Tour of Tower Cape Properties

www.towerpropertyfund.co.za Tour of Tower Cape Properties

Contents www.towerpropertyfund.co.za Tower Strategy Financial Highlights Operational Highlights Tower at a Glance Management Team Borrowings Valuations Operational Performance Top 10 Properties by Value Tpf International Business Case Towers Croatia Strategy Developments Value Add Opportunities Total Returns Strategy Debt Management Strategy Prospects 2 4 6 8 10 12 14 16 18 20 22 26 32 34 36 38 SUNCLARE 1

Tower Strategy Tower aims to generate, on a sustainable basis, competitive investment performance by: i) Adding value through local and international property asset management ii) Reinvesting capital in its own portfolio to grow its sustainable income iii) Acquiring properties in strong nodes with growth opportunities and selling properties which have reached the peak of their value Tower will continue to re-invest in value add opportunities in its existing portfolio and expand its portfolio through management s network of contacts throughout South Africa and abroad. 2 TOUR OF TOWER CAPE PROPERTIERS OLD CAPE QUARTER towerpropertyfund.co.za 3

Financial Highlights (at 31 May 2018) Distribution of 40.3 cents per share representing 5% growth from corresponding period Distributable earnings of R266 million Portfolio at 46 properties after the continued sale of non-core assets % Fund Total Return 20 15 10 Vukovarska Valuation Portfolio value of R4.9 billion Market capitalisation of R2.3 billion Loan-to-value of 38.6% Net asset value of R9.68 per share Properties sold or in the final process of sale of R247 million 5 Capital Raise Capital Raise 2014 2015 2016 2017 2018 4 TOUR OF TOWER CAPE PROPERTIERS SUB DUBROVNIK towerpropertyfund.co.za 5

Operational Highlights Vacancies reduced to 4.6% (SA 5.4%, Croatia 0%) WALE (portfolio) 4.3 years WALE (SA) 2.9 years Tenant retention ratio 90% Rental reversions - Retail 8.2%, Offices 1.88%, Industrial -9.77% Net operating cost ratio of 14% (gross of 28%) Previous high vacancy industrial properties, Meadowbrook (15 000m²) and Isando (10 000m²) now fully let Certain properties well through the J curve including Cape Quarter, De Ville, VMD and Sunclare showing potential upside 6 TOUR OF TOWER CAPE PROPERTIERS MEADOWBROOK towerpropertyfund.co.za 7

Tower at a Glance (at 30 September 2018) Property portfolio value: R4.5bn Rentable area (GLA): 279 000m² Occupancy rate (GLA): 95.5% Gearing (LTV): Average gross rental: Existing lease escalations: 7.59% Number of properties: 44 Average property value: 35% (36.7% post Yazaki acquisition) R110.78/m² R102m OFFICE 5% 47% 48% GAUTENG RETAIL INDUSTRIAL Sectoral Profile KZN WCAPE CROATIA Value 23% 35% 8% 34% Value Geographic Profile 8 TOUR OF TOWER CAPE PROPERTIERS 9

Management Team Marc Edwards Chief Executive Officer Strategy, Acquisitions, Debt and Capital Raising Johan Malherbe Asset Manager Western Cape, KwaZulu Natal, Specialised Finance, Acquisitions and Strategy Joanne Mabin Chief Financial Officer Financial Controls and Management Bruce Rogerson Asset Manager Gauteng, Acquisitions and Disposals 10 TOUR OF TOWER CAPE PROPERTIERS UPPER GRAYSTON towerpropertyfund.co.za 11

Borrowings Total debt ZAR debt Euro debt Loan facilities (R 000) 1 966 301 617 986 1 348 315 Weighted cost of funding (%) 5.21 9.10 3.43 Debt expiry profile (years) 3.3 0.4 * 4.7 Percentage hedged (%) 78 81 77 Hedging expiry profile (years) 2.6 2.1 2.7 * renewal terms under negotiation. The Standard Bank Euro debt (EUR 47 million) was refinanced at 3 month euribor plus 320 bps, 45 bps lower than the previous rate. 12 TOUR OF TOWER CAPE PROPERTIERS VMD towerpropertyfund.co.za 13

Valuations Valuations are a combination of Directors valuations and independent valuations. Directors valuations utilise a standard cap rate on forward income method of valuation whilst independent valuations utilise a discounted cash flow method of valuation. 14 TOUR OF TOWER CAPE PROPERTIERS MEDSCHEME towerpropertyfund.co.za 15

Operational Performance Space let in the period 98 842m 2 New space let 52 157m 2 Renewable space let 46 685m 2 Total vacant space (SA) 14 997m 2 Total vacant space (Croatia) 2 788m 2 50 40 30 20 10 0 % Lease expiry profile by revenue per sector Monthly <May 19 <May 20 <May 21 <May 22 <May 23 <May 24 <May 25 Industrial Office Retail * Excluding Konzum head lease and including vacancies committed to and in the process of signing % Lease expiry profile by GLA per sector 30 25 20 15 10 5 0 Monthly <May 19 <May 20 <May 21 <May 22 <May 23 <May 24 <May 25 Industrial Office Retail 16 TOUR OF TOWER CAPE PROPERTIERS 17

Top 10 Properties by Value Property Sector Value (R) Location Cape Quarter Square Mixed Use 770m Greenpoint, CPT* Sub-Dubrovnik Retail 381m Dubrovnik, Croatia** Sunclare Mixed Use 277m Claremont, CPT VMD Kvart Office 251m Zagreb, Croatia** De Ville Centre Mixed Use 246m Durbanville, CPT Link Hills Retail 206m Waterfall, KZN Meridijan 16 Retail 176m Zagreb, Croatia** Old Cape Quarter Mixed Use 164m Greenpoint, CPT Upper Grayston Office 163m Sandton, JHB Medscheme Office 144m Florida North, JHB * Cape Quarter Precinct, post-sale of residential units, anticipated value in excess of R1.2 billion (excluding development profit). ** at R14.80 to the Euro. 18 TOUR OF TOWER CAPE PROPERTIERS CAPE QUARTER 19

TPF International Business Case TPF International Limited Forward yield 7.4% Portfolio size 91 million Loan to value 35% Interest on funding circa 3% Current shareholders Tower Property Fund 74%, Oryx Properties Limited 26% Immediate pipeline circa Euro 100 million 20 TOUR OF TOWER CAPE PROPERTIERS VMD 21

Towers Croatia Strategy

Towers Croatia Strategy Tower s investment in TPF International ( TPF ) is intended to: Diversify its exposure to only one property market Obtain capital and income growth through purchases and asset management initiatives Grow Tower s earnings European properties have low lease escalations which is problematic when viewed against TWR s SA properties. To combat this, Tower is: Assisting TPF to acquire new, yield accretive properties to boost TPF and TWR income Acquire properties with historically low rentals which are due to correct Acquire properties with asset management upside TPF is attempting to raise cash from like minded investors who are looking for foreign property exposure in a defensive portfolio. TWR may look to sell its own shares in TPF if SA opportunities exist on a stronger growth basis. TPF is looking to off load two hypermarket centres and will reinvest the proceeds in accretive acquisitions. 24 TOUR OF TOWER CAPE PROPERTIERS 25

Developments Napier Street 16 apartments in addition to 2 floors of retail 140 parking bays selling at R570 000 each (Incl VAT) Current asking prices averaging circa R90 000/m² (Incl VAT) Anticipated capital profits of R20 million Will add to footfall of Cape Quarter 26 TOUR OF TOWER CAPE PROPERTIERS NAPIER STREET 27

Developments (continued) Old Cape Quarter 55 apartments in addition to existing retail and offices Will be introducing new retail concept to Cape Town Municipal approval received in December 2016 for construction early 2019 Will utilise units to best effect Anticipated capital profits through sale of residential units is circa R106 million 2 K 1 K 0 K * Source: www.cmainfo.co.za De Waterkant Growth in Value (R) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CLIFTON CAMPS BAY CITY OF CAPE TOWN DE WATERKANT 28 TOUR OF TOWER CAPE PROPERTIERS OLD CAPE QUARTER towerpropertyfund.co.za 29

Value Add Opportunities

Value Add Opportunities Napier Street R20 million* Old Cape Quarter R106 million* Link Hills refurbishment Re-financing debt Euro X million refinanced with SBSA at a reduced interest cost of 45 bpts TPF International acquisitions and sales * Assumes current selling price remains achievable with no capital expenditure increase. As a fall back, we can revert to short-term lets yielding 11.4%. 32 TOUR OF TOWER CAPE PROPERTIERS OLD CAPE QUARTER 33

Total Returns Strategy TWR s previous focus has been on income growth. This has often been short term focussed and has neglected the long term opportunities which exist in the portfolio TWR s strategy will focus on property net income growth with growth in tangible net asset value per share Capital proceeds will be deployed to strenghten the balance sheet before they are used to grow income Income growth will remain a key focus but not at the expense of the longevity of the company A key focus will be on the short term reduction in LTV, especially that of the Euro debt provided by SBSA where SA properties act as security Excess cash will be used to repurchase TWR shares and re-invested in the existing portfolio New acquisitons will be considered however returns need to be higher than those available in the current portfolio 34 TOUR OF TOWER CAPE PROPERTIERS VMD 35

Debt Management Strategy Short term focus to reduce LTV to 35% Reduce exposure to SBSA Euro loans and pay down as much of these as possible despite the negative effect this may have on distributions - this is a key risk to the business Hedge out at least 70% of interest rate exposure Obtain interest only loans on the Croatian properties in TPF 36 TOUR OF TOWER CAPE PROPERTIERS DE VILLE 37

Prospects Higher focus on sustainable income moving forward Re-investment of capital proceeds debt, shares and property Croatian portfolio expected to grow in TPF International Limited Refinance SBSA Euro debt Continue to focus on redevelopment opportunities Continue to sell tail Flat property net income growth 2019 38 TOUR OF TOWER CAPE PROPERTIERS CROATIA 39

Tower Property Valuations - May 2018 TOWER PROPERTY VALUATIONS MAY 2018 # TYPE GLA (SQM) VACANCY (GLA) WEIGHTED AVE GROSS RENT/SQM MAY 2018 VALUATIONS RATE/SQM (GLA) RATE/SQM (GBA) FORWARD YIELD VALUATION METHOD OFFICES 108 550 6% 124.62 1 699 504 177 15 656 9 298 9.30% 1 VMD Kvart, Zagreb, Croatia 10 650 0% - 251 767 734 23 640 12 839 7.25% Market 2 Sunclare, Claremont, Cape Town 14 776 0% 131.55 277 000 000 18 747 12 017 8.73% DCF 3 6-8 Sturdee Ave, Rosebank, JHB 7 368 3% 139.82 131 500 000 17 848 12 331 8.44% DCF 4 Medscheme, 38 Conrad St, Florida North 7 967 0% 116.15 144 205 311 18 101 12 762 9.00% Directors 5 Clifton Place, Berea, Durban 6 391 6% 151.32 106 200 000 16 618 7 513 10.08% DCF 6 15 Wellington Road, Parktown 4 316 0% 165.00 94 000 000 21 779 8 561 9.23% DCF 7 382 Jan Smuts Ave, Craighall Park, JHB 5 614 53% 109.63 61 000 000 10 865 4 908 10.44% DCF 8 Upper Grayston Block E, Sandton, JHB 2 886 17% 138.40 51 000 000 17 675 11 762 8.67% DCF 9 308 Kent Rd, Randburg, JHB 5 503 0% 92.48 64 000 000 11 630 5 934 9.50% DCF 10 Constantia View, Querelina, JHB 5 871 18% 132.17 59 000 000 10 050 5 656 10.17% DCF 11 3 River Rd, Bedfordview, JHB 4 957 21% 114.66 51 000 000 10 288 10 288 9.92% DCF 12 31 Beacon Rd, Florida North, JHB 4 359 0% 117.33 58 000 000 13 307 13 307 9.54% DCF 13 Upper Grayston Block F, Sandton, JHB 2 338 20% 158.77 49 000 000 20 954 15 997 8.67% DCF 14 Whitby Manor, Midrand 3 741 0% 71.48 28 888 900 7 723 7 723 9.01% Directors 15 The Braides, Gallo Manor, JHB 4 361 0% 98.45 52 100 000 11 947 6 544 9.84% DCF 16 Viscount Road Office Park, Bedfordview, JHB 2 872 0% 134.75 37 052 863 12 901 8 605 9.50% Directors 17 Upper Grayston Block B, Sandton, JHB 2 081 0% 167.34 42 000 000 20 183 13 121 9.88% DCF 18 Willowvale, Ruimsig, JHB 2 042 0% 99.95 21 000 000 10 286 6 856 9.12% DCF 19 St Andrews Office Park, Bedfordview, JHB 1 639 0% 104.94 21 000 000 12 813 8 544 9.30% DCF 20 Upper Grayston Block D, Sandton, JHB 1 307 0% 143.60 21 500 000 16 455 11 128 8.43% DCF 21 Woodlands Office Park, Woodmead, JHB 1 301 0% 122.02 17 164 309 13 197 8 798 10.04% Directors 22 Coachmans Crossing C, Bryanston, JHB 1 137 0% 144.97 19 290 756 16 966 11 311 9.00% Directors 23 Hanover Square, Edenvale, JHB 3 317 0% 64.29 20 600 000 6 210 4 140 10.65% DCF 24 Waterford Office Park, Woodmead, JHB 1 161 0% 105.34 14 173 911 12 208 8 141 10.02% Directors 25 Coachmans Crossing D, Bryanston, JHB 557 0% 166.51 6 811 000 12 229 6 764 9.00% Directors Upper Grayston Block A, Sandton, JHB 40 0% 249 394 6 188 6 188 8.25% Directors RETAIL AND MIXED USE 126 534 3% 129.49 2 574 435 088 20 346 10 045 9.49% 4 Agrokor Shopping Centres 30 354 0% 775 056 668 25 534 18 171 7.50% Market 5 Cape Quarter Square, Cape Town 21 968 4% 216.12 770 000 000 35 051 14 540 8.62% DCF 6 De Ville Centre, Durbanville, Cape Town 13 532 0% 160.06 246 000 000 18 180 9 340 9.44% DCF 7 Link Hills Shopping Centre, Waterfall, KZN 13 233 9% 132.33 206 000 000 15 567 8 466 9.49% DCF 8 Cape Quarter Piazza, Cape Town 6 423 5% 157.51 186 970 900 29 110 14 995 8.50% Development 9 Evagold Centre, Evaton Gauteng 11 944 0% 105.49 113 000 000 9 461 9 461 9.89% DCF 10 Shoprite Ennerdale, Gauteng 8 231 3% 93.29 72 000 000 8 747 8 747 9.26% DCF 11 Shoprite Modimolle, Limpopo Province 7 799 15% 102.51 50 846 570 6 520 6 520 10.00% Directors 12 135 Musgrave Rd, Berea, Durban 4 594 0% 143.04 68 000 000 14 802 7 070 9.19% DCF 13 Clearview Village, Florida North, JHB 7 683 0% 55.02 24 160 950 3 145 3 145 13.00% Directors 14 32 Napier Rd, Cape Town 773 0% - 62 400 000-0.00% Development INDUSTRIAL 44 187 8% 55.02 228 227 500 5 165 5 165 9.41% 1 Meadowbrook DC, 74 Lascelles Rd, Edenvale 14 219 0% 47.98 80 000 000 5 626 5 626 9.08% DCF 2 Isando, 8 Industry Rd, Isando 14 288 0% 38.52 52 200 000 3 653 3 653 8.66% DCF 3 Route 21, Prospect Close, Irene 4 967 0% 84.12 48 500 000 9 764 9 764 9.05% DCF 4 Kuit Street, 320 Kuit Street, Watloo, Pretoria 8 039 9% 49.44 37 500 000 4 665 4 665 9.20% DCF 5 Cleveland, 10A Cleveland Rd, Cleveland, JHB 2 674 100% - 10 027 500 3 750 3 750 11.08% Vacant 44 TOTALS 279 270 5% 4 502 166 765 16 121

Tower Portfolio View per Category TOWER PORTFOLIO VIEW PER CATEGORY VALUATION CATEGORY VALUATION CATEGORISED SUMMARY FIRE SALE PRICE SCENARIOS BRACKET VALUATION % OF TOTAL % OF VALUE PRICE % OF TOTAL Notes VMD 251 767 734 CROATIA 1 026 824 401 23% 90% 924 141 961 22% KONZUM 775 056 668 CQ 1 019 370 900 23% 110% 1 121 307 990 27% CROATIA 1 026 824 401 A 798 705 311 18% 110% 878 575 842 21% B 883 449 394 20% 85% 750 931 985 18% CQS 770 000 000 C 227 318 927 5% 75% 170 489 195 4% CQP 186 970 900 D 546 497 831 12% 50% 273 248 916 7% NAPIER 62 400 000 TOTALS 4 502 166 765 100.00% 91% 4 118 695 889 100% CAPE QUARTER 1 019 370 900 Sunclare 277 000 000 DeVille 246 000 000 Sturdee 131 500 000 Medscheme 144 205 311 A 798 705 311 Clifton 106 200 000 Ennerdale 72 000 000 Evagold 113 000 000 Link Hills 206 000 000 Meadowbrook 80 000 000 Route 21 48 500 000 Upper Grayston (4) 163 749 394 Wellington Rd 94 000 000 B 883 449 394 31 Beacon 58 000 000 Coachmans (2) 26 101 756 Musgrave 68 000 000 St Andrews 21 000 000 Viscount 37 052 863 Woodlands 17 164 309 MAY 2018 ACTUAL MARKET DIFFERENCE C 227 318 927 Shares in Issue 339 550 000 339 550 000 NAV/SHARE 9.60 7.00 2.60 3 River 51 000 000 NAV 3 259 680 000 2 376 850 000 882 830 000 308 Kent 64 000 000 VALUATION LESS FIRE SALE SCENARIO 383 470 875 382 Jan Smuts 61 000 000 NET "SURPLUS" 499 359 125 Braides 52 100 000 Clearview 24 160 950 Cleveland 10 027 500 Constantia View 59 000 000 VALUATIONS PER CATEGORY C 5% B 19% D 12% A 18% CROATIA 23% CQ 23% Hanover 20 600 000 Isando 52 200 000 Kuit Street 37 500 000 Modimolle 50 846 570 Waterford 14 173 911 Whitby 28 888 900 Cape Quarter Square Weighted Ave Gross Rental/sqm Willowvale 21 000 000 D 546 497 831 Office 222.58 TOTAL 4 502 166 765 Retail 205.32 40 TOUR OF TOWER CAPE PROPERTIERS