2005 INTERIM RESULTS for the six months ended 30 September 2005

1
2005 INTERIM RESULTS for the six months ended 30
September 2005
2
Highlights

• Distribution up 8.3 on strong property
  performance
• Overall portfolio vacancy rate reduced to 3.8 of
  gross rentals
• R80m expansion and upgrading project launched
• Securitisation will impact positively on
  full-year and future results

3
Salient features of results

• Net profit before tax, debenture interest and
  fair value adjustment of R115m (2004 R75m) -
  includes R33.9m from MICC
• Net asset value per linked unit up to 654c from
  494c at September 04 (32.6)
• Distribution up to 32.5c from 30c (8.3)

4
Group income statement
Unaudited six months ended 30 Sept 2005 R000
Property revenue 275 196
Straight-line rental income accrual 13 797
Gross property revenue 288 993
Property expenses (95 599)
Net profit from property operations 193 394
Administrative expenses (5 595)
Investment and other income 1 313
Operating profit before finance costs 189 112
Finance costs (73 981)
Net profit before debenture interest 115 131
5
Group income statement contd
Unaudited six months ended 30 Sept 2005 R000
Debenture interest (94 518)
Net profit before fair value changes 20 613
Fair value adjustment 161 765
Net profit before taxation 182 378
Taxation (28 149)
Net profit 154 229
Attributable to Linked unitholders of the company 143 375
Minority shareholders 10 854
6
Reconciliation
Unaudited six months ended 30 Sept 2005 R000
Attributable profit after taxation 143 375
Adjusted for
Change in fair value of investment properties (175 562)
Straight-line rental accrual net of deferred taxation 11 766
Deferred taxation on change in fair value adjustment of investment properties 22 298
Debenture interest net of minority interest 86 982
Minority interest in revaluation surplus net of deferred taxation 10 063
Headline earnings of linked units 98 922
Adjusted for straight-line rental accrual net of deferred taxation (11 766)
Earnings available for distribution 87 156
Distribution for six months ended 30 Sept 05 87 162
7
Group balance sheet

Unaudited at 30 Sept 2005 R000
ASSETS
Non-current assets 3 338 154
Current assets 45 931
Total assets 3 384 085
EQUITY AND LIABILITIES
Equity and reserves 422 865
Non-current liabilities 2 813 538
Current liabilities 147 682
Total equity and liabilities 3 384 085
Sept 05 Sept 04
NAV 654 cents 494 cents
Premium to NAV 5.5
Loan to value ratio 39.7 41
8
The property portfolio

• Vukile 52 properties with GLA of 676 961m²
• MICC 40 properties with GLA of 395 322m²
  (MICC to sell Sandton Sanlam Park for R60.25m
  cash, subject to conditions precedent)
• Vukile portfolio valued at R2.27 billion (up
  6.4)
• MICC valued at R1.051 billion (up 4.9)

9
The Vukile portfolio
National tenant groups - of GLA and gross
rentals
10
The Vukile portfolio
Lease expiry profile - of gross rentals
11
The Vukile portfolio
Vacancy profile - of gross rentals
Figures in brackets as at 31 March 2005
(Commercial space in Randburg re-classified)
12
The Vukile portfolio
Large vacancies ( of gross rentals)
Sept 04 Mar 05 Sept 05
Bloemfontein Plaza 21.2 19.4 10.7
Randburg Square 23.6 22.7 23.7
If Randburg excluded, overall vacancy drops to
1.8
13
The Vukile portfolio
Sectoral spread - of gross rentals
Figures in brackets prior to commercial space in
Randburg re-classified
14
The Vukile portfolio
Geographical spread - of GLA
15
The Vukile portfolio
New leases and renewals

• Total contract value R124 million
• Total rentable area 71 060 m²
• Includes
• CCMA in Durban Embassy (R16.1m)
• Bateman in Bedfordview GIS (R9.7m)
• Y Hotels in Bloemfontein Plaza (R9.1m)

16
The MICC portfolio
National tenant groups - of GLA and gross
rentals
17
The MICC portfolio
Lease expiry profile - of gross rentals
18
The MICC portfolio
Vacancy profile - of gross rentals
19
The MICC portfolio
Large vacancies ( of gross rentals)

• Fredman Drive sold commercial vacancy reduces
  to 11.8 (4.6 total)
• With Fredman Drive out Hillview, Randburg
  contributes 35 of commercial vacancy (0.8
  total)
• i.e. if Fredman and Hillview out, overall vacancy
  drops to 3.8

20
The MICC portfolio
Sectoral spread - of gross rentals
21
The MICC portfolio
Geographical spread - of GLA
22
Combined portfolio

• Number of properties 92
• GLA 1 072 283m²
• Market value R 3.32 billion
• Vacancy ( of gross rentals) 4.7
• Sectoral spread
• Retail 54
• Commercial 34
• Industrial 12

23
Strategic objectives (annual report)

• Enhancement of existing properties
• Debt funding structure
• Improvement of liquidity of linked units

24
Capex project

• Board has approved R80m to upgrade and expand
  Phoenix Plaza and Dobsonville
• Phoenix Plaza GLA to be increased by 3 500m² and
  Dobsonville by 5 000m²
• Initial yield of 11 expected
• Work to start in January and finish August 2006

25
CMBS Overview

• Commercial Mortgage Backed Securitisation (CMBS)
  used worldwide since late 1980s as alternative to
  bank loans for commercial property owners
• Part of growing move towards disintermediation
  (i.e. reduced reliance on traditional bank
  finance)

26
CMBS Overview contd
27
CMBS Overview contd

• CMBS 120bn currently outstanding in Europe
• South Africas first CMBS was launched in
  November 2004. Vukile launched second on 31
  October, Growthpoint third on 23 November

28
CMBS Structure

• CMBS is a substitute for bank debt through the
  use of a special purpose vehicle (SPV)
• The SPV makes a loan to the borrower and funds
  this loan by issuing highly rated securitisation
  notes to capital markets investors
• The properties are generally (not always) held in
  an insolvency-remote subsidiary SPV of the
  transaction sponsor

29
CMBS Structure
30
CMBS funding costs and benefits

• Notes issued by SPV are rated by rating agency
  (e.g. Moodys or Fitch)
• Due to high credit rating of the notes, capital
  market investors prepared to purchase with low
  margin
• This low margin translates to lower cost of funds
  for SPV, which benefit is passed back to borrower
  as lower margin on loan
• In addition to lower funding costs, CMBS offers
  number of benefits to property owners, including
• Diversified funding base
• Decreased pressure on traditional credit lines
• Validation of asset and property management
  functions by the rating agency

31
Vukiles securitisation programme

• R2 billion CMBS programme arranged by ABSA
  launched on
• 31 October 2005
• First issuance of 5 and 7 year floating rate
  notes totalling
• R770 million
• Floating rate notes converted into fixed-rate
  exposure through interest rate swaps
• Overall debt cost, after all expenses and costs,
  will reduce from 11.16 to 10 NACM
• If in place for year ended 31 March 2005,
  earnings would have been 5 higher than
  reported
• Future benefits if structure is utilised (set-up
  costs not repeated)

32
Liquidity

• Trading volumes continue to improve
• 6 months to end March 2005 - R137 million
• 6 months to end September 2005 R174 million
• ( 27)
• Average monthly trade
• 6 months to end March 2005 R22.8 million
• 6 months to end September 2005 R29.0 million

33
BEE initiatives

• Discussions underway which may lead to
  substantial portion of Sanlam shareholding (58)
  sold to BEE consortium

34
Acquisition of MICC

• Vukile currently owns 75.003 of MICCs issued
  linked units
• Making good progress towards acquiring balance
  and delisting MICC
• Cautionary announcement made on 22 November 2005

35
Prospects

• Continued strong performance expected from
  property portfolio
• Prospects for further reduction in vacancies
• Benefits of securitisation will start flowing
  through in 2nd half and following years
• Full-year distribution growth could be similar to
  interims

36
Questions
?
END