ARROWHEAD PROPERTIES ANNUAL RESULTS 2016

WHO owns Arrowhead?

FUND MANAGER %

Public Investment Corporation 10,2

Investec Asset Management 9,0

Prudential Investment Managers 7,8

Stanlib Asset Management 6,2

Visio Capital Management 5,6

Grinrod Asset Management 4,5

Arrowhead executive 4,5

Foord Asset Management 3,6

Sanlam Investment Management 3,3

Sesfikile Capital 3,0

THE Arrowhead offering

• 5 years of superior growth

• Strong balance sheet

• Trusted management team

• Deal making ability

• Disciplined acquisition strategy

• Active asset and property management

• Improved liquidity since combining A and B shares

FIVE years of growth

2016 2015 2014 2013 2012

Distribution per Arrowhead share (cents) 82,55 – – – –

Distribution per A share (cents)§ – 75,15 66,62 60,00 60,00

Distribution per B share (cents)§ – 75,15 66,62 53,01 40,58

Distribution per combined A and B shares (cents)§ – 150,30 133,24 113,01 100,58

Closing share price on JSE on 30 September per Arrowhead share (cents) 865 – – – –

Closing share price on JSE on 30 September per A share (cents)§ – 960 785 691 650

Closing share price on JSE on 30 September per B share (cents)§ – 955 788 666 585

Closing share price on JSE on 30 September per combined A and B shares (cents)§ – 1 915 1 573 1 357 1 235

Total return per Arrowhead share (%) 0 – – – –

Total return per combined A and B shares (%)§ – 31 33 19 41*

Trading volume Arrowhead share (%) 26 – – – *

Trading volume A shares (%)§ – 38 29 64 *

Trading volume B shares (%)§ – 38 27 36 –

Market capitalisation (R billion) 8,9 8,4 5,9 2,8 2,1

*

FIVE years of growth

2016 2015 2014 2013 2012

Property portfolio value (R billion) 10,0 8,6 7,0 3,1 2,2

Investment in Indluplace (R billion) 1,3 1,2 0,5 – –

Investment in Dipula (R billion) 0,4 0,5 0,3 – –

Investment in Rebosis (R billion) 1,1 – – – –

Commercial property portfolio (m2) 905 149 886 775 868 301 514 021 429 543

Commercial property portfolio let (%) 92 93 94 91 87

Borrowings (R million) 3 096 2 414 2 360 719 615

Borrowings as a percentage of property value (%) 27 28 34 23 28

Weighted cost of borrowings (%) 9,35 8,96 8,61 8,17 8,13

* Not full year.

§ On 29 February 2016 Arrowhead’s 468,7 million B shares were converted to A shares and all the A shares (937,4 million after the conversion) reclassified “ordinary” shares.

*

ARROWHEAD at 30 September 2016

• Diverse commercial portfolio value R10,0 billion

• Interest in Indluplace 60,1%

• Gearing R3,1 billion

• Interest in Rebosis 19%

• Interest in Dipula 11%

TOTAL dividend

R’000 2016 2015Revenue (excluding straight line rental income) 1 531 560 1 217 913 Listed securities income 71 770 19 115 Property expenses (567 968) (411 883)Administration and corporate costs (38 094) (31 130)Finance expenses (237 292) (219 679)Finance income 53 360 32 650 Non-controlling interest profits elimination (net of antecedent income) (85 355) (16 688)Distributable income 727 981 590 298 Antecedent income 31 586 21 169 Antecedent income – subsidiary 2 316 – Accrued distribution on listed securities 67 646 22 587 Listed securities income recognised in previous reporting period (19 795) – Total dividend 809 734 634 054 Dividend to the Arrowhead Charitable Trust* 25 620 11 749 Total dividend after effects of Arrowhead Charitable Trust 835 354 645 803 Total dividend (cents) 82,55 75,15

Dividend growth of 9,85%Property expenses as a percentage of revenue – gross 37% 34%Property expenses as a percentage of revenue – net 15% 13%

* Dividend to the Arrowhead Charitable Trust is added back as it is eliminated on consolidation

CORE portfolio

YEAR ENDED 30 SEPTEMBER 2016 30 SEPTEMBER 2015 GROWTH

R’000 R’000 %

Revenue 1 107 953 1 028 117 7,77

Property expenses (402 207) (362 685) 10,90

Net operating income 705 746 665 432 6,06

ASSUMING A GEARING RATIO ON THE PORTFOLIO OF 25% AND AN ANNUAL EFFECTIVE INTEREST RATE OF 9% THE TOTAL GROWTH IN DISTRIBUTABLE INCOME WOULD GROW TO 7,9%.

TOTAL acquisitions

R’000

Cleary Park shopping centre 466 027

Access Park (remaining 10%) 79 695

Rebosis shares 1 104 846

Dipula B shares 23 037

TOTAL 1 673 605

Indluplace acquired R630 million of property

TOTAL sales

R’000

Benoni Rynfield Shopping Centre 30 000

Beyers Naude (Blackheath) 27 200

Gradner Street (Roggebaai) 51 000

Witbank Vusani House 18 200

TOTAL 126 400

SOLD but not transferred

R’000

Business Centre 33 000

Pentagraph Building 26 500

Tyrwitt Avenue 36 000

TOTAL 95 500

ARROWHEAD AS AT 30 SEPTEMBER 2016

R’000 2016 2015

ASSETS

Non-current assets 12 172 867 9 649 996

Investment property 9 877 538 8 538 107

Property, plant and equipment 985 284

Loans to participants of group share purchase and option schemes 540 558 433 886

Goodwill 176 830 176 830

Interest in subsidiaries – –

Financial assets 1 570 696 482 420

Derivative instruments 6 261 18 469

Current assets 159 282 148 307

Trade and other receivables 80 858 61 119

Cash and cash equivalents 78 424 87 188

Non current assets held for sale 95 500 108 200

Total assets 12 427 649 9 906 503

EQUITY AND LIABILITIES

Shareholders’ interest 8 202 208 6 770 409

Non-controlling interest 981 753 576 127

Other non-current liabilities 2 900 739 2 426 048

Secured financial liabilities 2 890 639 2 408 033

Derivative instruments 10 100 18 015

Current liabilities 342 949 133 919

Trade and other payables 142 949 133 919

Secured financial liabilities 200 000 –

Total equity and liabilities 12 427 649 9 906 503

DEBT

• Loans of R3,1 billion

• LTV of 27,5%

DEBT EXPIRY2017 R 200 million

2018 R 679 million

2019 R 831 million

2020 R 1 109 million

2021 R 277 million

Total R 3 096 million

• 84,1% of loans fixed

• Effective interest rate 9,35% for year ended 30 September 2016

AT 30 September 2016

• 154 commercial properties

• 47% retail, 41% office and 12% industrial (sectoral by value)

• Overall vacancy of 7,8%: retail 7,8%, office 9,4%, industrial 5,5%

AT 30 September 2016

• Average rental per sector: R114m2 retail, R116m2 office, R39m2 industrial

• Escalation per sector: 7,99% retail, 8,41% office, 8,23% industrial

• Average lease profile 3,76 years

• Reversions per sector: retail 8,75%, office 4,68%, industrial 11,25%

INDLUPLACE

In June 2015 Arrowhead listed its wholly owned subsidiary Indluplace (formerly Arrowhead Residential) on the JSE. At year end Arrowhead had owned 60,1% of Indluplace.

At 30 September 2016 Indluplace owned 5 447 residential units located in Gauteng and Mpumalanga valued at R2,4 billion and gearing of under 7%.

Its earnings for the year ended 30 September 2016 were R222,5 million from which it declared dividends of 92,61 cents per share.

Indluplace’s strategy is to grow its portfolio significantly with revenue enhancing residential assets to be acquired countrywide, to be let to occupants at varying income levels. Arrowhead, through its major shareholding, benefits from increasing distributions from Indluplace.

REBOSIS

As at 30 September 2016, Arrowhead owned 101 million Rebosis shares representing 19,02% of the issued share capital of the Company. The acquisition was made with the objective of being able to acquire a meaningful investment in a listed REIT with a sought after portfolio of properties. The investment was made on a revenue enhancing basis for Arrowhead.

In its reviewed consolidated results for the 12 months ended 31 August 2016, Rebosis reported assets of R12,8 billion and debt of R4,5 billion. A dividend of 62,66 cents was declared for the six months ended 31 August 2016.

In October 2016 Rebosis acquired additional properties to the value of R4,9 billion.

DIPULA

Arrowhead owns 47,3 million Dipula B shares representing approximately 11,5% of the issued share capital of Dipula. The acquisitions were made with the objective of being able to acquire all or part of the property portfolio.

Dipula is a REIT carrying on business as a long-term investor in real estate in South Africa. Asset management is performed by an external asset manager which is 100% black owned and managed. Furthermore, Dipula’s management has a sizeable interest in the fund, thus aligning the interest of management with that of shareholders.

In its audited consolidated financial results for the year ended 31 August 2016, Dipula reflected a property portfolio of R7,1 billion and debt of R3,0 billion. The distribution on the Dipula B share was 89,49 cents per share for the year.

THE Gemgrow transaction

Arrowhead has concluded an agreement which, subject to the fulfillment of certain conditions precedent will result in:1. Gemgrow and its asset management company, owned by Vukile, being

internalised with Vukile being issued with 22 945 522 Gemgrow B shares.

2. Gemgrow selling to Vukile a retail property portfolio for R2,45 billion.

3. Gemgrow purchasing from Vukile an office and industrial portfolio of properties for R2,4 billion plus R18,2 million in cash.

4. Gemgrow purchasing from Arrowhead, a wholly owned subsidiary, Cumulative, that owns a retail, office and industrial portfolio to be settled by the issue to the Arrowhead Group of 247 412 267 Gemgrow B shares.

THE GEMGROW transaction (continued)

As a result of the above Gemgrow will own a portfolio of office, retail and industrial properties valued at R4,325 billion with gearing of R977,19 million. Arrowhead will own 55,2% of Gemgrow and Vukile 27,0%.

Gemgrow has forecasted earnings of 101,87 cents per A share and 73,36 cents per B share for year ended 30 September 2017.

ARROWHEAD strategy after the Gemgrow transaction

• Maintain dividend out-performance. Better than SAPY.

• Dividend predictable – no exposure to currency or interest rate movements.

• South African focused.

• Bigger and better “quality” properties but still revenue enhancing.

• Consolidation with and investments in other listed REITs on revenue enhancing basis.

• Defensive nature of portfolio.

• Focus on asset management.

“NEW” Arrowhead

54 properties

R5,679 billion property portfolio

5,95% vacancy overall

Sector breakdown: Retail 53%, Office 39%, Industrial 8%

R107 million average asset size

TOP 5 properties

ACCESS PARKWestern CapeR 711 000 00020 456 m2

Retail

TOP 5 properties

CLEARY PARKEastern CapeR 490 000 00036 294 m2

Retail

TOP 5 properties

WESTGATE MALLWestern CapeR 316 520 00028 951 m2

Retail

TOP 5 properties

SASOL ROSEBANKGautengR 265 772 00013 350 m2

Office

TOP 5 properties

MIDTOWN MALLNorth WestR 245 642 00017 456 m2

Retail

ARROWHEAD twelve months to 30 September 2017

• Manage lease expiries in advance

• Tenant retention & letting vacant space

• Pro-active asset management

• Sales

• Dedicated new business role – highly incentivised role in respect of leasing, sales and acquisitions

ARROWHEAD twelve months to 30 September 2017

• Sasol assumed vacant from 1 January – 30 September 2017

• Images of soft refurbishment attracting interest

• Live leads

• Broken up into smaller pockets

• Asking R159/m2

• Forecast excludes letting of Sasol (UPSIDE!)17

ARROWHEAD twelve months to 30 September 2017

• Indluplace

• Gemgrow

• Rebosis

• Dipula

17

ARROWHEAD twelve months to 30 September 2017

• Consolidation opportunities

• 6% – 8% dividend growth

• Forecast excludes letting of vacant space, yield enhancing acquisitions and letting of Sasol (UPSIDE!)

www.arrowheadproperties .co.za

THANK YOU