INTERIM RESULTS PRESENTATION. for the six months ended 31 August 2016

Transcription

1 INTERIM RESULTS PRESENTATION for the six months ended 31 August 2016

2 NPA Cape Town INTRODUCTION & HIGHLIGHTS SANDILE NOMVETE

3 INTRODUCTION TO DELTA Dsds Sovereign underpinned JSE listed asdasdas REIT Industry leading level 2 Market capitalisation # of 76.3% B-BBEE R5.3bn of revenue from sovereign tenants empowered property fund up from R3.5bn at 29 Feb 2016 Dominant in Pretoria & Durban CBDs Average property value of R98.8m Assets under management of R11.8bn by 100% black-owned asset manager 3 # closing share price of R7.42 and 710,632,183 shares in issue as at 25 October 2016

4 HIGHLIGHTS SINCE LISTING Investment Portfolio Growth Rands (bn) Feb-14: Surpasses pre-listing target of a R7 billion asset portfolio. REIT Status approved Nov-12: Delta lists on the JSE main board with a portfolio value of R2.1 billion Jul-13: Launches R2 billion Domestic Medium Term Note Programme Jun-14: Launches and lists Delta International (rebranded to Mara Delta), the first specialist pan-african focused property fund to be listed on JSE Aug-16: Balance sheet strengthened, gearing reduced to 41%. Portfolio GLA surpasses 1 million m Nov-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Graph includes market value of listed investments

5 CORPORATE HIGHLIGHTS OF PAST 6 MONTHS Distribution growth of Gearing reduced to Like-for-like net property income growth of 7.1% 41.0% 5.2% Fifth consecutive period of growth in half-year distribution (Feb 2016: 47.2%) in a challenging environment Vacancies largely unchanged at 9.2% (SAPOA average 10.5%) Property portfolio now exceeds 1 million m 2 in Gross Lettable Area Reaffirmed GCR Credit Rating for both Corporate (BBB+) and DCM Secured Bond (A+) 5

6 SNAPSHOT Listing date: 02 November 2012 JSE classification: Real Estate Holdings & Development Asset manager: Delta Property Asset Management (Pty) Ltd JSE code: DLT Asset management fee: 0.35% of enterprise value 31 August August February 2016 Shares in issue 710,632, ,316, ,097,436 Market capitalisation R4.63 billion R4.45 billion R3.47 billion NAV per share R9.86 R9.65 R10.61 No. of properties Valuation of property portfolio R11.36 billion R9.08 billion R10.10 billion Average value per property R98.78 million R million R million Gross lettable area 1,003,028 m² 723,929 m² 813,505 m² Tenant Sectorial profile (GLA) Office - Sovereign: 71.1% Office - Sovereign: 65.4% Office - Sovereign: 67.5% Office - Other: 19.0% Office - Other: 23.5% Office - Other: 21.4% Industrial: 6.8% Industrial: 4.1% Industrial: 3.9% Retail: 3.1% Retail: 7.0% Retail: 7.2% Vacancy rate 9.2% 8.4% 9.0% Weighted average rent (per m 2 ) R R R Weighted Average Lease Expiry # (years) Weighted average in force escalation 7.1% 7.9% 7.8% Loan to value 41.0% 46.0% 47.2% Fixed % 84.1% 79.0%* 83.5% Weighted Average Cost of Debt 9.0% 8.1% 8.8% * Restated with revolver facilities excluded # By revenue 6

7 Delta Towers, Durban FINANCIAL REVIEW SHANEEL MAHARAJ

8 FINANCIAL HIGHLIGHTS OF PAST 6 MONTHS Dsds asdasdas Gearing reduced to Successfully refinanced or settled Interest cover ratio maintained 41.0% R832m 2.38 (Feb 2016: 47.2%) of debt (Feb 2016: 2.38, Aug 2015: 2.16) Net cost to income ratio 10.2% Fixed debt of 84.1% Property operating margin maintained at 72.7% 8 (Feb 2016: 12.2%) (Feb 2016: 83.5%) in tough economic environment

9 FINANCIAL REVIEW 31 Aug Aug Feb 2016 Revenue (R 000) 757, ,160 1,247,582 Net property income (R 000) 550, , ,531 Finance costs (R 000) (228,638) (194,701) (412,713) Cost to income ratio (net / gross) 10.2% / 27.2% 11.4% / 27.3% 12.2% / 26.4% Investment property (R 000) 11,357,790 9,082,064 10,095,181 Listed securities - Mara Delta (R 000) 459, , ,546 Borrowings (R 000) 5,004,118 4,570,263 5,094,310 Gearing level 41.0% 46.0% 47.2% Interest cover ratio Weighted average interest rate 9.0% 8.1% 8.8% Average debt expiry period (years) Average debt fix expiry period (years) Fixed % 84.1% 79.0% * 83.5% Net asset value per share R9.86 R9.65 R10.61 * Figures restated to exclude revolver facilities

10 DISTRIBUTABLE INCOME STATEMENT R 000 H1 Aug 16 H1 Aug 15 FY2016 Change % (H1 16 vs H1 15) Net property income (excl. straight line accrual) 550, , , % Administration expenses (41,330) (36,366) (82,744) 13.7% Realised foreign exchange loss (39) - Net finance costs (215,055) (180,657) (379,979) 19.0% Dividend received - Mara Delta 18,851 14,057 36, % Sundry income 15 6,080 7,266 (99.8%) Antecedent interest - 9,010 9,010 (100.0%) Retained distributable earnings - - (912) - 10 Distributable income for the period 313, , , % Number of shares in issue 710,632, ,316, ,097, % Number of shares entitled to distribution 681,722, ,316, ,097, % Distribution per share (cents) %

11 GROWTH IN DISTRIBUTIONS Historic distribution per share Cents / share % 7-7.5% 15.6% H % % % % % H FY2013 H1 Aug-13 H2 Feb-14 FY2014 H1 Aug-14 H2 Feb-15 FY2015 H1 Aug-15 H2 Feb-16 FY2016 H1 Aug-16 FY2017 (target)

12 DISTRIBUTABLE EARNINGS BRIDGE R , ,000 95,625 4,794 (9,010) (34,286) 340, ,000 (4,964) (6,065) 313, , ,000 34, , , , , ,000 H1 Aug 2015 Existing portfolio Acquisitions Dividends received (Mara Delta) Antecedent dividend Net finance costs Admin costs Other income H1 Aug 2016

13 LIKE-FOR-LIKE NET PROPERTY INCOME ANALYSIS Description Amount (R) % Net Property Income (NPI) Aug ,484,000 Increased NPI from base portfolio held at 31 Aug ,417, % NPI attributable to acquisitions post 31 Aug ,625, % NPI Aug ,526, % Increased NPI from base portfolio held at 31 Aug ,417, Time weighting of acquisitions concluded in H1 Aug 2015 (12,564,000) Like-for-like increase in NPI 21,853, %

14 STATEMENT OF FINANCIAL POSITION R Aug Aug Feb 2016 Assets Change % (Aug 16 vs Feb 16) Non-Current assets 10,567,801 9,227,782 9,085, % Investment property 10,155,844 8,816,434 8,684, % Fair value of property portfolio 9,969,666 8,633,026 8,500, % Straight line rental income accrual 186, , , % Investment in associate 403, , ,327 (5.4%) Other non-current assets 8,003 4,523 17,732 (54.9%) Current assets 506, , ,113 (2.5%) Non-current assets held for sale 1,201, ,630 1,410,481 (14.8%) Total assets 12,276,027 9,950,051 11,015,353 (11.4%) Equity and liabilities Total Equity 7,007,810 5,231,003 5,656, % Total Liabilities 5,268,217 4,719,048 5,358,724 (1.7%) Non-current liabilities 4,039,368 3,783,115 3,610, % Current liabilities 1,228, ,933 1,747,909 (29.7%) Total equity and liabilities 12,276,027 9,950,051 11,015, % NAV per share R9.86 R9.65 R10.61 (7.1%) 14

15 NAV BRIDGE Rands (2.65) (0.36) (0.01) Feb 2016 Assets acquired through acquisitions net of debt raised Remaining impact from operations Revaluation of financial instruments & forex gains Contribution of associate Issue of shares for acquisitions Dividend paid Disposals 31 Aug 2016

16 DEBT SUMMARY As at 31 August 2016 Facility Type R m Weighted Ave. Rate Weighted Ave. Term Floating bank facilities 2, % 2.1 Fixed bank facilities % 1.7 Revolving bank facilities % 3.9 Total bank facilities 4, % 2.3 DMTN programme - floating % 0.5 Vendor loans % 0.3 Total borrowings, net of accrued interest 4, % 2.1 Accrued interest 53 TOTAL 5,004 Total fixed bank facilities % 1.7 Interest rate swap contracts 2, % 2.2 Cross currency swaps 225 Libor + 2.9% 0.8 Total fixed 3, Fixed % and total weighted average cost of debt: 84.1% 9.0% Interest Cover Ratio: 2.38 Loan to Value Ratio: 41.0%

17 GRAPHICAL DEBT ANALYSIS Sources of Debt 3.5% 11.9% 0.3% Debt Classification 12.9% 9.3% 2.5% 0.3% 16.1% 84.3% Total: R4,951m 58.9% Total: R4,951m ZAR Banking Facilities (R4,174m) USD Banking Facilities (R175m) DMTN Programme (R587m) Vendor Loans (R15m) Floating Bank Facilities (R2,913m) Revolving Bank Facilities (R640m) Unsecured Com. Paper (R125m) Fixed Bank Facilities (R796m) Secured Bonds (R462m) Vendor Loans (R15m) Financier Split 3.5% 5.7% 0.3% 1.8% Fixed Debt Breakdown 6.2% 11.9% 22.1% % 59.2% 71.7% Nedbank (R2,930m) Debt Capital Markets (R587m) Bank of China (R175m) Vendor Loans (R15m) Total: R4,951m Standard Bank (R872m) Investec (R283m) Sanlam Capital Markets (R89m) Swap Contracts (R2,582m) Cross Currency Swaps (R225m) Total: R3,603m Fixed Banking Facilities (R796m)

18 DEBT EXPIRY PROFILE R mil 1,200 1, Feb Feb Feb Feb Feb Feb DMTN Programme Fixed Bank Facilities Floating Bank Facilities Revolving Bank Facilities Vendor Loans Swap Contracts

19 DEBT COMMENTARY Cost of debt significantly increased across the industry in last 12 months Liquidity in Debt Capital Markets has reduced for smaller funds such as Delta, and sentiment towards government has exacerbated this constraint Nonetheless, Delta has Successfully refinanced or settled R832m in vanilla and DCM debt Managed to further reduce LTV to 41.0% (Feb 16: 47.2%) Increased fixed debt to 84.1% (Feb 16: 83.5%) by concluding R360m in swaps at weighted average base rate of 8.05% Maintained similar average debt expiry and average fix expiry metrics of 2.1 (Feb 16: 2.3) and 2.1 (Feb 16: 2.1) 19 Significant progress achieved in refinancing of DLTB02 Secured Bond of R462m.

20 PORTFOLIO REVIEW OTIS TSHABALALA SARS Randburg

21 PORTFOLIO BREAKDOWN Office - Sovereign * Office - Other Industrial Retail Total Number of properties Gross lettable area (m 2 ) 725, ,787 39,541 23,716 1,003,028 Vacancy (%) 7.3% 12.6% 28.8% 3.4% 9.2% Value R8.55bn R2.22bn R0.18bn R0.26bn R11.36bn Average rental (R/m 2 ) Weighted ave. escalation (%) 7.1% 7.4% 8.0% 7.4% 7.1% Weighted ave. lease expiry (by revenue) - by building type 1.8 years 1.8 years 3.1 years 9.0 years 2.0 years Weighted ave. lease expiry (by revenue) - tenant specific # 1.9 years 1.9 years 2.6 years 3.2 years 2.0 years 21 Cost to income ratio (net) 8.8% 19.9% 17.5% 18.4% 10.2% Cost to income ratio (gross) 25.1% 39.9% 36.4% 40.3% 27.3% * Multi-tenant buildings are classified according to majority tenant type. Office - Other buildings therefore contain a minority element of Sovereign tenants # This classification looks specifically at the tenant type within each building

22 SECTORAL SPLIT GLA - by building GLA - by tenant * Office - Sovereign (72.4%) Office - Other (21.3%) Office - Sovereign (71.1%) Office - Other (19.0%) Industrial (2.4%) Retail (6.8%) Retail (3.9%) Industrial (3.1%) Rental - by building Office - Sovereign (79.2%) Rental - by tenant Office - Sovereign (76.3%) Office - Other (17.4%) Office - Other (15.3%) 22 Retail (1.9%) Retail (6.9%) Industrial (1.5%) Industrial (1.5%) * Excludes vacancies. Analysis focuses on what category the specific tenant falls into, rather than the category of the building

23 DETAILED TENANT BREAKDOWN Tenant Profile by GLA Tenant Profile by Rental 3.1% 1.5% 6.8% 6.9% 19.0% 40.4% 15.4% 39.94% 4.53% 4.2% 71.1% 11.73% 76.2% 11.8% % 20.11% Office - Sovereign Office - Other National Government Provincial Government Retail Industrial Local Government State-Owned Enterprise Excludes vacancies. Total occupied GLA = 911,086 m 2

24 UPDATE ON SOVEREIGN TENANTS 2 nd dispensation (3 year terms, 5.5% escalations) ends in March 2017 DPW in conjunction with National Treasury have gone on roadshows during October 2016 to communicate the new leasing framework going forward Highlights of framework at this stage: Occupy appropriate space at market related rentals Longer term leases for empowered tenants on a sliding scale Coordinated engagement from DPW, Treasury and user departments with financial institutions, SAPOA, SABIPP and business Standardisation of lease agreements and office specifications Roll out of automated payment system to make payments more efficient Concession from DPW to continue servicing rental payments on month-tomonth and expired leases 24 The Property Management Trading Entity continues to recruit suitably qualified property professionals to improve delivery

25 UPDATE ON SOVEREIGN TENANTS What this means for Delta: Ongoing improved and effective communication Providing long term leases for empowered landlords on a sliding scale Indicatively, a 100% empowered company (incl. Mancos) = 9 year 11 month lease, 50% empowered = 5 year lease Delta would thus qualify for long term leases This would enable ongoing CAPEX investments and improvements 25 Delta well placed to provide the appropriate accommodation to government At market related rentals In the nodes that government strategically wish to occupy

26 LEASING Total leases concluded 1 March August 2016 No of Leases Total Area (m 2 ) W.A. Expiry Rate (R / m 2 ) * W.A. Achieved Rate (R / m 2 ) * Reversion W.A. Esc. achieved Renewed leases (expiring FY Feb2017) 69 48, (8.8%) 7.3% Renewed leases (expiring FY Feb2018) 8 10, (5.6%) 6.0% Total renewals concluded 77 59, (7.9%) 7.0% Renewals by Sector Sector No of Leases Total Area W.A. Term (months) W.A. Expiry Rate / m 2 * W.A. Achieved Rate / m 2 * Reversion W.A. Esc. achieved National government - Nelspruit 10 16, (21.7%) 6.0% National government - all other 4 8, (11.2%) 6.0% National government - subtotal 14 25, (21.1%) 6.0% Provincial government 1 4, (9.1%) 7.5% Local government 1 3, (11.9%) 7.5% State-owned enterprise 3 14, % 8.0% Office - other 30 7, (13.9%) 7.8% Retail 28 4, % 7.7% Total 77 59, (7.9%) 7.1% 26 * All rentals quoted are gross rentals

27 LEASING - OUTLOOK Anticipated sovereign renewals - leases on month-to-month or expiring by 28 February 2017 Sector No of Leases Total Area W.A. Proposed Rate / m 2 * W.A. Expiry Rate / m 2 * Reversion leases on month-to-month or expiring by 28 February 2017 National government , % Provincial government 16 67, (9.8%) Local government 1 21, (5.4%) State-owned enterprise 7 28, (19.6%) Total , (4.0%) Leases expiring in March 2017 National government 14 70, % Provincial government (3.9%) Total 15 70, % 27 Grand Total , % * All rentals quoted are gross rentals

28 LEASE EXPIRY PROFILE AT 31 AUGUST 2016 Total portfolio - by GLA Total portfolio - by rental 28 Vacant (9.2%) Month-to-month (16.7%) 28 Feb 17 (11.5%) 28 Feb 18 (23.6%) 28 Feb 19 (12.0%) 29 Feb 20 (8.1%) 28 Feb 21 (11.4%) Beyond 28 Feb 2021 (7.5%) Month-to-month (18.1%) 28 Feb 17 (12.6%) 28 Feb 18 (23.1%) 28 Feb 19 (15.9%) 29 Feb 20 (9.7%) 28 Feb 21 (12.3%) Beyond 28 Feb 2021 (8.4%)

29 GEOGRAPHICAL AND GRADE SPLIT GLA - by building Gauteng (43.3%) Kwazulu-Natal (29.2%) Free State (8.5%) Limpopo (4.5%) Western Cape (4.2%) Northern Cape (4.0%) Mpumalanga (3.3%) Eastern Cape (2.4%) North West (0.6%) Rental - by building Gauteng (43.8%) Kwazulu-Natal (23.9%) Limpopo (9.0%) Free State (7.2%) Western Cape (4.9%) Northern Cape (4.4%) Mpumalanga (3.5%) Eastern Cape (2.8%) North West (0.5%) Office grade - by GLA Office grade by rental A (20.6%) A (26.3%) 29 B (79.4%) B (73.7%)

30 GOVERNMENT PRECINCT - PRETORIA 30

31 NODAL ANALYSIS - PRETORIA : Delta owned properties 10: ABSA Towers 11: Momentum building 12: Treasury 13: Telkom Towers 14: CGI Building (DPW Head Office) 15: AVN Building (DPW occupied) 16: State Theatre 17: Sammy Marks Shopping Centre 18: Intended new municipal HQ

32 NODAL ANALYSIS - DURBAN : Delta owned properties 15: Durban International Convention Centre 16: Durban City Hall 17: Workshop Mall (Old Railway Workshop) 18: Durban Marina 19: SAHARA Park Kingsmead 20: South Beach 21: Redefine Towers 22: Commercial City Building 23: Durban Bay House

33 NODAL ANALYSIS - BLOEMFONTEIN : Delta owned properties 14: Hoffman Square 15: Sand du Plessis Theatre 16: Waterfront Mall 17: Loch Logan 18: Appeal Court 19: Fourth Raadsaal 20: Bloemfontein City Hall 21: CR Swart Building 22: Lebohang Building 23: Bram Fisher Building 24: Liberty Life Building

34 ACQUISITIONS Strategy is to continue to (opportunistically) focus on Significant assets (> R100m) Underpinned by (or have potential for) long term sovereign leases Located in nodes attractive to sovereign tenants Past 6 months: Transferred 17 assets Aggregate purchase price of R1.34 bn Weighted average yield of 13.1% GLA of 199,355 m 2 34

35 ACQUISITIONS - REDEFINE PORTFOLIO UPDATE Rationale: Yield accretive at 13.3% Enhanced presence in nodes of Jhb, Pta, Dbn where Delta has existing exposure and representation Provided opportunity to decrease LTV through 100% share issuance Delta best placed to extract value from a sovereign portfolio Leasing: 4 year renewal at 17 Harrison Street: 11,627m 2, R / m 2, 8% esc 113,390m 2 In advanced negotiations 35 CAPEX: Refurbishments largely lease dependant Commitment of R14.2m made for 17 Harrison Street

36 DISPOSAL OF NON-CORE ASSETS Rationale: Recycling of capital from non-core or non-performing assets to reduce gearing, fund CAPEX, create liquidity for future acquisitions Past 6 months: Transferred Tembisa Megamart R206m, 9% yield, transfer date 25 Aug assets subject to signed sale agreements R578.1m, certain assets lodging imminently, others have various conditions precedent still to be met, disposal yields between % 36 Delta will continue to dispose of non-core assets with a rational approach to capital allocation in line with investment strategy

37 CAPEX OTIS TSHABALALA CMH Durban

38 REDEVELOPMENT STRATEGY Delta to deploy CAPEX into portfolio Enhancing earnings and value uplift Securing long term stable returns Provide competitive offering and excellent accommodation to tenants Identify assets where greatest value can be added, through value enhancing developments, renewal of long term leases and activation of under-utilised area or available bulk Three tier approach to CAPEX Defensive Tenant installation Project specific 38 Original FY2017 budget of R294m (including projects on next slide) H1 spend = R107m Budget for remainder of FY2017 = c.a. R187m, majority of which is lease dependant

39 CAPEX - EXISTING PORTFOLIO Property 88 Field Commission House Embassy Building Beacon Hill Pine Parkade Isivuno House Shell House Approved budget 89,400,000 28,250,000 21,843,000 40,000,000 40,800,000* 77,000,000* 43,800,000* Spent in FY ,728,783 11,118,424 7,982, Spent in H ,897,889 6,238,873 11,211, , Budget for H ,773,328 3,812,446 2,648,441 4,200,000 4,402,000 4,235,000 4,500,000 Remaining budget - 7,080,257-34,968,000 36,398,000 72,765,000 39,300, Description Internal refurbishment of tenanted floors for DPW Internal refurbishment Façade Upgrade Internal refurbishment of tenant space Refurbishment of parking and retail offering including improved tenant mix Internal refurbishment of tenant space for Tshwane council Internal refurbishment of tenant space for Ethekwini council * Subject to leasing * Subject to leasing * Subject to leasing

40 Hensa Towers, Polokwane CONCLUSION SANDILE NOMVETE

41 MARA DELTA Shareholding 23.9% at 31 August 2016 valued at R459m 1 at Aug 2016 R18.8m included in H distribution from Jan - Jun 2016 dividend Delta in process of migrating its Mara Delta holding to SEM Shares trading on R19.25, and on $1.74 as at 31 Aug 2016 Value would be = R573.5m 2 compared to R459m Delta strategy Maintain current levels, without following rights in the short term 41 Delta is cognisant of its own liquidity, the investment will be assessed on an ongoing basis 1 JSE share price of R ,866,776 shares held 2 At rate of 1 USD : ZAR 13.81

42 CONCLUSION Executive & senior management changes CFO: Shaneel Maharaj appointed Dec 2015 COO: Otis Tshabalala promoted from Head of Investments June 2016 Head of Capital Projects: Andries Schoeman appointed Dec 2015 Operations: Sandra Mqina now Head of Operations Enriched non-executive expertise at Board level Completed Strengthening of balance sheet Significant progress made Gearing reduced to 41.0%, on track to reduce LTV < 40% Credit rating maintained Work continues to refinance / term out / settle debt Significant progress in refinancing R462m secured note Progress made with disposal of non-core assets and capital being recycled and allocated more effectively 42

43 CONCLUSION Sovereign leasing Progress made, ongoing task Difficult environment, HOWEVER most leasing ever concluded in a 6 month period Significant work done to educate market on sovereign tenants leasing policies, renewals expected to pick-up after policy announcement in April 2017 Delta remains competitive, with well founded relationships (DPW Task Team) and able to offer an attractive product at market rentals Strategy Progress made, ongoing task Continued to focus internally and bed down recently acquired portfolios Focused asset management and CAPEX spend on buildings to maintain and enhance valuations of properties Acquisitions have been in line with Sovereign focus, will continue to grow opportunistically in line with strategy 43 Outlook Delta s defensive portfolio is well positioned to withstand tough economic conditions On track to meet full year distribution forecast

44 Q&A THANK YOU th Street Parkmore

45 ANNEXURES Embassy Building, Durban

46 ANNEXURES Board of directors Shareholder profile Acquisitions Disposals Top 10 properties by value GLA and vacancy reconciliation Income and expense components Property operating expenses breakdown Profitability metrics Detailed lease expiry tables and graphs 46

47 EXECUTIVE MANAGEMENT Executive Directors Sandile Nomvete Chief Executive Officer Exec Dep. & Prop Dev. Prog. (Wits & UCT Business Schools) Otis Tshabalala Chief Operating Officer Prop Dev. Prog, CCPP Appointed: 7 June 2016 Shaneel Maharaj Chief Financial Officer BCom (Acc) (Hons) (Univ. of Natal), CA(SA), HDipTax Sandile co-founded Motseng Investment Holdings which eventually became the empowerment partner to Marriot Property Group. A series of mergers and acquisitions within the sector provided the opportunity for Motseng to become the largest 100% blackowned property management company in South Africa. Sandile serves as a director on a number of other listed entities, including KAP Limited. He has nearly a decade and a half of experience in executive and non-executive positions. Sandile is a graduate of the Property Development Programme from the University of Cape town Graduate School of Business, and holds an Executive Development Programme and Finance for non-financial managers Diploma from the University of Witwatersrand Graduate School of Business. Mr Otis Tshabalala has been appointed as COO and an executive director of Delta with effect from 7 June Otis is a graduate of the Property Development Programme from the University of Cape Town and a CCPP from the University of Pretoria and also has several certificates in real estate. Apart from heading up the task team that manages Deltas account with the Department of Public Works, Otis has over 24 years experience in the commercial property sector, with more than 12 years spent in the property finance space. He is a key member of the team that grew Delta from listing with 20 properties to its current portfolio of 116 assets and has also been instrumental in assisting with Delta s funding and capital raising. Shaneel is a Chartered Accountant with over fifteen years work experience. He graduated from the University of Natal and completed his articles at Deloitte and Touche. He started his career in 2002 with Imperial Fleet Services head office and progressed to Financial Manager of its Government Business Unit. Shaneel then joined Cargo Carriers Limited in 2006 as Group Financial Manager and played an integral role in the restructure and growth within the business. He was appointed to the board of Cargo Carriers as Financial Director in Shaneel joined Delta Property Fund in December 2015, bringing with him a wealth of experience and excellent track record of stakeholder engagement, relationship building, effectively managing the treasury function and implementing new systems. 47

48 BOARD OF DIRECTORS - CONTINUED Non-Executive directors JB Magwaza Independent Non-Executive Chairman Nooraya Khan Lead Independent Non-Executive Director Ian Macleod Independent Non-Executive Director Dumo Motua Independent Non-Executive Director Committees: NRC*, SETC Committees: IC, ARC*, NRC Committees: IC, ARC Committees: NRC, SETC* 48 Marelise de Lange Independent Non-Executive Director Committees: IC, ARC Nombuso Afolayan Independent Non-Executive Director Committees: IC Andrew Konig Non-Executive Director Appointed 01 April 2016 Bronwyn Corbett Non-Executive Director Non-Executive status as of 07 June 2016 Board Committees IC = Investment Committee, ARC = Audit, Risk and Compliance Committee, NRC = Nomination and Remuneration Committee, SETC = Social, Ethics & Transformation Committee * Denotes chairperson

49 SHAREHOLDER PROFILE As at Aug 2016 Units held Holding Redefine Properties % Coronation Fund Managers % Stanlib Asset Management % Grindrod Asset Management % Public Investment Corporation % Sanlam Investment Management % Kagiso Asset Management % Investec Asset Management % Directors Holdings % Absa Asset Management % Prudential Investment Managers % Eskom Pension & Provident Inv. Management % Subtotal % Other % Total % 49

50 ACQUISITIONS - DETAIL Property name Location Sector GLA m 2 Tenancy Rent/ m 2 Vacancy Purchase Price 2 Devonshire Place Durban Office - Sovereign 8,123 Single % 39,000, Harrison Street & Kay St Parking Johannesburg Office - Sovereign 12,379m 2 & 61 bays Single % 87,600,000 Commissioner House Bellville Cape Town Office - Sovereign 4,019 Single % 40,000,000 Domus Pretoria Office - Other 5,443 Multi % 41,600,000 Hatfield Forum East Pretoria Office - Other 6,390 Multi % 44,000,000 Hollard House & Parkade Johannesburg Office - Sovereign 10,415 Single % 72,600,000 Isivuno House Pretoria Office - Sovereign 23,694 Single % 227,000,000 Nosa Pretoria Office - Sovereign 3,770 Single % 24,000,000 Pine Parkade Durban Retail / Parking 2,985m 2 & 1430 bays Multi % 71,000,000 Poyntons Pretoria Office - Sovereign 73,187 Single % 352,000,000 Shell House Durban Office - Sovereign 14,022 Single % 90,236,460 Shorburg Pretoria Office - Other 15,041 Multi % 89,800,000 Standard Bank Nelspruit Nelspruit Office - Other 2,374 Multi % 24,200, Treasury House Pietermaritzburg Office - Other 9,764 Multi % 52,797, ,606 1,255,833,860 Standard Bank Nelspruit UNISA Nelspruit Office - Sovereign 5,589 Multi % 34,782,050 Bldg 3, Silver Stream Business Park Bryanston Office - Other 2,160 Multi % 44,648,511 Total 199,355 1,335,264,421

51 DISPOSAL OF NON-CORE ASSETS Property Sector Location GLA Sales price (R) Transfer Date Transferred 14, ,000, Aug 2016 Tembisa Retail Midrand 14, ,000,000 Sale agreements concluded 67, ,100,000* Block G Office - Sovereign Pretoria CBD 7, ,800,000 End Nov 2016 Presidia Office - Other Pretoria CBD 12, ,000,000 End Nov 2016 Damelin Building Office - Other Durban CBD 3,933 55,800,000 End Nov 2016 Top Trailers site 1 Industrial Wadeville, Johannesburg 15,741 50,000,000 End Nov 2016 Broadcast House Office - Sovereign Mthatha, Eastern Cape 4,934 33,000,000 Early Nov Ferreira Street Office - Other Nelspruit 2,282 End Nov ,000,000 1 Ferreira Street Office - Other Nelspruit 961 End Nov 2016 Thema Thumo Office - Sovereign Kimberley 2,396 28,500,000 Early Nov Top Trailer Site 2 Industrial Wadeville, Johannesburg 12,623 23,000,000 End Nov 2016 Protea Coin Durban Office - Other Durban 4,365 9,000,000 Early Nov other non-core assets 52, ,781,000 # * Aggregate disposal yield of 10.3% # Total book value at Feb 2016

52 TOP 10 PROPERTIES (BY VALUE) Forum Building Hallmark Building Liberty Towers Delta Towers Location Pretoria Location Pretoria Location Durban Location Durban Sector Office - Sovereign Sector Office - Sovereign Sector Office - Other Sector Office - Other 52 GLA 41,003 m 2 GLA 26,255 m 2 GLA 40,095 m 2 GLA 40,958m 2 Vacancy Nil Vacancy Nil Vacancy 3.5% Vacancy 31.2% Valuation R660 mil Valuation R410 mil Valuation R395 mil Valuation R358 mil

53 TOP 10 PROPERTIES - CONTINUED Poyntons Hensa Towers Embassy Building The Marine Location Pretoria Location Polokwane Location Durban Location Durban Sector Office - Sovereign Sector Office - Sovereign Sector Office - Sovereign Sector Office - Other 53 GLA m 2 GLA 13,675 m 2 GLA 32,781 m 2 GLA 24,655 m 2 Vacancy 8.9% Vacancy Nil Vacancy 27.9% Vacancy 23.1% Valuation R352 mil Valuation R343 mil Valuation R325 mil Valuation R304 mil

54 TOP 10 PROPERTIES - CONTINUED Delta Heights Phomoko Towers Location Pretoria Location Polokwane Sector Office - Sovereign Sector Office - Sovereign 54 GLA 19,122 m 2 GLA 13,058 m 2 Vacancy 1.8% Vacancy Nil Valuation R275 mil Valuation R262mil

55 GLA AND VACANCY RECONCILIATION Properties (No.) Total GLA (m 2 ) Vacant GLA (m 2 ) Vacancy (%) As at 29 February ,505 73, % Disposals (1) (14,025) (1,065) Acquisitions ,355 12, % Leases terminated ,238 New letting of vacant space - - (10,860) Adjustments - CMH Building 1-6, Adjustments - Other (1) (1,726) 1,960 As at 31 August ,003,028 91, % 1 The CMH building was incorrectly measured at 29 February Area of 6,412 m 2 was originally accounted for as parking, however, this in fact space occupied by the CMH dealership as part of their showroom. The entire GLA of the building is thus 13,091 m 2 compared to 6,679 m 2 as at 29 February 2016

56 INCOME AND EXPENSE COMPONENTS Income Expense Contractual rental income - R757.2m Foreign exchange profit- R18.4m Interest income - R 13.6m Property operating expenses - R206.7m Administrative expenses - R41.3m Finance costs - R228.6m Share of loss in associate - R23.7m 56

57 PROPERTY OPERATING EXPENSES 25,453 (R'000s) 14,454 6,098 Municipal expenses (68.9%) 5,161 Service contracts (12.3%) Property management and letting fees (7.0%) Repairs and maintenance (3.0%) Rental paid (2.5%) Onsite staff costs (2.0%) Other expenses (1.8%) Insurance (1.6%) Consumables (0.5%) Provision for doubtful debts (0.5%) 142,357 4,235 3,781 3,

58 PROFITABILITY METRICS 90% 80% 70% 60% Profitability per sector 85% 80% 75% 76% 86% 120% 100% 80% Municipal recoveries 105% 90% 81% 86% 50% 40% 40% 40% 36% 60% 49% 30% 20% 10% 9% 25% 20% 18% 17% 10% 27% 40% 20% 11% 0% Office - Sovereign Office - Other Cost to Income Ratio (Net) Cost to Income Ratio (Gross) Municipal Recovery Ratio Retail Industrial Total 0% Rates Electricity Water & Effluent Refuse Levies, meter reading and other Total 58

59 LEASE EXPIRY BY GLA AND RENTAL TABULAR REPRESENTATION Expiry Period GLA (m 2 ) % Cumulative % Rental (%) Cumulative % Vacant 91, % 9.2% - - Month to Month 167, % 25.9% 18.1% 18.08% 28-Feb , % 37.4% 12.7% 30.8% 28-Feb , % 61.0% 23.1% 53.9% 28-Feb , % 73.0% 15.9% 69.8% 29-Feb-20 81, % 81.1% 9.6% 79.4% 28-Feb , % 92.5% 12.3% 91.7% 59 Beyond 28 Feb , % 100.0% 8.3% 100.0% Total 1,003, % 100%

60 LEASE EXPIRY BY GLA SECTORAL TABULAR REPRESENTATION Sector Month to Month 28 Feb Feb Feb Feb Feb 21 Beyond 28 Feb 2021 TOTAL National Government 79,729 36, ,343 11,521 16,194 55,610 22, ,667 Provincial Government 43,439 24, ,434 5,754 8,865 21, ,303 Local Government 21,339-13,828 3, ,202 State-owned Enterprise ,130 17,475 11,555 24,876 20,671 4, ,420 Total Sovereign 144,979 88, ,943 56,544 46,824 85,146 48, ,592 Other - Other 19,583 18,990 36,452 54,416 23,976 9,281 10, ,500 Retail 2,777 7,471 12,251 9,146 10,943 2,751 16,499 61,837 Industrial , ,980-28, Vacant , , , , ,106 81, ,158 75,472 1,003,028 All units are square meters (m 2 )

61 LEASE EXPIRY PROFILE BY GLA GRAPHICAL REPRESENTATION Total Portfolio (Inner ring) Month to month (18.4%) 28-Feb-17 (12.7%) 28-Feb-18 (26.0%) 28-Feb-19 (13.2%) 29-Feb-20 (9.0%) 28-Feb-21 (12.5%) 10,942 9,146 Beyond 28 Feb 2021 (8.2%) 9,281 23,975 46,824 16,980 2,751 85,146 54,416 81, , ,106 56,544 10,803 16,499 48,170 75, , , , , ,943 19,583 88,987 18,990 2,777 7,471 Sectoral Breakdown (Outer ring) Office - sovereign (647,593) Office - other (173,499) Retail (61,838) Industrial (28,157) 61 11,177 12,251 36,452 Excludes vacancies Total occupied GLA = 911,086 m 2

62 LEASE EXPIRY PROFILE BY TENANT SECTOR GLA - Office Sovereign Month to Month (22.4%) 28 Feb 17 (13.7%) 28 Feb 18 (27.3%) 28 Feb 19 (8.7%) 29 Feb 20 (7.2%) 28 Feb 21 (13.2%) Beyond 28 Feb 2021 (7.4%) Rental - Office Sovereign Month to Month (21.4%) 28 Feb 17 (13.0%) 28 Feb 18 (23.5%) 28 Feb 19 (12.8%) 29 Feb 20 (7.3%) 28 Feb 21 (13.5%) Beyond 28 Feb 2021 (8.5%) GLA - Office General Rental - Office Other Month to Month (11.3%) 28 Feb 17 (10.9%) 28 Feb 18 (21.0%) 28 Feb 19 (31.4%) 29 Feb 20 (13.8%) 28 Feb 21 (5.4%) Beyond 28 Feb 2021 (6.2%) Month to Month (9.1%) 28 Feb 17 (12.0%) 28 Feb 18 (19.0%) 28 Feb 19 (31.5%) 29 Feb 20 (17.1%) 28 Feb 21 (6.4%) Beyond 28 Feb 2021 (4.9%) 62

63 LEASE EXPIRY PROFILE BY TENANT SECTOR GLA - Retail Month to Month (4.5%) 28 Feb 17 (12.1%) 28 Feb 18 (19.8%) 28 Feb 19 (14.8%) 29 Feb 20 (17.7%) 28 Feb 21 (4.4%) Beyond 28 Feb 2021 (26.7%) Rental - Retail Month to Month (4.9%) 28 Feb 17 (13.2%) 28 Feb 18 (20.7%) 28 Feb 19 (18.7%) 29 Feb 20 (20.8%) 28 Feb 21 (5.5%) Beyond 28 Feb 2021 (16.2%) GLA - Industrial Rental - Industrial Month to Month (0.0%) 28 Feb 17 (0.0%) 28 Feb 18 (39.7%) 28 Feb 19 (0.0%) 29 Feb 20 (0.0%) 28 Feb 21 (60.3%) Beyond 28 Feb 2021 (0.0%) Month to Month (0.0%) 28 Feb 17 (0.0%) 28 Feb 18 (58.0%) 28 Feb 19 (0.0%) 29 Feb 20 (0.0%) 28 Feb 21 (42.0%) Beyond 28 Feb 2021 (0.0%) 63