of preparation – IHS Res 1 Properties Forecasts

The IHS Res 1 Properties Forecasts have been prepared utilising the following financial and other information:• the IHS Res 1 Sale Agreements;• Rent rolls in respect of each of the IHS Res 1 Properties as at 30 September 2018;• Existing IHS Res 1 Leases in respect of 5% of the total IHS Res 1 Leases for each of the IHS Res 1 Properties;• MDA tenant retention and letting activity report as at 30 September 2018;• Historical vacancies and bad debt history for each of the IHS Res 1 Properties;

65

• Historical vacancy allowance for each of the IHS Res 1 Properties;• The individual trial balances for each of the IHS Res 1 Properties for the six months ended 30 June 2018 and the

12 months ended 31 December 2017, 2016 and 2015;• Quotations and historical costs in respect of allocated expenses such as audit fees and directors’ costs; and• The Directors’ knowledge and experience in the residential property industry.

The IHS Res 1 Properties rental revenue is short-term in nature and consists of the following categories of rental revenue:

1. Tenants with 12-month IHS Res 1 Leases which constitute 21% and 4% of the total rental income for the IHS Res 1 Properties for the one month ended 31 December 2018 and the 12 months ended 31 December 2019:

1.1 Contracted rental revenue which means rental income that relates to:

1.1.1 Rental income for a maximum period of 12 months which constitutes the length of the legally binding 12 month IHS Res 1 Leases. Once the 12 month IHS Res 1 Leases expire, they revert to month-to-month rental arrangements that continue until such time as the rental agreements are terminated either on 21 business days’ notice by the tenant or by Transcend;

1.1.2 Rental income that is derived in terms of the month-to-month rental arrangements that exist subsequent to the expiry of the initial 12 month period of the IHS Res 1 Leases and up until the end of the average tenancy period of 15 months (i.e. 3 months from the start date of the 12-month IHS Res 1 Leases); and

1.2 Un-contracted rental income constitutes forecast rental revenue that will be derived from new rental agreements with new tenants during the Forecast Periods. The assumptions on which the un-contracted rental income has been based are set out below.

2. Tenants with month-to-month lease agreements which constitute 49% and 25% of the total rental income for the IHS Res 1 Properties for the one month ended 31 December 2018 and the 12 months ended 31 December 2019:

2.1 Contracted rental revenue means rental revenue that is short-term in nature and relates to:

2.1.1 the initial period during which all tenants are covered by legally binding IHS Res 1 Leases due to the notice period obligation being 21 business days (“Initial Period”);

2.1.2 In the period subsequent to the Initial Period, which income is subject to an automatic renewal (unless express termination notice has been given by Transcend or the lessee), but which is not guaranteed due to the tenants and/or Transcend’s ability to terminate the IHS Res 1 Leases with a 21 business day notice period, and comprises of the period from the expiry of the contracted rental revenue during the Initial Period until the end of the average tenancy period of 15 months (i.e. 15 months from the start date of the month-to-month agreement) for IHS Res 1 Properties (“Renewal Period”);

2.2 Un-contracted rental revenue constitutes forecast rental revenue that will be derived from new rental agreements with new tenants during the Forecast Periods.

3. No rental revenue is categorised as near contracted rental revenue.

Basis of preparation – Protea Glen Forecasts

The Protea Glen Forecast has been prepared utilising the following financial and other information:

For the period from 1 December 2018 to 30 November 2019:• The Protea Glen Sale Agreement;• The individual trial balances for Protea Glen for the six months ended 30 June 2018 and the 12 months ended

31 December 2017, 2016 and 2015 (for purposes of expenses and recoveries);• Quotations and historical costs in respect of allocated expenses such as audit fees and Directors’ costs.

4. The net rental revenue in respect of Protea Glen is underwritten by a 100% rental guarantee from the Effective Date for a period of 12 months (i.e. 1 December 2018 to 30 November 2019). This guarantee effectively underwrites the gross rental income net of a vacancy provision of 7.5%. As a consequence, the net rental revenue in respect of Protea Glen for this period is all contracted rental revenue.

5. Recoveries do not form part of the rental guarantee and have been classified in line with the underlying Protea Glen Lease agreement. Rental income relating to Protea Glen that is derived in terms of the month-to-month rental arrangements that exist subsequent to the Initial Period and up until the end of the average tenancy period of 27 months (i.e. 27 months from the start date of the month-to-month agreement) is classified as contracted rental revenue and, therefore, the recoveries for this period are also classified as contracted rental revenue.

66

For the period from 1 December 2018 to 30 November 2019:• Rent rolls in respect of Protea Glen as at 30 September 2018;• MDA tenant retention and letting activity report as at 30 September 2018;• Historical vacancies and bad debt history for Protea Glen; and• Historical vacancy allowance for Protea Glen.

Protea Glen rental revenue is short-term in nature and consists of the following categories of rental revenue:

6. Contracted rental revenue which comprises of rental income that is derived in terms of the month-to-month rental arrangements that exist subsequent to the expiry of the 12 month rental guarantee and up until the end of the average tenancy period of 27 months (i.e. 27 months from the start date of the month-to-month agreement) for Protea Glen; and

7. Recoveries are categorised in line with the revenue from the underlying Protea Glen Lease agreements.

The forecast statements of profit and loss and other comprehensive income for each of the IHS Res 1 Properties Forecasts, Protea Glen Forecasts and collectively the Forecasts:

1 2 3 4 5 6

R’000

IHS Res 1 Properties

forecast for the

one month ending

31 Dec 2018

Protea Glen forecast

for the one month

ending 31 Dec 2018

Total forecast

for the one month

ending 31 Dec 2018

IHS Res 1 Properties

forecast for the

12 months ending

31 Dec 2019

Protea Glen forecast

for the 12 months

ending 31 Dec 2019

Total forecast

for the 12 months

ending 31 Dec 2019

Property revenue 15 141 903 16 044 179 404 11 288 190 692

Rental income 14 110 747 14 857 166 334 9 329 175 663Recoveries 1 031 157 1 188 13 070 1 959 15 029

Direct property costs (5 043) (427) (5 470) (60 161) (4 963) (65 124)

Net property operating income 10 098 476 10 574 119 243 6 326 125 568

Admin expenses (659) (35) (693) (8 086) (423) (8 509)

Property admin (79) (10) (88) (1 130) (123) (1 252)Management fee (580) (25) (605) (6 957) (300) (7 257)

Operating profit 9 439 442 9 881 111 156 5 903 117 059Fair value adjustments 179 004 869 179 872 – – –Interest income – – – – – –Interest expense (5 620) (279) (5 899) (67 445) (3 345) (70 790)

Profit before tax 182 823 1 032 183 854 43 711 2 558 46 269

Taxation expense – – – – – –

Profit for the period 182 823 1 032 183 854 43 711 2 558 46 269

Distributable earnings 182 823 1 032 183 854 43 711 2 558 46 269

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Reconciliation between earnings and headline earnings per Share

1 2 3 4 5 6

R’000

IHS Res 1 Properties

forecast for the

one month ending

31 Dec 2018

Protea Glen forecast

for the one month

ending 31 Dec 2018

Total forecast

for the one month

ending 31 Dec 2018

IHS Res 1 Properties

forecast for the

12 months ending

31 Dec 2019

Protea Glen forecast

for the 12 months

ending 31 Dec 2019

Total forecast

for the 12 months

ending 31 Dec 2019

Profit for the year attributable to shareholders 182 823 1 032 183 854 43 711 2 558 46 269Gain/(loss) on fair value adjustment of investment properties (179 004) (869) (179 872) – – –Headline earnings attributable to shareholders 3 819 163 3 982 43 711 2 558 46 269Earnings per Share (in cents) 122.90 0.69 123.60 29.38 1.72 31.10Headline earnings per Share (in cents) 2.57 0.11 2.68 29.38 1.72 31.10Weighted average number of shares in issue 148 755 148 755 148 755 148 755 148 755 148 755

Analysis of contractual nature of rental revenue

One month ending 31 December 2018 12 months ending 31 December 2019

IHS Res 1 Properties

Protea Glen Total

IHS Res 1 Properties

Protea Glen Total

Twelve-month leases 21% – 20% 4% – 4%Month-to-month leases 49% – 47% 26% 3% 25%Rental guarantee – 93% 4% – 85% 4%Uncontracted 30% 7% 29% 70% 12% 67%

TOTAL 100% 100% 100% 100% 100% 100%

Assumptions that are under the control of the Directors

Twelve-month lease agreements – contracted revenue

1. Contracted rental revenue has been determined for each Property based on the starting dates of each existing 12 month IHS Res 1 Leases;

2. Twelve-month IHS Res 1 Leases in respect of 5% of the forecast contracted rental revenue for each of the Forecast Periods ending 31 December 2018 and 31 December 2019, respectively, were inspected by KPMG as part of their procedures relating to the forecast financial procedures; and

3. Based on the average historical occupancy profile for the IHS Res 1 Properties of 15 months, the forecast includes rental revenue for an additional period of three months subsequent to the expiry of the 12 month IHS Res 1 Leases in the category of contracted rental revenue;

Month-to-month lease agreements – contracted revenue

1. The Initial Period contracted rental revenue includes the first 21 business day period of rental revenue from all month-to-month IHS Res 1 Leases in existence on 1 December 2018;

2. Month-to-month IHS Res 1 Leases in respect of 5% of the forecast contracted rental revenue for each of the Forecast Periods ending 31 December 2018 and 31 December 2019, respectively, were inspected by KPMG as part of their procedures relating to the forecast financial procedures;

3. The rental revenue has been determined for the IHS Res 1 Properties based on the existing month-to-month IHS Res 1 Leases and the average historical occupancy profile of 15 months; and

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4. The Renewal Period rental revenue subsequent to the rental guarantee period has been determined for Protea Glen in respect of the one-month period from 1 to 31 December 2019 based on the existing month-to-month Protea Glen Leases and the average historical occupancy profile of 29 months. In addition, the recoveries relating to Protea Glen have been determined for the full Forecast Periods based on the revenue categorisation of the related Protea Glen Lease agreement and an average historical vacancy profile of 27 months.

Guaranteed revenue – contracted revenue

1. The net rental revenue in respect of Protea Glen is underwritten by a 100% rental guarantee from the Effective Date for a period of 12 months (i.e. 1 December 2018 to 30 November 2019). This guarantee effectively underwrites the gross rental income net of a vacancy provision of 7.5%.

Un-contracted revenue

1. Un-contracted rental revenue has been calculated as the total potential rental revenue that could be generated if all the IHS Res 1 Units were tenanted less a vacancy allowance less contracted revenue. The vacancy allowance has been calculated on a property-by-property basis taking into account the experience of the executive management team and available historical data for each of the IHS Res 1 Properties. The average vacancy allowance for the IHS Res 1 Properties, excluding Midrand Village and De Velde, is 5%. The average vacancy for Midrand Village and De Velde is 8%;

2. The vacancy allowance takes into account the anticipated void period prior to a unit being re-tenanted and a bad debts provision for the IHS Res 1 Properties; and

3. Uncontracted revenue in respect of recoveries and Protea Glen for the one-month ending 31 December 2019 has been determined based on points 1 and 2 above. The average vacancy for Protea Glen is 7.5%.

Escalations

1. The forecast average annual rental escalations for the IHS Res 1 Properties ranges from 0% to 4% for the six months ended 30 June 2018, 1% to 5% for the 12 months ending 31 December 2018 and 1% to 5% for the 12 months ending 31 December 2019.

Other income

1. Recoveries of operating costs are recognised as part of revenue and the related costs are recognised as part of property operating expenses.

Expenditure

1. A comparison of the forecast and historical expenditures on an annualised basis, incurred on an aggregated basis for the IHS Res 1 Properties and Protea Glen for the six months ended 30 June 2018 and the 12 months ended 31 December 2017, was conducted. No expenditure items are forecast to increase by 15% or more for the 12 months ended 31 December 2019.

Assumptions that are not under the control of the Directors

No unforeseen market and economic factors that will affect tenants’ ability to meet their commitments in terms of existing IHS Res 1 Properties and Protea Glen have been included in the IHS Res 1 Properties Forecast, Protea Glen Forecasts and collectively the Forecasts.

Bad debts will remain at the level experienced for the six-months ended 30 June 2018 and the 12 months ended 31 December 2017, being an average of 1.5% and 2% of total revenue, respectively.

No increase or decrease in the fair value of properties will occur during the Forecast Periods other than the fair value adjustments arising due to the purchase considerations for the IHS Res 1 properties and Protea Glen being at a discount to the fair values.

Finance costs are calculated using an effective interest rate of 9.1% (based on three facilities of a three-year facility of JIBAR plus 190 bps, five-year facility of JIBAR plus 225 bps and a facility of prime minus 1 percentage point) for the Forecast Periods or the purposes of the IHS Res 1 Properties Forecasts, Protea Glen Forecasts and collectively the Forecasts.

69

Annexure 7

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE FORECAST STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF THE IHS RES 1 PROPERTIES, PROTEA GLEN AND THE COMBINED IHS RES 1 PROPERTIES AND PROTEA GLEN

The DirectorsTranscend Residential Property Fund Limited54 Peter PlaceBlock GPeter Place Office ParkBryanston, 2191

Dear Sirs

16 November 2018

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE FORECAST STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME OF THE IHS RES 1 PROPERTIES, PROTEA GLEN AND THE COMBINED IHS RES 1 PROPERTIES AND PROTEA GLEN

The definitions commencing on page 6 of the Circular apply mutatis mutandis to this report

Report on the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen forecast information

We have undertaken a reasonable assurance engagement in respect of the property forecasts of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen for the one-month ending 31 December 2018 and the 12 months ending 31 December 2019, as set out in Annexure 6 of the Circular to Transcend Shareholders to be issued on or about Wednesday, 21 November, comprising the forecast statements of profit or loss and other comprehensive income and the vacancy and lease expiry profile of the IHS Res 1 Properties, Protea Glen and the combined IHS Res 1 Properties and Protea Glen (the “Forecast Information”), as required by paragraphs 8.35 to 8.44 of the Listings Requirements.

We have also undertaken a limited assurance engagement in respect of the Directors’ assumptions used to prepare and present the Forecast Information, as set out in the assumptions to the Forecast Information presented in Annexure 6, as required by paragraph 8.43 of the Listings Requirements.

Directors’ responsibility for the Forecast Information and for the assumptions used to prepare the Forecast Information

The Directors are responsible for the preparation and presentation of the Forecast Information and for the reasonableness of the assumptions used to prepare the Forecast Information as set out in the assumptions to the Forecast Information presented in Annexure 6 in accordance with paragraphs 8.35 to 8.44 of the Listings Requirements (“Listings Requirements relating to Forecast Information”). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the Forecast Information on the basis of those assumptions that is free from material misstatement, whether due to fraud or error.

Inherent limitations

Actual results are likely to be different from the Forecast Information since anticipated events frequently do not occur as expected and the variation may be material. Consequently, readers are cautioned that the Forecast Information may not be appropriate for purposes other than described in the purpose of the report paragraph below.

Our independence and quality control

We have complied with the independence and other ethical requirements of the Code of Professional Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors (IRBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The IRBA Code is consistent with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (Part A and B).

70

KPMG Inc. applies the International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Part A – Limited assurance engagement on the reasonableness of the Directors’ assumptions

Reporting accountant’s responsibility

Our responsibility is to express a limited assurance conclusion on whether anything has come to our attention that causes us to believe that the assumptions do not provide a reasonable basis for the preparation and presentation of the Forecast Information in accordance with the Listings Requirements relating to Forecast Information, based on the procedures we have performed and the evidence we have obtained. We conducted our limited assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE 3400), The Examination of Prospective Financial Information (ISAE 3400), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain limited assurance about whether the Directors’ assumptions provide a reasonable basis for the preparation and presentation of the Forecast Information.

A limited assurance engagement undertaken in accordance with ISAE 3400 involves assessing the source and reliability of the evidence supporting the Directors’ assumptions. Sufficient appropriate evidence supporting such assumptions would be obtained from internal and external sources including consideration of the assumptions in the light of historical information and an evaluation of whether they are based on plans that are within the entity’s capacity. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks.

The procedures we performed were based on our professional judgement and included inquiries, observations of processes performed, inspection of documents, analytical procedures, evaluating the reasonableness of best-estimate assumptions and agreeing or reconciling with underlying records.

Our procedures included evaluating the Directors’ best-estimate assumptions on which the Forecast Information is based for reasonableness.

The procedures performed in a limited assurance engagement are less in extent than for, and vary in nature from, a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether the Directors’ assumptions provide a reasonable basis for the preparation and presentation of the Forecast Information.

Limited assurance conclusion on the reasonableness of the Directors’ assumptions

Based on the procedures we have performed and evidence we have obtained, nothing has come to our attention that causes us to believe that the Directors’ assumptions do not provide a reasonable basis for the preparation and presentation of the Forecast Information.

Part B – Reasonable assurance engagement on the Forecast Information

Reporting accountant’s responsibility

Our responsibility is to express an opinion based on the evidence we have obtained about whether the Forecast Information is properly prepared and presented on the basis of the Directors’ assumptions disclosed in the assumptions to the Forecast Information presented in Annexure 6 (the “Assumptions”) and in accordance with the Listings Requirements relating to Forecast Information. We conducted our reasonable assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE 3400), The Examination of Prospective Financial Information (ISAE 3400), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether such Forecast Information is properly prepared and presented on the basis of the Assumptions disclosed in the notes to the Forecast Information presented in Annexure 6 and in accordance with the Listings Requirements relating to Forecast Information.

A reasonable assurance engagement in accordance with ISAE 3400 involves performing procedures to obtain evidence that the Forecast Information is properly prepared and presented on the basis of the assumptions and in accordance with the Listings Requirements relating to Forecast Information. The nature, timing and extent of procedures selected depend on the reporting accountant’s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error, of the Forecast Information. In making those risk assessments, we considered internal control relevant to the Directors’ preparation and presentation of the Forecast Information.

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Our procedures included:• Inspecting whether the Forecast Information is properly prepared on the basis of the assumptions;• Inspecting whether the Forecast Information is properly presented and all material assumptions are adequately disclosed,

including a clear indication as to whether they are best-estimate assumptions; and• Inspecting whether the forecast statement of profit or loss and other comprehensive income is prepared on a consistent

basis with the historical financial statements, using appropriate accounting policies.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion on the Forecast Information

In our opinion, the Forecast Information, for the one-month ending 31 December 2018 and the 12 months ending 31 December 2019, is properly prepared and presented on the basis of the assumptions and in accordance with the Listings Requirements relating to Forecast Information.

Purpose of the report

This report has been prepared for the purpose of satisfying the requirements of paragraph 8.40 of the Listings Requirements and for no other purpose.

KPMG Inc.Registered Auditor

GS KolbéChartered Accountant (SA)Registered AuditorDirector

16 November 2018

KPMG Crescent85 Empire RoadParktown, 2193, (Private Bag 9, Parkview, 2122)

72

Annexure 8

PRO FORMA STATEMENT OF FINANCIAL POSITION OF TRANSCEND

The pro forma statement of financial position of Transcend has been prepared to illustrate the effect of the acquisition of the IHS Res 1 Properties and Protea Glen (the “Acquisitions”) on Transcend.

The Acquisitions are assumed to have occurred on 30 June 2018 and are based on Transcend’s published interim financial information as at 30 June 2018. The Acquisitions have been treated as acquisitions of assets for accounting purposes and not as a business combination in terms of IFRS 3: Business Combinations.

In October 2018, the IASB issued amendments to IFRS 3 Business Combinations which are effective for years beginning on or after 1 January 2020. These amendments may be early adopted. Transcend has elected to early adopt these amendments as at 31 October 2018.

The definition of a business has been updated in this amendment. Per the amendment, in order to assess whether a transaction is the acquisition of a business, an entity first assesses whether substantially all of the fair value of the gross assets acquired are concentrated in a single asset or group of similar assets. If the fair value is concentrated in this way then the transaction is not the acquisition of a business.

It is our understanding that substantially all of the fair value of the gross assets acquired by Transcend in the acquisition of the rental enterprises are concentrated in the properties hence the transaction is not considered to be the acquisition of a business under IFRS 3.

The pro forma statement of financial position of Transcend has been prepared for illustrative purposes only and because of its nature may not fairly present Transcend’s financial position and changes in equity after the Acquisitions.

The pro forma statement of financial position of Transcend has been prepared using accounting policies that comply with IFRS and that are consistent with those applied in the published interim financial information of Transcend for the six months ended and as at 30 June 2018.

The pro forma statement of financial position of Transcend has been prepared in accordance with the Listings Requirements and the South African Institute of Chartered Accountants Guide on Pro forma Financial Information (revised and issued in September 2014) and are the responsibility of the Directors.

KPMG’s reporting accountant’s report on the pro forma statement of financial position of Transcend is set out in Annexure 9 to this Circular.

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The pro forma statement of financial position of Transcend as at 30 June 2018 is set out in the following table:

R’000

Published Transcend

as at 30 June 2018

Pro forma adjustments

for IHS Res 1 – at acquisition

Pro forma adjustments

for Protea Glen – at acquisition

Pro forma adjustments

for the Acquisitions –

at year endPost the

Acquisitions

ActualR’000

Column 1

Pro formaR’000

Column 2

Pro formaR’000

Column 3

Pro formaR’000

Column 4

Pro formaR’000

Column 5

ASSETS      Non-current assets 1 221 001 1 218 396 60 421 179 872 2 679 691

Investment property 1 219 201 1 218 396 60 421 179 872 2 677 891Property and equipment 1 800 – – – 1 800

Current assets 45 454 – – – 45 454

Trade and other receivables 4 018 – – – 4 018Cash and cash equivalents 41 436 – – – 41 436

Total assets 1 266 455 1 218 396 60 421 179 872 2 725 145

EQUITY AND LIABILITIES  Shareholders’ interest 687 944 477 240 23 667 179 872 1 368 723

Stated capital 632 276 483 781 23 991 – 1 140 048Retained earnings 55 668 (6 541) (324) 179 872 228 675

Non-current liabilities 503 862 741 156 36 755 – 1 281 773

Interest-bearing borrowings 502 910 741 156 36 755 – 1 280 821Derivative liabilities 952 – – – 952Current liabilities 74 649 – – – 74 649

Short-term portion of interest-bearing borrowings 52 467 – – – 52 467Trade and other payables 21 174 – – – 21 174Provision for audit fees 398 – – – 398Derivative liabilities 610 – – – 610Current taxation – – – – –

Total equity and liabilities 1 266 455 1 218 396 60 421 179 872 2 725 145

Number of Shares 66 305 662 78 553 907 3 895 557 – 148 755 126NAV and TNAV per share (Rand) 10.38 – 9.20

Notes and assumptions:

1. Column 1 presents the statement of financial position of Transcend, which has been extracted, without adjustment, for the published interim financial information of Transcend for the six months as at 30 June 2018.

2. Columns 2 and 3 presents the financial effects of the Acquisitions as if the Proposed Transactions had been effective on the effective date of 30 June 2018, as follows:2.1 Investment property has been adjusted to include the IHS Res 1 Properties and Protea Glen at the purchase considerations (cost prices) of

R1 209.9 million and R60 million respectively, plus the property transfer and bond registration costs amounting to R8.9 million which have been capitalised to investment property in terms of IAS 40: Investment Property read together with IAS 16: Property, Plant and Equipment;

2.2 Retained loss has been adjusted for R6.8 million of the transaction costs which have been expensed in terms of IAS 32: Financial Instruments: Presentation;

2.3 Stated capital has been adjusted for the 82 449 464 new Transcend Shares that will be issued at a price of R6.29 in settlement of 40% of the purchase considerations plus the transaction costs, property transfer and bond registration costs, amounting to R518.6 million ((purchase consideration for the IHS Res 1 Properties of R1 209.9 million plus transaction costs of R25.36 million) * 40% + (purchase consideration for Protea Glen of R60 million plus transaction costs of R1.26 million) * 40%)). Stated capital has been further adjusted for the R10.8 million of transaction costs which have been capitalised in terms of IAS 32: Financial Instruments: Presentation; and

74

2.4 Interest-bearing borrowings has been adjusted for the 60% of the purchase consideration plus the transaction costs, property transfer and bond registration costs, amounting to R777.9 million ((purchase consideration for IHS Res 1 Properties of R1 209.9 million plus transaction costs of R25.36 million) * 60% + (purchase consideration for Protea Glen of R60 million plus transaction costs of R1.26 million) *40%)) that will be settled through debt as detailed on page 16 of this Circular.

3. Column 4 presents the financial effects of the revaluation of the IHS Res 1 Properties and Protea Glen to fair value assuming that the Effective Date and the financial year-end were both 30 June 2018, as follows:3.1 The IHS Res 1 Properties and Protea Glen acquisitions have been treated as asset acquisitions in terms of the amendments to IFRS 3: Business

Combinations issued in October 2018 which Transcend has elected to early adopt. In terms of the amendments, if substantially all of the fair value of the gross assets acquired are concentrated in a single asset or group of similar assets, then the transaction is not the acquisition of a business. This is the case in respect of the Proposed Transactions and, therefore, the Acquisitions are not considered to be the Acquisitions of a business under IFRS 3.

3.2 Investment property and retained earnings have been adjusted to reflect investment property at fair value at year end, in terms of IAS 40 Investment Property. The fair value per the pro forma statement of financial information equals the fair values of investment property reflected in the Report of Interim Special Purpose Carve-Out Historical Financial Information. The fair value of the IHS Res 1 Properties and Protea Glen amounts to R1 397.4 million and R61.29 million respectively, and takes into consideration the fair value per the Independent Property Valuers market valuations as set out in Annexure 4.

3.3 The IFRS 13 Fair Value Measurement and IFRS 1 Presentation of Financial Statements information relating to the IHS Res 1 Properties is included in note 4 to the Interim Special Purpose Carve-Out Historical Financial Information included as Annexure 14 to this Circular. Discount to valuation amount: Recently PSP made a decision to exit all investments it holds in the African market in the short-term. By taking this decision it would need to divest of its 95% interest in IHS Res 1 business which facilitated the sale of the IHS Res 1 Properties. These properties were placed on the market and Transcend made an offer of R1 209.9 million to IHS Res 1 in respect of the IHS Res 1 Properties. This is below the independent property valuation values of R1 397.4 million (an offer accepted by IHS Res 1 as the Purchase Consideration). The discount of price to valuation amount is a direct result of PSP seeking an immediate exit from its investments in Africa and represents a fair selling price between a willing buyer and willing seller.

4. The IFRS 13 Fair Value Measurement and IFRS 1 Presentation of Financial Statements information relating to Protea Glen is set out as follows:

Protea GlenErven 8487 and 8488 Protea Glen Extension 11, Kganwe Street, Protea Glen, Soweto– Purchase price 60 000 000– Fair value adjustment 1 290 000– Capitalised expenditure –

61 290 000

5. The reconciliation of the pro forma shareholders interest for Transcend subsequent to the Acquisition is as follows:

R’000 Stated capital Retained earnings Shareholders’ interest

Opening balance 30 June 2018 632 276 55 668 687 944Issue of new Transcend shares 518 607 – 518 607Transaction costs capitalised (10 835) (10 835)Transaction costs expensed – (6 866) (6 866)Fair value adjustment – 179 872 179 872

1 140 048 228 675 1 368 723

75

Annexure 9

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE COMPILATION OF THE PRO FORMA STATEMENT OF FINANCIAL POSITION OF TRANSCEND

The DirectorsTranscend Residential Property Fund Limited54 Peter PlaceBlock GPeter Place Office ParkBryanston, 2191

16 November 2018

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE COMPILATION OF THE PRO FORMA STATEMENT OF FINANCIAL POSITION OF TRANSCEND

The definitions commencing on page 6 of the Circular apply mutatis mutandis to this report.

Introduction

We have completed our assurance engagement to report on the compilation of the Pro forma statement of financial position of Transcend by the Directors of the Company (the “Directors”), which comprises the Pro forma net asset value and net tangible asset value per share of Transcend, the Pro forma statement of financial position of Transcend as at 30 June 2018 and the related notes and assumptions, including a reconciliation showing all of the Pro forma adjustments to the stated capital and retained earnings relating to Transcend, subsequent to the acquisitions of the IHS Res 1 Properties and Protea Glen (collectively “Pro forma SOFP”). The Pro forma net asset value and net tangible asset value per share of Transcend are set out in paragraph 4.2 of the Circular and the Pro forma SOFP is set out in Annexure 8 of the Circular. The Pro forma SOFP has been compiled on the basis of the applicable criteria specified in the paragraph entitled Directors’ Responsibility for the Pro Forma SOFP set out below.

The Pro forma SOFP has been compiled by the Directors to illustrate the impact of the acquisitions of the IHS Res 1 Properties and Protea Glen (the “Acquisitions”) on the Pro forma statement of financial position and the related notes, including a reconciliation showing all of the pro forma adjustments to the stated capital and retained earnings relating to Transcend.

As part of this process, Transcend’s net asset value and net tangible asset value per share and statement of financial position have been extracted by the Directors from Transcend’s published financial information for the six months ending and as at 30 June 2018 (the “Published Financial Information”).

Directors’ Responsibility for the Pro forma SOFP

The Directors are responsible for compiling the Pro forma SOPF on the basis of the applicable criteria as detailed in paragraph 13.16, read together with paragraphs 8.15 to 8.33, of the Listings Requirements and the SAICA Guide on Pro forma Financial Information, revised and issued in September 2014 (the “Applicable Criteria”), as applicable.

Independent Reporting Accountant’s Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Professional Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors (IRBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The IRBA Code is consistent with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (Part A and B).

KPMG Inc. applies the International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

76

Independent Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion about whether the Pro forma SOFP has been compiled, in all material respects, by the Directors on the basis of the Applicable Criteria.

We conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus, issued by the International Auditing and Assurance Standards Board. This standard requires that the reporting accountant complies with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled, in all material respects, the Pro forma SOFP on the basis of the Applicable Criteria.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on the Published Financial Information used in compiling the Pro forma SOFP. We have performed a review of the Report of Interim Special Purpose Carve-Out Historical Financial Information used in compiling the Pro forma SOFP. Our reporting accountant’s report on the Report of Interim Special Purpose Carve-Out Historical Financial Information is included as Annexure 14 to this Circular.

The purpose of the Pro forma SOFP included in the Circular is solely to illustrate the impact of the Acquisitions on the unadjusted Published Financial Information as if the Acquisitions had been undertaken on 30 June 2018 for purposes of the pro forma net asset value and net tangible asset value per share and pro forma statement of financial position. Accordingly, we do not provide any assurance that the actual outcome of the Acquisitions, subsequent to its implementation, will be as presented in the Pro forma SOFP.

A reasonable assurance engagement to report on whether the Pro forma SOFP has been properly compiled, in all material respects, on the basis of the Applicable Criteria involves performing procedures to assess whether the Applicable Criteria used by the Directors in the compilation of the Pro forma SOFP provide a reasonable basis for presenting the significant effects directly attributable to the Acquisitions and to obtain sufficient appropriate evidence about whether:

• The related pro forma adjustments give appropriate effect to the Applicable Criteria; and• The Pro forma SOPF reflects the proper application of those pro forma adjustments to the unadjusted Published Financial

Information.

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s understanding of the nature of Transcend, the Acquisitions in respect of which the pro forma SOFP has been compiled and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Pro forma SOFP.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Pro forma SOFP has been compiled, in all material respects, on the basis of the Applicable Criteria.

KPMG Inc.Registered Auditor

Per GS KolbéChartered Accountant (SA)Registered AuditorDirector

16 November 2018

KPMG Crescent85 Empire RoadJohannesburg2193(Private Bag 9, Parkview, 2122)

77

Annexure 10

REPORT OF THE PRO FORMA STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR TRANSCEND FOR THE SIX MONTHS ENDED 30 JUNE 2018

Introduction

The definitions commencing on page 6 of the Circular have been used throughout this Annexure 10.

As detailed in the Circular, Transcend holds the Existing Portfolio of 14 income generating residential properties located across South Africa and is listed as a REIT on the AltX. Transcend has recently entered into the IHS Res 1 Sale Agreements to acquire the 1 983 IHS Res 1 Units. The acquisition of the IHS Res 1 Properties constitutes a related party transaction and a reverse takeover in terms of the Listings Requirements.

The pro forma statement of profit or loss and other comprehensive income for Transcend (the “Pro forma SOCI”) for the six months ended 30 June 2018 has been prepared for illustrative purposes only to provide information about what Transcend would have looked like had the acquisition of the IHS Res 1 Properties taken place on 1 January 2018 and, because of its nature, it may not fairly present Transcend’s results of operations after the acquisition of the IHS Res 1 Properties. The Pro forma SOCI has been prepared in accordance with Transcend’s accounting policies as included in their published interim financial statements for the six ended 30 June 2018, which are compliant with IFRS.

The IHS Res 1 Properties comprises of 1 983 IHS Res 1 Units, each of which is transferred separately.

Given the volume of the IHS Res 1 Units to be transferred, it is anticipated that title to 100% of the IHS Res 1 Units will not be transferred into Transcend’s name on the Effective Date. The Directors do expect, however, that the conditions precedent specified in the IHS Res 1 Sale Agreements, including competition commission approval, will have been met by the Effective Date and, therefore, the risks and rewards of ownership will have transferred to Transcend by this date. Based  on  this understanding, Transcend expects to be able to recognise 100% of the rental revenue and 100% of the expenditure from each of the IHS Res 1 Units to be transferred from the Effective Date.

It has been assumed for purposes of the Pro forma SOCI that 78 553 907 Shares will be placed in terms of the Private Placement.

The Directors are responsible for the Pro forma SOCI.

78

Pro forma SOCI for the six months ended 30 June 2018

R’000 Before

Acquisitionsof the IHS

Res 1Properties

ConsolidationJournals

Interest Adjustments After

Published Pro forma Pro forma Pro forma Pro forma

Rental income from investment properties 71 482 75 666 – – 147 148Recoveries of operating costs from tenants 6 570 7 372 – – 13 942

Revenue 78 052 83 038 – – 161 090Property operating expenses (28 344) (27 467) (1 192) – (57 003)

Net operating income 49 708 55 571 (1 192) – 104 087Other operating expenses (4 578) (3 273) (6 866) – (14 717)

Operating profit 45 130 52 298 (8 058) – 89 370Unrealised gain/(loss) on interest rate swaps 1 466 – – – 1 466Gain/(loss) on fair value adjustment of investment properties – 22 887 (8 496) – 14 391Net finance charges (24 785) (34 424) – 701 (58 508)

Finance income 1 005 – – 1 005Finance costs (25 790) (34 424) – 701 (59 513)

Profit before taxation 21 811 40 761 (16 554) 701 46 719

Taxation – – – – –

Profit and total comprehensive income for the period 21 811 40 761 (16 554) 701 46 719

Reconciliation between earnings and headline earnings per ShareProfit for the year attributable to shareholders 21 811 40 761 – – 46 719Gain/(loss) on fair value adjustment of investment properties – (22 887) – – (14 391)Headline earnings attributable to shareholders 21 811 17 874 – – 32 329Earnings per Share (in cents) 32.89 32.25Headline earnings per Share (in cents) 32.89 22.32Weighted average number of shares in issue 66 306 144 860

Notes:1. The “Before” Column sets out the statement of profit or loss and other comprehensive income of Transcend for the six months ended 30 June 2018

extracted, without adjustment, from the published interim financial statements of Transcend for the six months ended and as at 30 June 2018;2. The ”Acquisition of the IHS Res 1 Properties” Column sets out the reviewed statement of profit or loss and other comprehensive income of the IHS

Res 1 Properties for the six months ended 30 June 2018 extracted, without adjustment, from the Report of Interim Special Purpose Carve-Out Historical Financial Information of the IHS Res 1 Properties for the six months ended 30 June 2018 included as Annexure 14 to this Circular. The fair value of the IHS Res 1 investment property at 31 December 2017 amounted to R1 374.5 million. The fair value of 30 June 2018 amounted to R1 397.4 million resulting in a fair value adjustment of R22.9 million for the six months ended 30 June 2018;

3. The “Consolidation Journals” Column includes the following pro forma adjustments:a. The expensing of transaction costs amounting to R6.5 million in terms of IAS 32: Financial Instruments: Presentation. These adjustments will

not have a continuing effect on the Pro forma SOCI;b. Property transfer and bond registration costs of R8.5 million;c. The reversal of the property management fee historical paid by the IHS Res 1 Properties to the asset manager amounting to R2.286 million.

This adjustment will have a continuing effect on the Pro forma SOCI;d. Included the management fee that will be paid by the IHS Res 1 Properties to Transcend amounting to R3.478 million. This adjustment will

have a continuing effect on the Pro forma SOCI.4. The “Interests Adjustment” illustrates the net effect of the following:

a. The reversal of the historical interest expense relating to the IHS Res 1 Properties as Transcend is only acquiring the properties and not the related debt amounting to R34.424 million. This adjustment will have a continuing effect on the Pro forma SOCI;

b. The inclusion of a notional interest expense arising due to the refinancing of debt to an amount of R33.723 million. The notional interest has been calculated using an average interest rate of 9.1%, calculated as the three-month JIBAR plus 215bps, for a period of six months. This adjustment will have a continuing effect on the Pro forma SOCI; and

5. The “After” Column illustrates the aggregated statement of profit or loss and other comprehensive income of Transcend after the adjustments detailed above.

79

Annexure 11

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE COMPILATION OF THE PRO FORMA STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR TRANSCEND FOR THE SIX MONTHS ENDED 30 JUNE 2018

The DirectorsTranscend Residential Property Fund Limited54 Peter PlaceBlock GPeter Place Office ParkBryanston, 2191

16 November 2018

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE COMPILATION OF THE PRO FORMA STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR TRANSCEND FOR THE SIX MONTHS ENDED 30 JUNE 2018

The definitions commencing on page 6 of the Circular apply mutatis mutandis to this report.

Introduction

We have completed our assurance engagement to report on the compilation of the pro forma statement of profit or loss and other comprehensive income for Transcend for the six months ended 30 June 2018 by the directors of the Company (the “Directors”). The pro forma statement of profit or loss and other comprehensive income for Transcend for the six months ended 30 June 2018 consists of the Pro forma earnings and diluted earnings, headline and diluted headline earnings of Transcend, the pro forma statement of profit or loss and other comprehensive income of Transcend and the related notes, subsequent to the acquisition of the IHS Res 1 Properties, detailed in Annexure 10 of the Circular (collectively the “Pro forma  SOCI”). The Pro forma SOCI has been compiled on the basis of the applicable criteria specified in the paragraph entitled Directors’ Responsibility for the Pro forma SOCI set out below.

The Pro forma SOCI has been compiled by the Directors to illustrate the impact of the acquisition of the IHS Res 1 Properties on the Pro forma SOCI and the related notes.

As part of this process, Transcend’s earnings, diluted earnings, headline earnings and diluted headline earnings and statement of profit or loss and other comprehensive income have been extracted by the Directors from Transcend’s published interim financial results for the six months ended 30 June 2018, incorporated by reference in this Circular (the “Published Interim Financial Information”).

Directors’ Responsibility for the Pro forma SOCI

The Directors are responsible for compiling the Pro forma SOCI on the basis of the applicable criteria as detailed in paragraphs 8.15 to 8.33 of the Listings Requirements and the SAICA Guide on Pro forma Financial Information, revised and issued in September 2014 (the “Applicable Criteria”), as applicable.

Independent Reporting Accountant’s Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Professional Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors (IRBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Part A and B).

KPMG Inc. applies the International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

80

Independent Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion about whether the Pro forma SOCI has been compiled, in all material respects, by the Directors on the basis of the Applicable Criteria.

We conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus, issued by the International Auditing and Assurance Standards Board. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled, in all material respects, the Pro forma SOCI on the basis of the Applicable Criteria.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on the Published Interim Financial Information used in compiling the Pro forma SOCI. We have performed a review of the Interim Special Purpose Carve-Out Historical Information used in compiling the Pro Forma SOCI. The Report of Interim Special Purpose Carve-Out Historical Information is included as Annexure 14 to the Circular.

The purpose of the Pro forma SOCI included in the Circular is solely to illustrate the impact of the acquisition of the IHS Res 1 Properties on the unadjusted Published Interim Financial Information as if the acquisition of the IHS Res 1 Properties had been undertaken on 1 January 2018 for purposes of the pro forma earnings, diluted earnings, headline earnings and diluted headline earnings per share and the pro forma statement of profit or loss and other comprehensive income. Accordingly, we do not provide any assurance that the actual outcome of the acquisition of the IHS Res 1 Properties, subsequent to their implementation, will be as presented in the Pro forma SOCI.

A reasonable assurance engagement to report on whether the Pro forma SOCI has been properly compiled, in all material respects, on the basis of the Applicable Criteria, involves performing procedures to assess whether the Applicable Criteria used by the Directors in the compilation of the Pro forma SOCI provides a reasonable basis for presenting the significant effects directly attributable to the acquisition of the IHS Res 1 Properties and to obtain sufficient appropriate evidence about whether:

• The related pro forma adjustments give appropriate effect to the Applicable Criteria; and• The Pro forma SOCI reflects the proper application of those pro forma adjustments to the unadjusted Published Interim

Audited Financial Information.

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s understanding of the nature of Transcend and the acquisition of the IHS Res 1 Properties in respect of which the Pro forma SOCI has been compiled and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Pro forma SOCI.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Pro forma SOCI has been compiled, in all material respects, on the basis of the Applicable Criteria.

KPMG Inc.Registered Auditor

Per GS KolbéChartered Accountant (SA)Registered AuditorDirector

16 November 2018

KPMG Crescent85 Empire RoadJohannesburg2193(Private Bag 9, Parkview, 2122)

81

Annexure 12

REPORT OF THE PRO FORMA STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR TRANSCEND FOR THE YEAR ENDED 31 DECEMBER 2017

Introduction

The definitions commencing on page 6 of the Circular have been used throughout this Annexure 12.

As detailed in the Circular, Transcend holds the Existing Portfolio of fourteen income generating residential properties located across South Africa and is listed as a REIT on the AltX. Transcend has recently entered into the IHS Res 1 Sale Agreements to acquire the 1 983 IHS Res 1 Units. The acquisition of the IHS Res 1 Properties constitutes a related party transaction and a reverse takeover in terms of the Listings Requirements.

The pro forma statement of comprehensive income for Transcend (the “Pro forma SOCI”) for the year ended 31 December 2017 has been prepared for illustrative purposes only to provide information about what Transcend would have looked like had the acquisition of the IHS Res 1 Properties taken place on 1 January 2017 and, because of its nature, it may not fairly present Transcend’s results of operations after the acquisition of the IHS Res 1 Properties. The Pro forma SOCI has been prepared in accordance with Transcend’s accounting policies as included in their annual financial statements for the year ended 31 December 2017, which are compliant with IFRS.

The IHS Res 1 Properties comprises of 1 983 HIS Res 1 Units, each of which is transferred separately.

Given the volume of the IHS Res 1 Units to be transferred, it is anticipated that title to 100% of the IHS Res 1 Units will not be transferred into Transcend’s name on the Effective Date. The Directors do expect, however, that the conditions precedent specified in the IHS Res 1 Sale Agreements, including Competition Commission approval, will have been met by the Effective Date and, therefore, the risks and rewards of ownership will have transferred to Transcend by this date. Based  on  this understanding, Transcend expects to be able to recognise 100% of the rental revenue and 100% of the expenditure from each of the IHS Res 1 Units to be transferred from the Effective Date.

It has been assumed for purposes of the Pro forma statement SOCI that 78 553 907 Shares will be placed in terms of the Private Placement.

The Directors are responsible for the Pro forma SOCI.

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Pro forma SOCI for the year ended 31 December 2017

Before

Acquisition of the IHS

Res 1Properties

Consolidation Journals

InterestAdjustments After

Audited Pro forma Pro forma Pro forma Pro forma

Rental income from investment properties 144 784 136 876 – – 281 660Recoveries of operating costs from tenants 12 436 10 873 – – 23 309

Revenue 157 220 147 749 – – 304 969Property operating expenses (55 297) (56 741) (1 855) – (113 893)

Net operating income 101 923 91 008 (1 855) – 191 076Other operating expenses (8 705) (8 825) (6 866) – (24 396)

Operating profit 93 218 82 183 (8 720) – 166 681Gain/(loss) on fair value adjustment of investment properties 29 240 (82 663) 14 391 – (39 032)Unrealised loss on revaluation of interest-rate swaps (3 028) – – – (3 028)Net finance charges (51 400) (71 010) – 3 565 (118 845)

Finance income 1 591 21 525 – – 23 116Finance costs (52 991) (92 535) – 3 565 (141 961)

Profit before taxation 68 030 (71 490) 5 671 3 565 5 775Taxation (57) – – – (57)

Profit and total comprehensive income for the period 67 973 (71 490) 5 671 3 565 5 718

Reconciliation between earnings and headline earnings per ShareProfit for the year attributable to shareholders 67 973 – – – 5 718Change in fair value of investment properties (29 240) – – – 39 032Headline earnings attributable to shareholders 38 733 – – – 44 751Earnings per Share (in cents) 102.51 3.95Headline earnings per Share (in cents) 58.42 30.89Weighted average number of shares in issue 66 306 144 860

Notes:1. The “Before” Column sets out the audited statement of profit or loss and other comprehensive income of Transcend for the year ended 31 December

2017 extracted, without adjustment, from the audited annual financial statements of Transcend for the year ended and as at 31 December 2017;2. The “Acquisitions of the IHS Res 1 Properties” Column sets out the audited statement of profit or loss and other comprehensive income of the IHS

Res 1 Properties for the year ended 31 December 2017 extracted, without adjustment, from the Report of Audited Special Purpose Carve-Out Historical Financial Information of the IHS Res 1 Properties for the three years ended 31 December 2017, 2016 and 2015 included as Annexure 16 to this Circular. The fair value of the IHS Res 1 investment property at 31 December 2017 amounted to R1 374.5 million.

3. The “Consolidation Journals” Column includes the following pro forma adjustments:a. a. The fair value of 30 June 2018 amounted to R1 397.4 million resulting in a pro forma fair value adjustment of R22.9 million for the six months

ended 30 June 2018 less the property transfer and bond registration costs of R8.5 million;b. The expensing of transaction costs amounting to R6.5 million in terms of IAS 32: Financial Instruments: Presentation. These adjustments will

not have a continuing effect on the Pro forma SOCI;c. The reversal of the property management fee historical paid by the IHS Res 1 Properties to the Asset Manager amounting to R5.102 million.

This adjustment will have a continuing effect on the Pro forma SOCI;d. Included the management fee that will be paid by IHS Res 1 Properties to Transcend amounting to R6.956 million. This adjustment will have

a continuing effect on the Pro forma SOCI;4. The “Interests Adjustment” illustrates the net effect of the following:

a. The reversal of the historical interest income relating to the positive cash and cash equivalents balance amounting to R21.525 million, and the interest expense relating to the IHS Res 1 Properties, amounting to R92.535 million, as Transcend is only acquiring the properties and not the related debt or cash and cash equivalents. This adjustment will have a continuing effect on the Pro forma SOCI;

b. The inclusion of a notional interest expense arising due to the refinancing of debt to an amount of R67.445 million. The notional interest has been calculated using an average interest rate of 9.1%, calculated using the three-month JIBAR plus 215bps, for a period of 12 months. This adjustment will have a continuing effect on the Pro forma SOCI; and

5. The “After” Column illustrates the aggregated statement of profit or loss and other comprehensive income of Transcend after the adjustments detailed above.

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Annexure 13

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE COMPILATION OF THE PRO FORMA STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR TRANSCEND FOR THE YEAR ENDED 31 DECEMBER 2017

The DirectorsTranscend Residential Property Fund Limited54 Peter PlaceBlock GPeter Place Office ParkBryanston, 2191

16 November 2018

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE COMPILATION OF THE PRO FORMA STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR TRANSCEND FOR THE YEAR ENDED 31 DECEMBER 2017

The definitions commencing on page 6 of the Circular apply mutatis mutandis to this report.

Introduction

We have completed our assurance engagement to report on the compilation of the pro forma statement of profit or loss and other comprehensive income for Transcend for the year ended 31 December 2017 by the directors of the Company (the “Directors”). The pro forma statement of profit or loss and other comprehensive income for Transcend for the year ended 31 December 2017 consists of the pro forma earnings and diluted earnings, headline and diluted headline earnings of Transcend, the pro forma statement of profit or loss and other comprehensive income of Transcend and the related notes, subsequent to the acquisition of the IHS Res 1 Properties, detailed in Annexure 12 of the Circular (collectively “Pro forma SOCI”). The Pro forma SOCI has been compiled on the basis of the applicable criteria specified in the paragraph entitled Directors’ Responsibility for the Pro forma SOCI set out below.

The Pro forma SOCI has been compiled by the Directors to illustrate the impact of the acquisition of the IHS Res 1 Properties on the Pro forma SOCI and the related notes.

As part of this process, Transcend’s earnings, diluted earnings, headline earnings and diluted headline earnings and statement of profit or loss and other comprehensive income have been extracted by the Directors from Transcend’s audited annual financial statements for the year ended and as at 31 December 2017, incorporated by reference in this Circular (the “Audited Financial Information”).

Directors’ Responsibility for the Pro forma SOCI

The Directors are responsible for compiling the Pro forma SOCI on the basis of the applicable criteria as detailed in paragraphs 8.15 to 8.33 of the Listings Requirements and the SAICA Guide on Pro forma Financial Information, revised and issued in September 2014 (the “Applicable Criteria”), as applicable.

Independent Reporting Accountant’s Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Professional Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors (IRBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Part A and B).

KPMG Inc. applies the International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Independent Reporting Accountant’s Responsibilities

Our responsibility is to express an opinion about whether the Pro forma SOCI has been compiled, in all material respects, by the Directors on the basis of the Applicable Criteria.

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We conducted our engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus, issued by the International Auditing and Assurance Standards Board. This standard requires that the reporting accountants comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether the Directors have compiled, in all material respects, the Pro forma SOCI on the basis of the Applicable Criteria.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on the Audited Financial Information used in compiling the Pro forma SOCI. We have performed a review of the Special Purpose Carve-Out Historical Information used in compiling the Pro Forma SOCI. Our reporting accountant’s report on the Report of Special Purpose Carve-Out Historical Information is included as Annexure 16 to this Circular.

The purpose of the Pro forma SOCI included in the Circular is solely to illustrate the impact of the Proposed Transactions on the unadjusted Audited Financial Information as if the Proposed Transactions had been undertaken on 1 January 2017 for purposes of the pro forma earnings, diluted earnings, headline earnings and diluted headline earnings per share and the pro forma statement of profit or loss and other comprehensive income. Accordingly, we do not provide any assurance that the actual outcome of the Proposed Transactions, subsequent to their implementation, will be as presented in the Pro forma SOCI.

A reasonable assurance engagement to report on whether the Pro forma SOCI has been properly compiled, in all material respects, on the basis of the Applicable Criteria, involves performing procedures to assess whether the Applicable Criteria used by the Directors in the compilation of the Pro forma SOCI provides a reasonable basis for presenting the significant effects directly attributable to the Proposed Transactions and to obtain sufficient appropriate evidence about whether:

• The related pro forma adjustments give appropriate effect to the Applicable Criteria; and• The Pro forma SOCI reflects the proper application of those pro forma adjustments to the unadjusted Audited Financial

Information.

The procedures selected depend on the reporting accountant’s judgment, having regard to the reporting accountant’s understanding of the nature of Transcend, the Proposed Transactions in respect of which the Pro forma SOCI has been compiled and other relevant engagement circumstances.

The engagement also involves evaluating the overall presentation of the Pro forma SOCI.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the Pro forma SOCI has been compiled, in all material respects, on the basis of the Applicable Criteria.

KPMG Inc.Registered Auditor

Per GS KolbéChartered Accountant (SA)Registered AuditorDirector

16 November 2018

KPMG Crescent85 Empire RoadJohannesburg2193(Private Bag 9, Parkview, 2122)

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Annexure 14

REPORT OF INTERIM SPECIAL PURPOSE CARVE-OUT HISTORICAL FINANCIAL INFORMATION OF THE IHS RES 1 PROPERTIES FOR THE SIX MONTHS ENDED 30 JUNE 2018

The definitions commencing on page 8 of the Circular have been used throughout this Annexure 14.

As detailed in the Circular, Transcend has entered into the IHS Res 1 Sale Agreements in terms of which it will acquire each of the 1 983 IHS Res 1 Units, as divisible units, and the right of extension in terms of section 25 of the Sectional Titles Act, No 95 of 1986 (“Right of Extension”) (collectively, the “the IHS Res 1 Properties”) from the seller.

Basis of preparation

The statement of profit or loss and other comprehensive income for the six months ended 30 June 2018, the statement of net assets as at 30 June 2018, the related accounting policies and the notes relating to the IHS Res 1 Properties (“Interim Special Purpose Carve-Out Historical Financial Information”) have been prepared in accordance with Section 8.2(e) of the JSE Listings Requirements which requires, inter alia, that the Interim Special Purpose Carve-Out Historical Financial Information be presented in respect of the subject of the Category 1 transaction, namely, the IHS Res 1 Properties.

Section 8.7 of the JSE Listings Requirements states that, notwithstanding the requirements of IFRS, if reviewed interim financial information is being prepared for the purposes of Section 8 of the JSE Listings Requirements, no comparative results need to be shown if that interim financial information has been prepared using accounting policies that are identical to those contained in the historical financial information. Section 8.7 has been applied to the preparation of this Interim Special Purpose Carve-Out Historical Financial Information and no comparative financial information has been presented.

Cash flow statements and statements of changes in equity have not been presented in this Interim Special Purpose Carve-Out Historical Financial Information as this is not considered to be meaningful as Transcend is only acquiring IHS Res 1 Units and the Right of Extension.

Although Transcend is only acquiring the IHS Res 1 Units and Right of Extension from the seller, the historical interest received by the IHS Res 1 Properties in respect of cash and cash equivalents and the historical interest paid in respect of the previous funding of the IHS Res 1 Units has been included in the statement of profit or loss and other comprehensive income for the six months ended 30 June 2018 as this forms part of the historical expenses relating to the IHS Res 1 Properties. Going forward, Transcend will pay interest in respect of the IHS Res 1 Properties in terms of the debt funding that it has put in place in respect of the acquisition of the IHS Res 1 Properties as detailed in paragraph 2.2 of the Circular.

The Interim Special Purpose Carve-Out Historical Financial Information has been prepared, to the extent applicable, in accordance with the accounting policies of Transcend.

KPMG Inc. is the reporting accountant to Transcend. KPMG Inc. conducted the review of the Interim Special Purpose Carve-Out Historical Financial Information in accordance with International Standards on Auditing and reported without qualification on the Interim Special Purpose Carve-Out Historical Financial Information.

The Directors are responsible for the Interim Special Purpose Carve-Out Historical Financial Information.

Directors commentary

As at 30 June 2018, the IHS Res 1 Properties consisted of seven properties, representing a total of 2 063 residential units. one of these properties, Birchwood, was still in lease-up during this period.

During the period under review properties which were in the process of being exited. These included Midrand Village. At Midrand Village 30 units were registered and transferred as at the end of June 2018 with a further 47 sales in progress.

The overall property exit strategy was agreed to be by means of a property sale (yield sale) to the open market.

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Statements of profit and loss and other comprehensive income for the six months ended 30 June 2018

Statements of profit and loss and other comprehensive income

Figures in Rand Note(s) 30 June 2018

Rental income from investment properties 5 75 666 228Recoveries of operating costs from tenants 7 371 735

Revenue 83 037 963Other income –Property operating expenses 6 (27 467 032)

Net operating profit 55 570 931Other operating expenses 7 (3 273 209)

Operating profit 52 297 722Fair value adjustments 9 22 886 567Finance costs 8 (34 423 586)

Profit/(Loss) for the year 40 760 703

Other comprehensive income –

Profit and total comprehensive income for the year 40 760 703

Statements of net assets as at 30 June 2018

Statement of net assets

Figures in Rand Note(s) 30 June 2018

AssetsNon-Current AssetsInvestment property 4 1 397 400 000

Total Assets 1 397 400 000

Notes to the Special Purpose Interim Carve-Out Financial Information

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of preparation

The statement of profit or loss and other comprehensive income for the six months ended 30 June 2018, the statement of net assets as at 30 June 2018, the related accounting policies and the notes relating to the IHS Res 1 Properties (“Interim Special Purpose Carve-Out Historical Financial Information”) have been prepared in accordance with Section 8.2(e) of the JSE Listings Requirements which requires, inter alia, that the Interim Special Purpose Carve-Out Historical Financial Information be presented in respect of the subject of the Category 1 transaction, namely, the IHS Res 1 Properties.

Section 8.7 of the JSE Listings Requirements states that, notwithstanding the requirements of IFRS, if reviewed interim financial information is being prepared for the purposes of Section 8 of the JSE Listings Requirements, no comparative results need to be shown if that interim financial information has been prepared using accounting policies that are identical to those contained in the historical financial information. Section 8.7 has been applied to the preparation of this Interim Special Purpose Carve-Out Historical Financial Information and no comparative financial information has been presented.

Consolidated cash flow statements and consolidated statements of changes in equity have not been presented in this Interim Special Purpose Carve-Out Historical Financial Information as this is not considered to be meaningful as Transcend is only acquiring Units and the Right of Extension.

Although Transcend is only acquiring the IHS Res 1 Units and Right of Extension from the seller, the historical interest received by the IHS Res 1 Properties in respect of cash and cash equivalents and the historical interest paid in respect of the previous funding of the IHS Res 1 Units has been included in the statement of profit or loss and other comprehensive income for the six months ended 30 June 2018 as this forms part of the historical expenses relating to the IHS Res 1 Properties. Going forward, Transcend will pay interest in respect of the

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IHS Res 1 Properties in terms of the debt funding that it has put in place in respect of the acquisition of the IHS Res 1 Properties as detailed in paragraph 2.2 of the Circular.

The Interim Special Purpose Carve-Out Historical Financial Information has been prepared, to the extent applicable, in accordance with the accounting policies of Transcend.

KPMG Inc. is the reporting accountant to Transcend. KPMG Inc. conducted the review of the Interim Special Purpose Carve-Out Historical Financial Information in accordance with International Standards on Auditing and reported without qualification on the Interim Special Purpose Carve-Out Historical Financial Information.

The Directors are responsible for the Interim Special Purpose Carve-Out Historical Financial Information.

a) Purpose

These Special Purpose Carve-Out Financial Information is intended for the sole use of providing financial information to meet the requirements of Sections 8 and 13 of the JSE Limited’s (“JSE”) Listings Requirements. The financial information relates to the specific properties to be acquired by Transcend Residential Property Fund Limited (“Transcend”) in terms of the Proposed Transactions. The following properties are to be acquired by Transcend:

– Midrand Village

– De Velde

– Birchwood Village

– Southgate Ridge

– Urban Ridge (West)

– Urban Ridge (East)

– Urban Ridge (South)

b) Basis of measurement

The Special Purpose Interim Carve-Out Financial Information is prepared on the fair value basis for investment properties as set out in note 4.

c) Functional and presentation currency

The Special Purpose Interim Carve-Out Financial Information is presented in South African Rand (“Rand”), which is the IHS Res 1 Properties’ functional currency. All financial information presented in Rand has been rounded to the nearest Rand.

2.1 Investment property

Investment property consists of land and buildings held to earn rental income for the long term and subsequent capital appreciation.

Investment properties are initially recognised at cost on acquisition, including all costs directly attributable to the acquisition, and subsequent additions that will result in future economic benefits and whose cost can be measured reliably, are capitalised.

Subsequent to initial recognition, investment properties are measured at their fair value. Fair value adjustments are recognised in profit or loss.

Investment properties are maintained, upgraded and refurbished, where necessary, in order to preserve or improve the capital values as far as it is possible to do so. Maintenance and repairs which neither materially add to the value of the properties nor prolong their useful lives, are charged against profit or loss.

In line with the Transcend valuation policy, valuations are performed annually for at least one-third of the properties. However, due to the size of the current portfolio, management’s practice for the past two financial years has been to appoint independent valuers to value the entire IHS Res 1 Properties.

Gains or losses on subsequent measurement or disposals of investment properties are recognised in profit or loss. Such gains or losses are excluded from the calculation of distributable earnings.

A gain or loss arising on disposal of investment properties is recognised in profit or loss, measured as the difference between the disposal proceeds and the carrying amount.

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2.2 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

The IHS Res 1 Properties is party to numerous leasing contracts as the lessor of the properties. All leases are operating leases, which are those leases where the IHS Res 1 Properties retains a significant portion of the risks and rewards of ownership.

The IHS Res 1 Properties’ rental revenue is short-term in nature and consists of contracted rental revenue for a period of 12 months which constitutes the length of the IHS Res 1 Properties’ legally binding lease agreements. Once the lease agreements expire, they revert to month-to-month rental agreements that continue until such time as the rental agreements are terminated either on one month’s notice by the tenant or by the IHS Res 1 Properties.

In some instances, the IHS Res 1 Properties provides certain incentives for the lessee to enter into lease agreements. Initial periods of the lease term may be agreed to be rent-free or at a reduced rent. All incentives are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive’s nature or form or the timing of payments. The IHS Res 1 Properties recognises the aggregate cost of incentives as a reduction of rental income.

Leases of assets are classified as finance leases when the leases transfer substantially all risks and rewards incidental to ownership of the assets to the IHS Res 1 Properties. All other leases are classified as operating leases.

2.3 Revenue recognition

Revenue from the letting of investment property comprises gross rental income and recoveries of operating costs. Rental income is recognised in the period it is earned.

2.4 Service charges and other expenses recoverable from tenants

Service charges and other such receipts are included in net rental income, gross of the related costs. The directors evaluated the substance of the lease agreement, and found the company acts as principal for the collection of service charges and other expenses recoverable from tenants. Income arising from the recovery of operating costs, is recognised in the period in which the compensation becomes receivable.

2.5 Operating profit

Operating profit included in profit or loss represents the net revenue earned from investment property, adjusted for property operating expenses and income.

2.6 Key judgements and sources of estimation uncertainty

The preparation of Special Purpose Interim Carve-Out Financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information on key estimates and assumptions which have the most significant effect on the financial statements are set out below.

The properties are valued at each reporting date. For the purposes of the 30 June 2018 valuations, all properties were independently valued. By obtaining external valuations from accredited valuators, management is of the opinion that the risk relating to estimation has been mitigated. Refer to note 4 Investment property for further information.

The fair value of investment properties was assessed by Broll Valuation & Advisory Services (Pty) Ltd and Real Insight (Pty) Ltd, both registered valuers in terms of Section 19 of the Property Valuers Professional Act, No 47 of 2000, with recognised and relevant professional qualifications and with recent experience in the location and category of the investment properties being valued.

The key assumptions used to determine the fair value of the properties are provided in note 4 Investment property.

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2.7 Standards and interpretations applicable to the IHS Res 1 Properties not yet effective

The IHS Res 1 Properties has initially adopted IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers from 1 January 2018, which do not have a material effect on the IHS Res 1 Properties’ financial statements. There has consequently been no restatement of any opening balances as at 1 January 2018.

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Notes to the Special Purpose Interim Carve-Out Financial Statements

Figures in Rand 30 June 2018

4. INVESTMENT PROPERTYOpening balance 1 374 513 433Additions –Disposals –Fair value adjustments 22 886 567

Total 1 397 400 000

Details of propertiesSouthgate RidgeErf 3030 and 3031, Naturena Extension 16, Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 218 959 603– Fair value adjustment (5 067 700)– Capitalised expenditure 2 708 097

216 600 000

Midrand VillageClayville Extension 46 Township, Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 148 094 504– Fair value adjustment 3 374 485– Capitalised expenditure 1 831 011

153 300 000

Urban Ridge WestEfr 1399, Halfway Gardens Extension 25, Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 159 702 691– Fair value adjustment (8 588 909)– Capitalised expenditure 1 986 218

153 100 000

Urban Ridge EastEfr 1357 and 658, Halfway Gardens Extension 25, Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 108 570 483– Fair value adjustment (332 989)– Capitalised expenditure 1 362 506

109 600 000

De VeldeSections 133 – 139, 141 – 146, 205 – 220, 299 – 326, 680 – 911, of Farm 794 Stellenbosch RD, in the sectional title scheme known as De Velde, The Western Cape– Purchase price 291 890 013– Fair value adjustment 42 041 438– Capitalised expenditure 3 768 549

337 700 000

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Figures in Rand 30 June 2018

Urban Ridge SouthErven 1383 and 1384, Halfway Gardens Extension 54 Township, Registration Division JR, The Province of Gauteng.– Purchase price 129 920 000– Fair value adjustment 7 241 408– Capitalised expenditure 1 638 592

138 800 000

Birchwood VillageErf 93 Chartwell Ext 14 (Phase 1 and Phase 2), Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 364 506 058– Fair value adjustment (81 624 941)– Capitalised expenditure 5 418 883

288 300 000

Fair value measurement of investment properties

The properties were valued as at 1 October 2018 by capitalising the net contractual income derived from the properties for a period of one year in advance by an applicable capitalisation rate as determined by the following external independent valuers:

Real Insight Proprietary Limited – Theuns Behrens, Professional Associated Valuer; and

Real Insight Proprietary Limited – Johan Liebenberg, Professional Associated Valuer.

It is the independent property valuers and management’s view that the assumptions used as at 1 October 2018 are not materially different from those that would apply at 30 June 2018.

Expected operating income

The average rental income ranges from R5 786 to R10 921 per unit. Generally, the rentals are market related compared to similar buildings in comparable areas.

Capitalisation rate

The capitalisation rate ranges from 8% to 9.25%. The capitalisation rate applied was derived using an appropriate risk-free rate and adding on property-related risk and illiquidity risk related to property, as well as further amounts related to each property’s construction, size, duration, rental, exit and other property-specific risks. Testing this for reasonableness was achieved by comparing the resultant value per opportunity and effective yield rate against current project sales information, and comparative sales of similar properties in similar locations.

Growth rate

The range for rental escalations is 3.5% to 5%. The rental growth rates are based on current experience with actual growth achieved, but should trend towards inflation over the long term and expectations of future increases based on budgets. The lower growth rates are reflective of tough current economic conditions.

Vacancy factor

In order to apply a conservative approach, 3% to 8% of the gross income was deducted as a provision for rental that may not be collected as a consequence of vacancy, tenant failure or tenant refitting during the course of the coming year. The current vacancies are market-related.

Valuation process

All of the IHS Res 1 Properties’ investment properties were valued at 1 October 2018 by external registered valuers. All valuations were reviewed by the executive directors and asset managers. For all investment properties, their current use equates to the highest and best use.

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Figures in Rand 30 June 2018

5. REVENUERental income 75 666 228

6. PROPERTY OPERATING EXPENSESUtilities & Municipal rates and expenses 7 078 366Bad debts written off 2 028 881Property Management fees 6 132 600Repairs and maintenance expenses 3 758 334Levies 3 717 738Security 1 338 274Other property operating expenses 3 412 839

27 467 032

7. OTHER OPERATING EXPENSESAsset management fees 1 055 737Auditor's remuneration 558 214Other 1 659 258

3 273 209

8. FINANCE COSTS –Interest received – Bank (1 041 904)Interest received – Main Street 1250 Proprietary Limited (9 059 216)Interest on interest-bearing borrowings 44 755 701Other interest paid (230 995)

34 423 586

Figures in Rand 30 June 2018

9. FAIR VALUE INFORMATIONFair value hierarchy

The estimated fair values of financial assets as at 30 June 2018 have been determined using available market information and appropriate valuation methodologies.

IFRS 13 requires that an entity discloses for investment properties measured at fair value, the level in the fair value hierarchy into which the fair value measurements are categorised in their entirety.

The fair value hierarchy reflects the significance of the inputs used in making fair value measurements.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

The fair value hierarchy has the following levels:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Details of changes in valuation techniques:

There have been no significant changes in valuation techniques.

Significant transfers between level 1, level 2 and level 3:

There have been no significant transfers between level 1, level 2 and level 3.

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Figures in Rand 30 June 2018

Level 3 reconciliationInvestment propertyOpening balance 1 374 513 433Capitalised expenditure –Fair value adjustments 22 886 567

Closing balance 1 397 400 000

The fair value gains and losses are included in the fair value adjustments line in profit or loss.

10. SUBSEQUENT EVENTSThe have been no materially significant events subsequent to the Report of Interim Special Purpose Carve-Out Historical Financial Information of the IHS Res 1 Properties for the six months ended 30 June 2018, other than as detailed in the Circular of which this report forms a part.

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Annexure 15

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE INTERIM SPECIAL PURPOSE CARVE-OUT HISTORICAL FINANCIAL INFORMATION OF THE IHS RES 1 PROPERTIES FOR THE SIX MONTHS ENDED 30 JUNE 2018

The DirectorsTranscend Residential Property Fund Limited54 Peter PlaceBlock GPeter Place Office ParkBryanston, 2191

16 November 2018

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE INTERIM SPECIAL PURPOSE CARVE-OUT HISTORICAL FINANCIAL INFORMATION OF THE IHS RES 1 PROPERTIES FOR THE SIX MONTHS ENDED 30 JUNE 2018

The definitions commencing on page 6 of this Circular apply mutatis mutandis to this report.

Introduction

At your request, and for the purposes of the Circular, we have reviewed the statement of profit or loss and other comprehensive income and the net asset statement, including a summary of significant accounting policies and the notes thereto of the IHS Res 1 Properties for the six months ended and as at 30 June 2018 presented in the Report of Interim Special Purpose Carve-Out Historical Financial Information set out in Annexure 14 to the Circular (collectively “Interim Special Purpose Carve-Out Historical Financial Information”).

The Interim Special Purpose Carve-Out Historical Financial Information has been prepared in accordance with the basis of preparation paragraph set out in Annexure 14 to the Circular for purposes of compliance with the Listings Requirements.

The directors of Transcend are responsible for the compilation, contents and preparation of the Circular including the Interim Special Purpose Carve-Out Historical Financial Information included therein, in accordance with the Listings Requirements. The directors of the IHS Res 1 Properties are responsible for the preparation of the Interim Special Purpose Carve-Out Historical Financial Information in accordance with the basis of preparation paragraph set out in Annexure 14 to the Circular, for purposes of compliance with the Listings Requirements.

KPMG Inc. is the independent auditor to the IHS Res 1 Properties and the independent reporting accountant to Transcend.

Independent Reporting Accountant’s Review Report on the Interim Special Purpose Carve-Out Historical Financial Information

We have reviewed the Interim Special Purpose Carve-Out Historical Financial Information, which comprises the condensed statement of profit or loss and other comprehensive income and the condensed net asset statement, including a summary of significant accounting policies and the notes thereto of the IHS Res 1 Properties for the six months ended and as at 30 June 2018, presented in the Report on the Special Purpose Reviewed Interim Carve-Out Historical Financial Information set out in Annexure 14 to the Circular.

Responsibilities of the Directors of the IHS Res 1 Properties for the Interim Special Purpose Carve-Out Financial Information

The directors of the IHS Res 1 Properties are responsible for the preparation of the Interim Special Purpose Carve-Out Historical Financial Information in accordance with the basis of preparation paragraph set out in Annexure 14 to the Circular, for purposes of compliance with the Listings Requirements, and for such internal control as the directors of the IHS Res 1 Properties determine is necessary to enable the preparation of the Interim Special Purpose Carve-Out Historical Financial Information that is free from material misstatement, whether due to fraud or error.

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Independent Reporting Accountant’s Responsibilities for the Interim Special Purpose Interim Reviewed Carve-Out Historical Financial Information

Our responsibility is to express a review conclusion on the Interim Special Purpose Carve-Out Historical Financial Information based on our review in accordance with the International Standard on Review Engagements ISRE 2410: Review of Interim Financial Information Performed by the Independent Auditor of the Entity. ISRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the Interim Special Purpose Carve-Out Historical Financial Information, taken as a whole, is not prepared in all material respects in accordance with the basis of preparation paragraph set out in Annexure 14 to the Circular, for purposes of compliance with the Listings Requirements. This Standard also requires us to comply with relevant ethical requirements.

A review of the Interim Special Purpose Carve-Out Historical Financial Information in accordance with ISRE 2410 is a limited assurance engagement in terms of which we perform procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures and evaluating the evidence obtained.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on the Interim Special Purpose Carve-Out Historical Financial Information.

Conclusion on the Interim Special Purpose Carve-Out Historical Financial Information

Based on our review, nothing has come to our attention that causes us to believe that the Interim Special Purpose Carve-Out Historical Financial Information for the six months ended 30 June 2018, has not been prepared, in all material respects, in accordance with the basis of preparation paragraph set out in Annexure 14 to the Circular, for purposes of compliance with the Listings Requirements.

Emphasis of Matter – Basis of Preparation

We draw attention to the basis of preparation paragraph to the Interim Special Purpose Carve-Out Historical Financial Information, which describes the basis of preparation, including the approach to, and the purpose for preparing, the financial information. As a result, the Interim Special Purpose Carve-Out Historical Financial Information may not be suitable for another purpose. Our conclusion is not modified in respect of this matter.

KPMG Inc.Registered Auditor

Per GS KolbéChartered Accountant (SA)Registered AuditorDirector

16 November 2018

KPMG Crescent85 Empire RoadParktown2193Private Bag 9, Parkview, 2122

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Annexure 16

REPORT OF SPECIAL PURPOSE CARVE-OUT HISTORICAL FINANCIAL INFORMATION OF THE IHS RES 1 PROPERTIES FOR THE THREE YEARS ENDED 31 DECEMBER 2017, 2016 AND 2015

The definitions commencing on page 6 of the Circular have been used throughout this Annexure 16.

As detailed in the Circular, Transcend has entered into the Sale Agreements in terms of which it will acquire each of the 1 983 IHS Res 1 Units, as divisible units, and the right of extension in terms of section 25 of the Sectional Titles Act, No 95 of 1986 (“Right of Extension”) (collectively, the “the IHS Res 1 Properties”) from the seller.

Basis of preparation

The statements of profit or loss and other comprehensive income for the three years ended 31 December 2017, 2016 and 2015, the statements of net assets as at 31 December 2017, 2016 and 2015, the related accounting policies and the notes relating to the IHS Res 1 Properties (“Special Purpose Carve-Out Historical Financial Information”) have been prepared in accordance with Section 8.2(e) of the JSE Listings Requirements which requires, inter alia, that the Special Purpose Carve-Out Historical Financial Information be presented in respect of the subject of the Category 1 transaction, namely, the IHS Res 1 Properties.

The Special Purpose Carve-Out Historical Financial Information has been compiled by extracting the underlying audited annual financial statements of International Housing Solutions Residential Partnership LP (“IHS Res 1”), prepared in accordance with IFRS (“Audited Financial Statements”), and adjusted as follows:

1. Exclude the assets and liabilities and income and expenditure of IHS Res 1’s 100% subsidiary, Main Street 1250 Proprietary Limited (“Main Street”);

2. Eliminate the consolidation entries in respect of Main Street;

3. Exclude the assets and liabilities and the associated accounting policies and notes relating to IHS Res 1 that are not being acquired by Transcend in terms of the IHS Res 1 Sale Agreements;

4. Exclude the cash flow statement and the statement of changes in equity and the associated accounting policies and notes as Transcend is only acquiring IHS Res 1 Units and the Right of Extension and, therefore, these are not meaningful;

5. Recognise investment property at fair value in line with Transcend’s accounting policy;

6. Reverse depreciation on investment property carried at cost and include a fair value adjustment; and

7. Recognise recoveries of operating costs as part of revenue and the related costs as part of property operating expenses.

Although Transcend is only acquiring the IHS Res 1 Units and Right of Extension from the seller, the historical interest received by the IHS Res 1 Properties in respect of cash and cash equivalents and the historical interest paid in respect of the previous funding of the IHS Res 1 Units has been included in the statements of profit or loss and other comprehensive income for the three years ended 31 December 2017, 2016 and 2015 as this forms part of the historical expenses relating to the IHS Res 1 Properties. Going forward, Transcend will pay interest in respect of the IHS Res 1 Properties in terms of the debt funding that it has put in place in respect of the acquisition of the IHS Res 1 Properties as detailed in paragraph 2.2 of the Circular.

The Special Purpose Carve-Out Historical Financial Information has been prepared, to the extent applicable, in accordance with the accounting policies of Transcend.

KPMG Inc. is the reporting accountant to Transcend. KPMG Inc. conducted the audits of the Audited Financial Statements in in accordance with International Standards on Auditing 700 (Revised), Forming an Opinion and Reporting on Financial Statements and reported without qualification on the Audited Financial Statements. KPMG Inc. also conducted the audits of the Audited Special Purpose Carve-Out Historical Financial Information in accordance with International Standards on Auditing 800 (Revised), Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks and reported without qualification on the Special Purpose Carve-Out Historical Financial Information.

The Directors are responsible for the Special Purpose Carve-Out Historical Financial Information.

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Directors commentary

December 2017

As at 31 December 2017, the Res 1 Portfolio represented a total of 2 093 residential units.

The exit of Midrand Village (225 units) from the portfolio was approved during the year with the strategy being an exit by means of individual unit sales to the open market. At the end of the year, no units had transferred out of Midrand Village and all units were owned by IHS Res 1 Properties.

December 2016

As at 31 December 2016, the IHS Res 1 Properties’ investment properties increased and represented a total of 2 093 as all units acquired for De Velde and Birchwood transferred during the year.

No further approved acquisitions were made over the period.

December 2015

As at 31 December 2015, the IHS Res 1 Properties consisted of seven fully transferred properties. These investments represented a total of 1 733 residential units and excluded any new acquisitions that were approved during that year.

Over the 2015 year, two additional investment property acquisitions were made, being De Velde and Birchwood. These contributed an additional 310 and 360 units respectively, with all phases of De Velde commencing transfer during the 2015 year. All 310 units at De Velde transferred to IHS Res 1 during the 2015 year.

Statements of profit and loss and other comprehensive income for the years ended 31 December 2017, 2016 and 2015

Figures in Rand Note(s) 31 December 2017 31 December 2016 31 December 2015

Rental income from investment properties 5 136 876 271 108 156 181 99 680 894Recoveries of operating costs from tenants 10 873 228 6 707 255 5 781 215

Revenue 147 749 499 114 863 436 105 462 110Other income 5 340Property operating expenses 6 (56 741 163) (41 729 864) (35 494 676)

Net operating profit 91 008 336 73 133 572 69 972 773Other operating expenses 7 (8 825 149) (9 536 493) (8 403 658)

Operating profit 82 183 187 63 597 079 61 569 115Fair value adjustments 9 (82 662 696) 78 485 229 (78 091 447)Finance costs 8 (71 009 325) (64 725 525) (43 924 393)

Profit/(Loss) for the year (71 488 834) 77 356 783 (60 446 725)Other comprehensive income – – –

Profit/Loss and total comprehensive income for the year (71 488 834) 77 356 783 (60 446 725)

Statements of net assets as at 31 December 2017, 2016 and 2015

Figures in Rand Note(s) 31 December 2017 31 December 2016 31 December 2015

AssetsNon-Current AssetsInvestment property 4 1 374 513 433 1 457 176 129 1 008 765 959

Total Assets 1 374 513 433 1 457 176 129 1 008 765 959

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Notes to the Special Purpose Interim Carve-Out Financial Information

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of preparation

The statements of profit or loss and other comprehensive income for the three years ended 31 December 2017, 2016 and 2015, the statements of net assets as at 31 December 2017, 2016 and 2015, the related accounting policies and the notes relating to the IHS Res 1 Properties (“Special Purpose Carve-Out Historical Financial Information”) have been prepared in accordance with Section 8.2(e) of the JSE Listings Requirements which requires, inter alia, that the Special Purpose Carve-Out Historical Financial Information be presented in respect of the subject of the Category 1 transaction, namely, the IHS Res 1 Properties.

a) Purpose

These Special Purpose Carve-Out Financial Information is intended for the sole use of providing financial information to meet the requirements of Sections 8 and 13 of the JSE Limited’s (“JSE”) Listings Requirements. The financial information relates to the specific properties to be acquired by Transcend Residential Property Fund Limited (“Transcend”) in terms of the Proposed Transactions. The following properties are to be acquired by Transcend:

– Midrand Village

– De Velde

– Birchwood Village

– Southgate Ridge

– Urban Ridge (West)

– Urban Ridge (East)

– Urban Ridge (South)

b) Basis of measurement

The Special Purpose Carve-Out Financial Information is prepared on the fair value basis for investment properties as set out in note 4.

c) Functional and presentation currency

The Special Purpose Carve-Out Financial Information is presented in South African Rand (“Rand”), which is the IHS Res 1 Properties’ functional currency. All financial information presented in Rand has been rounded to the nearest Rand.

2.1 Investment property

Investment property consists of land and buildings held to earn rental income for the long term and subsequent capital appreciation.

Investment properties are initially recognised at cost on acquisition, including all costs directly attributable to the acquisition, and subsequent additions that will result in future economic benefits and whose cost can be measured reliably, are capitalised.

Subsequent to initial recognition, investment properties are measured at their fair value. Fair value adjustments are recognised in profit or loss.

Investment properties are maintained, upgraded and refurbished, where necessary, in order to preserve or improve the capital values as far as it is possible to do so. Maintenance and repairs which neither materially add to the value of the properties nor prolong their useful lives, are charged against profit or loss.

In line with the Transcend valuation policy, valuations are performed annually for at least one-third of the properties. However, due to the size of the current portfolio, management’s practice for the past two financial years has been to appoint independent valuers to value the IHS Res 1 Properties.

Gains or losses on subsequent measurement or disposals of investment properties are recognised in profit or loss. Such gains or losses are excluded from the calculation of distributable earnings.

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A gain or loss arising on disposal of investment properties is recognised in profit or loss, measured as the difference between the disposal proceeds and the carrying amount.

2.2 Leases

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

The IHS Res 1 Properties is party to numerous leasing contracts as the lessor of the properties. All leases are operating leases, which are those leases where the IHS Res 1 Properties retains a significant portion of the risks and rewards of ownership.

The IHS Res 1 Properties rental revenue is short-term in nature and consists of contracted rental revenue for a period of 12 months which constitutes the length of the IHS Res 1 Properties’ legally binding lease agreements. Once the lease agreements expire, they revert to month-to-month rental agreements that continue until such time as the rental agreements are terminated either on one month’s notice by the tenant or by the IHS Res 1 Properties.

In some instances, the IHS Res 1 Properties provides certain incentives for the lessee to enter into lease agreements. Initial periods of the lease term may be agreed to be rent-free or at a reduced rent. All incentives are recognised as an integral part of the net consideration agreed for the use of the leased asset, irrespective of the incentive’s nature or form or the timing of payments. The IHS Res 1 Properties recognises the aggregate cost of incentives as a reduction of rental income.

Leases of assets are classified as finance leases when the leases transfer substantially all risks and rewards incidental to ownership of the assets to the IHS Res 1 Properties. All other leases are classified as operating leases.

2.3 Revenue recognition

Revenue from the letting of investment property comprises gross rental income and recoveries of operating costs. Rental income is recognised in the period it is earned.

2.4 Service charges and other expenses recoverable from tenants

Service charges and other such receipts are included in net rental income, gross of the related costs. The directors evaluated the substance of the lease agreement, and found the company acts as principal for the collection of service charges and other expenses recoverable from tenants. Income arising from the recovery of operating costs, is recognised in the period in which the compensation becomes receivable.

2.5 Operating profit

Operating profit included in profit or loss represents the net revenue earned from investment property, adjusted for property operating expenses and income.

2.6 Key judgements and sources of estimation uncertainty

The preparation of Special Purpose Carve-Out Financial Information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information on key estimates and assumptions which have the most significant effect on the financial statements are set out below.

The properties are valued at each reporting date. For the purposes of the 31 December 2017, 2016 and 2015 valuations, all properties were independently valued. By obtaining external valuations from accredited valuators, management is of the opinion that the risk relating to estimation has been mitigated. Refer to note 4 Investment property for further information.

The fair value of investment properties was assessed by Broll Valuation & Advisory Services (Pty) Ltd and Real Insight (Pty) Ltd, both registered valuers in terms of Section 19 of the Property Valuers Professional Act, No 47 of 2000, with recognised and relevant professional qualifications and with recent experience in the location and category of the investment properties being valued.

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The valuation models have been applied in accordance with the recommendations of the International Valuation Standards Committee. The Board and the Investment Committee will conclude that the valuation models used by the IHS Res 1 Properties are consistent with the principles in IFRS 13.

The key assumptions used to determine the fair value of the properties are provided in note 4 Investment property.

2.7 Standards and interpretations applicable to the IHS Res 1 Properties not yet effective

There are new or revised accounting standards and interpretations in issue that are not yet effective. These include the following standards and interpretations that are material to the business of the IHS Res 1 Properties and may have an impact on future financial statements, or those for which the impact has not yet been assessed.

IFRS 9 Financial Instruments

IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. The following topics in the new standard may be material to the business of the IHS Res 1 Properties or have an impact on the financial statements which is yet to be determined:

– Classification – Financial assets and financial liabilities

– Impairment – Financial assets and contract assets

– Hedge accounting

– Disclosures

Under IFRS 9 there are two options in respect of the classification of financial assets, namely, financial assets measured at amortised cost or at fair value. Financial assets are measured at amortised cost when the business model is to hold assets in order to collect contractual cash flows and when they give rise to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets are measured at fair value.

Embedded derivatives are no longer separated from hybrid contracts that have a financial asset host.

IFRS 9 has retained in general the requirements of IAS39 for financial liabilities, except for the following two aspects:

– Fair value changes for financial liabilities (other than financial guarantees and loan commitments) designated at fair value through profit or loss, that are attributable to the changes in the credit risk of the liability, will be presented in other comprehensive income. The remaining amount of the fair value change is recognised in profit or loss. However, if this requirement creates or enlarges an accounting mismatch in profit or loss, then the whole fair value change is presented in profit or loss. The determination as to whether such presentation would create or enlarge an accounting mismatch is made on initial recognition and is not subsequently reassessed; and

– Derivative liabilities that are linked to and must be settled by delivery of an unquoted equity instrument whose fair value cannot be reliably measured, are measured at fair value.

A working group has been set up to assess the impact of the new standard on the financial statements. The group will work towards completing their impact assessments by June 2018.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

IFRS 15 is effective from annual period beginning on or after 1 January 2018, with early adoption permitted.

The company’s current measurement and recognition principles are currently being assessed against the standard. We, however, do not expect a material impact to measurement principles currently applied.

IFRS 16 Leases

The new standard states that lessees should be required to recognise assets and liabilities arising from all leases (with limited exceptions) on the statement of financial position. Lessor accounting has not substantially changed in the new standard. IFRS 16 supersedes existing lease guidance, including IAS 17: Leases, IFRIC 4: Determining Whether an Arrangement Contains a Lease, and SIC 15: Operating Leases – Incentives.

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The model reflects that, at the start of the lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. In response to concerns expressed about the cost and complexity to apply the requirements to large volumes of small assets, the IASB decided not to require a lessee to recognise assets and liabilities for short-term leases (less than 12 months), and leases for which the underlying asset is of low value (such as laptops and office furniture).

A lessee measures lease liabilities at the present value of future lease payments. A lessee measures lease assets initially at the same amount as lease liabilities, and also includes costs directly related to entering into the lease. Lease assets are amortised in a similar way to other assets such as property, plant and equipment. This approach will result in a more fair presentation of a lessee’s assets and liabilities and, together with enhanced disclosure, will provide great transparency of a lessee’s financial leverage and capital employed.

The company is currently assessing the impact of this standard but do not expect a material impact to the measurement principles currently applied.

IAS 40 Investment Property: Transfers of investment property

The amendment provides a clear definition that transfer is made only when there is an actual change in use, with examples of when an asset meets or ceases to meet the definition of investment property and there is evidence of the change in use.

The amendments are effective retrospectively for annual periods beginning on or after 1 January 2018, with early adoption permitted.

The impact on the Special Purpose Carve-Out Financial Information for the company has not yet been determined.

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Notes to the Special Purpose Carve-Out Financial Information (continued)

Figures in Rand 31 December 2017 31 December 2016 31 December 2015

4. INVESTMENT PROPERTYOpening balance 1 457 176 129 1 008 765 959 1 073 562 433Additions – 369 924 941 13 294 973Fair value adjustments (82 662 696) 78 485 229 (78 091 447)

Total 1 374 513 433 1 457 176 129 1 008 765 959

Details of propertiesSouthgate RidgeErf 3030 and 3031, Naturena Extension 16, Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 218 959 603 218 959 603 218 959 603– Fair value adjustment (16 567 700) 1 730 407 20 730 407– Capitalised expenditure 2 708 097 2 708 097 2 708 097

205 100 000 223 398 107 242 398 107

Midrand VillageClayville Extension 46 Township, Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 148 094 504 148 094 504 148 094 504– Fair value adjustment 4 887 918 1 724 907 (625 839)– Capitalised expenditure 1 831 011 1 831 011 1 831 011

154 813 433 151 650 422 149 299 676

Urban Ridge WestEfr 1399, Halfway Gardens Extension 25, Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 159 702 691 159 702 691 159 702 691– Fair value adjustment (17 488 909) 805 218 9 505 218– Capitalised expenditure 1 986 218 1 986 218 1 986 218

144 200 000 162 494 127 171 194 127

Urban Ridge EastEfr 1357 and 658, Halfway Gardens Extension 25, Registration Division JR, City of Johannesburg, Province– Purchase price 108 570 483 108 570 483 108 570 483– Fair value adjustment (3 732 989) 10 366 269 9 557 145– Capitalised expenditure 1 362 506 1 362 506 1 362 506

106 200 000 120 299 258 119 490 134

De VeldeSections 133 – 139, 141 – 146, 205 – 220, 299 – 326, 680 – 911, of Farm 794 Stellenbosch RD, in the sectional title scheme known as De Velde, The Western Cape Province.– Purchase price 291 890 013 291 890 013 291 890 013– Fair value adjustment 66 341 438 8 694 394 (111 730 965)– Capitalised expenditure 3 768 549 3 768 549 3 768 549

362 000 000 304 352 956 183 927 597

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Figures in Rand 31 December 2017 31 December 2016 31 December 2015

Urban Ridge SouthErven 1383 and 1384, Halfway Gardens Extension 54 Township, Registration Division JR, The Province of Gauteng.– Purchase price 129 920 000 129 920 000 129 920 000– Fair value adjustment (658 592) (6 502 274) 10 897 726– Capitalised expenditure 1 638 592 1 638 592 1 638 592

130 900 000 125 056 318 142 456 318

Birchwood VillageErf 93 Chartwell Ext 14 (Phase 1 and Phase 2), Registration Division JR, City of Johannesburg, Province of Gauteng.– Purchase price 364 506 058 364 506 058 –– Fair value adjustment (98 624 941) – –– Capitalised expenditure 5 418 883 5 418 883 –

271 300 000 369 924 941 –

Fair value measurement of investment properties

The properties were valued as at 31 December 2017, 2016 and 2015 by capitalising the net contractual income derived from the properties for a period of one year in advance by an applicable capitalisation rate as determined by the external independent valuers:

2017

Real Insight Proprietary Limited – Theuns Behrens, Professional Associated Valuer;

Real Insight Proprietary Limited – Johan Liebenberg, Professional Associated Valuer.

2016 and 2015

Broll Valuation & Advisory Services Proprietary Limited – Roger Hunting, MRICS, Dip T.P., MIV (SA), Professional Valuer;

Broll Valuation & Advisory Services Proprietary Limited – Debbie Orchard, AssocRICS, Dip., MIV (SA), Professional Valuer; and

Broll Valuation & Advisory Services Proprietary Limited – Mwangala Elham Shamaila, MRICS, MSc (Bldg), MIV (SA), Professional Valuer.

Expected operating income

The average rental income ranges from R5 638 – R11 401 per unit (2016: 5 540 – R9 941 per unit) (2015: R5 453 – R9 165 per unit). Generally, the rentals are market-related compared to similar buildings in comparable areas.

Capitalisation rate

The capitalisation rate ranges from 8% to 9% (2016: 9% to 9.3%) (2015: 9%). The capitalisation rate applied was derived using an appropriate risk-free rate and adding on property-related risk and illiquidity risk related to property, as well as further amounts related to each property’s construction, size, duration, rental, exit and other property specific risks. Testing this for reasonableness was achieved by comparing the resultant value per opportunity and effective yield rate against current project sales information, and comparative sales of similar properties in similar locations.

Growth rate

The range for rental escalations is 4% to8% (2016: 2.5% to 5%) (2015: 6.5% to 8.5%). The rental growth rates are based on current experience with actual growth achieved but should trend towards inflation over the long term and expectations of future increases based on budgets.

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Vacancy factor

In order to apply a conservative approach, 3% – 8% (2016: 3% – 5%) (2015: 1.6% – 5.0%) of the gross income was deducted as a provision for rental that may not be collected as a consequence of vacancy, tenant failure or tenant refitting during the course of the coming year. The current vacancies are market-related.

Valuation process

All of the IHS Res 1 Properties’ investment properties were valued at 31 December 2017, 2016 and 2015 by external registered valuers. All valuations were reviewed by the executive directors and asset managers. For all investment properties, their current use equates to the highest and best use.

Figures in Rand 31 December 2017 31 December 2016 31 December 2015

5. REVENUERental income 136 876 271 108 156 181 99 680 894

6. PROPERTY OPERATING EXPENSESUtilities & Municipal rates and expenses 23 917 306 19 968 383 15 113 833Bad debts written off 2 543 642 3 205 428 842 616Property Management fees 9 978 818 7 076 657 6 132 600Repairs and maintenance expenses 5 978 374 5 317 329 3 216 815Levies 5 314 999 4 785 865 2 752 358Security 2 426 306 2 241 630 2 022 017Other property operating expenses 6 581 720 (865 429) 5 414 438

56 741 163 41 729 864 35 494 676

7. OTHER OPERATING EXPENSESAsset management fees 4 789 773 6 353 746 5 536 826Auditor's remuneration 872 092 515 620 797 895Other 3 163 284 2 667 127 2 068 937

8 825 149 9 536 493 8 403 658

8. FINANCE COSTSInterest received – Bank (1 478 952) (106 535) (328 474)Interest received – Main Street 1250 Proprietary Limited (20 046 471) (17 123 842) (14 219 532)Interest received – Other – – (13 293)Interest on interest-bearing borrowings 92 520 245 81 867 538 58 469 133Other interest paid 14 503 88 364 16 559

71 009 325 64 725 525 43 924 393

9. FAIR VALUE INFORMATIONFair value hierarchy

The estimated fair values of investment properties as at 31 December 2017, 31 December 2016 and 31 December 2015 have been determined using available market information and appropriate valuation methodologies.

IFRS 13 requires that an entity discloses for investment properties measured at fair value, the level in the fair value hierarchy into which the fair value measurements are categorised in their entirety.

The fair value hierarchy reflects the significance of the inputs used in making fair value measurements.

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Figures in Rand 31 December 2017 31 December 2016 31 December 2015

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety shall be determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety.

The fair value hierarchy has the following levels:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Details of changes in valuation techniques:

There have been no significant changes in valuation techniques.

Significant transfers between level 1, level 2 and level 3:

There have been no significant transfers between level 1, level 2 and level 3. Level 3 reconciliationInvestment propertyOpening balance 1 457 176 129 1 008 765 959 1 073 562 433Additions – 369 924 941 13 294 973 Fair value adjustments (82 662 696) 78 485 229 (78 091 447)

Closing balance 1 374 513 433 1 457 176 129 1 008 765 959

The fair value gains and losses are included in the fair value adjustments line in profit or loss.

10. SUBSEQUENT EVENTSThere have been no materially significant events subsequent to 31 December 2017 other than as detailed in the Circular.

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Annexure 17

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE SPECIAL PURPOSE CARVE-OUT HISTORICAL FINANCIAL INFORMATION OF THE IHS RES 1 PROPERTIES FOR THE YEARS ENDED AND AS AT 31 DECEMBER 2017, 31 DECEMBER 2016 AND 31 DECEMBER 2015

The DirectorsTranscend Residential Property Fund Limited54 Peter PlaceBlock GPeter Place Office ParkBryanston, 2191

16 November 2018

INDEPENDENT REPORTING ACCOUNTANT’S REPORT ON THE SPECIAL PURPOSE CARVE-OUT HISTORICAL FINANCIAL INFORMATION OF THE RES 1 PORTFOLIO FOR THE YEARS ENDED AND AS AT 31 DECEMBER 2017, 31 DECEMBER 2016 AND 31 DECEMBER 2015

The definitions commencing on page 6 of the Circular apply mutatis mutandis to this report.

Introduction

At your request, and for the purposes of the Circular, we have audited the historical statements of profit and loss and other comprehensive income and the net asset statements, including a summary of significant accounting policies and the notes thereto, of the IHS Res 1 Properties for the years ended and as at 31 December 2017, 31 December 2016 and 31 December 2015 set out in the Report of Special Purpose Carve-out Historical Financial Information, included in Annexure 16 to the Circular (“Special Purpose Carve-Out Historical Financial Information”).

The Special Purpose Carve-Out Historical Financial Information is prepared in accordance with the basis of preparation paragraph set out in Annexure 16 to the Circular for purposes of compliance with the Listings Requirements.

The directors of Transcend are responsible for the compilation, contents and preparation of the Circular including the Special Purpose Carve-Out Historical Financial Information included therein, in accordance with the Listings Requirements. The directors of the IHS Res 1 Properties are responsible for the preparation of the Special Purpose Carve-Out Historical Financial Information in accordance with the basis of preparation paragraph set out in Annexure 16 to the Circular for purposes of compliance with the Listings Requirements.

KPMG Inc. is the independent auditor to the IHS Res 1 Properties. KPMG Inc. is also the independent reporting accountant to Transcend.

Part A – Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 2016

Independent Reporting Accountant’s Report on the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016.

Opinion

We have audited the Special Purpose Carve-Out Historical Financial Information, which comprises the statements of profit or loss and other comprehensive income and the net asset statements, including a summary of significant accounting policies and the notes thereto, set out in Annexure 16 to the Circular (collectively the “Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016”).

In our opinion, the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016 is prepared, in all material respects, in accordance with the basis of preparation paragraph set out in Annexure 16 to the Circular for purposes of compliance with the Listings Requirements.

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Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing 800 (Revised), Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks. Our responsibilities under those standards are further described in the Independent Reporting Accountant’s Responsibilities for the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016 section of our report. We are independent of the IHS Res 1 Properties in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our unmodified opinion on the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016.

Emphasis of Matter – Basis of Preparation

We draw attention to the basis of preparation paragraph to the Special Purpose Carve-out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016, which describes the basis of preparation, including the approach to and the purpose for preparing the financial information. As a result, the Special Purpose Carve-Out Historical Financial Information may not be suitable for another purpose. Our opinion is not modified in respect of this matter.

Responsibilities of the Directors of the IHS Res 1 Properties for the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016

The directors of the IHS Res 1 Properties are responsible for the preparation of the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016 in accordance with the basis of preparation paragraph set out in Annexure 16 to the Circular for purposes of compliance with the Listings Requirements, for determining that the basis of preparation is acceptable in the circumstances and for such internal control as the directors of the IHS Res 1 Properties determine is necessary to enable the preparation of Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016 that is free from material misstatement, whether due to fraud or error.

In preparing the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016, the Directors are responsible for assessing the ability of the IHS Res 1 Properties to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the IHS Res 1 Properties or to cease operations, or have no realistic alternative but to do so.

Independent Reporting Accountant’s Responsibilities for the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016

Our objectives are to obtain reasonable assurance about whether the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016 is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the IHS Res 1 Properties’ internal control.

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• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors of the IHS Res 1 Properties.

• Conclude on the appropriateness of the directors of the IHS Res 1 Properties’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the IHS Res 1 Properties to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our independent reporting accountant’s report to the related disclosures in the Special Purpose Carve-Out Historical Financial Information for the years ended and as at 31 December 2017 and 31 December 2016 or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our independent reporting accountant’s report. However, future events or conditions may cause the IHS Res 1 Properties to cease to continue as a going concern.

We communicate with the directors of the IHS Res 1 Properties regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Part B – Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015

Independent Reporting Accountant’s Report on the Special Purpose Carve-Out Historical Financial information for the year ended and as at 31 December 2015

We have audited the Special Purpose Carve-Out Historical Financial Information for the year ended 31 December 2015, which comprises the statement of profit or loss and other comprehensive income and the statement of net assets, including a summary of significant accounting policies and the notes thereto which forms part of the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015 as presented in Annexure 16 to the Circular (collectively the “Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015”).

Responsibilities of the directors of the IHS Res 1 Properties for the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015.

The directors of the IHS Res 1 Properties are responsible for the preparation of the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015 in accordance with the basis of preparation paragraph set out in Annexure 16 to the Circular for purposes of compliance with the Listings Requirements, for determining that the basis of preparation is acceptable in the circumstances and for such internal control as the directors of the IHS Res 1 Properties determine is necessary to enable the preparation of the Special Purpose Carve-Out Historical Financial Information that is free from material misstatement, whether due to fraud or error.

Independent Reporting Accountant’s Responsibilities for the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015.

Our responsibility is to express an opinion on the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015 based on our audit.

We conducted our audits in accordance with ISA’s. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015 is free from material misstatement.

Scope of audit

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion on the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015

In our opinion, the Special Purpose Carve-Out Historical Financial Information for the year ended and as at 31 December 2015 as set out in Annexure 16 to the Circular, is prepared, in all material respects, in accordance with the basis of preparation paragraph set out in Annexure 16 to the Circular for purposes of compliance with the Listings Requirements.

Emphasis of Matter – Basis of Preparation

We draw attention to the basis of preparation paragraph to the Special Purpose Carve-out Historical Financial Information, which describes the basis of preparation, including the approach to and the purpose for preparing the financial information. As a result, the Special Purpose Carve-Out Historical Financial Statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter.

KPMG Inc.Registered Auditor

GS KolbéChartered Accountant (SA)Registered AuditorDirector

16 November 2018

KPMG Crescent85 Empire RoadParktown2193(Private Bag 9, Parkview, 2122)

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Annexure 18

Transcend Residential Property Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2016/277183/06)(JSE Share Code: TPF ISIN ZAE000227765)

(Approved as a REIT by the JSE)(“Transcend” or “the Company”)

WRITTEN RESOLUTION OF SHAREHOLDERS

Unless otherwise defined, the terms defined in the Circular to which this Annexure containing the Resolutions is attached and forms part, bear the same meanings in this notice, and in particular the Resolutions set out below.

Notice is hereby given that the Board has resolved to submit, pursuant to section 60 of the Companies Act, the Resolutions to be considered and voted on in writing by Shareholders of the Company (“the Notice”).

1. The Directors resolved that the record date for the purpose of voting on the Resolutions (being the date on which a Shareholder must be registered in the Company’s securities register in order to vote on the Resolutions) shall be Friday, 9 November 2018 (“Record Date”).

2. In terms of section 65(2) of the Companies Act, the Board of Directors of a Company may propose a resolution to be considered by shareholders and may determine whether that resolution will be considered at a meeting, or by vote, or written consent, in terms of section 60 of the Companies Act.

3. Section 60(1) of the Companies Act provides that a resolution that could be voted on at a shareholders’ meeting may instead be submitted for consideration to the shareholders entitled to exercise voting rights in relation to that resolution and voted on in writing by such shareholders within 20 (twenty) business days after the resolution was submitted to them.

4. Section 60(2) of the Companies Act provides that a resolution contemplated in section 60(1) will have been adopted if it is supported by persons entitled to exercise sufficient voting rights for it to have been adopted as an ordinary or special resolution, as the case may be, at a properly constituted shareholders’ meeting and, if adopted, has the same force and effect as if it had been approved by voting at a meeting.

5. For a special resolution to be approved by Shareholders by way of a written resolution, it must be supported by at least 75% (seventy-five percent) of the voting rights exercisable on the resolution. For the ordinary Resolutions to be approved by Shareholders by way of written resolution, it must be supported by more than 50% (fifty percent) of the voting rights exercisable on the resolution.

1. SPECIAL RESOLUTION NUMBER 1 – AUTHORITY TO ISSUE SHARES AS REQUIRED IN TERMS OF THE ACT

“RESOLVED AS A SPECIAL RESOLUTION that, subject to the approval of Ordinary Resolution 1 below, to the extent that the aggregate Transcend Shares issued pursuant to the implementation of the Proposed Transactions referred to in Ordinary Resolution 1 is equal to or exceeds 30% of the voting power of all Shares presently in issue, the issue of all such Shares be and is hereby authorised and approved in terms of section 41(3) of the Act, and that any one Director of the Company and/or the Company Secretary be and is hereby authorised to do all such things and sign all such documents as required to give effect to this resolution.”

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Voting and additional information

This Special Resolution 1 must be approved by a 75% majority of the votes validly exercised by Shareholders.

The reason for Special Resolution Number 1 is that section 41(3) of the Act requires that companies obtain the approval of shareholders by special resolution for any issue of securities, in a single transaction or an integrated series of transactions, if the voting power of the securities that will be issued will be equal to or exceed 30% of the voting power of all the securities of that class held immediately before the issue. The effect of Special Resolution Number 1 will therefore be to grant the Company the requisite approval to issue the Shares as required in terms of section 41(3) of the Act.

2. ORDINARY RESOLUTION NUMBER 1: APPROVAL OF THE ACQUISITION OF THE IHS RES 1 PROPERTIES AND PROTEA GLEN AS A REVERSE TAKE-OVER RELATED PARTY TRANSACTION

“RESOLVED AS AN ORDINARY RESOLUTION that, in terms of the Listings Requirements, the Company be and is hereby authorised to implement the acquisition by Transcend, by way of a series of indivisible transactions, 1 983 Units from IHS Res 1 and 176 Units from Sunnyshore, being the “Proposed Transactions” as more fully defined and described in the Circular to which this Notice is annexed, and that any one Director of the Company and/or the Company Secretary be and is hereby authorised to do all such things and sign all such documents as required to give effect to this resolution.

Voting and additional information

Ordinary Resolution number 1 must be approved by more than 50% of the votes validly exercised by Shareholders, excluding related parties and their associates. Accordingly, SAWHF and IHS s.a.r.l and their associates, are precluded from voting on this resolution.

The reason for Ordinary Resolution Number 1 is to approve the Proposed Transactions which are collectively categorised as a Reverse Takeover and related party transaction in terms of the Listings Requirements. The effect of Ordinary Resolution Number 1 is that the Proposed Transactions shall be approved in terms of the Listings Requirements.

By order of the Board

R WesseloChief Executive OfficerThursday, 22 November 2018

Registered office Transfer Secretaries

54 Peter Place, Peter Place Office Park Link Market Services South Africa Proprietary LimitedBlock C, Cardiff House, Ground Floor 19 Ameshoff StreetBryanston, Johannesburg 13th Floor2191 Braamfontein South Africa Johannesburg, 2001

112 PRINTED BY INCE (PTY) LTD REF. JOB017290

Annexure 19

Transcend Residential Property Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2016/277183/06)(JSE Share Code: TPF ISIN ZAE000227765)

(Approved as a REIT by the JSE)(“Transcend” or “the Company”)

VOTING FORM

Voting Form in terms of section 60 of the Companies Act

Shareholders who hold Dematerialised Shares, but not in their own-name, must furnish their CSDP or broker with their instructions for voting in respect of the Resolutions. Such Shareholders must not lodge this Voting Form. Unless such Shareholders advise their CSDP or broker, as the case may be, by the cut-off time stipulated in terms of any agreement between the Shareholder and the CSDP or broker that the Shareholder wishes to give or withhold consent in respect of the Resolutions, or to appoint a proxy to give or withhold such consent on their behalf, the CSDP or broker will assume that the Shareholder does not wish to complete the Voting Form or to appoint a proxy to do so.

I/We(please print full names)

of

(please state full address)

being the holder/s of Shares in the issued share capital of the Company, hereby vote as follows:

Special Resolution Number 1 For Against Abstain

Authority to issue Shares as required in terms of the Act

Ordinary Resolution Number 1

Approval of the acquisition of the IHS Res 1 Properties and Protea Glen as a Category 1 related party transaction

Insert an “X” in the relevant space above according to how you wish your votes to be cast. If you wish to cast your votes in respect of a lesser number of Shares than you own in the Company, insert the number of Shares held in respect of which you desire to vote (refer to note 6).

Signed at on 2018

Signature

Assisted by me (where applicable)

Transcend Residential Property Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2016/277183/06)(JSE Share Code: TPF ISIN ZAE000227765)

(“Transcend” or “the Company”)

FORM OF PROXY

This form of proxy is not to be used by beneficial owners of Shares who have dematerialised their Shares through a CSDP or broker, as the case may be, unless you are recorded in the sub-register as an own-name dematerialised Shareholder. Generally, you will not be an own-name dematerialised Shareholder unless you have specifically requested your CSDP to record you as the holder of the Shares in your own-name in the Company’s sub-register.

This form of proxy is only for use by certificated, own-name Dematerialised Shareholders and CSDP’s or brokers (or their nominees) registered in the Company’s sub-register as the holder of Dematerialised Shares.

Each Shareholder entitled to vote is entitled to appoint a proxy (who need not also be a Shareholder of the Company) to vote in place of that Shareholder.

Please note the following:

• the appointment of your proxy may be suspended at any time to the extent that you choose to act directly and in person in the exercise of your rights as a Shareholder;

• the appointment of the proxy is revocable; and• you may revoke the proxy appointment by (i) cancelling it in writing, or making a later inconsistent appointment of a proxy;

and (ii) delivering a copy of the revocation instrument to the proxy, and to the Company.Please note that any Shareholder that is a company may authorise any person to act as its representative.

I/We(please print full names)

of

(please state full address)

being the holder/s of Shares in the issued share capital of the Company, do hereby appoint (refer to note 5):

1. or failing him/her,

2.

as my/our proxy to vote for me/us on my/our behalf in respect of the Ordinary Resolution as set out in Annexure 18 of this Circular submitted to the Shareholders in terms of section 60 of the Companies Act for the purpose of considering and, if deemed fit, passing, the Ordinary Resolution, and to vote on such Ordinary Resolution in respect of the Shares registered in my/our names in accordance with the following instructions:

Special Resolution Number 1 For Against Abstain

Authority to issue Shares as required in terms of the Act

Ordinary Resolution Number 1

Approval of the acquisition of the IHS Res 1 Properties and Protea Glen as a Category 1 related party transaction

Insert an “X” in the relevant space above according to how you wish your votes to be cast. If you wish to cast your votes in respect of a lesser number of Shares than you own in the Company, insert the number of Shares held in respect of which you desire to vote (refer to note 6).

Signed at on 2018

SignatureAuthority of signatory to be attached (where applicable – see note 10)

Assisted by me (where applicable – see note 12)

SUMMARY OF RIGHTS

SUMMARY OF SHAREHOLDERS RIGHTSIN RESPECT OF PROXY APPOINTMENTS AS CONTAINED

IN SECTION 58 OF THE COMPANIES ACT

Please note that in terms of section 58 of the Companies Act:(a) This proxy form must be dated and signed by the Shareholder appointing the proxy;(b) You may appoint an individual as a proxy, including an individual who is not a Shareholder of the Company, to vote on your behalf;(c) Your proxy may delegate his/her authority to act on your behalf to another person, subject to any restriction set out in this proxy

form;(d) This proxy form must be delivered to the Company, or to the Transfer Secretaries, before your proxy exercises any of your rights as

a Shareholder;(e) The appointment of your proxy or proxies will be suspended at any time to the extent that you choose to act directly and in person

in the exercise of any of your rights as a Shareholder;(f) The appointment of your proxy is revocable unless you expressly state otherwise in this proxy form;(g) As the appointment of your proxy is revocable, you may revoke the proxy appointment by (i) cancelling it in writing, or (ii) making

a later inconsistent appointment of a proxy and delivering a copy of the revocation instrument to the proxy and to the Company. Please note the revocation of a proxy appointment constitutes a complete and final cancellation of your proxy’s authority to act on your behalf as of the later of the date stated in the revocation instrument (if any) or the date on which the revocation instrument was delivered to the Company and the proxy initially appointed;

(h) If this proxy form has been delivered to the Company, as long as that appointment remains in effect, any notice that is required by the Companies Act, or the Company’s MOI to be delivered by the Company to you, will be delivered by the Company to you or your proxy or proxies if you have directed the Company to do so in writing, and paid any reasonable fee charged by the Company for so doing;

(i) Your proxy is entitled to exercise, or abstain from exercising, any voting right of yours but only as directed by you on this proxy form; and

(j) The appointment of your proxy remains valid for one year after the date on which it was signed or any longer or shorter period expressly set out in the appointment, unless it is revoked by you before then on the basis as set out above.

NOTES TO FORM OF PROXY1. The following categories of Shareholders are entitled to complete a form of proxy:

(a) Certificated Shareholders whose names appear on the Company’s register;(b) Own-name electronic Shareholders whose names appear on the sub-register of a CSDP;(c) CSDP’s with nominee accounts; and(d) Brokers with nominee accounts.

2. Certificated Shareholders wishing to vote in respect of the Resolutions have to ensure beforehand with the Transfer Secretaries that their Shares are registered in their name.

3. Beneficial Shareholders whose Shares are not registered in their own-name, but in the name of another, for example a nominee, may not complete a proxy form unless a form of proxy is issued to them by the registered Shareholder. They should contact the registered Shareholder for assistance in issuing instruction on voting their Shares or obtaining a form of proxy to vote in respect of the Resolutions.

4. All beneficial owners who have dematerialised their Shares through a CSDP or broker, other than those in their own-name, must provide the CSDP or broker with their voting instructions. Shareholders who have dematerialised their Shares, other than those in their own-name, must not lodge the Voting Form attached as Annexure 19 to this Notice.

5. A Shareholder may insert the name of a proxy or the names of two alternative proxies of the Shareholder’s choice in the space/s provided. The person whose name stands first on the form of proxy will be entitled to act as proxy to the exclusion of those whose names follow.

6. Please insert the number of votes in the relevant spaces according to how you wish your votes to be cast. However, if you wish to cast your votes in respect of a lesser number of Shares than you own in the Company, insert the number of Shares in respect of which you desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote, or to abstain from voting in respect of the Ordinary Resolution as he/she deems fit in respect of all Shareholder’s votes exercisable thereon. A Shareholder or the proxy is not obliged to use all the votes exercisable by the Shareholder, or by the proxy, but the total of votes cast and in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the Shareholder or by the proxy.

7. Forms of proxy may be sent to the Company by any of the following methods at any of the following addresses:• lodged at the registered office of the Company at Transcend Residential Property Fund Limited, 54 Peter Place Block C, Cardiff House,

Peter Place Office Park, Bryanston, Johannesburg, 2191, during office hours (09:00 to 17:00);• lodged at the office of the Transfer Secretaries, Link Market Services South Africa Proprietary Limited, 19 Ameshoff Street, 13th Floor,

Braamfontein, Johannesburg, 2001, during office hours (09:00 to 17:00);• posted to the Transfer Secretaries at PO Box 4844, Johannesburg, 2000; or• emailed to the Transfer Secretaries at investorenquiries@linkmarketservices.co.za.

8. Forms of proxy must be received or lodged by no later than Wednesday, 2 January 2019 being the last business day on which the Voting Form may be received by the Company or the Transfer Secretaries.

9. The completion and lodging of this form of proxy will not preclude the relevant Shareholder from voting personally in respect of the Resolutions to the exclusion of any proxy appointed in terms thereof.

10. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy.11. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.12. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been

registered by the Company Secretary or the Transfer Secretaries.13. The Company may reject or accept a form of proxy that is completed and/or received other than in accordance with these notes if it is satisfied as to the

manner in which the Shareholder wishes to vote.