TOWER PROPERT Y FUND Annual Results Presentation TPF 2016 CROATIA 1 Annual Results for the period 31 May 2016
TOWER PROPERT Y FUND Presentation Outline Page Financial Highlights 1 Operational Highlights 2 Tower Strategy 3 Tower At A Glance 4 Management Team 5 Financial Results 6 TPF 2016 Borrowings 8 Operational Performance 9 CROATIA Top 10 Properties By Value 10 Greening 11 Corporate Social Responsibility 12 Success Story - SunClare 13 Success Story - Cape Quarter 14 New Development 15 Success Story - VMD Kvaart 16 Croatian Retail Acquisition 17 Top 10 Beneficial Shareholders 25 Prospects 26 Annual Results for the period 31 May 2016
Financial Highlights • Full distribution of 92 cents per share in line with guidance • Revenue up 52% to R376 million • Headline earnings up 32% to R164 million • Distributable earnings up 61% to R221 million • Portfolio expanded to 50 properties* • Portfolio value R5.1 billion* • Market capitalisation R2.7 billion* • R740 million raised through book build* • Net asset value of R9.85 per share *30 June 2016 1 Annual Results for the period 31 May 2016
Operational Highlights • Vacancies at 4%* • R1.6 billion of property acquired in Croatia accounting for 31% of company assets* • Management company internalised* • Debt risk reduced through exposure to low European interest rates • Portfolio value increased by 65% to R5.1 billion* *30 June 2016 2 Annual Results for the period 31 May 2016
Tower Strategy Tower aims to generate competitive investment performance by adding value through property asset management and the cost effective greening of its property portfolio resulting in lower operational expenditure and increased tenant retention. TPF 2016 CROATIA Tower aims to expand its portfolio through management’s network of contacts throughout South Africa and abroad. 3 Annual Results for the period 31 May 2016
Tower At A Glance 8% 26% 31% (June 2016) (June 2016) Revenue Revenue as at 30 June 2016 43% Office Industrial W.Cape Croatia R5.1bn Property portfolio value 10% Retail 49% KZN Gauteng 313 000m 2 Rentable area (GLA) Sectoral Geographic 33% Profile Profile 96% Occupancy rate (GLA) 7.46% Existing portfolio escalations R101/m 2 Average gross rental Tower Asset Growth Purchase Price Valuation 6 39% Gearing (LTV) 5 4 3 2 1 Listing Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 4 Annual Results for the period 31 May 2016
Management Team Marc Edwards Bruce Kerswill* Chief Executive Officer Executive Director Strategy, Acquisitions, Debt and Strategy, Marketing and Greening Capital Raising Joanne Mabin Johan Malherbe Chief Financial Officer Asset Manager Financial Controls and Management Western Cape Keith Craddock* Bruce Rogerson Executive Director Asset Manager Financial, Administration, Gauteng and KwaZulu-Natal and Property Management * No longer executive directors from 1 July 2016, however remain non-executive directors of the company 5 Annual Results for the period 31 May 2016
Financial Results Condensed consolidated statement of profit and loss and other comprehensive income Audited year Audited year ended 31 May 2016 ended 31 May 2015 R'000 R'000 Revenue 376,451 247,721 Net property operating expenses (30,733) (34,928) Net property rental income 345,718 212,793 Administration expenses (23,946) (14,952) Other income 10,377 2,914 Foreign exchange loss (30,519) - Net operating profit 301,630 200,755 Fair value adjustments on investment properties (10,604) 101,740 Fair value adjustments on interest rate derivatives (7,533) 762 Profit from operations 283,493 303,257 Net finace costs (115,040) (76,683) Indirect capital raising expenses (894) (206) Profit before tax 167,559 226,368 Taxation - - Profit for the period 167,559 226,368 Other comprehensive income - items that may subsequently be reclassified to profit and loss Exchange difference on foreign operations 42,968 - Total comprehensive profit for the period 210,527 226,368 Basic and diluted earnings per share - weighted average shares in issue (cents) 67,1 149,9 Headline and diluted headline earnings per share - weighted average shares in issue (cents) 73,8 82,6 6 Annual Results for the period 31 May 2016
Financial Results Condensed consolidated statement of financial position Audited year Audited year ended 31 May 2016 ended 31 May 2015 R'000 R'000 Assets Non-current assets 3,945,530 3,140,990 Current assets 251,673 98,795 Total assets 4,197,203 3,239,785 Equity and liabilities Stated capital 2,236,244 1,518,389 Retained income 89,390 146,650 Foreign currency translation reserve 41,949 - Shareholders' interest 2,367,583 1,665,039 Non-controlling interest 20,228 - Total equity 2,387,811 1,665,039 Liabilities Non-current liabilities 1,054,748 857,341 Current liabilities 754,644 717,405 Total equity and liabilities 4,197,203 3,239,785 7 Annual Results for the period 31 May 2016
10% Borrowings 10% 2016 as at 31 July 2016 1% 31 May 79% Standard Bank of South Africa (Rand) 1% Nedbank (Rand) • Maximum targeted loan to value - 40% 10% Standard Bank of South Africa (Euro) 81% exposed to 10% Privredna Banka Zagreb (Euro) South Africa • LTV - 39% 79% • Total borrowings - R2.1 billion • Fixed debt - 64% • Weighted average rate - 6.11% 7% 20% 40% 2016 Prior to the Agrokor transaction, Tower’s debt was 80% exposed to 31 July 40% Standard Bank of South Africa (Rand) 1% Nedbank (Rand) South Africa. Post the transaction, Tower’s exposure to South African 32% Standard Bank of South Africa (Euro) 37% exposed to debt reduced to 41% with 59% being through Euro dominated loans 20% Privredna Banka Zagreb (Euro) South Africa 7% Zagrebacka Banka (Euro) where most of the loans are at fixed interest rates for five years. 1% 32% 8 Annual Results for the period 31 May 2016
Operational Performance Lease expiry profile by Revenue per sector (Rmillion) 50 40 • Over 70 000m 2 of space let in the period 30 20 • 29 534m 2 of new space let 10 • 40 812m 2 of renewable space let Monthly <May <May <May <May <May <May >May 2017 2018 2019 2020 2021 2022 2023 Industrial Office Retail • 5 non-core properties currently for sale with expected sales value of circa R200 million. Proceeds to be used to reduce debt Lease expiry profile by GLA per sector 40 • 2 properties sold at a value of R116.5 million 35 30 25 20 15 10 5 0 Vacant Monthly <May <May <May <May <May <May >May 2017 2018 2019 2020 2021 2022 2023 Industrial Office Retail 9 Annual Results for the period 31 May 2016
Top 10 Properties By Value as at 31 May 2016 Property Sector Value Location Cape Quarter Square Mixed use R653m Cape Town VMD KVART Office R452m Zagreb, Croatia Link Hills Shopping Centre Retail R228m Waterfall, KZN Sunclare Office R232m Claremont De Ville Shopping Centre Retail/Office R232m Durbanville Upper Grayston Office R175m Sandton Cape Quarter Piazza Retail/Office R160m Cape Town 6 - 8 Sturdee Avenue Office R137m Rosebank Medscheme Office R120m Florida North Evagold Shopping Centre Retail R99m Evaton, Gauteng 10 Annual Results for the period 31 May 2016
Greening • Total of 1300kWh’s per annum being generated from solar • 1.9 million kWh’s of lighting saved per annum • Circa 3 million kg’s of carbon off set per year • R4 million per annum saved as a result of green initiatives • Cape Quarter currently undergoing an assessment to qualify as a Green Star “existing building” rating through the Green Building Council of South Africa 11 Annual Results for the period 31 May 2016
Corporate Social Responsibility • Ubuntu Trust achieving great success - first South African player selected • BEE Trust through Ubuntu under negotiation • The Ubuntu Football Academy offers intensive coaching, quality education and holistic mentorship to exceptional young players over a sustained period of 6 years (13-18 years) • Ubuntu currently seeking additional corporate sponsorship of R2 million per annum to fund expanded program 12 Annual Results for the period 31 May 2016
Success Stories SunClare • Fully let • Tigers Milk opening 1 September 2016 • Common area refurbishment • Space not owned by Tower under negotiation to acquire 13 Annual Results for the period 31 May 2016
Success Stories Cape Quarter • Fully let • Refurbishment of restaurant area • Excellent new brands in Jenny Morris & Bootleggers • 19 Residential apartments - development begun 14 Annual Results for the period 31 May 2016
New Development Cape Quarter Residential Development Napier Street • 19 Apartments • Cost of R31 000/m� • Modeled on R40 000/m� selling price • Current asking prices in the area - R65 000/m� • 119 Parking bays being let @R2500 per bay Piazza • 58 Apartments • Holding yield daily lets of 10% • Ability to sell off units at R65 000/m� if required • Sales profit of circa R120 million anticipated 15 Annual Results for the period 31 May 2016
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