investec...at r4.2 billion, an increase in the carrying value of investment property of 103% in the...

Investec Property Fund Lim

ited integrated annual review and financial statem

ents2013

Investec Property Fund Limited integrated annual review and financial statements2013Investec Property Fund Limited Proper ty Fund L im i ted

Investec Property Fund LimitedIncorporated in the Republic of South AfricaRegistration number 2008/011366/06Share code IPF | ISIN ZAE 000155099

Secretary and registered officeC/o Company SecretarialInvestec Bank Limited100 Grayston DriveSandown, Sandton 2196PO Box 785700Sandton 2146

Internet addresswww.investecpropertyfund.com

AuditorsErnst & Young Inc.Wanderers Office Park52 Corlett DriveIllovo, Johannesburg

Transfer secretariesComputershare Investor Services (Pty) Ltd70 Marshall StreetJohannesburg 2001PO Box 61051Marshalltown 2107Telephone (27 11) 370 5000

SponsorInvestec Bank Limited100 Grayston DriveSandown, Sandton 2196PO Box 785700Sandton 2146

Trustee for debenture holdersIronwood Trustees15 Rodger Street (Cnr Twist Street)Rosendal 7530

DirectorateExecutive directors

S Hackner (chairman)SR Leon (chief executive officer)DAJ Donald (chief financial officer)

Non-executive directors

MP Crawford* (lead independent director)LLM GiuricichS Mahomed*CM Mashaba*MM Ngoasheng*GR Rosenthal*

* Independent

Corporate information

For queries regarding information in this document

Investor RelationsTelephone (27 11) 286 7070e-mail: [email protected] address:www.investec.com/en_za/#home/investor_relations.html

PreparerThis integrated annual report and financial statements have been prepared under the supervision of the chief financial officer DAJ Donald CA(SA)

Investec Property Fund Limited integrated annual review and financial statements 2013 1

Investec Property Fund Limited is committed to promoting sustainable stakeholder confidence in our conduct as a business and as a responsible corporate citizen.

For easy reading we have provided cross referencing tools, set out alongside.

Overview of Investec Property Fund Limited About us 3Our footprint 4Property selection 5Property portfolio 8

Executive reports Chairman’s report 12Chief executive officer’s report 15Directorate 20

Corporate governance and risk management Corporate governance 22Risk management 28Stakeholders 31Sustainability report 32

Annual financial statements Directors’ responsibility statement 34Approval of the company annual financial statements 34Certificate of company secretary 34Independent auditor’s report to the members of Investec Property Fund Limited 35Report of the audit and risk committee 36Directors’ report 37Statement of comprehensive income 40Statement of financial position 41Statement of changes in equity 42Statement of cash flows 42Segmental analysis 43Notes to the annual financial statements 45

Unitholder information Linked unitholder analysis 69Linked unitholders’ diary 71King III checklist 72Notice of annual general meeting 76Form of proxy 81Notes to the form of proxy 83

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23

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Reporting standard

Denotes our consideration of a reporting standard

Website

Indicates that additional information is available on our website: www.investecpropertyfund.co.za

Audited information

Denotes information in the risk and remuneration reports that form part of the group’s audited annual financial statements

Page references

Refers readers to information elsewhere in this report

About this report

Contents

11

Overview ofInvestec Property Fund Limited

11

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About us

Investec Property Fund Limited (the Fund or company) listed in the Real Estate Holdings and Development Sector of the JSE Limited (the JSE) on 14 April 2011.

Notwithstanding the Fund’s relatively recent introduction to the listed property sector, the Manager, Investec Property (Pty) Ltd, has a long history of success in the property sector from the mid 1990s up to late 2007 when it sold out of its listed management interests and holdings.

The current management team comprises a blend of seasoned and proven entrepreneurial experience and young professionals, while maintaining strong adherence to the principles of sound corporate governance and long-term sustainability.

The Fund listed on the JSE on 14 April 2011 at which time the property portfolio comprised 29 properties in South Africa with a total GLA of 369 189m², acquired for R1 696.5 million, independently valued at R1 771.0 million. During the current year the Fund acquired 20 properties and disposed of two properties, which together with the prior year acquisitions, brings the total portfolio to 50 properties valued at R4.2 billion, an increase in the carrying value of investment property of 103% in the current year alone.

The company is a limited liability, variable loan stock company formed with the purpose of investing in direct real estate, where the directors believe there is potential for income generation and capital growth.

Investment property comprises land and buildings held to generate rental income and capital growth over the long term. Should any properties no longer meet the Fund’s investment criteria and be sold, any profits or losses will be of a capital nature and will not be distributed to linked unitholders. Effectively, all rental income, less operating costs and interest on debt, is distributed to linked unitholders semi-annually.

The authorised share capital of the Fund is R10 000 000 divided into 1 000 000 000 ordinary shares of one cent each. Each ordinary share is linked to one variable rate, unsecured, subordinated debenture of 999 cents. The Fund’s ordinary shares and debentures trade as linked units on the JSE. In terms of the debenture trust deed, the interest payable on the debenture component of the linked unit is always at a minimum 999 times greater than the dividend payable per ordinary share.

In the current year, the Fund issued 113.22 million new linked units into the market via a rights offer to existing shareholders. The offer was successful with an oversubscription and a total of R1.5 billion was raised. In addition 34 million units were issued as part consideration for the acquisition of properties. Thus the total number of issued linked units at year end is 317.22 million.

The Fund is managed and operated by Investec Property (Pty) Ltd (Investec Property or the Manager) in terms of an asset management and property management agreement. Investec Property is a wholly owned subsidiary of Investec Limited.

The objective of the Fund is to grow its asset base by investing in well priced income producing investment properties in the office, industrial and retail property sectors to optimise capital and income returns over time for linked unitholders

Our highlights for the year

Full year distribution of 99.99 cpu – up 7.5%

Final distribution of 53.16 cpu – up 7.9%

Low gearing of 10.7% – provides significant headroom for future acquisitions

R1.5 billion of new equity raised through oversubscribed rights offer

Debt capital markets accessed – R3.0 billion DMTN programme in place; R450 million utilised

Strong underlying property fundamentals

Corporate and secured credit ratings upgraded – now A- and AA- respectively

15% increase in net asset value per unit

2012

1 055mn

Vacancy low

at 2.9% Total value of properties

R4.2 billion

R2.1 billion in acquisitions

103% portfolio growth

11

Investec Property Fund Limited integrated annual review and financial statements 20134

Overview

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Our footprint

Western Cape

Gauteng

Eastern Cape

Free State

Limpopo

Mpumalanga

KwaZulu-Natal

Northern Cape

North West

Our property landscape

Property Fund

Industrial OfficeRetail

In a highly acquisitive year which resulted in the property portfolio doubling in value, the asset management team simultaneously focused on active management of the base portfolio

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Property selection

GLA: 13 787m2 Carrying value:

R305.0 million

Acquisition date 1 October 2012

Occupancy 99.7% occupied

The FirsMajor tenants Bombela, The Fishmonger The Grillhouse

RosebankJohannesburg

Great NorthRoad PlazaMajor tenant Woolworths

Musina Limpopo

GLA: 13 561m2 Carrying value: R157.0 million

Acquisition date 6 June 2012


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Property selection (continued)

The Scientific Building

Major tenant The Scientific Group



Occupancy 100% occupied

Kya SandsJohannesburg

Builders Warehouse The Glen

Major tenants Builders Warehouse Tiger Wheel and Tyre


Acquisition date 15 January 2013


GleneaglesJohannesburg

95 Main Reef Road Major tenants Kqwebo Dynamic Plastics


Acquisition date 1 April 2011


Boksburg Johannesburg

BMW Boksburg North

Major tenant BMW


Acquisition date 20 December 2012


Boksburg NorthJohannesburg

Investec Pretoria

Major tenant Investec Limited


Acquisition date 1 November 2012


Menlo Park Pretoria

Nonkqubela Link Mall Major tenants Shoprite Standard Bank


Acquisition date 14 December 2012


KhayelitshaWestern Cape

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Property selection (continued)

Alrode Multipark Major tenants UTI Conree Transport




AlrodeAlberton

Woolworths House Major tenants Shoprite, Woolworths Mr Price, Cashbuild




Central business districtCape Town

Innovation Group Major tenant Innovation Group (UK listed)




Randburg Johannesburg

General ElectricMajor tenants General Electric

Midrand Gauteng


Acquisition date 25 July 2012


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Property Address Grade ProvinceTenancy

M/S*

GLA31 March

2012m²

GLA31 March

2013m²

Effective date

of acquisition

Total costs of

acquisition (includingcapitalised

costs) to 31 March

2012R

Revaluation/(impairment)

31 March 2012

R

Carrying value

(fair value/directors’ valuation)31 March

2012R

Disposals to

31 March 2013

R

Additions at cost year to

31 March 2013

R

Total capitalised

costs year to

31 March 2013

(including acquisition

costs)R

Revaluation (impairment)

31 March 2013

R

Carrying value(fair value/directors’ valuation)31 March

2013R

Independent valuations

during the year

R

Valuation per

square metre

31 March 2013

R

Average gross rental per square

metre (excluding

parking) 31 March

2013 R

Occupancy rate

31 March 2012

%

Occupancyrate

31 March 2013

%

Offices 104 067 96 774 1 132 245 359 50 354 641 1 182 600 000 (200 000 000) 442 252 295 24 190 517 50 157 188 1 499 200 000 – 15 492 1 125 100.0% 92.7%

345 Rivonia Road Rivonia, Johannesburg A Gauteng M 10 495 10 495 01/04/2011 130 000 000 (13 000 000) 117 000 000 – – 342 676 (7 342 676) 110 000 000 – 10 482 1 659 100.0% 100.0%

373 Pretorius Street CBD, Pretoria C Gauteng S 13 340 – 01/04/2011 125 000 000 – 125 000 000 (125 000 000) – – – – – – 878 100.0%

4 Protea Place Sandown, Sandton A Gauteng M 6 955 6 955 01/04/2011 90 000 000 30 000 000 120 000 000 – – 17 796 379 (12 996 379) 124 800 000 124 800 000 17 945 1 760 100.0% 100.0%

5 Walnut Road Periphery CBD, Durban C KwaZulu-Natal S 14 041 – 01/04/2011 75 000 000 – 75 000 000 (75 000 000) – – – – – – 529 100.0%

230 15th Road Randjiespark, Midrand B Gauteng S 6 759 6 759 01/04/2011 57 500 000 (4 900 000) 52 600 000 – – 2 644 535 (10 244 535) 45 000 000 – 6 658 332 100.0% 0.0%

Innovation Group Randburg, Johannesburg B Gauteng S 15 500 15 500 01/10/2011 151 745 359 18 254 641 170 000 000 – – 1 383 441 18 616 559 190 000 000 – 12 258 1 277 100.0% 100.0%

Investec Offices Durban Umhlanga Rocks, Durban B KwaZulu-Natal S 6 543 6 543 01/04/2011 215 000 000 10 000 000 225 000 000 – – – 7 000 000 232 000 000 232 000 000 35 458 3 012 100.0% 100.0%

Investec Offices Pretoria Menlo Park, Pretoria A Gauteng S – 6 301 01/11/2012 – – – – 169 952 295 655 235 2 792 470 173 400 000 – 27 521 908 100.0%

The Firs Rosebank, Johannesburg A Gauteng M – 13 787 01/10/2012 – – – – 272 300 000 1 368 251 31 331 749 305 000 000 – 22 122 1 316 99.7%

Woolworths House CBD, Cape Town A Western Cape S 30 435 30 435 01/04/2011 288 000 000 10 000 000 298 000 000 – – – 21 000 000 319 000 000 319 000 000 10 481 829 100.0% 100.0%

Industrial A 277 691 291 079 703 706 181 76 093 819 779 800 000 – 119 057 332 16 013 554 80 679 114 995 550 000 – 3 420 395 96.0% 98.2%

17 Derrick Road Spartan, Kempton Park B Gauteng S 5 997 5 997 01/04/2011 17 500 000 700 000 18 200 000 – – 145 850 1 404 150 19 750 000 – 3 293 363 100.0% 100.0%

95 Main Reef Road Boksburg North, Boksburg C Gauteng M 14 438 14 264 01/04/2011 10 064 484 4 935 516 15 000 000 – – 25 678 4 974 322 20 000 000 35 000 000 1 402 338 83.2% 99.2%

Alrode Multipark Alrode, Alberton B Gauteng M 89 233 90 762 01/04/2011 182 499 811 52 500 189 235 000 000 – – 5 708 091 33 491 909 274 200 000 – 3 021 376 99.0% 100.0%

Ampaglas East London Wilsonia, East London B Eastern Cape S 5 802 5 802 01/04/2011 8 500 000 – 8 500 000 – – – 700 000 9 200 000 – 1 586 168 100.0% 100.0%

6 Nywerheid Tunney, Elandsfontein C Gauteng S 4 035 4 035 01/04/2011 21 000 000 – 21 000 000 – – – 1 100 000 22 100 000 – 5 477 566 100.0% 100.0%

Benoni Multipark Benoni Extension 12, Benoni C Gauteng M 40 107 40 960 01/04/2011 70 000 000 – 70 000 000 – – 3 503 898 16 496 102 90 000 000 – 2 197 313 92.0% 92.1%

Boksburg Minipark Boksburg North, Boksburg B Gauteng M 9 151 9 151 01/04/2011 14 000 000 – 14 000 000 – – 636 187 5 863 813 20 500 000 – 2 240 333 79.6% 100.0%

British American Tobacco Waltloo, Pretoria A Gauteng S 13 170 13 170 01/12/2011 40 062 082 3 937 919 44 000 000 – – 1 500 225 (500 225) 45 000 000 45 000 000 3 417 366 100.0% 100.0%

Capital Motors CBD, Pretoria B Gauteng S 7 463 7 463 01/04/2011 19 700 000 300 000 20 000 000 – – – 1 500 000 21 500 000 – 2 881 289 100.0% 100.0%

General Electric Northmid Corporate Park, Midrand A Gauteng S – 11 180 25/07/2012 – – – – 119 057 332 820 706 6 821 962 126 700 000 126 700 000 11 333 723 100.0%

Gresmac Epping, Cape Town B Western Cape M 13 395 13 395 01/04/2011 31 199 665 (199 665) 31 000 000 – – 1 280 396 (280 396) 32 000 000 – 2 389 308 79.2% 93.0%

Heriotdale Minipark Heriotdale, Johannesburg C Gauteng M 4 851 4 851 01/04/2011 12 800 000 900 000 13 700 000 – – 170 254 (170 254) 13 700 000 – 2 824 380 100.0% 80.9%

Hycol Mini Units Wynberg, Sandton C Gauteng M 2 350 2 350 01/04/2011 7 000 000 800 000 7 800 000 – – 163 753 (163 753) 7 800 000 – 3 320 450 100.0% 100.0%

Makro Montague Gardens Montague Gardens, Cape Town A Western Cape S 11 236 11 236 01/04/2011 80 000 000 2 500 000 82 500 000 – – – – 82 500 000 – 7 342 801 100.0% 100.0%

Monsanto Nuffield, Springs B Gauteng S 9 819 9 819 01/04/2011 27 200 000 1 400 000 28 600 000 – – 461 014 ( 461 014) 28 600 000 – 2 913 398 100.0% 100.0%

Renew It Wynberg, Sandton B Gauteng S 5 013 5 013 01/04/2011 20 000 000 2 000 000 22 000 000 – – 62 200 5 237 800 27 300 000 – 5 446 498 100.0% 100.0%

SABB Maitland Maitland, Cape Town C Western Cape M 16 017 16 017 01/04/2011 44 900 000 4 100 000 49 000 000 – – 650 318 2 849 682 52 500 000 52 500 000 3 278 351 100.0% 100.0%

SABB Mayville Mayville, Durban C KwaZulu-Natal S 4 003 4 003 01/04/2011 16 400 000 600 000 17 000 000 – – – ( 5 000 000) 12 000 000 – 2 998 488 100.0% 100.0%

Scientific Building Kya Sands, Randburg A Gauteng S 5 733 5 733 01/10/2011 35 080 140 (280 140) 34 800 000 – – 345 199 5 354 801 40 500 000 – 7 064 675 100.0% 100.0%

5 Endean City Deep, Johannesburg C Gauteng S 2 342 2 342 01/04/2011 10 000 000 500 000 10 500 000 – – 222 960 1 477 040 12 200 000 – 5 209 563 100.0% 100.0%

Table Choice Aeroton Aeroton, Johannesburg B Gauteng S 6 994 6 994 01/04/2011 25 800 000 400 000 26 200 000 – – 265 682 34 318 26 500 000 26 500 000 3 789 450 100.0% 100.0%

8 Flamink Alrode, Alberton C Gauteng S 6 543 6 543 01/04/2011 10 000 000 1 000 000 11 000 000 – – 51 143 (51 143) 11 000 000 – 1 681 208 100.0% 100.0%

Retail A 23 188 180 297 94 200 000 8 800 000 103 000 000 – 1 547 833 735 10 221 971 31 194 294 1 692 250 000 – 9 386 425 100.0% 97.5%

Balfour Park Shopping Centre Highlands North, Kensington A Gauteng M – 36 451 01/11/2012 – – – – 295 819 187 1 046 364 (865 551) 296 000 000 – 8 120 694 94.1%

BMW Boksburg North Bardene, Boksburg North A Gauteng S – 7 526 20/12/2012 – – – – 62 500 000 1 070 251 5 129 749 68 700 000 – 9 128 238 100.0%

Builders Warehouse Bloemfontein Hospitaalpark, Bloemfontein A Free State M – 9 378 20/12/2012 – – – – 98 000 000 515 917 (515 917) 98 000 000 – 10 450 244 100.0%

Builders Warehouse Polokwane Polokwane, Limpopo A Limpopo M – 8 500 20/12/2012 – – – – 93 000 000 488 199 (488 199) 93 000 000 – 10 941 252 100.0%

Builders Warehouse The Glen Gleneagles, Johannesburg A Gauteng M – 11 103 15/01/2013 – – – – 139 000 000 715 951 (715 951) 139 000 000 – 12 519 228 100.0%

Builders Warehouse Witbank President Park, Emalahleni A Mpumalanga S – 5 512 08/01/2013 – – – – 80 000 000 417 338 (417 338) 80 000 00 – 14 514 274 100.0%

Builders Warehouse Zambesi Pretoria Montana, Pretoria A Gauteng S – 8 907 29/01/2013 – – – – 104 500 000 534 429 (534 429) 104 500 000 – 11 732 175 100.0%

Great North Road Plaza Musina, Limpopo A Limpopo M – 13 561 06/06/2012 – – – – 145 000 000 2 056 841 9 943 159 157 000 000 157 000 000 11 577 984 96.4%

Jet Umtata York Road, Umtata B Eastern Cape M 3 566 3 721 01/04/2011 48 000 000 – 48 000 000 – – – 8 500 000 56 500 000 – 15 184 1 429 100.0% 100.0%

Megamark Mall Kriel, Mpumalanga A Mpumalanga M – 20 848 11/12/2012 – – – – 202 315 484 452 422 10 932 094 213 700 000 – 10 250 321 97.6%

Nissan Roodepoort Roodepoort, Johannesburg A Gauteng S – 4 893 18/12/2012 – – – – 34 800 000 184 119 (184 119) 34 800 000 – 7 112 266 100.0%

Nonkqubela Link Mall Khayelitsha, Cape Town A Western Cape M – 7 786 14/12/2012 – – – – 99 399 064 287 077 (186 141) 99 500 000 – 12 779 390 96.3%

Plastic Land Fourways Fourways, Johannesburg A Gauteng S – 1 296 18/01/2013 – – – – 13 000 000 78 357 (78 357) 13 000 000 – 10 031 222 100.0%

Shoprite Checkers Thabazimbi Vanderbijl Street, Thabazimbi B North West S 4 125 4 125 01/04/2011 15 200 000 (700 000) 14 500 000 – – – 2 500 000 17 000 000 – 4 121 386 100.0% 100.0%

Shoprite Checkers Vanderbijlpark CBD, Vanderbijilpark B Gauteng S 15 497 15 497 01/04/2011 31 000 000 9 500 000 40 500 000 – – 1 372 470 (822 470) 41 050 000 41 050 000 2 649 216 100.0% 100.0%

Super Group Greenstone Edenvale, Johannesburg A Gauteng S – 5 686 05/02/2013 – – – – 50 000 000 264 324 (264 324) 50 000 000 – 8 794 189 100.0%

Tile World Supa Quick Fourways Fourways, Johannesburg A Gauteng M – 2 400 23/01/2013 – – – – 23 500 000 132 544 (132 544) 23 500 000 – 9 792 226 100.0%

Unitrans Polokwane Polokwane, Limpopo A Limpopo S – 4 322 20/12/2012 – – – – 20 000 000 113 835 (113 835) 20 000 000 – 4 627 156 100.0%

VW McCarthy Roodepoort Constantia, Johannesburg A Gauteng S – 2 595 07/01/2013 – – – – 26 000 000 140 202 (140 202) 26 000 000 – 10 019 287 100.0%

Wetherly’s and Chateaux D’Ax Bryanston Bryanston, Johannesburg A Gauteng M – 6 190 20/12/2012 – – – – 61 000 000 351 331 (351 331) 61 000 000 – 9 855 265 81.8%

Total 404 946 568 151 1 930 151 540 135 248 460 2 065 400 000 (200 000 000) 2 109 143 362 50 426 042 162 030 596 4 187 000 000 – 7 370 556 97.3% 97.1%

* Multi or single tenanted.

Property portfolio

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Property Address Grade ProvinceTenancy

M/S*

GLA31 March

2012m²

GLA31 March

2013m²

Effective date

of acquisition

Total costs of

acquisition (includingcapitalised

costs) to 31 March

2012R

Revaluation/(impairment)

31 March 2012

R

Carrying value

(fair value/directors’ valuation)31 March

2012R

Disposals to

31 March 2013

R

Additions at cost year to

31 March 2013

R

Total capitalised

costs year to

31 March 2013

(including acquisition

costs)R

Revaluation (impairment)

31 March 2013

R

Carrying value(fair value/directors’ valuation)31 March

2013R

Independent valuations

during the year

R

Valuation per

square metre

31 March 2013

R

Average gross rental per square

metre (excluding

parking) 31 March

2013 R

Occupancy rate

31 March 2012

%

Occupancyrate

31 March 2013

%

Offices 104 067 96 774 1 132 245 359 50 354 641 1 182 600 000 (200 000 000) 442 252 295 24 190 517 50 157 188 1 499 200 000 – 15 492 1 125 100.0% 92.7%

345 Rivonia Road Rivonia, Johannesburg A Gauteng M 10 495 10 495 01/04/2011 130 000 000 (13 000 000) 117 000 000 – – 342 676 (7 342 676) 110 000 000 – 10 482 1 659 100.0% 100.0%

373 Pretorius Street CBD, Pretoria C Gauteng S 13 340 – 01/04/2011 125 000 000 – 125 000 000 (125 000 000) – – – – – – 878 100.0%

4 Protea Place Sandown, Sandton A Gauteng M 6 955 6 955 01/04/2011 90 000 000 30 000 000 120 000 000 – – 17 796 379 (12 996 379) 124 800 000 124 800 000 17 945 1 760 100.0% 100.0%

5 Walnut Road Periphery CBD, Durban C KwaZulu-Natal S 14 041 – 01/04/2011 75 000 000 – 75 000 000 (75 000 000) – – – – – – 529 100.0%

230 15th Road Randjiespark, Midrand B Gauteng S 6 759 6 759 01/04/2011 57 500 000 (4 900 000) 52 600 000 – – 2 644 535 (10 244 535) 45 000 000 – 6 658 332 100.0% 0.0%

Innovation Group Randburg, Johannesburg B Gauteng S 15 500 15 500 01/10/2011 151 745 359 18 254 641 170 000 000 – – 1 383 441 18 616 559 190 000 000 – 12 258 1 277 100.0% 100.0%

Investec Offices Durban Umhlanga Rocks, Durban B KwaZulu-Natal S 6 543 6 543 01/04/2011 215 000 000 10 000 000 225 000 000 – – – 7 000 000 232 000 000 232 000 000 35 458 3 012 100.0% 100.0%

Investec Offices Pretoria Menlo Park, Pretoria A Gauteng S – 6 301 01/11/2012 – – – – 169 952 295 655 235 2 792 470 173 400 000 – 27 521 908 100.0%

The Firs Rosebank, Johannesburg A Gauteng M – 13 787 01/10/2012 – – – – 272 300 000 1 368 251 31 331 749 305 000 000 – 22 122 1 316 99.7%

Woolworths House CBD, Cape Town A Western Cape S 30 435 30 435 01/04/2011 288 000 000 10 000 000 298 000 000 – – – 21 000 000 319 000 000 319 000 000 10 481 829 100.0% 100.0%

Industrial A 277 691 291 079 703 706 181 76 093 819 779 800 000 – 119 057 332 16 013 554 80 679 114 995 550 000 – 3 420 395 96.0% 98.2%

17 Derrick Road Spartan, Kempton Park B Gauteng S 5 997 5 997 01/04/2011 17 500 000 700 000 18 200 000 – – 145 850 1 404 150 19 750 000 – 3 293 363 100.0% 100.0%

95 Main Reef Road Boksburg North, Boksburg C Gauteng M 14 438 14 264 01/04/2011 10 064 484 4 935 516 15 000 000 – – 25 678 4 974 322 20 000 000 35 000 000 1 402 338 83.2% 99.2%

Alrode Multipark Alrode, Alberton B Gauteng M 89 233 90 762 01/04/2011 182 499 811 52 500 189 235 000 000 – – 5 708 091 33 491 909 274 200 000 – 3 021 376 99.0% 100.0%

Ampaglas East London Wilsonia, East London B Eastern Cape S 5 802 5 802 01/04/2011 8 500 000 – 8 500 000 – – – 700 000 9 200 000 – 1 586 168 100.0% 100.0%

6 Nywerheid Tunney, Elandsfontein C Gauteng S 4 035 4 035 01/04/2011 21 000 000 – 21 000 000 – – – 1 100 000 22 100 000 – 5 477 566 100.0% 100.0%

Benoni Multipark Benoni Extension 12, Benoni C Gauteng M 40 107 40 960 01/04/2011 70 000 000 – 70 000 000 – – 3 503 898 16 496 102 90 000 000 – 2 197 313 92.0% 92.1%

Boksburg Minipark Boksburg North, Boksburg B Gauteng M 9 151 9 151 01/04/2011 14 000 000 – 14 000 000 – – 636 187 5 863 813 20 500 000 – 2 240 333 79.6% 100.0%

British American Tobacco Waltloo, Pretoria A Gauteng S 13 170 13 170 01/12/2011 40 062 082 3 937 919 44 000 000 – – 1 500 225 (500 225) 45 000 000 45 000 000 3 417 366 100.0% 100.0%

Capital Motors CBD, Pretoria B Gauteng S 7 463 7 463 01/04/2011 19 700 000 300 000 20 000 000 – – – 1 500 000 21 500 000 – 2 881 289 100.0% 100.0%

General Electric Northmid Corporate Park, Midrand A Gauteng S – 11 180 25/07/2012 – – – – 119 057 332 820 706 6 821 962 126 700 000 126 700 000 11 333 723 100.0%

Gresmac Epping, Cape Town B Western Cape M 13 395 13 395 01/04/2011 31 199 665 (199 665) 31 000 000 – – 1 280 396 (280 396) 32 000 000 – 2 389 308 79.2% 93.0%

Heriotdale Minipark Heriotdale, Johannesburg C Gauteng M 4 851 4 851 01/04/2011 12 800 000 900 000 13 700 000 – – 170 254 (170 254) 13 700 000 – 2 824 380 100.0% 80.9%

Hycol Mini Units Wynberg, Sandton C Gauteng M 2 350 2 350 01/04/2011 7 000 000 800 000 7 800 000 – – 163 753 (163 753) 7 800 000 – 3 320 450 100.0% 100.0%

Makro Montague Gardens Montague Gardens, Cape Town A Western Cape S 11 236 11 236 01/04/2011 80 000 000 2 500 000 82 500 000 – – – – 82 500 000 – 7 342 801 100.0% 100.0%

Monsanto Nuffield, Springs B Gauteng S 9 819 9 819 01/04/2011 27 200 000 1 400 000 28 600 000 – – 461 014 ( 461 014) 28 600 000 – 2 913 398 100.0% 100.0%

Renew It Wynberg, Sandton B Gauteng S 5 013 5 013 01/04/2011 20 000 000 2 000 000 22 000 000 – – 62 200 5 237 800 27 300 000 – 5 446 498 100.0% 100.0%

SABB Maitland Maitland, Cape Town C Western Cape M 16 017 16 017 01/04/2011 44 900 000 4 100 000 49 000 000 – – 650 318 2 849 682 52 500 000 52 500 000 3 278 351 100.0% 100.0%

SABB Mayville Mayville, Durban C KwaZulu-Natal S 4 003 4 003 01/04/2011 16 400 000 600 000 17 000 000 – – – ( 5 000 000) 12 000 000 – 2 998 488 100.0% 100.0%

Scientific Building Kya Sands, Randburg A Gauteng S 5 733 5 733 01/10/2011 35 080 140 (280 140) 34 800 000 – – 345 199 5 354 801 40 500 000 – 7 064 675 100.0% 100.0%

5 Endean City Deep, Johannesburg C Gauteng S 2 342 2 342 01/04/2011 10 000 000 500 000 10 500 000 – – 222 960 1 477 040 12 200 000 – 5 209 563 100.0% 100.0%

Table Choice Aeroton Aeroton, Johannesburg B Gauteng S 6 994 6 994 01/04/2011 25 800 000 400 000 26 200 000 – – 265 682 34 318 26 500 000 26 500 000 3 789 450 100.0% 100.0%

8 Flamink Alrode, Alberton C Gauteng S 6 543 6 543 01/04/2011 10 000 000 1 000 000 11 000 000 – – 51 143 (51 143) 11 000 000 – 1 681 208 100.0% 100.0%

Retail A 23 188 180 297 94 200 000 8 800 000 103 000 000 – 1 547 833 735 10 221 971 31 194 294 1 692 250 000 – 9 386 425 100.0% 97.5%

Balfour Park Shopping Centre Highlands North, Kensington A Gauteng M – 36 451 01/11/2012 – – – – 295 819 187 1 046 364 (865 551) 296 000 000 – 8 120 694 94.1%

BMW Boksburg North Bardene, Boksburg North A Gauteng S – 7 526 20/12/2012 – – – – 62 500 000 1 070 251 5 129 749 68 700 000 – 9 128 238 100.0%

Builders Warehouse Bloemfontein Hospitaalpark, Bloemfontein A Free State M – 9 378 20/12/2012 – – – – 98 000 000 515 917 (515 917) 98 000 000 – 10 450 244 100.0%

Builders Warehouse Polokwane Polokwane, Limpopo A Limpopo M – 8 500 20/12/2012 – – – – 93 000 000 488 199 (488 199) 93 000 000 – 10 941 252 100.0%

Builders Warehouse The Glen Gleneagles, Johannesburg A Gauteng M – 11 103 15/01/2013 – – – – 139 000 000 715 951 (715 951) 139 000 000 – 12 519 228 100.0%

Builders Warehouse Witbank President Park, Emalahleni A Mpumalanga S – 5 512 08/01/2013 – – – – 80 000 000 417 338 (417 338) 80 000 00 – 14 514 274 100.0%

Builders Warehouse Zambesi Pretoria Montana, Pretoria A Gauteng S – 8 907 29/01/2013 – – – – 104 500 000 534 429 (534 429) 104 500 000 – 11 732 175 100.0%

Great North Road Plaza Musina, Limpopo A Limpopo M – 13 561 06/06/2012 – – – – 145 000 000 2 056 841 9 943 159 157 000 000 157 000 000 11 577 984 96.4%

Jet Umtata York Road, Umtata B Eastern Cape M 3 566 3 721 01/04/2011 48 000 000 – 48 000 000 – – – 8 500 000 56 500 000 – 15 184 1 429 100.0% 100.0%

Megamark Mall Kriel, Mpumalanga A Mpumalanga M – 20 848 11/12/2012 – – – – 202 315 484 452 422 10 932 094 213 700 000 – 10 250 321 97.6%

Nissan Roodepoort Roodepoort, Johannesburg A Gauteng S – 4 893 18/12/2012 – – – – 34 800 000 184 119 (184 119) 34 800 000 – 7 112 266 100.0%

Nonkqubela Link Mall Khayelitsha, Cape Town A Western Cape M – 7 786 14/12/2012 – – – – 99 399 064 287 077 (186 141) 99 500 000 – 12 779 390 96.3%

Plastic Land Fourways Fourways, Johannesburg A Gauteng S – 1 296 18/01/2013 – – – – 13 000 000 78 357 (78 357) 13 000 000 – 10 031 222 100.0%

Shoprite Checkers Thabazimbi Vanderbijl Street, Thabazimbi B North West S 4 125 4 125 01/04/2011 15 200 000 (700 000) 14 500 000 – – – 2 500 000 17 000 000 – 4 121 386 100.0% 100.0%

Shoprite Checkers Vanderbijlpark CBD, Vanderbijilpark B Gauteng S 15 497 15 497 01/04/2011 31 000 000 9 500 000 40 500 000 – – 1 372 470 (822 470) 41 050 000 41 050 000 2 649 216 100.0% 100.0%

Super Group Greenstone Edenvale, Johannesburg A Gauteng S – 5 686 05/02/2013 – – – – 50 000 000 264 324 (264 324) 50 000 000 – 8 794 189 100.0%

Tile World Supa Quick Fourways Fourways, Johannesburg A Gauteng M – 2 400 23/01/2013 – – – – 23 500 000 132 544 (132 544) 23 500 000 – 9 792 226 100.0%

Unitrans Polokwane Polokwane, Limpopo A Limpopo S – 4 322 20/12/2012 – – – – 20 000 000 113 835 (113 835) 20 000 000 – 4 627 156 100.0%

VW McCarthy Roodepoort Constantia, Johannesburg A Gauteng S – 2 595 07/01/2013 – – – – 26 000 000 140 202 (140 202) 26 000 000 – 10 019 287 100.0%

Wetherly’s and Chateaux D’Ax Bryanston Bryanston, Johannesburg A Gauteng M – 6 190 20/12/2012 – – – – 61 000 000 351 331 (351 331) 61 000 000 – 9 855 265 81.8%

Total 404 946 568 151 1 930 151 540 135 248 460 2 065 400 000 (200 000 000) 2 109 143 362 50 426 042 162 030 596 4 187 000 000 – 7 370 556 97.3% 97.1%

* Multi or single tenanted.

21


Overview

of Investec Prop

erty Fund Lim

ited

Property portfolio (continued)

Geographic spread

Office

Industrial

Retail

7.2

8.0

7.6

7.0

Percentage8.4

7.8

7.4

8.2

20

100

60

0

Rand120

80

40

2.0

10.0

6.0

0

Percentage12.0

8.0

4.0

Weighted average rent escalation (GLA)

Average annualised property yields

Weighted average rental per square metre (GLA)

GLA

a Eastern Cape 2%

b Free State 1%

c Gauteng 72%

d KwaZulu-Natal 2%

e Limpopo 4%

f Mpumalanga 4%

g North West 1%

h Western Cape 14%

c

Revenue

a Eastern Cape 1%

b Free State 1%

c Gauteng 67%

d KwaZulu-Natal 9%

e Limpopo 5%

f Mpumalanga 2%

g North West 1%

h Western Cape 14%

c

a

31 March 2013

a Industrial 24%

b Retail 33%

c Office 43%

b

c a

a

de

fg

hb b

d

ef

h

g

Sectoral spread

GLA

a Industrial 51%

b Retail 33%

c Office 16%

b

c

Revenue

a Industrial 35%

b Retail 23%

c Office 42%

b

ca

Asset value

a Industrial 24%

b Retail 33%

c Office 43%

b

c

a

a

Tenant profile Single vs multi-tenanted

GLA

a A 71%

b B 16%

c C 13%

Revenue

a A 73%

b B 15%

c C 12%

Revenue

a Single-tenanted 55%

b Multi-tenanted 45%

GLA

a Single-tenanted 40%

b Multi-tenanted 60%

b

c

a

b

c

b

a

ab

a

21

Executivereports

2

22


Executive rep

orts

Chairman’s report

This brings the total distribution for the year to 99.99 cpu, representing a 7.5% increase over the prior year. These results reflect the defensiveness of the portfolio and management’s continual focus on the underlying property fundamentals against a backdrop of inflationary cost pressures.

The performance is further underpinned by a significant proportion of high-quality, long-term single tenancies, low vacancies and an elongated portfolio lease expiry

profile. Receivables have been tightly managed during the year under review and at the year end, gross arrears were limited to R1.9 million; representing 0.55% of total collectibles over the year.

The financial results also include the negative impact of holding cash longer than anticipated due to delays in the timing of property transfers, caused primarily by delays in obtaining municipal clearances and other statutory requirements, out of the control of the Fund and its management.

The board of directors is pleased to announce a 7.9% increase in the final distribution to 53.16 cents per unit (cpu) for the six months ended 31 March 2013 (31 March 2012: 49.29 cpu).

Portfolio growth

During the year the Fund completed R2.1 billion of new acquisitions, all of which are anticipated to be accretive to unitholders. This has taken the portfolio from R1.7 billion at listing in April 2011 to R4.2 billion at year end, more than doubling the size of the portfolio through the acquisition of quality assets. A good example of this was the R742.8 million acquisition of a quality property portfolio from Giuricich during the year, made up of several Builders Warehouses and other properties with national tenants – we also welcome them as new investors in the Fund, having taken 17 million linked units as part of the sale consideration, and Luigi Giuricich who joined the board as a non-executive director.

The Fund has also increased its retail footprint through the acquisitions of Balfour Park, Megamark Mall, Great North Road Plaza and Nonkqubela Mall, with the latter three properties expanding the Fund’s footprint in rapidly developing sectors of the market.

Capital funding

The Fund was successful in raising R1.5 billion of new equity by way of an oversubscribed rights offer that closed on 2 November 2012. Units were issued at a

clean price of R13.25 (a further 57 cents represented antecedent interest that was returned to the unitholders in December 2012 as part of the interim distribution) and the proceeds of the issue were used, in part, to fund the R2.1 billion of new acquisitions that were made during the year.

As noted in our 2012 annual report, the Fund registered a R1 billion domestic medium-term note (DMTN) programme, drawing down R450 million in April 2012 to fund acquisitions. During the current year this facility was extended to R3 billion, however only R450 million was drawn down at year end. Together with an interest rate swap that ensured that 75% of borrowings were fixed, the notes were placed at an all-in cost of borrowing of 8.2%, supported by a credit rating on a secured basis of an A while on an unsecured basis was a BBB+. These credit ratings were both subsequently upgraded to A-and AA- respectively, underpinned by a track record of delivery, cash flow predictability, strong property fundamentals, funding flexibility and low gearing levels.

The Fund’s gearing ratio remained low at 10.7% at year end, well below the stated range of 30% – 40% providing significant headroom to pursue suitable acquisitions in the future which is further supported by the extensive debt facilities in place. Thus the Fund remains in a position to move quickly when an opportunity arises.

Distribution growth

2012

2013

20

60

0

Cents per unit120

40

80

100

First half Second half Full year

+7.9%

+7.5%

+7.1%

Sectoral growth

2012

2013

200

600

0

R’million1 800

400

800

1 600

Of�ce Industrial Retail

1 000

1 400

1 200

22

13Investec Property Fund Limited integrated annual review and financial statements 2013

Executive rep

orts

Chairman’s report (continued)

During the year, the Fund took the decision to create a security SPV structure which is in the process of being set up, to facilitate the raising of term debt in the future, establishing a clear debt strategy and debt planning process as well as a firm platform for growth.

REIT legislationOn 1 April 2013, National Treasury introduced the South African Real Estate Investment Trust (REIT) tax dispensation which will consolidate the existing Property Loan Stocks (PLS) and Property Unit Trusts (PUT) structures. The purpose of the REIT dispensation is to provide certainty in respect of the taxation of the current South African property investment structures and to bring such structures on par with leading international norms (i.e. a flow through structure as seen in the UK, Australia and US). This will, in effect, see distributions as tax deductible in the REIT itself.

Additionally, capital gains tax will no longer apply to the REIT on disposal of capital assets. Thus the deferred tax on the fair value adjustments made in the prior and current financial years will fall away. However, this is unlikely to have an effect on distributable earnings in the forthcoming financial year.

There are several key REIT requirements, as set out below both from a JSE and tax perspective, however none that we foresee will have any material impact on the Fund, nor on our unitholders.

The Fund made the required application to the JSE to be listed as a REIT on 31 May 2013 and was granted REIT status on 7 June 2013. As such, the Fund will be deemed a REIT for the full financial year beginning 1 April 2013. As provision has been made within the legislation to allow for the linked unit structure to continue, the Fund will delay the collapsing of our capital structure until we have received certainty on the tax implications.

management programme, with the results being reported directly to the audit and risk committee of the board.

One of the key risks to the Fund and the nature of our business is investment risk in relation to acquisitions. This is a key component of the risk management programme, whereby we undertake a fairly conservative approach to the acquisition of properties. The core focus when making investment decisions is on the underlying property fundamentals. Coming back to the Fund’s goal, we will only invest in properties that are likely to produce a sustained and reliable income stream or have the potential for increases in income over time. Highly experienced property people make up the investment committee which approves all the acquisitions. The majority of the investment committee comprises independent directors.

Changes to the board

Suliman Mahomed and Luigi Giuricich were appointed to the board with Suliman’s appointment effective 14 May 2012 and Luigi’s effective 1 December 2012. Both Suliman and Luigi have been appointed as members of the investment committee. We are highly optimistic about the contribution that Suliman and Luigi will make to the Fund in the coming years and welcome them to the team.

Going concern

The board has performed a thorough review of the Fund’s budgets and cash flow forecasts for FY2014 and based on this review, the borrowing and financial positions of the Fund and the property environment in general, the board is satisfied that the Fund continues to be a going concern and has applied this principle in preparation of the financials.

Sustainability

The Fund acknowledges its responsibility to its stakeholders, the environment and the community at large. Thus in the current year, a social and ethics committee has been set up in order to oversee the projects that the Fund carries out in this regard. The board and its members wish to assure the stakeholders that in the current year there will be a persistent effort to continually

Governance As set out on pages 22 to 27 in

this report, the Fund’s board, management and employees of the Manager are committed to upholding the disclosure, transparency and listing rules of all the applicable regulations, statutes, including the JSE Listings Requirements, and the King Code of Governance Principles for South Africa (King III).

Thus all stakeholders can take assurance from the fact that the Fund is being managed ethically and in compliance with the latest legislation, regulations and best practice.

During the current year the board and its members committed themselves to undergo a board evaluation review, a process by which all the members of the board assess whether or not the board and its committees are carrying out the prescribed duties with the requisite skill, knowledge and due care. This process was carried out by the lead independent director through a series of questionnaires and follow up one-on-one meetings with each board member and results communicated to the board for action, where applicable.

Risk management

As explored in great depth on pages 28 to 30 the Fund’s board, management and employees of the Manager are highly committed to the risk management of the Fund.

The audit and risk committee takes control of the risk management process, and given the closeness of the relationship with the Manager, the Fund forms part of the risk management process of Investec. As such, the Fund is subject to a rigorous risk

JSE REIT requirements 2013

R300 million of property IPF has R4.2 billion

Total consolidated liabilities not to exceed 60% of gross asset value

IPF ratio of 15% at 31 March 2013 (excluding debentures)

Earn 75% of revenue from property rental IPF revenue is 100% rental related

Distribute at least 75% of taxable earnings IPF will distribute 99.9% in FY13

22


Executive rep

orts

Chairman’s report (continued)

improve our business and environmental sustainability. In this vein, the Fund has embarked on a sustainability programme with the aim to improve the energy efficiency of the properties benefiting the Fund as well as the clients who occupy the buildings.

Further information is contained on page 32.

Prospects

The board believes that the highest priority is the retention of clients, which will thus remain in the forefront of the Fund’s activity in the forthcoming financial year.

Despite the uncertain economic outlook, highly competitive landscape and upward

pressure on administration and operating costs, the board anticipates distribution growth in the region of 6% and 8% in the coming financial year. The forecast is based on assumptions that the macro-economic environment will not deteriorate markedly, no major corporate failures will occur, budgeted renewals will be concluded and that clients will be able to absorb the recovery of rising rates and utility costs. Budgeted rental income was based on contractual escalations and market related renewals.

The information and opinions contained above are recorded and expressed in good faith and based on sources believed to be reliable. No representation, warranty, undertaking or guarantee of whatever nature is made or given concerning the accuracy and/or completeness of such information.

R2.1 billion of new acquisitions in 2013

This forecast has not been reviewed or reported on by the Fund’s independent external auditors.

AcknowledgementsMy appreciation is extended to the board for their commitment, support and active contribution in the significant growth of the Fund in the last 12 months. Thank you to the management and employees of the Manager who have been fundamental to the strong performance of the Fund in its second year of operation.

22


Executive rep

orts

Chief executive officer’s report

The Fund’s continuing focus and commitment to underlying property fundamentals both in new acquisitions and in effectively managing its investment portfolio is all the more critical when viewed in the context of the market disruption and volatility experienced between the time of announcement of the Fund’s results and the issuing of this annual report. The Fund’s successful R1.5 billion rights offer, resulting in a very low gearing of 10.7%, sets a platform for effective acquisitions at more realistic prices which it is anticipated will evolve from the recent market volatility.

The current year has continued to experience the anticipated increasing cost pressures, with local authority charges as well as other costs rising in certain instances at double digit rates. The industry also continues to confront ongoing new development in all three sectors of industrial, retail and offices and across most geographic sectors which, for the most part, seems to be demand driven or niche. Nevertheless, this dictates careful consideration both in effectively managing the investment portfolio and in making new investments.

The Fund’s management has and will continue to focus on its core philosophy of hands-on active management of physical property, in conjunction with efficient management of its balance sheet to ensure a solid and stable platform and effective springboard to act quickly when needed to invest in high-quality new properties.

Against this highly competitive landscape, the Manager is gratified to have been able to deliver a full year distribution growth of 7.5% and to have doubled its asset base to R4.2 billion.

The Fund is pleased to have delivered good income distribution growth of 7.5% for the year, while also doubling its asset base with good quality and well priced acquisitions against the backdrop of a highly competitive market which saw the SA listed property sector outperform competitor asset classes, strongly supported by a low interest rate environment.

Our key performance indicators

20126.34%

201310.70%

Gearing

20122.70%

20132.90%

Vacancy rate

201232

201350

Number of properties

2012406 706m2

2013568 151m2

Gross lettable area

2012170 000 000

2013317 220 000

Units in issue

201293.02c

201399.99c

Distribution per unit

Operations and sectoral performanceThe Fund invests in the three commercial property sectors being retail, industrial and office for the generation of net property income for distribution to linked unitholders and to achieve income and capital growth over time. Its dedicated and experienced team is focused on hands-on management of the property assets, client service and retention and returns to shareholders, with a strong commitment to continually investing in existing and new assets for business continuity and longevity.

In a highly acquisitive year which resulted in the property portfolio doubling in value, the asset management team simultaneously invested in the base portfolio.

Through ongoing commitment to client retention, good maintenance of the properties and proactive leasing, vacancy levels remained well contained at 2.9%, marginally up from 2.7% due mainly to a small single tenanted office building not renewing their lease.

The core portfolio with its high proportion of long-term single tenanted properties (40%) and high proportion of listed and large corporate tenants (65%), continued to demonstrate its defensiveness.

The industrial portfolio with a defensive component of mature, well located, very good quality warehousing, which were consequently able to offer competitive rentals, showed good growth.

Of the R2.1 billion of acquisitions, approximately R1.5 billion consists of retail properties. Of that approximately 50% comprises very well located big box retail with high quality tenancies, with the balance comprising shopping centres targeted to the growing mid LSM market.

22


Executive rep

orts

Chief executive officer’s report (continued)

GE building in Corporate Park, Midrand is considered a trophy industrial property.

It was deemed opportune this year to trade out of certain non-core assets and consequently 373 Pretorius Street in the Pretoria CBD tenanted by the local authority, and 5 Walnut Road in the Durban CBD were sold at a combined profit of R39 million, the proceeds having been reinvested in the acquisitions. Subsequent to year end the Fund has sold a large industrial property in Springs resulting in a capital profit of R9 million.

While the sectoral charts now seemingly reflect a portfolio well balanced by sector, the Fund wishes to emphasise again that the acquisitions were and will continue to be focused on property fundamentals, with the portfolio composition by sector or geography being a by-product of that process.

Growth and acquisitionThe Fund remains highly acquisitive as it has been in the two years since listing, demonstrated by having grown its assets 2.5 times, always based on property fundamentals to mitigate risk by a portfolio effect and to become better positioned and competitive against its peer group, while acknowledging the highly competitive market for scarce good property.

The lease expiry profile of the Fund demonstrates a relatively low risk expiry profile for the foreseeable future, partly aided by the sale of the three non-core properties, one post year end.

The Fund’s management team has been bolstered with the employment of a specialist retail asset manager, portfolio manager, a new head of finance and two support accounting staff. The Manager will continue to seek to employ quality people ahead of the growth curve.

Property portfolioAs stated the year has seen fairly dramatic changes in the portfolio with the acquisition of 20 properties for a total cost of R2.1 billion, more than doubling the size of the portfolio from R1.7 billion to R4.2 billion, as well as the sale of two assets considered non-core. The portfolio now comprises 50 properties with the gross lettable area (GLA) having increased from 406 706m2 to 568 151 square metres.

Notably the retail acquisitions include the dominant shopping centres in the key smaller towns of Musina and Kriel, Balfour Park in Johannesburg and a small very well positioned centre in Khayelitsha in the Cape as well as 12 big box retail properties which boasts 96% national tenants including five Builders Warehouse properties. High quality office investments include Investec Pretoria regional office and the prestigious Firs of Rosebank. The highway fronting

Vacancy levels

Tenanted

Vacant

50 000

0

GLA (m2)

350 000

100 000

Of�ce Industrial Retail

150 000

250 000

300 000

200 000

7.3%

92.7%

1.8%

98.2%

2.5%

97.5%

Lease expiry profile by sector

2

6

0

% of revenue20

4

10

18

2014 2015 2018

8

12

14

20172016

Office

Industrial

Retail

16

>2018

Property growth since listing

0.5

1.5

0

R’billion4.5

1.0

2.5

4.0

04/11

1.7bn29 properties2.0

3.0

3.5

03/13

4.2bn50 properties

09/12

2.3bn34 properties

03/12

2.1bn32 properties

09/11

1.7bn29 properties

22


Executive rep

orts


AcquisitionsCost

R’millionGLA

m2

Office 442.3 20 090

The Firs 272.3 13 787

Investec offices Pretoria 170.0 6 301

Industrial 119.1 11 180

General Electric 119.1 11 180

Retail 1 547.8 159 061

Great North Road Plaza 145.0 13 561

Balfour Park 295.8 36 311

Megamark Mall 202.3 23 103

Nonkqubela Mall 99.4 7 778

Giuricich portfolio (12 assets) 742.8 70 782

BMW Boksburg 62.5 7 526

Total 2 109.1 190 329

DisposalsOriginal

costCarrying

valueGLA

m2

Proceedson sale

Profit/(loss)on sale

5 Walnut Road 71 000 000 75 000 000 14 040 87 000 000 9 728 964

373 Pretorius Street 125 000 000 125 000 000 13 340 155 000 000 29 337 231

Financial results and simplified accounting informationConsistent with general practice in the listed property sector, we have included a simplified statement of comprehensive income and simplified statement of financial position to make the financial statements more understandable and better aligned to the cash-based basis of reporting operating results which are relevant to paying distributions to our linked unitholders and to eliminate fair value adjustments and other non-cash adjustments as required by IFRS. These simplified statements do not comply with IFRS.

The IFRS compliant statements are set out on pages 40 to 45.

The Manager will continue to leverage off its network both internal and external, as it has to date, to source quality acquisition opportunities and will continue to manage its balance sheet and establish funding facilities to position it to move quickly on the right acquisition opportunities.

Simplified statement of comprehensive income

R’000 2013 2012

Revenue 331 398 211 558

Property expenses (59 669) (38 498)

Net property income 271 729 173 060

Fund operating expenses (3 041) (2 701)

Asset management fee (17 834) (9 157)

Interest received 25 143 3 016

Interest paid (39 184) (6 034)

Profit before taxation 236 813 158 184

Taxation (66) (49)

Profit before debenture interest 236 747 158 135

Debenture interest and dividends (236 747) (158 135)

Retained profit – –

Linked units in issue (number) 317 220 000 170 000 000

Distribution per linked unit (cpu) 99.99 93.02

22


Executive rep

orts


Simplified statement of financial position

R’000 2013 2012

Property assets 4 187 000 2 065 400

Current assets 452 343 16 634

Cash and cash equivalents 398 730 4 567

Other current assets 53 613 12 067

Total assets 4 639 343 2 082 034

Linked unitholders’ interest 3 943 176 1 838 079

Nominal value of interest bearing long-term liabilities 450 000 130 900

Derivative liability 5 294 1 169

Current liabilities 240 873 111 886

Total equity and liabilities 4 639 343 2 082 034

Property costsThe cost to income ratio for the Fund is calculated on the basis where revenue includes the billings from rental income, contractual operating costs, rates recoveries and turnover rentals whilst the full expense is included as property expenses, except for the utility expenses which are reflected net of recoveries.

During the current year there was a slight improvement in the cost to income ratio for the Fund from 18.2% to 18.0%. This shows the ability to control costs despite the inflationary pressures of costs including electricity and rates charges. This low ratio demonstrates how the Fund has managed to secure a high proportion of single tenanted properties, where municipal charges are paid directly by the client to the relevant authorities.

Finance costsFinance costs include interest paid on the following:

• R450 million of DMTN, drawn down on 14 April 2012. The DMTN carries an all-in cost of funding of 8.2% when taking account of the interest rate swaps used to fix the Fund’s interest rate exposure

• Bridge facility, utilised for two months to fund the acquisition of the Innovation Building.

Finance incomeFinance income comprises the interest income on the distributable cash flows generated by the Fund. This rose substantially in the year to R25.1 million (2012: R3.0 million) as a result of the delay in the divestiture of cash relating to acquisitions, funded by the DMTN programme and rights offer. Additionally, antecedent interest of R4.6 million is also included, relating to the Giuricich transaction.

Fair value adjustmentsThe Fund’s policy is to value investment properties at year end, with independent valuations performed on a rotational basis to ensure property is valued at least every three years by an independent external valuer. The directors’ valuation methods include using the discounted cash flow model and the capitalisation method. Total revaluations for the current year amounted to R162.0 million.

In certain instances, a lower valuation than the independent valuation was adopted by the board as it takes a conservative view on valuations and does not recognise the valuation attributable to vacant space where there is any uncertainty in the short- term ability to let this space and any value attributable to undeveloped bulk, both of which are valued by the independent valuers. The total fair value adjustment attributed to investment properties is reduced by the total straight-line rental revenue adjustment that has already been attributed to the fair value of the investment properties.

The debentures forming part of our linked units are reflected at fair value which represents the net asset value attributable to debenture holders. In terms of the debenture trust deed, the interest payable on the debentures is always at a minimum 999 times the dividend payable on the ordinary shares. Ultimately all the fair adjustments on the assets and liabilities of the Fund are therefore attributable to the debentures. Consequently the net effect of the fair value adjustments on investment property, borrowings and derivative assets is adjusted to the fair value of the debentures.

Interest ratesGiven that the primary purpose of the Fund is to invest in real estate, the board took the decision not to speculate with respect to interest rates and established a policy in 2011 that a minimum of 75% of total borrowing costs be hedged. At year end, the Fund has in place a fixed interest rate swap that, together with the fixed portion of the DMTN, accounts for 75% of this borrowing exposure. The fixed rate obtained was 7.15% (excluding borrowing margin) which has been factored into our determination of our all in borrowing cost of 8.2% following the placement of our secured notes.

22


Executive rep

orts


BorrowingsThe Fund reported total borrowings of R450 million at year end, resulting from the drawdown on the DMTN programme to fund several acquisitions. This reflected a gearing ratio of 10.7%, providing substantial headroom to aggressively pursue attractive acquisitions as we seek a target LTV of 30% – 40%.

The Fund has excess capacity on existing facilities, as set out in the table below, but continues to investigate funding alternatives that will best suit our needs whilst ensuring the best return for shareholders.

The Fund is conscious of the need to diversify its sources of debt funding and as such, took the decision to create a security special purpose vehicle (SPV) structure to facilitate the raising of term debt. However this facility is still in the process of being set up and so is not included in the current year’s results.

In addition, the Fund’s debt expiry profile remains strong, with the first repayment of capital due in 2015. With new facilities being added early in the 2014 financial year, the Fund is well placed to take advantage of changes in debt markets.

DMTN programme*R’000

Capital repayment date

Interest rate 2013

Tranche 1 13 April 2015 3-month JIBAR + 1.40% 134 000



Tranche 6 13 April 2017 Fixed at 8.80% 226 000

Total long-termborrowings 450 000

* Investment property to the value of R948.3 million has been bonded as security for this facility.

Debt facilitiesR’000

Facility available

Drawn down at year end

Capacity available

DMTN programme 3 000 000 450 000 2 550 000

Bridge facility 500 000 – 500 000

Total 3 500 000 450 000 3 050 000

Debt maturity profile

50

0

R’million300

100

2015 2016 2017

150

250

200

2


Executive rep

orts

Directorate

Executive directors (details as at the date of this report)

Sam Hackner (57)Executive chairmanBCom (Hons), Dip Acc, CA(SA)

Committees: Investment (chairman),standing invitation to all committee meetings

Sam Hackner has over 30 years of experience in the property industry and is currently the chief executive officer and global head of Investec Property. In 2003 he was appointed chairman of Growthpoint, the largest property fund listed on the JSE. Mr Hackner resigned as chairman of Growthpoint in July 2008, a year after the property management and asset management functions were sold by Investec to Growthpoint. He is currently a member of the board of directors and advisory board of the Investec GLL Global Special Opportunities Real Estate Fund, a R3.7 billion Luxembourg-based fund for investment in global real estate.

Samuel R Leon (63)Chief executive officerLLB (London)

Committees: Investment, Social and ethics,standing invitation to all committee meetings

Sam Leon has over 35 years of experience across all sectors of the property industry with 20 years at Investec Property (Pty) Ltd, firstly as a director, then managing director and currently as deputy chairman. He was a founder of the transformation of Growthpoint into South Africa’s largest listed property fund and was a director until Investec sold its interests in October 2007. Sam was also a director of specialist listed property fund Metboard Properties Limited, until it was sold to Growthpoint in April 2007, as well as a board member of SAPOA (the South African Property Industry body). He is currently a member of the board of directors and advisory board of the Investec GLL Global Special Opportunities Real Estate Fund, a R3.7 billion Luxembourg-based fund for investment in global real estate.

David AJ Donald (62)Chief financial officerBCom, H Dip Taxation Law, CA(SA)

Committee: Audit and risk

Dave Donald has significant experience in accounting and finance and is currently a director of Investec Property (Pty) Ltd,

a position held since 2001, where he is responsible for operational, accounting and finance functions. From 1983 to 1997, he was a partner at Coopers & Lybrand in Johannesburg.


Michael P Crawford (70)Lead Independent non-executive director

Committees: Audit and risk, Investment,Nominations

Michael Crawford has approximately 35 years of experience in property development. He was the founding shareholder of RPP Developments, a successful property development fund, and acted as managing director and later chairman thereof. Michael is currently the chairman of Stratford Property Ventures. Major developments overseen by him include Centurion Shopping Mall, Fourways Golf Park (office park), Linbro Park (industrial) and the Tygerberg Business Park (industrial).

Constance M Mashaba (51)Independent non-executive directorBCom (Hons) Business Management

Committees: Audit and risk, Social and ethics

Constance Mashaba worked for Black Like Me as financial manager from inception until 1997 when it was sold to Colgate Palmolive. She joined Labat Traffic Solutions as the financial manager responsible for all financial activities reporting to the managing director. She is currently the managing director of Black Like Me (Pty) Ltd responsible for strategic planning and management of the business, particularly In the areas of sales and marketing for the local and continental markets.

Moses M Ngoasheng (55)Independent Non-executive directorBA Economics and Politics, BSoc Sci (Hons), MPhil

Committees: Investment, nominations,Social and ethics (chairman)

Moses Ngoasheng previously worked in the ANC’s economics department until 1993 when he joined Gencor’s Group Strategy Department. The following year he founded an investment company Safika Holdings (Pty) Ltd, of which he is currently

the chief executive officer. In 1995, he was requested by deputy president Thabo Mbeki to become his economic adviser. When Mbeki was made president in 1999, Mr Ngoasheng became economic adviser to the President. In 2000, he returned to Safika as chairman and assisted in building the company into a substantial business.

Graham R Rosenthal (68)Independent non-executive directorCA(SA)

Committees: Audit and risk (chairman),Nominations

Graham Rosenthal spent his entire professional career with Arthur Andersen and its predecessors, becoming a partner of the South African practice in 1968 and an international partner in 1984. He retired from Arthur Andersen in 2000 after having been in charge of their South African audit and business advisory practice. He has served as chairman of the investigations committee of SAICA. Since 2000 he has, inter alia, served as a non-executive member of various audit committees, is a non-executive director of Sun International Limited, serves as a non-executive member of credit committees of the Investec group and is a trustee of their staff share schemes.

Suliman Mahomed (64)Independent non-executive directorCommittees: Investment

Suliman Mahomed has over 35 years’ experience in the investment and development of commercial property. He is presently chairman and chief executive of the Solly’s Group of companies, Solly’s Discount World, Solly Noor Properties and Computron.

Luigi LM Giuricich (52)Non-executive directorBCompt (Hons), CA(SA)

Committees: Investment

Luigi Giuricich has over 22 years of experience across all sectors of the construction and property sectors. Starting as the financial director of the S. Giuricich group of companies in 1990, he currently holds numerous directorships of group and associate companies.

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Corporate governance

IntroductionThe board ultimately provides leadership based on an ethical foundation, and oversees the overall process and structure of corporate governance. In formulating our governance framework, we aim to apply the highest standards of corporate governance practice, in a pragmatic manner. This enables us to:

• Build and sustain an ethical corporate culture in the company

• Identify and mitigate significant risks, including reputational risk

• Exercise effective review and monitoring of our activities

• Promote informed and sound decision making

• Enable effectiveness, efficiency, responsibility and accountability

• Enhance stakeholder perceptions of the business

• Facilitate legal and regulatory compliance

• Secure the trust and confidence of all stakeholders

• Protect our brand and reputation

• Ensure sustainable business practices, including social and environmental activities

• Disclose the necessary information to enable all stakeholders to make a meaningful analysis of our financial position and actions

• Respond appropriately to changes in market conditions and the business environment

• Remain at the forefront of international corporate governance practices.

At present, the Fund is a subsidiary of Investec Limited (the group) due to the 50.01% shareholding which the group has in the Fund. Furthermore, the Fund is

managed externally by Investec Property (Pty) Ltd (the Manager), in terms of the Asset Management and Property Management Agreement concluded between the parties.

The Manager is a wholly owned subsidiary of Investec Limited. The day-to-day management and operational functions are performed by employees of the Manager. The Fund has no employees or personnel of its own. In the circumstances, certain obligations imposed by regulation fall to be executed and complied with by the Manager, in the course of performing the designated operational activities on behalf of the Fund.

Values and ethicsGiven the shared brand association with the Investec group, we espouse the same values and philosophies which are the benchmark against which we measure behaviour and the practices in our business. Our values require that directors and employees operate with utmost integrity, displaying consistent and uncompromising moral strength and conduct in order to promote and maintain trust.

Sound corporate governance is entrenched in our values, culture, processes, functions and organisational structure. Our governance structures are designed to ensure that our values are embedded in our business and processes.

We have a strong organisational culture of entrenched values, which form the cornerstone of our interactions with all stakeholders. These values are embodied in a written statement of values, which serves as our code of ethics. We view all employees as the custodians of ethical behaviour, which is reinforced through internal processes, policies and procedures. As such all new employees attend an induction process at which our philosophies, values, culture, risk management and compliance procedures are explained and discussed.

Board statement

The board, management and employees of the Fund are committed to complying with the disclosure and transparency rules of the JSE Limited (JSE) Listings Requirements, the Companies Act, 2008 and the King Code of Governance Principles for South Africa 2009 (King III). Consequently, all stakeholders can be assured that we are being managed ethically and in compliance with all relevant legislation, regulation and recognised best practice.

King III

King III distinguishes between statutory provisions, voluntary principles and recommended practices. The King III Report provides best practice recommendations, whereas the King III Code details the principles that all entities should apply.

The majority of the principles of King III are being applied and this is evidenced in the various sections of this report, including pages 72 to 75 where a full checklist of our level of compliance with King III can be found.

The following principles of King III are currently not being applied:

• Sustainability reporting and disclosure should be independently assured;

– Sustainability reporting and related disclosure was not independently assured by an external expert. The audit and risk committee has overseen the integrated report, including sustainability disclosures, which have been verified by the Internal Audit division

– We recognise the importance of sustainability reporting and verification of our efforts in this area. This is a developmental area and we will aim to commission external verification in future

• Chairman of the board must be a non- executive independent director

– In order to remedy this, the board has appointed Michael Crawford as the lead independent director (LID).

Investec Property Fund Limited (the Fund) strives to promote sustainable stakeholder confidence in our business by creating value through our conduct as a responsible corporate citizen.


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Corporate governance (continued)

Financial reporting and going concernThe directors are satisfied that the Fund has adequate resources to continue in business for the foreseeable future. The assumptions underlying the going concern statement are discussed at the time of the approval of the annual financial statements by the board and these include:

• Budgeting and forecasts

• Profitability

• Capital

• Liquidity.

In addition, the directors are responsible for monitoring and reviewing the preparation, integrity and reliability of the financial statements, accounting policies and the information contained in the annual report.

In undertaking this responsibility, the directors are supported by an ongoing process for identifying, evaluating and managing the risks faced in preparing the financial and other information contained in this annual report. This process was in place for the year under review and up to the date of approval of the annual report and financial statements.

The process is implemented by management and independently monitored for effectiveness by the audit and risk committee and other sub-committees of the board, which are detailed on pages 28 to 31.

Our financial statements are prepared on a going concern basis, taking into consideration:

• The Fund’s strategy, prevailing market conditions and business environment

• Nature and complexity of our business

• Risks we assume, and their management and mitigation

• Key business and control processes in operation

• Credit rating and access to capital

• Needs of all our stakeholders

• Operational soundness

• Accounting policies adopted

• Corporate governance practices

• Desire to provide relevant and clear disclosures

• Operation of board committee support structures.

The board is of the opinion, based on its knowledge of the Fund, key processes in operation and specific enquiries, that there are adequate resources to support the Fund as a going concern for the foreseeable future. Furthermore, the board is of the opinion that the risk management processes and the systems of internal control are effective.

Board of directorsThe board seeks to exercise leadership, integrity and sound judgement in pursuit of strategic goals and objectives, to achieve long-term sustainability, growth and prosperity. The board is accountable for the performance and governance of the Fund. It provides leadership within a framework of prudent and effective controls which ensures risks are assessed and properly managed.

The board has adopted a board charter, which provides a framework of how the board operates as well as the type of decisions to be taken by the board and those which should be delegated to management.

The board meets its objectives by reviewing and guiding corporate strategy, setting the values and ethical standards, promoting high standards of corporate governance, approving key policies and objectives, ensuring that obligations to its shareholders and other stakeholders are understood and met, understanding the key risks we face, determining our risk tolerance and approving and reviewing the processes in operation to mitigate risk from materialising, including the approval of the terms of reference of key supporting board committees.

To achieve its objectives, the board may delegate certain of its duties and functions to various board committees, forums or the CEO, without abdicating its own responsibilities:

• The board has formally defined and documented, by way of terms of reference, the authority it has delegated to the various board committees

• In fulfilling its responsibilities, the board is supported by management in implementing the plans and strategies approved by the board.

Furthermore, directly or through its sub-committees, the board:

• Assesses the quantitative and qualitative aspects of the Fund’s performance through a comprehensive system of financial and non-financial monitoring involving an annual budget process, detailed monthly reporting, regular review of forecasts and regular management strategic and operational updates

• Approves annual budgets, capital plans, projections and business plans

• Monitors compliance with relevant laws, regulations and codes of business practice

• Ensures there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders and monitors our communication with all stakeholders and disclosures made to ensure transparent and effective communication

• Identifies and monitors key risk areas and key performance indicators

• Reviews processes and procedures to ensure the effectiveness of internal systems of control

• Ensures we adopt sustainable business practices, including our social and environmental activities

• Assisted by the audit and risk committee, ensures appropriate information technology (IT) governance processes are in place, and ensures that the process is aligned to the performance and sustainability objectives of the board

• Ensures the appropriate risk governance, including IT, is in place including continual risk monitoring by management and determines the levels of risk tolerance and that risk assessments are performed on a continual basis.

• Ensures the integrity of the company’s integrated report, which includes sustainability reporting

• Ensures the induction and ongoing training and development, of directors

• Evaluates the performance of senior management and considers succession planning.


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IndependenceAs at 31 March 2013, the board is compliant with Chapter 2, Principle 2.18 of King III in that the majority of non-executive directors are independent.

A summary of the factors the board uses to determine the independence of directors is detailed below:

ChairmanThe chairman of the board, Sam Hackner, is not considered to be independent as contemplated by King III, since he is the chief executive officer of the Manager.

King III recognises however, that a fund may have sound reasons for appointing a chairperson who does not meet all

the criteria for independence. In such circumstances, King III advocates the appointment of a lead independent director (LID) who can assist the board in dealing with any actual or perceived conflicts of interest that may arise where the chairperson is not independent.

Chairman and chief executive officer

The roles of the chairman and chief executive officer are distinct and separate with a clear division of responsibilities that has been approved by the board. The chairman leads the board and is

responsible for ensuring that the board receives accurate, timely and clear information to ensure that directors can perform their duties effectively.

Lead independent director

Since the chairman is an executive director, Michael Crawford has been appointed as the LID, in conformity with King III.

The main function of the LID as contemplated by King III is to provide independent leadership and advice to the board, without detracting from the

authority of the chairperson. The LID will chair those board meetings which deal with the succession of the chairperson and the chairperson’s performance appraisal. He is available to address any concerns or questions from shareholders and non-executive directors.

Relationships and associations

Board compositionThe board is of the view that the non-executive directors are independent of management and promote the interests of stakeholders. The balance of executive and non-executive directors is such that there is a clear division of responsibility to

ensure a balance of power, such that no one individual or group can dominate board processes or have unfettered powers of decision making. The board believes that it functions effectively and evaluates its performance annually.

Sam Leon is the deputy chairperson of the Manager and accordingly, is not considered to be independent as contemplated by King III.


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Skills, knowledge, experience and attributes of directorsThe board considers that the skills, knowledge, experience and attributes of the directors as a whole are appropriate for their responsibilities and our activities. The directors bring a diverse range of skills and expertise to the board including:

• International business and operational experience

• Understanding of the economics of the sectors in which we operate

• Knowledge of the regulatory environments in which we operate

• Financial, accounting, legal and property experience and knowledge.

The skills and experience profile of the board and its committees are regularly reviewed to ensure an appropriate and relevant composition from a governance, succession and effectiveness perspective.

Board and directors’ performance evaluationThe performance of the board, its committees and individual directors is evaluated each year according to recognised corporate governance practices. The performance evaluation process takes place both informally, through personal observations and discussions, as well as more formally, through completion of questionnaires. The results are considered and discussed by the board.

The LID conducts face-to-face meetings with each director to discuss the results of

the formal and informal evaluations and, in particular, to seek comments on strengths and developmental areas of the members, the chairman and the board as a whole. Individual training and development needs are discussed with each board member.

Ongoing training and development

Directors’ training and ongoing development is a standing board agenda item, including updates on various training and development initiatives. Board members receive regular updates on regulatory and governance matters as well as on the business and support functions. Following the board’s and directors’ performance evaluation process, any training needs are communicated to the company secretaries who ensure these needs are addressed.

Terms of appointment

On appointment, non-executive directors are provided with a letter of appointment. The letter sets out, among other things, duties, responsibilities and expected time commitments, details of our policy on obtaining independent advice and, where appropriate, details of the board committees of which the non-executive director is a member. We have an insurance policy that insures directors against liabilities they may incur in carrying out their duties.

Independent adviceThrough the company secretaries, individual directors are entitled to seek professional independent advice on matters

related to the exercise of their duties and responsibilities at the expense of Investec. No such advice was required during the 2013 financial year.

Company secretary

The juristic appointed company secretary is Investec Bank Limited. Benita Coetsee is the company secretary of Investec Property Fund Limited. Benita is professionally qualified and has experience gained over a number of years. Her services are evaluated by the Investec Bank Limited board members during the annual board evaluation process. Benita oversees the company secretarial services rendered by Investec Bank Limited to Investec Property Fund Limited.

In compliance with the JSE Listings Requirements, the board has considered and is satisfied that Benita is competent, has the relevant qualifications and experience and maintains an arms-length relationship with the board. In evaluating these qualities, the board considered the prescribed role and duties pursuant to the requirements codified in the Companies Act and the listings and governance requirements as applicable. In addition, the board confirms that Benita has never served as a director on the Boards of Investec Limited, Investec Bank Limited or Investec Property Fund Limited, nor does she or her representatives take part in board deliberations and only advise on matters of governance, form or procedure. The review was for the period 01 April 2012 to 31 March 2013.

RemunerationDirectors who are employed by the Manager will not be remunerated directly by the Fund for their services, as the Fund pays the asset management fee to the manager.

The remuneration paid to directors in the year ending 31 March 2013 is set out on pages 37 to 38 in the directors’ report.

The proposed remuneration of non-executive directors for the year ending 31 March 2014 is set out below:

Board meeting

Audit and risk committee

meeting*

Investment committee

meeting*

Social and ethics

committee meeting*

Investment committee resolutions

Amount R25 000 R15 000 R15 000 R15 000 R5 000

* An additional R5 000 is paid to the chairman of these committees.

The remuneration of the non-executive directors for the current year was determined on the basis of number of meetings attended and number of resolutions passed for the investment committee.


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Board meetingsThe board of the Fund meets at least four times annually. Four board meetings were held during the reporting period.

The chairman is responsible for setting the agenda for each meeting, in consultation with the chief executive officer and the company secretaries. Comprehensive information packs on matters to be considered by the board are provided to directors in advance of the meetings.

Directors IndependentYears’ service Board


Investment committee^

Social and ethics committee

Nominations committee**

Executive directors

Sam Hackner (chairman) No 2 years 4(4) 1(1)

Samuel R Leon (chief executive officer)

No 2 years 4(4) 1(1) 1(1)

David AJ Donald (chief financial officer)

No 2 years 4(4) *


Michael P Crawford (LID) Yes 2 years 4(4) 2(3) 1(1) –

Constance M Mashaba Yes 1 year 6 months

4(4) 2(3) 1(1)

Graham R Rosenthal Yes 1 year 7 months

4(4) 3(3) –

Moses M Ngoasheng Yes 1 year 6 months

3(4) 1(1) 1(1) –

Suliman Mahomed (appointed 14 May 2012)

Yes 11 months 3(4) 1(1)

Luigi LM Giuricich (appointed 1 December 2012)

No 4 months 1(4)

* By invitation.** No meeting was held for the nominations committee in the current year. However, two resolutions were passed during the year. ^ Only one meeting was held for the investment committee, however many resolutions were passed in the current year.


Directors’ dealings

The directors’ report, as set out on pages 37 to 39 contains details of Investec shares held by directors.

Directors’ dealings in the securities of the Fund are subject to a policy based on regulatory requirements and governance best practice.

All directors’ dealings are subject to the director’s dealing policy approved by the board. Any transactions in the securities of the Fund require the prior approval of the Compliance division and the chairman or, in case of executive director’s absence, the LID. All dealings of persons discharging management responsibilities require approval by line management, the Compliance division and the chairman.

Conflicts of interest

Given the close association with the Investec group, the Fund may participate in transactions in respect of which Investec may have an interest, whether direct or indirect, or via a relationship of some nature with another party. Conflicts of interest that may arise will be managed appropriately in accordance with the Investec conflicts of interest policy and procedures. The directors and employees of the Manager are governed and bound by this policy.

In the event that the Fund is presented with an investment proposal involving a property owned (in whole or in part), directly or indirectly, by Investec or any other related disposition of assets, such interest will be fully disclosed to the Fund and will be referred to the investment committee and the board. The investment

committee and the board must approve any such proposals referred to it before the investment or divestment is made. In the event that any directors and/or employees of the Manager are conflicted between their employment roles and their positions on the board or investment committee, such persons must recuse themselves from the decision making process.


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Board committees and responsibilities

Board of directors


Remuneration committee

Nominations committee

Social and ethics committee (SEC)

Investmentcommittee

• Approves the Fund’s strategy• Ensures that the Fund complies with all

applicable laws • Is responsible for the governance of

risk, including that of information technology (IT)

• Acts as focal point for, and custodian of, corporate governance

• Provides effective leadership based upon an ethical foundation

• Approves the terms of reference of board committees

• Ensures the Fund operates as a responsible corporate citizen.

The board is of the view that a remuneration committee is not required. The operations of the Fund are undertaken by the Manager, accordingly the Fund does not have any employees. The executive directors are employed by the Manager

and are not remunerated for their services as directors of the Fund. The remuneration of the non-executive directors is determined by the board.

The investment committee roles and responsibilities include:• Review and approve any proposed; – acquisitions or disposals of investment

properties or related investments; – development or redevelopment

opportunities; and – any other investments or disinvestments

for which the board may require investment committee approval

• Ensure all investment proposals approved by them are in the best interests of the Fund

• Assess whether any proposed deal is capable of causing significant risk, conflict of interest or embarrassment to the Fund.

The nominations committee roles and responsibilities include:• Identifying and nominating suitable

candidates to fill vacancies on the board• Determining and evaluating the adequacy,

efficiency and appropriateness of the corporate governance structure and practices

• Establishing and maintaining a board directorship continuity programme to:

– review the performance of and planning for, successors to the executive directors and chairperson of the board

– ensure the continued presence of non-executive directors

– conduct an annual self-assessment of the board

• Regularly reviewing the structure, size and composition (including the skills, knowledge and experience) of the board

• Making recommendations to the board with regard to any proposed board changes

• Making recommendations to the board for the retention of a current director.

Since the functions of the committee are universal in nature, the board resolved to constitute the committee to monitor the activities of the Fund. There is a significant degree of overlap between matters dealt with by the audit and risk committee and the social and ethics committee.

The chairman of the audit and risk committee is tasked with tabling a report at the SEC to give

assurance in relation to the compliance function, control framework, procedure and processes as well as any other matters where there may be an overlap with issues dealt with by the audit and risk committee or attending meetings of the SEC to provide feedback.

The audit and risk committee roles and responsibilities include:• Reviewing reports and financial

statements and integrated report• Reviewing the appropriateness of

accounting policies and application• Overseeing the external audit process • Considering the external audit scope• Reviewing internal audit plans, reports,

capacity and capability • Ensuring compliance with legal

requirements, accounting standards and the JSE Listings Requirements

• Ensuring the finance functions of the Manager, as they pertain to the Fund, are adequately skilled, resourced and experienced

• Ensuring the effectiveness of the internal financial controls and that no material weaknesses are identified

• Ensuring that the external auditors are independent.


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Risk management

Risk managementThe board is responsible for the entire risk management process and the systems of internal control. A number of committees and forums assist in this regard. Senior management is responsible for identifying risks and implementing appropriate mitigation processes and controls. The independent group risk management functions, accountable to the board, are responsible for establishing, reviewing and monitoring the process of risk management.

Philosophy and approachOur comprehensive risk management process involves identifying, quantifying, managing and mitigating the risks associated with the business.

Risk awareness, control and compliance are embedded in all our day-to-day activities.

We monitor and control risk exposure through operational and legal risk reporting teams. This approach is core to assuming a tolerable risk and reward profile, helping us to pursue controlled growth across our business.

Risk management objectives are to:

• Be the custodian of our risk management culture

• Ensure the business operates within the board stated risk appetite

• Support long-term sustainability by providing an established, independent framework for identifying, evaluating, monitoring and mitigating risk

• Set, approve and monitor adherence to risk parameters and limits and ensure they are implemented and adhered to consistently

• Aggregate and monitor our exposure across risk classes

• Coordinate risk management activities across the business

• Give the board reasonable assurance that the risks we are exposed to are identified and, to the best extent possible, managed and controlled

• Establish appropriate risk committees, as mandated by the board.

The following risks, which may result in reduction of earnings and/or loss of value should they materialise, are of primary importance:

Risk Impact Mitigation

Loss of important management information, delays in billing and collections in revenue or payment of expenditure resulting in client queries and inaccurate information.

• The Manager forms part of the Investec global business continuity management capability which focuses on building an appropriate level of resilience into Investec’s operations to mitigate the risk of severe operational disruptions occurring and with information security being a key area of focus

• The property management process is sub-contracted to the various property management companies, which adopt a similar process to mitigate the risk of operational disruptions.

Loss or volatility of earnings may have an effect on business objectives, customer service and regulatory responsibilities.

• Promotion of appropriate and relevant operational risk management practices

• These practices are monitored on an ongoing basis by Group Operational Risk Management and the Embedded Risk Managers (ERM).

Operational risk due to inadequate or failed internal processes

Movements in interest rates may result in increased borrowing costs, and hence reduce the distributable borrowings.

• 75% of the borrowings are hedged by an interest rate swap• Monitoring of the costs of borrowings, and restructuring the

borrowings whenever appropriate.Interest rate risk

Inability to take advantage of investment opportunities and thus reducing the distributable earnings.

• Manage our cash flows and monitor the liquidity needs via accurate forecasts of cash requirements

• Manage the maturity of debt to ensure even spread• Ensure there is a contingency funding plan (the R500 million

bridge loan facility).

Liquidity risk

Business continuity risk


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Risk management (continued)


Client dissatisfaction and non- renewal of leases.

• Service level agreements with the property managers outlining minimum service levels expected

• Constant and open communication with the property managers to ensure their goals are aligned with those of the Fund

• Communication with clients to identify any deficiencies in the quality of service.

• Buying properties at prices above market rates

• Making investments where the yield does not cover the cost of financing

• Capital erosion• Reduction of distributable

earnings.

• Investment committee reviews and approves all investments with reference to internal valuations and forecasts

• Detailed due diligence process• Ensuring a prudent approach by seeking to acquire properties

that offer good value with consistent and reliable income streams.

Investment risk

• Loss of revenue

• Decreased distributable earnings.

• Ongoing monitoring of the tenancy schedules to ensure vacancies are managed in advance

• Asset managers continually look for prospective clients and actively tasked to meet their needs.

Vacancy levels

• Reputation tarnished and return to unitholders reduced

• Investments inappropriate due to conflicts of interests.

• Board of directors committed to integrity and honesty• Board approved policy statement in place to ensure that we

comply with all relevant public disclosure obligations and uphold the board’s communication and disclosure philosophy

• Investment committee comprises a majority of independent directors. Interested parties recuse themselves from decision making, to mitigate any potential conflicts of interest that may arise.

Reputational risk and conflicts of interest

• Erosion of rental income and increases in property holding costs

• Increases in tenant installation and letting commissions

• Potential of discounting the rental rates to below market rates.

• Ongoing monitoring of the lease expiry profiles• Concentration of management on tenant retention and

renewals• Dedicated team of external brokers focused on securing

long-term leases.

Lease expiries concentrated in a single period

• Unforeseen damage to properties could increase expenses and thus reduce the distributable earnings.

• The Manager maintains adequate insurance to cover key insurable risks of the Fund.Property damage

or destruction risk

Lack of performance from the property managers

Weak information management could result in reputational risk and loss of clients.

• Robust controls are in place over information systems and data management

• Group ERM focus on ensuring confidentiality, integrity and integrity of information.

Information security risk


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Risk management (continued)

Internal audit

The Group Internal Audit function is engaged to perform the internal assurance function for the Fund. A risk-based audit approach is followed and the audit committee approves annual audit plans. The head of internal audit reports back to the chairman of the audit committee and the financial director. Internal Audit conducts a formal risk assessment of the Fund each year, to formulate a comprehensive risk-based audit plan. The assessment and programme are validated by executive management and approved by the audit committee.

Internal Audit also liaises with the external auditors and other assurance providers to enhance efficiencies in terms of combined assurance. The annual plan is reviewed regularly to ensure it remains relevant and responsive, given changes in the operating environment.

External audit

Ernst & Young Inc., are the auditors of the Fund. The independence of the external auditor is reviewed by the audit committee each year. The audit committee meets with the external auditors to review the scope of the external audit, budgets, the extent of non-audit services rendered and all other audit matters. The external auditors are invited to attend audit committee meetings and have access to the chairman of the audit committee.

Compliance

The Fund is subject to external regulation and supervision by various supervisory authorities, including the South African Financial Intelligence Centre (FIC), the National

Consumer Commission, the Competition Commission and the Estate Agents Affairs Board (EAAB). The primary regulator is the JSE, given that the Fund is listed.

We strive to establish and maintain open and active dialogue with regulators and supervisors. Processes are in place to respond proactively and pragmatically to emerging issues and we report regularly to regulators and supervisory bodies. We participate actively in industry committees and discussion groups to maintain and enhance the regulatory environment in which we operate.

The compliance function ensures that the Fund continuously complies with existing and emerging regulation impacting on its operations. We embrace our responsibility to conduct business in accordance with the governing laws and regulations. The compliance function is supported by Group Compliance and the Fund compliance officer. Recent developments affecting compliance in the sector include:

Property Sector Charter

The Property Sector Charter (charter) came into effect on 1 June 2012. The charter is a framework and establishes the principles upon which BBBEE will be implemented in the sector. The charter establishes targets and qualitative undertakings in respect of each element of BBBEE and outlines processes for implementing the commitments contained in the charter, as well as mechanisms to monitor and report on progress.

The board recognises that the objectives of the charter are vital to the overall sustainability of the company. It is a stated intention, to develop strategies that address each of the key components of the Charter. The social and ethics committee is responsible for overseeing implementation

of the objectives of the charter. The Fund has mandated an independent BEE consultancy to assist with a formal analysis and certification of our BBBEE status.

A number of targets are set for the sector, ranging from 12 months to 10 years. As a key player in the sector, the Fund is required to comply fully with the charter in its own right and is in the process of assessing its present status in relation to the scorecard.

REIT legislation

The new proposed REIT legislation was introduced in the Taxation Laws Amendment Act, 2012. The new REIT dispensation seeks to regularise the differing regulation and tax treatments governing the existing property loan stock (PLS) and property unit trust (PUT) structures. The amendments also aim to bring our property investment structures in line with international norms, to facilitate overseas investment in the sector.

Changes to the JSE Listings Requirements make provision for the listing of existing property entities as REITs. The Fund made the required application to the JSE to be listed as a REIT on 31 May 2013 and was granted REIT status on 7 June 2013.

Consumer protection

Consumer protection regulation remains a key initiative into 2013. The Consumer Protection Act does not apply to juristic persons or corporate entities with a net asset value exceeding R2 000 000. The CPA therefore has minimal impact since most clients fall within this exclusion.

Competition Commission

All medium and large transactions that do not involve related parties, require notification to the Competition Commission. The Giuricich transaction was approved in August 2012 without any conditions.

Regulatory and compliance risk

• The Manager maintains adequate insurance to cover key insurable risks of the Fund

• The board members endeavour to comply with the highest professional standards of integrity and behaviour, which builds trust.

• The Investec group compliance and group legal function ensures that the Fund and the Manager continuously comply with existing and emerging regulations that impact on its operations

• Ensuring compliance with all applicable laws, regulations and codes of conduct and practice through the compliance function

• Monitoring areas of non-compliance • Monitoring all regulatory risks• Reviewing the effectiveness of the procedures and control framework• Reviewing the suitable structure and size of the compliance function.

Potential non-compliance with any regulatory requirements may result in reputational risk and possible penalties.



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3

Our stakeholders

Communication, public disclosure obligations and stakeholder relationsThe board recognises that effective communication is integral to building stakeholder value and is committed to providing meaningful, transparent, timely and accurate financial and non-financial information to primary stakeholders. The aim is to enable stakeholders to make meaningful assessments and informed investment decisions about the Fund.

The key stakeholders in the company include:

Linked unitholders, government, regulatory bodies, clients, suppliers, rating agencies, the media, communities and industry equity and debt analysts.

Goal Processes to ensure compliance with public disclosure

• Significant announcements are released directly to the market primarily via the services offered by the JSE. Documents are also published on our website

• Maintenance of a comprehensive investor relations component to the Fund’s website

• Executive management meet with the key linked unitholders at least twice a year, after the release of interim and year-end results

• Linked unitholders are encouraged to attend the

annual general meeting and to raise issues and participate in discussions

• The chairpersons of the audit and risk, investment, nominations and social and ethics committees, as well as the LID, attend the annual general meeting to respond to relevant questions

• All valid proxy appointments are recorded and counted and, at general meetings, a schedule of the proxy votes cast is available to all linked unitholders

• Separate resolutions are posed on each substantially separate issue and resolutions are not bundled together inappropriately

• The chairperson and the non-executive directors are committed to communicating with linked unitholder representative bodies, to help develop a balanced understanding of their issues and concerns.

To comply with the disclosure obligations contained in the applicable JSE Listings Requirements


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Sustainability report

Sustainable business practicesOur sustainability goals reflect our culture of continuous advancement and reaffirm our belief that sustainability in its broadest sense is about managing and positioning the business for the long term. IPF’s sustainability philosophy is based on the recognition that we are driven by our commitment to our culture and values.

Our approach to sustainability reflects our acute awareness of the need for longevity and an ingrained understanding of the practices that underpin sustainability. This approach is documented throughout the integrated report. The Fund has decided to report on a basis that integrates both financial and non-financial information in line with King III’s recommendations. Thus this integrated annual report to stakeholders reflects how economic, social and environmental issues have impacted on our business strategy and in turn, how these are considered when making business decisions.

Sustainability is a key strategic issue and is about:

• Managing and positioning the Fund for the long term

• Building a sustainable business model that allows us to make a valuable contribution to society, to macro-economic stability and to our environment.

Environmental sustainabilityInvestec Property Fund Limited acknowledges that environmental responsibility is an integral part of its future success. As such, we have begun a sustainability project not to only better understand and reduce the impact of our properties on the environment, but also selectively introducing technologies that will ensure more efficient use of utilities thereby benefiting our tenants.

A benchmarking exercise was conducted on our entire portfolio to establish the baseline thereof for each individual building. From the results, a sample of buildings that are not performing optimally has been identified and these will, as part of a pilot project, be further analysed to identify opportunities for new initiatives and technologies. This pilot project may include initiatives and technologies such as, energy saving devices, water harvesting, possible use of solar power and recycling. The viability and appropriateness of such initiatives and technologies will be tested over the medium term and the successful alternatives will be rolled out to the entire portfolio over the medium term.

Of critical importance is ensuring that whilst our environmental responsibilities are discharged, we must invest in projects that will be viable; as such, the Fund is doing an analysis to identify those areas that will benefit most, in the short to medium term, from investment in new technologies.

The short-term focus, during the pilot project, will be on initiatives at a relatively low cost producing immediate return, the ‘low hanging fruit’. In line with the medium to long term, relatively higher cost technologies will be investigated with an aim to introduce them and produce higher returns.

Procurement reportWe recognise the potential for our procurement and supply chain practices to be agents for change in respect of the different aspects of sustainability. Thus we have implemented a policy of seeking out suppliers who demonstrate sound sustainability practices, including favourable BEE ratings. In instances of open tender, where delivery and price are similar, we utilise the services of BEE vendors. This policy is implemented through the Manager of the Fund.

Annual financialstatements

4


Annual financial statem

ents

4

The directors are responsible for the preparation and fair presentation of the annual financial statements of Investec Property Fund Limited.

These financials comprise:

• Statement of financial position at 31 March 2013

• Statement of comprehensive income for the year ended 31 March 2013

• Statement of changes in equity for the year ended 31 March 2013

• Statement of cash flows for the year ended 31 March 2013

• Notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes

• Directors’ report.

in accordance with International Financial Reporting Standards and the requirements of the Companies Act, as amended.

The directors are also responsible for such internal controls as they determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate

Directors’ responsibility statement

Certificate of company secretaryIn terms of section 88 (2) (e) of the Companies Act No 71 of 2008, as amended (the Act), we hereby certify that the company has filed the required returns and notices in terms of the Act for the financial year ended 31 March 2013 and that, to the best of our knowledge and belief, all such returns and notices are true, correct and up to date.

Benita Coetsee Company secretary Investec Bank Limited

28 June 2013 Sandton

accounting records and an effective system of risk management.

The directors have made an assessment of the ability of the company to continue as a going concern and have no reason to believe that the business will not be a going concern in the year ahead.

The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the applicable financial reporting framework.

Approval of the company’s annual financial statementsThe annual financial statements of Investec Property Fund Limited, as identified in the first paragraph, were approved by the board of directors on 28 June 2013 and are signed on their behalf by:

Sam Hackner Samuel R Leon Chairman Chief executive officer


signed on their behalf by:

Sam Hackner



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Independent auditor’s report to the members of Investec Property Fund Limited

We have audited the financial statements of Investec Property Fund Limited set out on pages 40 to 67, which comprise the statement of financial position as at 31 March 2013, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards and the requirements of the South African Companies Act, No 71 of 2008 (the Companies Act), and for such internal controls as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of Investec Property Fund Limited at 31 March 2013, its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Other reports required by the Companies Act

As part of our audit of the financial statements for the year ended 31 March 2013, we have read the directors’ report, the audit committee’s report and the company secretary’s certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

Ernst & Young Inc.Director – Rosanne de LangeRegistered AuditorChartered Accountant (SA)

Wanderers Office Park 52 Corlett Drive Illovo

28 June 2013 Johannesburg



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Report of the audit and risk committee

The audit and risk committee of the Fund has pleasure in submitting this report to linked unitholders as required by the Companies Act, No 71 of 2008 (the Companies Act) and as recommended by the King III Code of Governance Principles for South Africa (the King III Code).

The activities of the audit and risk committee (the committee), which comprises three independent non-executive directors, are determined by its terms of reference and mandate as set out on page 27.

The committee is satisfied that it has considered and discharged its responsibilities in terms of its mandate and terms of reference, the King III Code and the Companies Act.

The committee carried out its duties by, inter alia, reviewing the following:

• Internal audit reports

• Financial management reports

• Information technology reports pertaining to financial reporting

• External audit reports

• Management’s enterprise risk assessment.

The abovementioned information, together with interaction with the external and internal auditors, management and other invitees attending meetings in an ex officio capacity, enabled the committee to conclude that the risk management process and systems of internal financial control have been designed and were operating effectively during the year.

The committee is satisfied:

• Its members have the requisite financial skills and experience to contribute to its deliberations

• With the independence and effectiveness of the external auditor, including the provision of non-audit services and compliance with the

company policy in this regard. Accordingly the committee nominates Ernst & Young Inc. as independent auditors to continue in office until the conclusion of the 2014 annual general meeting

• The company has complied with the majority of the principles of King III Code and the JSE Listings Requirements

• It considered and approved the audit fee payable to the external auditors in respect of the audit for the year ended 31 March 2013 as well as their terms of engagement and scope of the audit

• That the appointment of the external auditor and IFRS adviser are in compliance with the Companies Act, the Auditing Professions Act and the JSE Listings Requirements

• With the effectiveness of the internal audit function and that the system of internal financial control in all key material aspects is effective and provides reasonable assurance that the financial records may be relied upon for the preparation of the annual financial statements

• With the expertise and experience of the chief financial officer and the overall adequacy and appropriateness of the finance function.

The committee, having fulfilled the oversight role regarding the reporting process and the integrated report, recommends the integrated report and the annual financial statements at and for the year ended 31 March 2013 for approval by the board of directors.

Graham Rosenthal ChairmanAudit and risk committee




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Directors’ report

We are a variable loan stock property company that invests in investment property where effectively all rental income, less operating costs and interest on debt, is distributed to linked unitholders semi–annually.

We listed on the JSE on 14 April 2011 initially with an investment property portfolio of 29 properties. We have concluded 23 acquisitions since listing with effective dates or transfer dates prior to year end and in addition have disposed of two properties which brings our current investment property portfolio to 50 properties in South Africa with a total gross lettable area (GLA) of 568 151m² valued at R4.2 billion.

Authorised and issued share and debenture capitalThe authorised share capital of the Fund is R10 000 000 divided into 1 000 000 000 ordinary shares of one cent each. Each ordinary share is linked to one variable rate, unsecured, subordinated debenture of 999 cents.

The company’s ordinary shares and debentures trade as linked units on the JSE. In terms of the debenture trust deed, the interest payable on the debenture component of the linked unit is always at a minimum 999 times greater than the dividend payable per ordinary share.

During the previous year ended 31 March 2012, the company issued a total of 170 000 000 new linked units to Investec Limited (Investec) immediately prior to the listing. In terms of a private placing Investec placed 84 999 900 units in the market as part of the listing of the Fund.

In the current year ended 31 March 2013 the company issued a total of 147 220 000 new linked units by way of a rights offer and two vendor placements as part consideration for the acquisition of properties. Therefore, at 31 March 2013 there are 317 220 000 linked units in issue. This, however differs to the number of units that are listed by 17 000 000 units relating to the vendor placement for the acquisition of The Firs. These units have been issued but not yet listed.

Financial resultsThe results of the Fund are set out in the financial statements and accompanying notes for the year ended 31 March 2013.

DistributionsAn interim dividend number 3 of 0.034 cents per share (after applying the dividend withholding tax of 15% would provide a net dividend of 0.0289 cents per share) and debenture interest payment number 3 of 46.800 cents totalling 46.834 cents per linked unit was declared for the six months ended 30 September 2012. The distribution was paid on 10 December 2012.

Linked unitholders were given notice of a final dividend declaration number 4 of 0.0358 cents per share (after applying the dividend withholding tax of 15% would provide a net dividend of 0.03043 cents per share) and debenture interest payment number 4 of 53.1257 cents totalling 53.1615 cents per linked unit for the six months ended 31 March 2013. The final distribution was paid on Tuesday, 18 June 2013.

Directors and secretary Details of the directors and

company secretary can be found on pages 22 to 27 of these annual financial statements.

Michael P Crawford, Moses M Ngoasheng and Constance M Mashaba retire by rotation at the forthcoming annual general meeting in terms of article 22 of the company’s Memorandum of Incorporation and offer themselves for re-election.

Luigi Giuricich has been appointed as a non-executive director effective 1 December 2012. Luigi has been appointed to the investment committee.

Directors’ interests in linked units

The directors’ interests in linked units are set out on page 70.

Directors’ remunerationExecutive directors who are employed by the Manager will not be remunerated directly by the Fund for their services as directors, as the Fund pays the asset management fee to the Manager. The remuneration paid to the executive directors for their services as directors of the Fund is paid by the Manager.

The remuneration paid by the Manager to the executive directors for the current financial year for services on behalf of the Fund and who act as the prescribed officers of the Fund, is as follows:

For the year ended 31 MarchR Salary

Fees for other services

Providentpension

fund andmedical aid

contributions Bonuses Total

Director

Sam Hackner 1 701 000 – – – 1 701 000

Samuel R Leon 2 187 000 – – – 2 187 000

David AJ Donald 972 000 – – – 972 000

Total 4 860 000 – – – 4 860 000



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The remuneration paid by the Fund to the non-executive directors for the current year is as follows:

For the year ended 31 MarchR

Directors’ fees

Fees for other

services

Providentpension

fund andmedical aid

contributions Bonuses Total

Director

Michael P Crawford 225 000 – – – 225 000

Constance M Mashaba 160 000 – – – 160 000

Moses M Ngoasheng 165 000 – – – 165 000

Graham R Rosenthal 180 000 – – – 180 000

Suliman Mahomed 130 000 – – – 130 000

Luigi Giuricich 25 000 – – – 25 000

Total 885 000 – – – 885 000

Corporate governance

The Fund’s corporate governance board statement and governance framework are set out on pages 22 to 27.


The audit and risk committee comprising independent non-executive directors meets regularly with the senior management of the Manager, the External Auditors, Investec Operational Risk, Investec Internal Audit, Investec Compliance and Investec Finance, to consider the nature and scope of the audit reviews and the effectiveness of our risk and control systems.

Further details on the role and responsibility of the audit and risk committee are set out on page 27.

Auditors

Ernst & Young Inc. have indicated their willingness to continue in office as auditors of Investec Property Fund Limited. A resolution to re-appoint them as auditors will be proposed at the annual general meeting scheduled to take place on Friday, 16 August 2013.

Contracts

The Fund does not have any contracts with directors.

Interests in subsidiaries

The Fund does not have any subsidiaries.

Major linked unitholders

The largest linked unitholders of the Fund are set out on page 69.

Special resolutions

At the annual general meeting held on 3 August 2012, special resolutions were passed in terms of which:

• A renewable authority was granted to the company to acquire its own linked units in terms of the provisions of the Companies Act, No 71 of 2008

• A renewable authority was granted to the company to approve directors’ remuneration in order to comply with the provisions of section 66(11)(h) and 66(9) of the Companies Act, No 71 of 2008

• The existing Memorandum of Incorporation of the company was abrogated in its entirety and replaced with a new Memorandum of Incorporation

• A renewable authority was granted to the company to provide financial assistance to subsidiaries and other related entities in order to comply with the provisions of section 44 and 45 of the Companies Act, No 71 of 2008.

At a general meeting of the company held on 27 September 2012, a special resolution was passed in terms of which:

• Authority was granted to the directors to issue linked units to a person related to the company in terms of section 41(1) of the Companies Act, No 71 of 2008.

Accounting policies and disclosureAccounting policies are set having regard to commercial practice and comply with applicable South African law and International Financial Reporting Standards.

These policies are set out on pages 48 to 49.

Directors’ report (continued)



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Financial instruments Detailed information on the

Fund’s risk management process and policy can be found in the risk management report on page 28 to 31.

Information on the Fund’s use of derivatives and hedges can be found on pages 46 to 47 and in note 26.

Management and administrationWith effect from 1 April 2011, Investec Property (Pty) Ltd, a wholly owned subsidiary of Investec, has been undertaking, in terms of an asset management and property management agreement, the Fund’s asset management and property management activities. Investec Property (Pty) Ltd has in turn outsourced all of the property management to property management companies, namely Growthpoint, Finlays, Periscopic and Hermans & Romans.

The asset management fee paid by the Fund to the Manager for the current year amounted to R17.8 million.

Directors’ report (continued)

Environmental policiesWe are committed to pursuing sound environmental policies in all aspects of our business and we seek to encourage and promote good environmental practice with our clients and the communities in which we operate.

Capital commitmentsAt 31 March 2013 the Fund had entered into agreements to purchase properties to a value of R253.9 million.

Subsequent eventsSubsequent to year end the Fund was granted REIT status on 7 June 2013 and will be classified as a REIT for the full financial year beginning 1 April 2013.



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Statement of comprehensive income

For the year ended 31 March R’000 Notes 2013 2012

Revenue, excluding straight-line rental revenue adjustment 331 398 211 558

Straight-line rental revenue adjustment 43 790 30 507

Revenue 2 375 188 242 065

Property expenses 3 (59 669) (38 498)

Net property income 315 519 203 567

Other operating expenses 4 (20 875) (11 858)

Operating profit 294 644 191 709

Fair value adjustments 5 (82 856) (30 507)

Profit on sale of investment property 39 066 –

Finance costs 6 (39 184) (6 034)

Finance income 7 25 143 3 016

Profit before debenture interest and taxation 236 813 158 184

Debenture interest 9 (236 576) (158 026)

Profit before taxation 237 158

Taxation 8 (66) (49)

Profit after taxation attributable to equity holders 171 109

Total comprehensive income attributable to equity holders 171 109

Cents Cents

Basic and diluted earnings per linked unit 10 0.07 0.06

Distribution per linked unit 9 99.99 93.02



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Statement of financial position

As at 31 March R’000 Notes 2013 2012

Assets

Non-current assets 11 4 187 000 2 065 400

Investment property 4 115 125 2 034 893


Current assets 452 343 16 634

Trade and other receivables 12 53 613 12 064

Taxation receivable – 3

Cash and cash equivalents 13 398 730 4 567

Total assets 4 639 343 2 082 034

Equity and liabilities

Shareholders’ interest 14 3 172 1 700

Debentures 15 3 940 004 1 836 379

Total unitholders’ interest 3 943 176 1 838 079

Non-current liabilities 16 455 294 1 169

Long-term borrowings 450 000 –

Other non-current financial liabilities 5 294 1 169


Trade and other payables 17 76 625 28 097

Current portion of other non-current liabilities 16 – 130 900

Taxation payable 41 –

Linked unitholders for interest and dividends 164 207 83 789

Total equity and liabilities 4 639 343 2 082 034

Linked units in issue 317 220 000 170 000 000



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Statement of changes in equity

Statement of cash flows

For the year ended 31 March R’000

Ordinary share

capital Retainedearnings

Totalshareholder’s

interest Total

equity

Balance at 1 April 2011 – – – –

Issue of ordinary shares 1 700 – 1 700 1 700

Total comprehensive income attributable to equity holders – 109 109 109

Dividends payable to ordinary shareholders – (109) (109) (109)

Balance at 31 March 2012 1 700 – 1 700 1 700

Issue of ordinary shares 1 472 – 1 472 1 472

Total comprehensive income attributable to equity holders – 171 171 171

Dividends payable to ordinary shareholders – (171) (171) (171)

Balance at 31 March 2013 3 172 – 3 172 3 172

For the year ended 31 March R’000 Notes 2013 2012

Cash flows from operating activities

Cash generated from operations 19 236 976 173 486

Finance income received 20 712 3 016

Finance costs paid (29 887) (2 285)

Taxation paid (28) (52)

Distribution paid to unitholders (163 404) (74 347)

Net cash inflow from operating activities 64 369 99 819

Cash flows from investing activities

Investment property acquired (1 698 266) (1 926 152)

Proceeds on sale of investment property 240 579 –

Capital expenditure (27 977) –

Net cash outflow from investing activities (1 485 664) (1 926 152)

Cash flows from financing activities

Current loans raised – 225 900

Corporate bonds issued 450 000 –

Repayment of current loans (130 900) (95 000)

Proceeds from issue of shares 1 132 1 700

Proceeds from issue of debentures 1 495 226 1 698 300

Net cash inflow from financing activities 1 815 458 1 830 900

Net increase in cash and cash equivalents 394 163 4 567

Cash and cash equivalents at beginning of year 4 567 –

Cash and cash equivalents at end of year 13 398 730 4 567



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Segmental analysis

For the year ended 31 March R’000 Office Industrial Retail Total

Statement of comprehensive income 2013

Revenue, excluding straight-line rental revenue adjustment 139 648 115 047 76 703 331 398

Straight-line rental revenue adjustment 24 378 11 717 7 695 43 790

Property expenses (23 045) (18 682) (17 942) (59 669)

Segment results 140 981 108 082 66 456 315 519

Net investment property revaluation 25 779 68 962 23 500 118 241

Total segment results 166 760 177 044 89 956 433 760

Other operating expenses (20 875)

Debenture fair value adjustment (196 972)

Fair value adjustment on interest rate swap derivatives (4 125)

Profit on sale of investment property 39 066

Finance costs (39 184)

Finance income 25 143

Profit before debenture interest and taxation 236 813

Statement of financial position extracts at 31 March 2013

Investment property balance 1 April 2012 1 182 600 779 800 103 000 2 065 400

Acquisitions 445 304 120 639 1 556 473 2 122 416

Disposals (200 000) – – (200 000)

Developments and capital expenditure 21 139 14 432 1 582 37 153

Fair value adjustments 50 157 80 679 31 195 162 031

Investment property at 31 March 1 499 200 995 550 1 692 250 4 187 000

Other current assets not managed on a segmental basis 452 343

Total assets as at 31 March 2013 4 639 343


Revenue, excluding straight-line rental revenue adjustment 113 653 80 122 17 783 211 558

Straight-line rental revenue adjustment 19 616 8 510 2 381 30 507

Property expenses (16 748) (20 779) (971) (38 498)

Segment results 116 521 67 853 19 193 203 567

Net investment property revaluation 34 738 65 084 8 919 108 741

Total segment results 151 259 132 937 28 112 312 308

Other operating expenses (11 858)

Debenture fair value adjustment (138 079)

Fair value adjustment on interest rate swap derivatives (1 169)

Profit on sale of investment property –

Finance costs (6 034)

Finance income 3 016

Profit before debenture interest and taxation 158 184


Investment property balance 1 April 2011 – – – –

Acquisitions 1 127 500 700 700 94 200 1 922 400

Developments and capital expenditure 746 3 006 – 3 752

Fair value adjustments 54 354 76 094 8 800 139 248

Investment property at 31 March 2012 1 182 600 779 800 103 000 2 065 400





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For the year ended 31 March R’000 Gauteng

Western Cape

KwaZulu-Natal

EasternCape

NorthWest

FreeState Mpumalanga Limpopo Total


Revenue, excluding straight-line rental revenue adjustment 220 759 47 019 29 093 6 293 1 594 2 290 8 195 16 155 331 398

Straight-line rental revenue adjustment 24 103 10 572 5 667 556 92 491 1 188 1 121 43 790

Property expenses (49 414) (3 338) (2 098) (328) (39) (245) (942) (3 265) (59 669)

Segment results 195 448 54 253 32 662 6 521 1 647 2 536 8 441 14 011 315 519

Total fair value adjustment on investment property 105 607 23 383 2 000 9 200 2 500 (516) 10 515 9 342 162 031

Statement of financial position extracts a 31 March 2013

Investment property balance 1 April 2012 1 216 900 460 500 317 000 56 500 14 500 – – – 2 065 400

Acquisitions 1 380 580 99 686 – – – 98 516 283 185 260 449 2 122 416

Disposals (125 000) – (75 000) – – – – – (200 000)

Developments and capital expenditure 35 013 1 931 – – – – – 209 37 153

Fair value adjustments 105 607 23 383 2 000 9 200 2 500 (516) 10 515 9 342 162 031

Investment property at 31 March 2013 2 613 100 585 500 244 000 65 700 17 000 98 000 293 700 270 000 4 187 000




Western Cape

KwaZulu-Natal

Eastern Cape

North West Total


Revenue, excluding straight-line rental revenue adjustment 131 470 40 769 32 015 5 786 1 518 211 558

Straight-line rental revenue adjustment 18 338 3 679 7 462 1 010 18 30 507

Property expenses (31 772) (2 901) (3 463) (287) (75) (38 498)

Segment results 118 036 41 547 36 014 6 509 1 461 203 567

Total fair value adjustment on total investment property 108 948 16 400 14 600 – (700) 139 248


Investment property balance 1 April 2011 – – – – – –

Acquisitions 1 104 400 443 900 302 400 56 500 15 200 1 922 400

Developments and capital expenditure 3 552 200 – – – 3 752

Fair value adjustments 108 948 16 400 14 600 – (700) 139 248

Investment property at 31 March 2012 1 216 900 460 500 317 000 56 500 14 500 2 065 400



Segmental analysis (continued)



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Western Cape

KwaZulu-Natal

EasternCape

NorthWest

FreeState Mpumalanga Limpopo Total


Revenue, excluding straight-line rental revenue adjustment 220 759 47 019 29 093 6 293 1 594 2 290 8 195 16 155 331 398

Straight-line rental revenue adjustment 24 103 10 572 5 667 556 92 491 1 188 1 121 43 790

Property expenses (49 414) (3 338) (2 098) (328) (39) (245) (942) (3 265) (59 669)

Segment results 195 448 54 253 32 662 6 521 1 647 2 536 8 441 14 011 315 519

Total fair value adjustment on investment property 105 607 23 383 2 000 9 200 2 500 (516) 10 515 9 342 162 031

Statement of financial position extracts a 31 March 2013

Investment property balance 1 April 2012 1 216 900 460 500 317 000 56 500 14 500 – – – 2 065 400

Acquisitions 1 380 580 99 686 – – – 98 516 283 185 260 449 2 122 416

Disposals (125 000) – (75 000) – – – – – (200 000)

Developments and capital expenditure 35 013 1 931 – – – – – 209 37 153

Fair value adjustments 105 607 23 383 2 000 9 200 2 500 (516) 10 515 9 342 162 031

Investment property at 31 March 2013 2 613 100 585 500 244 000 65 700 17 000 98 000 293 700 270 000 4 187 000




Western Cape

KwaZulu-Natal

Eastern Cape

North West Total


Revenue, excluding straight-line rental revenue adjustment 131 470 40 769 32 015 5 786 1 518 211 558

Straight-line rental revenue adjustment 18 338 3 679 7 462 1 010 18 30 507

Property expenses (31 772) (2 901) (3 463) (287) (75) (38 498)

Segment results 118 036 41 547 36 014 6 509 1 461 203 567

Total fair value adjustment on total investment property 108 948 16 400 14 600 – (700) 139 248


Investment property balance 1 April 2011 – – – – – –

Acquisitions 1 104 400 443 900 302 400 56 500 15 200 1 922 400

Developments and capital expenditure 3 552 200 – – – 3 752

Fair value adjustments 108 948 16 400 14 600 – (700) 139 248

Investment property at 31 March 2012 1 216 900 460 500 317 000 56 500 14 500 2 065 400





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Notes to the annual financial statements

1. Accounting policies1.1 Basis of preparation

The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

The financial statements are prepared in accordance with the requirements of the Financial Reporting Standards Council (FRSC), in addition to the International Financial Reporting Standards (IFRS) and the Companies Act.

The financial statements have been prepared on a historical cost basis, unless otherwise indicated.

Fair value adjustments, where applicable, do not affect the calculation of distributable earnings per unit to the extent that adjustments are made to the carrying values of assets and liabilities.

The financial statements are prepared on the going concern basis and the accounting policies set out below have been applied consistently by the company.

The preparation of financial statements in conformity with IFRS requires the board to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or the

period of the revision and future periods if the revision affects both current and future periods.

1.2 Segmental reporting

Determination and presentation of operating segments

The company has the following operating segments:

• Retail properties

• Office properties

• Industrial properties.

The above segments are derived from the way the business of the company is structured and managed. The Fund manages its business in the retail, office and industrial property sectors where resources are specifically allocated to each sector in achieving the Fund’s stated objectives.

Segment results include revenue and expenses directly attributable to a segment and the relevant portion of enterprise revenue and expenses that can be allocated on a reasonable basis to a segment. Segment assets and liabilities comprise those assets and liabilities that are directly attributable to the segment on a reasonable basis.

Segment capital expenditure is the total cost incurred during the period on investment property in each segment.

1.3 Revenue recognitionRevenue consists of rental income measured at fair value.

Revenue is recognised when it can be reliably measureable and it is probable that the economic benefits will flow to the company. The following specific recognition criteria must also be met before revenue is recognised:

Revenue from the letting of investment property in terms of rental agreements comprises gross rental income and recoveries of fixed operating costs, net of value added tax. Rental income is recognised in profit or loss on a straight-line basis over the term of the rental agreement. Recoveries of costs from lessees, where the company merely acts as an agent and makes

payment of these costs on behalf of lessees, are offset against the relevant costs.

1.4 Interest incomeInterest earned on cash invested with financial institutions is recognised in the statement of comprehensive income on an accrual basis using the effective interest method.

1.5 Financial instrumentsFinancial instruments are initially recognised at their fair value plus, for financial assets or financial liabilities not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial assets or financial liabilities. All other transaction costs are charged to profit or loss in the statement of comprehensive income immediately.

Any gains or losses on these instruments arising from fair value adjustments, where appropriate, do not affect distributable earnings. The company recognises financial instruments on the date it commits to purchase or sell such instruments. From this date, any gains and losses in the fair value of the financial assets and financial liabilities are charged to profit or loss in the statement of comprehensive income.

Certain financial instruments are designated upon initial recognition as at fair value through profit or loss as this eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognising gains or losses on them on different bases.

The company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the company is recognised as a separate asset or liability. The



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company derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

1.5.1 Trade and other receivables

Trade and other receivables are initially recognised and subsequently measured at cost, which approximates fair value as the effect of discounting is immaterial on these instruments. Any gains or losses on trade and other receivables are charged to profit or loss in the statement of comprehensive income. An estimate is made for credit losses based on a review of all outstanding amounts at the year end. Bad debts are written off as an expense in the statement of comprehensive income during the year in which they are identified.

1.5.2 Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in fair value. Cash and cash equivalents are measured at amortised cost.

1.5.3 Linked units

Compound financial instruments known as linked units are issued by the company to its unitholders. These compound instruments contain both an equity component (ordinary share) and a liability component (debenture).

Ordinary shares

The equity component of the linked units confers to the holder a residual interest in the company and the company has no obligation to deliver either cash or another financial asset to the holder. Equity instruments are initially measured net of directly attributable issue costs and are never subsequently re-measured.

Debentures

The liability component which contains an obligation to deliver cash to the holder comprises a debenture. Debentures are designated as held at fair value through profit or loss financial

liabilities. Debentures are measured initially at fair value, which is the issue value, and are subsequently re-measured to fair value. Fair value is derived from the underlying activities of the business and comprises the net asset value attributable to debenture holders after adjusting all other assets and liabilities to fair value.

The obligation to deliver cash arises from the company’s stated policy to distribute substantially all trading profits to linked unitholders. This distribution comprises interest on the debentures which in terms of the debenture trust deed is at a minimum 999 times the dividends payable on the ordinary shares.

1.5.4 Trade and other payables

Trade and other payables are initially recognised and subsequently measured at amortised cost, which approximates fair value as the effect of discounting is immaterial on these instruments. Any gains or losses on trade and other payables are charged to profit or loss in the statement of comprehensive income.

1.5.5 Derivative financial instruments

The company utilises derivative financial instruments to hedge its exposure to interest rate risk arising from its financing activities. In accordance with its treasury policy, the company does not hold or issue derivative financial instruments for trading purposes. However, as the hedge relationship is not designated as a hedge for accounting purposes, the derivatives are accounted for as trading instruments.

All derivative instruments of the company are recorded in the statement of financial position at fair value. Positive and negative fair values are reported as assets and liabilities respectively and are offset when there is both an intention to settle net and a legal right to offset exists.

Derivative financial instruments are initially recognised and subsequently measured at fair value with any gains or losses being charged to profit or loss in the statement of comprehensive income.

1.5.6 Long-term borrowings

Long-term borrowings are initially recognised and subsequently measured at amortised cost for long-term borrowings with a fixed interest rate. Long-term borrowings with a variable interest rate are designated at fair value, as this eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise if this was subsequently measured at amortised cost.

1.5.7 Other financial liabilities

Non-derivative financial liabilities, other than debentures and long-term borrowings, are measured initially and subsequently at fair value, with gains or losses being recognised in profit or loss in the statement of comprehensive income. The fair value is estimated by discounting the future cash payments using the market rate applicable at the reporting date.

1.5.8 Offset

Financial assets and liabilities are offset when there is both an intention to settle on a net basis (or simultaneously) and a legal right to offset exists.

1.5.9 Impairment

At each statement of financial position date the company reviews the carrying values of financial assets for an indication of impairment. The carrying value is compared to the estimated recoverable amount, with any excess of the carrying value over the recoverable amount impaired and recognised as an impairment.

1.6 Investment propertyProperties held by the company which are held for capital appreciation or rental income are classified as investment properties. Investment properties are carried in the statement of financial position at fair value, with fair value gains and losses recognised in the statement of comprehensive income.

Notes to the annual financial statements (continued)



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1. Accounting policies (continued)

1.6 Investment property (continued)

Investment property consists of land and buildings, installed equipment and undeveloped land held to earn rental income and capital appreciation over the long term. Properties are measured initially at cost at acquisition and subsequent additions that will result in future economic benefits and whose cost can be measured reliably, are capitalised.

Should any properties no longer meet the company’s investment criteria and are sold, any profits or losses will be of a capital nature and will be taxed at capital gains rates for all gains above the determined base cost.

Investment property under construction is measured at fair value. Direct costs relating to major capital projects are capitalised until the properties are brought into commercial operation.

Subsequent to initial recognition, investment properties are measured at their fair value. Investment property is maintained, upgraded and refurbished where necessary, in order to preserve or improve the capital value as far as it is possible to do so. Maintenance and repairs which neither materially add to the value of the properties nor prolong their useful lives are charged against profit or loss in the statement of comprehensive income.

Independent valuations are obtained on a rotational basis, ensuring that every property is valued at least once every three years by an external independent valuer.

The directors value the remaining properties that have not been independently valued annually on an open market basis. Directors’ valuations are prepared by considering the aggregate of the net annual rental receivable from the properties and where relevant, associated costs, using the discounted cash flow method and the capitalisation method. The directors are confident that their

valuations accurately represent the fair value.

Gains or losses on subsequent measurement or disposals of investment properties are recognised in profit or loss in the statement of comprehensive income. Deferred taxation on fair value gains/losses is provided for using the capital gains taxation rate in line with the rebuttable presumption contained in IAS 12. Such gains or losses are excluded from the calculation and determination of distributable earnings.

1.7 Impairment

At each statement of financial position date the company reviews the carrying value of non-financial assets, other than investment property and deferred tax assets, for indication of impairment. The recoverable amount, being the higher of fair value less cost to sell and value in use, is determined for any assets for which an indication of impairment is identified. If the recoverable amount of an asset is less than its carrying value, the carrying value of the asset is reduced to its recoverable value.

Impairment losses are recognised as an expense in the statement of comprehensive income in the period in which they are identified. Reversal of impairment losses is recognised in income in the period in which the reversal is identified, to the extent that the asset is not revalued to a carrying value that would have been calculated without impairment.

1.8 Rental agreements

A finance lease is a lease that transfers substantially all of the risks and rewards incidental to ownership of an asset. An operating lease is a lease other than a financial lease.

The company is party to numerous rental agreements in the capacity as lessor of the investment properties. All rental agreements are operating leases.

Where classified as operating leases, rentals payable/receivable are charged/credited in the statement of comprehensive income

on a straight-line basis over the lease term. Contingent rentals (if any) are accrued to the statement of comprehensive income when incurred. This does not affect distributable earnings. Turnover-based rental is recognised when it is due in terms of the relevant rental agreement.

1.9 Property letting commissions and tenant installationsWhen considered material, letting commissions and tenant installations are written off over the period of the lease to which they relate.

1.10 Provisions, contingent liabilities and contingent assetsProvisions are liabilities of uncertain timing or amount, and are recognised as soon as the company has a legal or constructive obligation which will lead to an outflow of economic resources to settle the obligation as a result of a past event. Contingent assets and contingent liabilities are not recognised.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

1.11 Taxation and deferred taxCurrent tax payable is provided on taxable profits at rates that are enacted or substantively enacted and applicable to the relevant period.

As of 1 April 2012, secondary taxation on companies (STC) was replaced with a dividend withholding taxation and thus no STC has been incurred in the current year.

Deferred taxation is provided using the liability method on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax assets or liabilities are measured using the tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax assets are recognised to the extent that it is probable



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that future taxable profit will be available against which the deferred tax asset can be utilised. Items recognised directly in the statement of comprehensive income are net of related current and deferred taxation.

1.12 Related parties

Related parties include any unitholder who is able to exert a significant influence on the operating policies of the company. Directors, their close family members and any employee who is able to exert a significant influence on the operating policies of the company are also considered to be related parties.

Any party appointed as the asset manager and property asset manager of the company is also considered to be a related party.

1.13 Share capital

1.13.1 Ordinary share capital

Ordinary shares are classified as equity.

1.13.2 Dividends

Dividends are recognised when the obligation to make payment arises.

1.14 Key management assumptions

In preparation of the financial statements the Fund makes estimations and applies judgement that could affect the reported amount of assets and liabilities within the next financial year. The key area in which judgement is applied lies with the valuation of investment properties. The valuation is performed by capitalising the budgeted net income of a property at the market-related yield applicable at the time assuming a constant yield.

1.15 Standards and interpretations applicable to the company not yet effective

The following standards, which may have an impact on the Fund in the future, have been issued but are not yet effective.

IFRS 9 – Financial Instruments-Classification and Measurement

This, the first phase of the IASB’s project to replace IAS 39 in its entirety, addresses the classification and measurement of financial instruments.

Amendments published in October 2010 incorporate the existing derecognition principles of IAS 39 directly into IFRS 9.

Financial assets

All financial assets are initially measured at fair value.

Subsequent measurement of debt instruments is only at amortised costs if the instrument meets the requirements of the ‘business model test’ and the ‘characteristics of financial asset test’.

All other debt instruments are subsequently measured at fair value.

All equity instruments are subsequently measured at fair value either through other comprehensive income (OCI) or profit and loss.

Embedded derivatives contained in non-derivative host contracts are not separately recognised. Unless the hybrid contract qualifies for amortised cost accounting, the entire instrument is subsequently recognised at fair value through profit and loss.

Financial liabilities

For liabilities measured at fair value through profit and loss, the change in the fair value of the liability attributable to change in credit risk is presented in OCI. The remainder of the change in fair value is presented in profit and loss.

All other classification and measurement requirements in IAS 39 have been carried forward into IFRS 9.

Effective for years beginning on or after January 2015.

Status of financial instruments project

There are a number of matters relating to IFRS 9 which are still to be completed including:

• Impairment, where the IASB is pursuing a ‘three bucket’

credit impairment approach under which financial assets would initially be included in one of three buckets based on the credit quality of each asset upon origination. The guiding principle of the new approach is to reflect the general pattern of deterioration in credit quality based on expected rather than incurred losses

• General hedge accounting where the IASB is proposing a hedging model that is hoped to align the accounting for hedging activities with the risk management practices of an entity. In addition the IASB is pursuing simplifying certain aspects of hedge accounting

• Portfolio (macro) hedge accounting. Proposals are still being developed by the IASB in this area.

IFRS 13 – Fair value measurement

FRS 13 describes how to measure fair value where fair value is required or permitted to be used as a measurement basis under IFRS (with certain standards being excluded from the scope of IFRS 13).

Under IFRS 13 fair value is presumed to be an ‘exit price’.

New disclosures related to fair value measurements are also introduced.

The impact of this standard is currently under evaluation.

Effective for periods beginning on or after 1 January 2013.

IFRS 9 – Mandatory effective date and transition disclosures (amendments to IFRS 9)

Mandatory effective date for IFRS 9 is 1 January 2015.

The impact of these amendments is currently under evaluation.

IFRS 7 – Disclosures

Amendments to IFRS 7 regarding offsetting financial assets and liabilities.

The impact of this standard is currently under evaluation.

Effective for periods beginning on or after 1 January 2013.




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For the year ended 31 March R’000 2013 2012

2. RevenueContracted rental 299 523 184 740

Assessment rates recovered 15 225 8 832

Contracted operating cost recoveries 9 089 3 548

Other income 6 268 13 246

Turnover rental 1 293 1 192

Revenue, excluding straight-line rental revenue adjustment 331 398 211 558


375 188 242 065


3. Property expensesAssessment rates 22 361 12 279

Cleaning 2 822 450

Consulting fees 65 –

Electricity – net 1 452 (468)

Cost 35 955 15 736

Recovery (34 503) (16 204)

Impairment loss relating to tenants and related receivables 834 1 205

Insurance 1 352 1 613

Letting commissions 2 355 3 933

Other property expenses 4 802 3 894

Property management expenses 8 231 6 684

Repairs and maintenance 6 501 1 608

Security 7 430 4 256

Tenant installation costs 1 481 3 133

Water and municipal charges – net (17) (89)

Cost 6 989 4 129

Recovery (7 006) (4 218)

59 669 38 498



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4. Other operating expensesAdministration costs 135 87

Asset management fee 17 834 9 157

Auditors’ remuneration 700 657

Audit fee 700 657

Other fees – –

Total other fees 240 151

Less: Capitalised to investment properties – (151)

Less: Capitalised to debentures (240)

Directors’ fees 885 325

Legal fees 263 200

Other fund expenses 1 058 1 432

20 875 11 858


5. Fair value adjustmentsGross investment property fair value adjustment 162 031 139 248

Less: Straight-line rental revenue adjustment (43 790) (30 507)

Net investment property revaluation 118 241 108 742

Fair value adjustment – loss on interest rate swap derivatives (4 125) (1 169)

Fair value adjustment before debenture fair value adjustment 114 116 107 572

Debenture fair value adjustment (196 972) (138 079)

Total fair value adjustment (82 856) (30 507)

5.1 Debenture fair value adjustmentDebentures are adjusted to fair value which represents the net asset value attributable to debenture holders, excluding intangible assets

The adjustment consists of:

Fair value adjustment on other assets and liabilities (114 116) (107 572)

Straight-line revenue adjustments (43 790) (30 507)

Capital items (39 066) –

(196 972) (138 079)


6. Finance costsInterest on corporate bonds 36 718 –

Other interest 2 466 6 034

39 184 6 034




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7. Finance incomeInterest received from banks 20 712 3 016

Interest received from antecedent divesture of distribution* 4 431 –

25 143 3 016

* During the year, the Fund acquired the Giuricich portfolio for which 17 million units were issued to Giuricich at R12.29 as part of the overall consideration. These units only accrued the distribution from the date of transfer of the properties.


8. TaxationSouth African normal tax 66 49

Normal tax 66 44

Secondary tax on companies – 5

Deferred taxation charge 30 251 25 406

Deferred taxation credit (30 251) (25 406)

Tax rate reconciliation:

Standard rate of South African normal taxation 28% 28%

Secondary tax on companies – 3%

Deferred tax asset not recognised 11 003% 8 383%

Capital gains tax rate on investment property fair value gain (6 384%) (8 383%)

Allowances granted with no related accounting expense (2 947%) –

Capital gains tax differential on investment property sold (1 672%) –

Effective tax rate 28% 31%



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9. Distribution per linked unitNet property income 315 519 203 567

Less: straight-line rental revenue adjustment (43 790) (30 507)

Other operating expenses (20 875) (11 858)

Finance costs (39 184) (6 034)

Finance income 25 143 3 016

Taxation (excluding capital gains tax and deferred tax) (66) (49)

Distributable earnings 236 747 158 135

Debenture interest 236 576 158 026

Ordinary dividend 171 109

Reconciliation of distribution per linked unit

Interim distribution for the six months ended 30 September 79 618 74 347

Interest on debentures 79 561 74 298

Dividend 57 49

Units in issue at 30 September 170 000 000 170 000 000

Interim distribution per unit (cpu) 46.83 43.73

Final distribution for the six months ended 31 March

Distributable earnings 236 747 158 135

Rights offer antecedent interest 11 500 –

248 247 158 135

Less: Interim distribution (79 618) (74 347)

Final distribution for the six months ended 31 March 168 629 83 788

Interest on debentures 168 515 83 728

Dividend 114 60

Units in issue at 31 March 317 220 000 170 000 000

Final distribution per unit (cpu) 53.16 49.29

Distribution for the full year Cents Cents

Interim distribution for the six months ended 30 September 46.83 43.73

Final distribution for the six months ended 31 March 53.16 49.29

99.99 93.02

Comprising:

Interest on debentures 99.92 92.96

Dividend 0.07 0.06




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10. Earnings per shareReconciliation of basic earnings to headline earnings

Total comprehensive income attributable to equity holders 171 109

Less: Net fair value adjustment – investment property (96 168) (88 646)

Fair value adjustment excluding straight-lining (118 241) (108 741)

Applicable taxation 22 073 20 095

Headline loss attributable to shareholders (95 997) (88 537)

Add: Net fair value adjustment – debentures 141 820 112 346

Fair value adjustment 196 972 138 079

Applicable taxation (55 152) (25 733)

Add: Debenture interest paid 236 576 158 026

Headline earnings attributable to linked unitholders 282 399 181 835

Cents Cents

Basic earnings per share 0.07 0.06

Headline loss per share (40.60) (46.90)

Headline earnings per linked unit 119.44 96.32

Earnings per linked unit 100.13 83.76

Number ofshares

Number ofshares

Shares in issue at the end of the year 317 220 000 170 000 000

Weighted average number of shares in issue 236 430 502 188 787 926

During the current year the Fund closed a rights offer that resulted in the issue of 113.2 million new units for a consideration of R1.5 billion. The rights issue was at a clean price of R13.25, which was less than the market value of R14.6 immediately prior to the rights issue. The bonus element of the rights issue has been taking into account when calculating the weighted number of shares (WANOS) and WANOS in the prior year has been retrospectively adjusted in accordance with IAS 33. Thus the prior periods earnings per share, earnings per linked unit, headline loss per share and headline earnings per linked unit have been adjusted accordingly.



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11. Investment propertiesCost 3 889 721 1 926 152

Accumulated fair value adjustment 225 404 108 742

Investment properties as per statement of financial position 4 115 125 2 034 893


Carrying value 4 187 000 2 065 400

Movement in investment properties

Balance at beginning of year 2 065 400 –

Acquisitions 2 122 416 1 922 400

Disposals (200 000) –

Capital expenditure 37 153 3 752

Unrealised surplus on revaluation of investment properties 162 031 139 248


Fair value gain on investment properties 118 241 108 742

Carrying value at end of year 4 187 000 2 065 400

Property to the value of R948.3 million has been bonded as security for the DMTN programme currently drawn down to a value of R450 million. All of the investment properties, except for Woolworths House which is held under leasehold terminating in July 2047, are held under freehold interests and the register of deeds is available for inspection at the registered office.

The investment properties were valued at 31 March 2013 by MRB Gibbons of Mills Fitchet Magnus Penny (Proprietary) Limited (Nat Dip Prop Val, MIV (SA), Professional Valuer) who is registered in terms of section 19 of the Property Valuers Professional Act, No 47 of 2000. The Fund’s policy is to value investment properties at year end, with independent valuations performed on a rotational basis to ensure each property is valued at least every three years by an independent external valuer. The directors’ valuation methods include using the discounted cash flow model and the capitalisation model.


12. Trade and other receivablesRental debtors 3 740 3 415

Impairment of receivables (487) (1 205)

Prepaid expenses 621 998

Municipal deposits 1 701 1 277

Property manager debtor 15 092 120

Value added tax 2 309 –

Sundry debtors 14 889 2 239

Accrued recoveries 15 748 5 220

53 613 12 064

In calculating the impairment of receivables, consideration is given to all failed rental payments as well as outstanding amounts past due.




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13. Cash and cash equivalentsCash held in call accounts 398 730 4 567


14. Ordinary share capitalAuthorised

1 000 000 000 ordinary shares with a nominal value of 1 cent each 10 000 10 000

Issued

On listing – 170 000 000 ordinary shares 1 700 1 700

Rights issue – 113 220 000 ordinary shares 1 132 –

Vendor placements – 34 000 000 ordinary shares 340 –

In issue at year end 3 172 1 700

In terms of the Memorandum of Incorporation and the debenture trust deed, each share is linked to one debenture of 999 cents. This linkage means that each share may only be issued and traded together with the debenture with which it is linked, until such time that it is de-linked in accordance with the terms of the Memorandum of Incorporation and the debenture trust deed.

The unissued shares are under the control of the directors of the company subject to the provisions of the Companies Act 2008, as amended and the requirements of the JSE Limited.

During the current year, 17 million linked units issued as consideration for the acquisition of a property have not been listed on the JSE as the property has not been transferred.


15. Debentures317 220 000 (2012: 170 000 000) variable rate, unsecured, subordinated debentures

Fair value at beginning of year 1 836 379 –

Issued during the year 1 922 843 1 698 300

Fair value adjustment 196 972 138 079

Rights offer expenses (16 190) –

Fair value 3 940 004 1 836 379

Issue value 3 621 143 1 698 300

Fair value adjustment previous years 138 079 –

Fair value adjustment current year 196 972 138 079

Other adjustments (16 190) –

The rights of the debenture holders to repayment of capital are subordinated to the claims of all other secured and unsecured creditors. The interest payable on the debenture of each linked unit will be at least 999 times the dividend payable on each share.

Subject to the subordination provisions, the debentures will be repayable if a final court order is granted or if an effective special resolution is passed for the winding up of the company or if the company, inter alia, commits a material breach of a material obligation under the debenture trust deed. The debentures are redeemable at the instance of the debenture holders at the 25th anniversary of the date of each allotment and issue of debentures.

This right must be exercised by special resolution of the debenture holders. Upon passing of this special resolution, the debentures shall be redeemed one year after the special resolution is passed.




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Capitalrepaymentdate Interest rate 2013 2012

16. BorrowingsLoans – unsecured

Investec bridge – R500 million facility Six month notice JIBAR + 2.25% – 56 000

Investec vendor loan on acquisition of Scientific Building On transfer Call rate – 34 900

Investec vendor loan on acquisition of BAT Building On transfer JIBAR + 2.25% – 40 000

Total nominal value of loans – unsecured – 130 900

Loans – secured – DMTN programme

Tranche 1 13 April 2015 Three-month JIBAR + 1.40% 134 000 –



Tranche 6 13 April 2017 Fixed at 8.80% 226 000 –

Total long–term borrowings – secured 450 000 –

Total nominal value of interest bearing borrowings 450 000 130 900

Fair value of swap derivative 5 294 1 169

Fair value of long-term interest bearingloans and derivatives 455 294 132 069

Less: Portion repayable within the next

12 months – (130 900)

Total non-current financial liabilities 455 294 1 169

During the current year the Fund registered a R3 billion domestic medium term note (DMTN) programme, of which R450 million was placed, the repayment profile of which is set out above. The R450 million has been drawn down at year end. In accordance with the Fund’s policy, there is an interest rate swap in place that, along with the fixed portion of the borrowing, fixes a total of 75% of the borrowings.

As per note 11, R948.3 million of investment property is bonded as security for the placed notes.


17. Trade and other payablesAccrued expenses 39 376 13 967

Accrued interest 13 046 3 749

Client deposits 12 202 6 080

Property management creditor 216 969

Trade creditors 2 222 3 332

Income received in advance 9 563 –

76 625 28 097




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18. Deferred taxation18.1 Taxable temporary differences

Investment property component

Fair value adjustment – investment property assets 162 031 139 248

162 031 139 248

Deferred tax rates applied to temporary differences Rate

Investment property component

Fair value adjustment – investment property assets 18.6% 30 251 25 733

Deferred tax liability 30 251 25 733

18.2 Deductible temporary differencesDebenture component

Fair value adjustment – debentures 196 972 139 079

Other assets/liabilities

Fair value adjustment – loss on fair value of interest rate swap derivatives 4 125 1 169

201 097 140 248

Deferred tax rates applied to temporary differences Rate

Debenture component

Fair value adjustment – debentures 28% 55 152 38 662

Other assets/liabilities

Fair value adjustment – loss on fair value of interest rate swap derivatives 28% 1 155 327

Potential deferred tax asset 56 307 38 989

Deferred tax asset not recognised 26 056 13 256

Deferred tax asset 30 251 25 733

The recovery of deferred tax assets is dependent on the generation of sufficient future taxable income. In order to recognise the asset, it must be probable that deductible temporary differences in excess of existing taxable temporary differences will be used.

The policy of the Fund is to distribute all taxable income (excluding capital gains) to linked unitholders, primarily in the form of tax deductible debenture interest. Whilst the debentures remain unredeemed future tax deductions are likely to equal or exceed any tax liability that may arise (excluding capital gains taxation). Therefore the extent to which the deferred tax asset is recognised is limited to the deferred tax liability raised. The net effect reflected on the statement of financial position is therefore Rnil.

18.3 Movement in deferred taxBalance at beginning of year – –

Movement in deferred tax liability (30 251) (25 733)

Movement in deferred tax asset 30 251 25 733

Balance at end of year – –




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19. Cash generated from operations Operating profit 294 644 191 709

Straight-line rental revenue adjustment (43 790) (30 507)

Other non-cash items (2 113) –

Working capital movement (11 765) 12 284

Trade and other receivables (41 550) (12 064)


Cash generated from operations 236 976 173 486

20. Borrowing powers The borrowing capacity of the Fund is unlimited in terms of its Memorandum of Incorporation.


21. Capital commitments Authorised and contracted 253 860 285 057

Authorised and not contracted – 21 934

253 860 306 991

The capital expenditure will be financed from existing funding facilities.


22. Minimum contracted rental incomeThe Fund leases a number of retail, office and industrial properties under operating leases, which typically run for a period of three to five years.

Contractual amounts due in terms of operating lease agreements:

Less than one year 390 990 212 852

Between one and five years 1 664 172 650 059

More than five years 223 043 460 906

2 278 205 1 323 817




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23. Related party transactions Investec Limited is the controlling shareholder of the Fund and through its wholly owned subsidiary Investec Property (Pty) Ltd

is the asset and property manager of the Fund, and therefore, Investec Limited and its subsidiaries are related parties to the Fund. All related party transactions are conducted at arm’s length.

Set out below are the related party transactions with Investec Limited and its subsidiaries that were concluded during the year.

For the year ended 31 MarchAcquisition of properties Office Industrial Retail

Total2013

Total2012

Number of properties 2 1 1 4 32

Gross lettable area (GLA)/(m²) 20 088 11 180 36 451 67 719 402 933

Cost of acquisition (R’000) 442 252 119 057 295 819 857 128 1 922 400

Included in the acquisition cost of an industrial building is R42.3 million in development costs which was paid to Investec Limited, included below within refurbishment costs.

For the year ended 31 MarchR’000 2013 2012

Investec Property (Pty) Ltd

Asset management fee (17 834) (9 157)

Refurbishment costs (59 987) –

Interest expense – vendor loans (2 103) –

In respect of the unlet space in 345 Rivonia Road, Investec Property (Pty) Ltd has undertaken to pay to the Fund the gross rental in respect of the unlet space for a period up to 1 April 2014:

Amounts received in the current year 6 375 11 991

Investec Bank Limited

Sponsor fee (150) (150)

Corporate and arranging fees (6 000) –

Rights offer fees (15 006) –

Rental received in respect of Durban and Pretoria offices 24 418 18 247

Borrowings*

Vendor loans – (74 900)

Investec bridge – R500 million facility – (56 000)

Interest on related party borrowings (362) (6 034)

Derivatives**

Fair value of interest rate swap derivative (5 294) (1 169)

Interest on interest rate swap derivative (2 040) –

Cash accounts

Cash held on call 398 730 4 567

Finance income 20 020 3 016

* See note 16 for terms of borrowings ** See note 26 for terms of interest rate swap derivative.

The Fund holds its call accounts and fixed deposit accounts with Investec Bank Limited and earns interest income thereon.

Interest is earned at the overnight safex call rate, currently 4.76%.

For the year ended 31 MarchBorrowings advanced to directors to acquire linked units in the Fund (R’000)

Amountoutstanding at beginning

of yearAmount

advancedOutstanding at year end

Units held2013

Units held2012

Sam Hackner 20 433 33 958 52 405 6 146 664 3 689 474

Sam Leon 8 587 17 129 25 012 3 118 888 1 504 789

Both loans are granted by Investec Securities (Pty) Ltd and extended over a 36 month period with interest payable at 8.25% per annum.




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24. Net asset valueNumber of linked units 317 220 000 170 000 000

Net asset value per linked unit (cents) 1 243.04 1 081.22

25. Subsequent events There have been no subsequent events that gave rise to adjusting journal entries in the current year.

At 31 March R’000

Held for trading

Designated at fair value

Non-financialinstruments

Amortised cost Total

26. Financial risk management26.1 Total financial assets and liabilities

The table below sets out the Fund’s accounting classification of each class of financial asset and liability and their fair values – 2013

Assets

Non-current assets – – 4 187 000 – 4 187 000

Current assets – – – 452 343 452 343

Trade and other receivables – – – 53 613 53 613

Cash and cash equivalents – – – 398 730 398 730

Total assets – – 4 187 000 452 343 4 639 343

Liabilities

Debentures – 3 940 004 – – 3 940 004

Long-term borrowings – 224 000 – 226 000 450 000

Other non-current liabilities 5 294 – – – 5 294

Current liabilities – – – 240 832 240 832

Trade and other payables – – – 76 625 76 625

Linked unitholders for distributions – – – 164 207 164 207

Total liabilities 5 294 4 164 004 – 466 832 4 636 130




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At 31 MarchR’000

Held for trading

Designated at fair value

Non-financialinstruments

Amortised cost Total

26. Financial risk management (continued)

26.1 Total financial assets and liabilities (continued)

Total financial assets and liabilities

The table below sets out the Fund’s accounting classification of each class of financial asset and liability and their fair values – 2012

Assets

Non-current assets – – 2 065 400 – 2 065 400

Current assets – – – 16 631 16 631

Trade and other receivables – – – 12 064 12 064

Cash and cash equivalents – – – 4 567 4 567

Total assets – – 2 065 400 16 631 2 082 031

Liabilities

Debentures – 1 836 379 – – 1 836 379

Long-term borrowings – – – – –

Other non-current liabilities 1 169 – – – 1 169

Current liabilities – 130 900 – 111 886 242 786

Trade and other payables – – – 28 097 28 097

Current portion of other non-current financial liabilities – 130 900 – – 130 900

Linked unitholders for distributions – – – 83 789 83 789

Total liabilities 1 169 1 967 279 – 111 886 2 080 334

Linked unitholders for distribution was incorrectly designated at fair value in the prior year.




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26.2 Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method, defined as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – inputs other than quoted prices included within level 1 that are observable for the assets and liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3 – inputs for the assets and liabilities that are not based on observable market data (unobservable inputs).


Total financial

instrumentsrecognised at fair value

Held for trading Designated at fair value

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

2013

Total assets – – – – – – –

Liabilities

Debentures 3 940 004 – – – – 3 940 004 –

Long-term borrowings 224 000 – – – – 224 000 –

Other non-current liabilities 5 294 5 294 – – – – –

Total liabilities 4 169 298 5 294 – – – 4 164 004 –

2012

Total assets – – – – – – –

Liabilities

Debentures 1 836 379 – – – – – 1 836 379

Long-term borrowings – – – – – – –

Current portion of other non-current financial liabilities 130 900 – – – – 130 900 –

Other non-current liabilities 1 169 1 169 – – – – –

Total liabilities 1 968 448 1 169 – – – 130 900 1 836 379

a. Details of changes in valuation techniques

There have been no significant changes in valuation techniques during the year under review.

b. Significant transfers between level 1, level 2 and level 3

During the year the inputs making up the debenture fair value have been reviewed, and the fair value hierarchy for the debentures was changed from a level 3 to a level 2 in the current year. The significant inputs have become more observable and the debentures have therefore been classified as level 2.

c. Level 3 reconciliation

At 31 MarchR’000

Openingbalance

1 April 2011 Issues

(Gain)/loss

in profit for the year

Openingbalance

1 April 2012

Transfers tolevel 2

Closingbalance

31 March2013

Debentures – 1 698 300 138 079 1 836 379 (1 836 379) –




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26.3 Other financial risk management considerations

The financial instruments of the Fund consist mainly of cash and cash equivalents, including deposits with banks, borrowings, derivative instruments, trade and other receivables and trade and other payables, debentures and linked unitholders for interest and dividends. The Fund purchases or issues financial instruments in order to finance operations and to manage the interest rate risks that arise from these operations and the source of funding.

The Fund has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk.

The board has overall responsibility for the establishment and oversight of the Fund’s risk management framework. The board has established the audit and risk committee, which is responsible for developing and monitoring the Fund’s risk management policies. The audit and risk committee reports regularly to the board on its activities.

The Fund’s risk management policies are established to identify and analyse the risks faced by the Fund, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Fund’s activities.

The audit and risk committee oversees how management monitors compliance with the Fund’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Fund. The audit and risk committee is assisted in its oversight role by Investec Internal Audit, which undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit and risk committee.

26.4 Credit risk Credit risk is the risk of financial loss to the Fund if a client or counterparty to a financial instrument fails to meet its contractual

obligations and arises principally from derivatives, as well as trade and other receivables. There is no significant concentration of credit risk as exposure is spread over a large number of counterparties.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

At 31 MarchR’000 2013 2012

Trade receivables 53 613 12 064

Cash and cash equivalents 398 730 4 567

Derivative assets and cash and cash equivalents

Exposure to credit risk is limited by investing in liquid funds and entering into derivative financial instruments with counterparties who have a high percentage tier one capital and strong credit ratings assigned by international credit rating agencies.

Trade receivables

The Fund’s exposure to credit risk is mainly in respect of clients and is influenced by the individual characteristics of each client. The Fund’s widespread client base reduces credit risk.

Management has established a credit policy under which each new client is analysed individually for creditworthiness before the Fund’s standard payment terms and conditions are offered which include, in the majority of cases, the provision of a deposit of at least one month’s rental. When available, the Fund’s credit review includes external ratings.

Impairment losses have been recorded for those debts whose recovery was not reasonably assured at year end. The maximum credit exposure at the reporting date was R1.9 million, of which R0.5 million has been provided for.




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26.5 Market riskInterest rate risk

The Fund is exposed to interest rate risk and adopts a policy of ensuring that at least 75% of its exposure to changes in interest rates on borrowings is on a fixed basis. This is achieved by entering into fixed or variable rate swap instruments. All such transactions are carried out within the guidelines set by the audit and risk committee. As a consequence, the Fund is exposed to fair value interest rate risk in respect of the fair value of its interest rate financial instruments, which will not have an impact on distributions. Short-term receivables and payables and investments are not directly exposed to interest rate risk.

It is estimated that for the year ended 31 March 2013, a 1% increase/decrease in interest rates on the variable rate borrowings would have decreased/increased the Fund’s profit before debenture interest by approximately R1.1 million.

At 31 March 2013, the interest rate on 75% of interest bearing borrowings were fixed for a weighted average of five years.

At 31 MarchR’000

Net swapexpiring

Financial year

2017 113 250

Currency risk

The Fund does not have any exposure to currency risk at 31 March 2013.

Liquidity risk

Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund’s policy is to seek to minimise its exposure to liquidity risk by balancing its exposure to interest rate risk and to refinancing risk. In effect the Fund seeks to borrow for as long as possible at the lowest acceptable cost. The Fund regularly reviews the maturity profile of its financial liabilities and will seek to avoid concentration of maturities through the regular replacement of facilities and by using a selection of maturity dates.

The tables below set out the maturity analysis of the Fund’s financial liabilities based on the undiscounted contractual cash flows. No interest payments on debentures have been included as the amounts involved are dependent on future profitability.

31 March R’000

Withinone year

One totwo years

Two tofive years

Over five years Total

2013

Debentures – – – 3 621 143 3 621 143

Long-term borrowings – – 450 000 – 450 000

Interest rate swap 2 288 2 288 4 003 – 8 579

Trade and other payables 64 423 – 12 202 – 76 625

Linked unitholders for distributions 164 207 – – – 164 207

Total liabilities 230 918 2 288 466 205 3 621 143 4 320 554

2012

Debentures – – – 1 698 300 1 698 300

Current position of other non-current financial liabilities 130 900 – – – 130 900

Interest rate swap 2 718 2 718 8 161 – 13 597

Trade and other payables 23 727 1 905 2 414 51 28 097

Linked unitholders for distributions 83 789 – – – 83 789

Total liabilities 241 134 4 623 10 575 1 698 351 1 954 683




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26.5 Market risk (continued)

Cash flows are monitored on a monthly basis to ensure that cash resources are adequate to meet the funding requirements of the Fund. In terms of covenants with its lenders, the nominal value of interest bearing borrowings may not exceed 50% of the value of investment property (including investment property reclassified as held for sale):

At 31 MarchR’000 2013 2012

Value of investment property 4 187 000 2 065 400

Nominal value of interest bearing borrowings utilised at year end 450 000 130 900

Ratio of interest bearing borrowings to value of investment property 10.7% 6.3%

26.6 Derivatives Derivative instruments are used to hedge the Fund’s exposure to any increases in interest rates on variable rate loans. Interest

rate swap contracts are entered into whereby the Fund hedges out its variable rate obligation to provide a maximum fixed rate obligation. Details of the interest rate fixed for variable swap instruments are as follows:

Financial institutionAmount

R’000 Start date End date Fixed rate

31 March 2013

Investec 113 250 28/3/2012 28/02/2017 7.15%

27. Capital management In terms of its Memorandum of Incorporation, the Fund has unlimited borrowing capacity. The Fund is funded partly by linked units

or owners’ capital and partly by external borrowings. The linked units each comprise one share of 1 cent linked to one debenture with a nominal value of R9.99.

In terms of its covenants entered into during the year, the Fund is committed in terms of its external borrowings, to a maximum value of external borrowings as a percentage of the value of investment property assets of 50%. In practice, the Fund aims to keep gearing levels between 30% and 40% over the long term. At 31 March 2013, the nominal value of borrowings was equal to 10.7% of the value of investment property.

The board’s policy is to maintain a strong capital base, comprising its linked unitholders’ interest, so as to maintain investor, creditor and market confidence and to sustain future development of the business. It is the Fund’s stated purpose to deliver medium- to long-term sustainable growth in distributions per unit. All net profits, as defined in the debenture trust deed, are distributed on a six monthly basis. The board monitors the level of distributions to linked unitholders and ensures compliance with the terms of the debenture trust deed and that no profits of a capital nature are distributed. There were no changes in the Fund’s approach to capital management during the year. The company is not subject to externally imposed capital requirements.




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28. Estimation of fair value The following summarises the major methods and assumptions used in estimating the fair values of financial instruments:

Trade receivables These are valued at their nominal value (less cumulative impairment losses) as the time value of money is considered to be

immaterial for these current assets. Impairment losses are estimated at the year end by reviewing amounts outstanding and assessing the likelihood of recoverability.

Non-current liabilities (excluding debentures) at fair value As a property loan stock company, the Fund relies on long-term borrowings to fund the acquisition of investment properties.

The Fund adopts the fair value model to measure the investment properties, with fair value adjustments being recorded through profit or loss. In order to eliminate any mismatch that would otherwise arise from measuring the non-current liabilities on a different basis, non-current liabilities are also measured at fair value through profit or loss. The value of these liabilities is estimated using a discounted cash flow analysis. Each future cash flow is discounted using the market rate indicated on the interest rate curve (see definition below) at the dates when the cash flows will take place.

Debentures

Debentures are designated as held at fair value through profit or loss financial liabilities. It is believed that this method results in the most relevant measure of the debenture liability as it represents the net asset value attributable to debenture holders after all other liabilities and assets are reflected at fair values. In addition, this method eliminates possible measurement inconsistencies that may arise by valuing the debenture liability on some other basis. These instruments are measured initially at issue price, and subsequently at fair value. Fair value represents the net asset value attributable to debenture holders after adjusting all other assets and liabilities to fair value.

Derivatives Derivative financial instruments consist of interest rate hedging instruments. Interest rate hedging instruments are valued by

discounting future cash flows using the market rate indicated on the interest rate curve (see definition below) at the dates when the cash flows will take place.

Trade payables Trade payables are valued at their nominal value as the time value of money is considered to be immaterial for these current

liabilities.

Definition of interest rate curve The interest rate curve is the South African swap curve which represents a benchmark interest rate curve for all JIBAR related

transactions in the market. JIBAR itself is a benchmark short-term interest rate and, as such, the swap curve gives a representation of future expectations of JIBAR. It is constructed using both short-dated financial instruments (such as forward rate agreements (FRAs), as well as longer-dated instruments (such as swaps) where the movements in the curve are reflected through price changes of the underlying instruments.


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Linked unitholders analysis

As at 31 March 2013 the Fund had 317.22 million linked units in issue.

Spread of linked unitholders as at 31 March 2013

HoldingsNumber of linked

unitholders% of total

linked unitholdersNumber of

linked units in issue % of Issued capital

1 – 10 000 1 836 66.93% 6 654 651 2.10%

10 001 – 50 000 667 24.32% 14 239 994 4.49%

50 001 – 100 000 81 2.95% 5 870 691 1.85%

100 001 and over 159 5.80% 290 454 664 91.56%

2 743 100.00% 317 220 000 100.00%

Linked unitholder classification as at 31 March 2013

Number of unitholders

Number of linked units held % holding

Public* 2 729 143 733 242 45.31%

Non-public 14 156 360 167 49.29%

Non-executive directors 4 352 999 1.37%

Executive directors 9 330 591 2.94%

Directorate of the Manager 3 443 001 1.09%

317 220 000 100.00%

* Per JSE Listings Requirements definition.

Largest linked unitholders as at 31 March 2013

Number of linked units held % holding

Investec Limited 158 610 167 50.00%

Stanlib Asset Management 25 329 649 7.98%

S Giuricich Group^ 17 000 000 5.40%

Investec Asset Management 12 725 973 4.01%

Government Employees Pension Fund 10 231 560 3.23%

Arzteversorgung Niedersachsen 8 000 000 2.52%

Sam Hackner 6 146 664 1.94%

Absa Asset Management 5 167 914 1.63%

Prudential Portfolio Managers 3 190 384 1.00%

Sam Leon 3 118 888 1.00%

Total 249 521 199 78.65%

^ Includes the 4 250 000 linked units beneficially held by L Giuricich.


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Linked unitholders analysis (continued)

Directors’ interest in linked units

Balance at 31 March

2013*

Balance at 31 March

2012

Executive directors

Sam Hackner 6 146 664 3 689 474

Samuel R Leon 3 118 888 1 504 789

David AJ Donald 65 039 39 039


Graham R Rosenthal 2 999 1 800

Constance M Mashaba 60 000 –

Moses M Ngoasheng 40 000 –

Luigi Giuricich^ 4 250 000 –

13 683 590 5 235 102

* Beneficially and non-beneficially held.^ Indirectly held through S Giuricich Group.

Linked unit statistics

2013 2012

Closing market price (R)

– Year end 16.21 11.7

– High 18.79 12.36

– Low 10.50 9.5

Linked units in issue (million) 317.22 170.0

Market capitalisation (R’million) 5 716 1 989

Daily average volume of linked units traded 146 208 142 793


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Linked unitholders’ diary

Financial year end 31 March 2013

Publication of financial results 23 May 2013

Final distribution paid to linked unitholders 18 June 2013

Annual report posted to linked unitholders 29 June 2013

Annual general meeting 16 August 2013

DistributionsAn interim dividend number 3 of 0.034 cents per share (after applying the dividend withholding tax of 15% would provide a net dividend of 0.0289 cents per share) and debenture interest payment number 3 of 46.800 cents totalling 46.834 cents per linked unit was declared for the six months ended 30 September 2012. The distribution was paid on 10 December 2012.

Linked unitholders were given notice of a final dividend declaration number 4 of 0.0358 cents per share (after applying the dividend withholding tax of 15% would provide a net dividend of 0.03043 cents per share) and debenture interest payment number 4 of 53.1257 cents totalling 53.161 cents per linked unit for the six months ended 31 March 2013. The final distribution was paid on Tuesday, 18 June 2013.

Distribution details

DistributionsDistribution

number2013

cents

Six months ended

30 September 2012 3 46.834

31 March 2013 4 53.161

Total 99.995


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King III checklist

Principle number Description status Status Cross references

Ethical leadership and corporate citizenship

1.1 The board should provide effective leadership based on an ethical foundation.

√ • Board Charter• Values and ethics

1.2 The board should ensure that the company is and is seen to be a responsible corporate citizen.

√ • Sustainability• Board statement

1.3 The board should ensure that the company’s ethics are managed effectively.

√ • Values and ethics• Social and ethics committee

Boards and directors

2.1 The board should act as the focal point for and custodian of corporate governance.

√ • Board Charter• Board of directors

2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable.

√ • Board of directors• Risk management

2.3 The board should provide effective leadership based on an ethical foundation.

√ • Board of directors• Values and ethics

2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen.

√ • Sustainability• Board of directors

2.5 The board should ensure that the company’s ethics are managed effectively.

√ • Ethics and values• Social and ethics committee

2.6 The board should ensure that the company has an effective and independent audit committee.

√ • Audit and risk committee• Terms of reference

2.7 The board should be responsible for the governance of risk. √ • Audit and risk committee• Risk management• Board of directors

2.8 The board should be responsible for information technology (IT) governance.

√ • Board of directors• Audit and risk committee

2.9 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards.

√ • Compliance• Risk management

2.10 The board should ensure that there is an effective risk-based internal audit.

√ • Risk management• Internal Audit

2.11 The board should appreciate that stakeholders’ perceptions affect the company’s reputation.

√ • Communication and stakeholder relations

2.12 The board should ensure the integrity of the company’s integrated annual report.

√ • Audit and risk committee• Board of directors

2.13 The board should report on the effectiveness of the company’s system of internal controls.

√ • Internal control• Internal financial controls

2.14 The board and its directors should act in the best interests of the company.

√ • Board of directors• Board statement

2.15 The board should consider business rescue proceeding or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act.

7 It is unlikely that business rescue will be an eventuality.

2.16 The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board.

7 The chairman is an executive director and is not the CEO.

A lead independent director (LID) has been appointed to overcome any issues arising from this requirement (further information on pages 22 to 24)

2.17 The board should appoint the chief executive officer and establish a framework for the delegation of authority.

√ • Board of directors• Chairman and chief executive

officer


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King III checklist (continued)


Boards and directors (continued)

2.18 The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent.

√ • Independence • Tenure

2.19 Directors should be appointed through a formal process. √ • Nominations committee

2.20 The induction of and ongoing training and development of directors should be conducted through formal processes.

√ • Ongoing training and development

2.21 The board should be assisted by a competent, suitably qualified and experienced company secretary.

√ • Company secretarial

2.22 The evaluation of the board, its committees and the individual directors should be performed every year.

√ • Board and directors’ performance evaluation

2.23 The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities.

√ • Board committees• Board of directors

2.24 A governance framework should be agreed between the group and its subsidiary boards.

7 • Not applicable

2.25 Companies should remunerate directors and executives fairly and responsibly.

√ • Remuneration committee• Remuneration

2.26 Companies should disclose the remuneration of each individual director and certain senior executives.

√ • Remuneration

2.27 Shareholders should approve the company’s remuneration policy. √ • Notice to the annual general meeting


3.1 The board should ensure that the company has an effective and independent audit committee.

√ • Audit and risk committee

3.2 Audit committee members should be suitably skilled and experienced independent non-executive directors.

√ • Skills, knowledge and experience• Board meetings

3.3 The audit committee should be chaired by an independent non-executive director.

√ • Audit and risk committee• Board meetings

3.4 The audit committee should oversee integrated reporting. √ • Board committee and responsibilities

• Report of the audit and risk committee

3.5 The audit committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities.

√ • Audit and risk committee roles and responsibilities

3.6 The audit committee should satisfy itself of the expertise, resources and experience of the company’s finance function.

√ • Committee roles and responsibilities


3.7 The audit committee should be responsible for overseeing of internal audit.



3.8 The audit committee should be an integral component of the risk management process.


3.9 The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process.



3.10 The audit committee should report to the board and shareholders on how it has discharged its duties.

√ • Report of the audit and risk committee


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The governance of risk

4.1 The board should be responsible for the governance of risk. √ • Internal control• Board of directors• Risk management

4.2 The board should determine the levels of risk tolerance. √ • Board of directors• Risk management

4.3 The risk committee or audit committee should assist the board in carrying out its risk responsibilities.


4.4 The board should delegate to management the responsibility to design, implement and monitor the risk management plan.

√ • Internal controls• Risk management

4.5 The board should ensure that risk assessments are performed on a continual basis.

√ • Risk management

4.6 The board should ensure that the frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks.


4.7 The board should ensure that management considers and implements appropriate risk responses.


4.8 The board should ensure continual risk monitoring by the management. √ • Risk management• Internal Audit

4.9 The board should receive assurance regarding the effectiveness of the risk management process.

√ • Internal Audit• Operational risk

4.10 The board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders.

√ • Risk management report• Communication with stakeholders

The governance of information technology

5.1 The board should be responsible for information technology (IT) governance.


5.2 IT should be aligned with the performance and sustainability objectives of the company.

√ • Board of directors• Sustainability report

5.3 The board should delegate to management the responsibility for the implementation of an IT governance framework.

√ • Board of directors• Report of the audit and risk

committee

5.4 The board should monitor and evaluate significant IT investments and expenditure.

√ • Board of directors

5.5 IT should form an integral part of the company’s risk management. √ • Board of directors • Report of the audit and risk

committee

5.6 The board should ensure that information assets are managed effectively.


5.7 A risk committee and audit committee should assist the board in carrying out its IT responsibilities.


Compliance with laws, codes, rules and standards

6.1 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards.

√ • Regulation and supervision• Audit and risk committee• Social and ethics committee

6.2 The board and each individual director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the company and its business.

√ • Audit and risk committee• Ongoing training and

development• Independent advice

6.3 Compliance risk should form an integral part of the company’s risk management process.

√ • Board of directors • Compliance

6.4 The board should delegate to management the implementation of an effective compliance framework and processes.

√ • Audit and risk committee• Compliance



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Internal audit

7.1 The board should ensure that there is an effective risk based internal audit.

√ • Internal audit• Audit and risk committee

7.2 Internal audit should follow a risk based approach to its plan. √ • Internal audit

7.3 Internal audit should provide a written assessment of the effectiveness of the company’s system of internal control and risk management.

√ • Report of the audit and risk committee

• Internal audit

7.4 The audit committee should be responsible for overseeing internal audit.

√ • Audit committee roles and responsibilities

7.5 Internal audit should be strategically positioned to achieve its objectives.

√ • Internal audit

Stakeholder relationships

8.1 The board should appreciate that stakeholders’ perceptions affect a company’s reputation.

√ • Board statement• Introduction

8.2 The board should delegate to management to proactively deal with stakeholder relationships.


8.3 The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company.


• Sustainability

8.4 Companies should ensure the equitable treatment of shareholders. √ • Communication and stakeholder relations

• Conflicts of interest

8.5 Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.


8.6 The board should ensure that disputes are resolved as effectively, efficiently and expeditiously as possible.


Integrated reporting and disclosure

9.1 The board should ensure the integrity of the company’s integrated annual report.


9.2 Sustainability reporting and disclosure should be integrated with the company’s financial reporting.

√ • Sustainability report

9.3 Sustainability reporting and disclosure should be independently assured.

7 In the current year this has not been done. Further explanation on page 22


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Notice of annual general meeting

Notice is hereby given that the annual general meeting of the Fund will be held in the 2nd Floor Boardroom, Investec Bank Limited, 100 Grayston Drive, Sandown, Sandton 2196 at 09:30 on Friday, 16 August 2013 to (i) deal with such business as may lawfully be dealt with at the meeting; and (ii) consider and, if deemed fit, to pass, with or without modification, the following ordinary and special resolutions of the Fund as set out hereunder.

Kindly note that in terms of section 63(1) of the Companies Act, No 71 of 2008, as amended (the Act), meeting participants (including proxies) will be required to provide reasonable satisfactory identification before being entitled to participate in or vote at the annual general meeting. Forms of identification that will be accepted include original and valid identity documents, driver’s licences and passports.

Given that the company’s ordinary shares are indivisibly linked to the company’s variable rate, unsecured, subordinated debentures having a nominal value of R9.99 (nine rand ninety nine cents) per debenture (debentures) and these securities trade together as a linked unit (linked unit), they are accordingly held by the same person. Where reference in this notice would typically be made to the ‘shareholders’ of the company, the company has rather adopted the use of the term ‘linked unitholders’. Voting rights will, however, only be exercisable in respect of the ordinary share component of the linked units.

Electronic participation

Linked unitholders entitled to attend and vote at the annual general meeting or proxies of

such linked unitholders shall be entitled to participate in the meeting (but not vote) by electronic communication. Should a linked unitholder wish to participate in the meeting by electronic communication, the linked unitholder concerned should advise the company thereof by submitting via registered mail addressed to the company (for the attention of the company secretary, PO Box 705700, Sandton 2146) relevant contact details, as well as full details of the linked unitholder’s title to relevant securities issued by the company accompanied with proof of identity, in the form of certified copies of identity documents and linked unit certificates (in the case of certificated linked units) and (in the case of dematerialised linked units) written confirmation from the linked unitholder’s CSDP confirming the linked unitholder’s title to the dematerialised linked units, to reach the company by no later than 09:30 on Thursday, 8 August 2013. Upon receipt of the required information by the company, the linked unitholder concerned will be provided with a secure code and instructions to access the electronic communication during the annual general meeting. Linked unitholders must note that access to the electronic communication will be at the expense of the linked unitholders who wish to utilise the facility. Linked unitholders making use of the electronic participation facility are requested to submit their proxy forms to the company, as directed in this notice, as voting at the annual general meeting will not be enabled via electronic means.

Record dates, proxies and voting In terms of section 59(1)(a) and (b) of the Act, the board of the company has set the record date for the purpose of determining which linked unitholders are entitled to:

• Receive notice of the annual general meeting (being the date on which a linked unitholder must be registered in the company’s securities register as a linked unitholder in order to receive notice of the annual general meeting) as Friday, 28 June 2013; and

• Participate in and vote at the annual general meeting (being the date on which the linked unitholder must be registered in the company’s securities register as a linked unitholder in order to participate in and vote at the annual general meeting) as Friday, 2 August 2013.

Linked unitholders who have not dematerialised their linked units or who have dematerialised their linked units with ‘own name’ registration, and who are entitled to attend, participate in and vote at the annual general meeting, are entitled to appoint a proxy (or more than one proxies in respect of different linked units held by them) to attend, speak and vote in their stead. A proxy need not be a linked unitholder and shall be entitled to vote on a show of hands or a poll. It is requested that proxy forms be forwarded so as to reach the transfer secretaries in South Africa by no later than 48 (forty eight) hours before the commencement of the annual general meeting. If linked unitholders who have not dematerialised their linked units or who have dematerialised their linked units with ‘own name’ registration, and who are entitled to attend, participate in and vote at the annual general meeting, do not deliver proxy forms to the transfer secretaries in South Africa by the relevant time, such linked unitholders will nevertheless be entitled to lodge the form of proxy in respect of the annual general meeting immediately prior to the exercising of the

Investec Property Fund Limited (Incorporated in the Republic of South Africa) (Registration Number 2008/011366/06) Share code: IPF | ISIN: ZAE000155099 (the Fund or the company)

Directors of the FundSam Hackner (chairman) Samuel R Leon (chief executive officer) Michael P Crawford (lead independent non-executive director) David AJ Donald (chief financial officer) Luigi LM Giuricich ( non-executive)Suliman Mahomed (independent non-executive) Constance M Mashaba (independent non-executive)Moses M Ngoasheng (independent non-executive) Graham R Rosenthal (independent non-executive)

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Notice of annual general meeting (continued)

linked unitholders’ rights at the annual general meeting, in accordance with the instructions therein, with the chairman of the annual general meeting.

Linked unitholders who have dematerialised their linked units, other than those linked unitholders who have dematerialised their linked units with ‘own name’ registration, should contact their CSDP or broker in the manner and within the time stipulated in the agreement entered into between them and their CSDP or broker:

• To furnish them with their voting instructions; or

• In the event that they wish to attend the annual general meeting, to obtain the necessary letter of representation to do so.

Every linked unitholder present in person or represented by proxy and entitled to vote shall, on a show of hands, have only one vote irrespective of the number of linked units such linked unitholder holds. On a poll, every linked unitholder present in person or represented by proxy and entitled to vote, shall be entitled to one vote for each linked unit such linked unitholder holds.

Presentation of annual financial statements To present to linked unitholders:

• the audited annual financial statements of the Fund for the year ended 31 March 2013, together with the reports of the directors and the auditors;

• the report by the chairman of the audit and risk committee; and

• the report by the chairman of the social and ethics committee.

The complete set of the audited annual financial statements, together with the abovementioned reports, are set out on pages 34 to 67 of the 2013 annual report.

To consider and if deemed fit, to pass, with or without modification, the following ordinary and special resolutions of the Fund:

1. To re-elect Michael P Crawford, as a director of the Fund in accordance with the provisions of the Memorandum of Incorporation of the Fund.

2. To re-elect Moses M Ngoasheng, as a director of the Fund in accordance with

the provisions of the Memorandum of Incorporation of the Fund.

3. To re-elect Constance M Mashaba, as a director of the Fund in accordance with the provisions of the Memorandum of Incorporation of the Fund.

4. To elect Luigi LM Giuricich, whose appointment as a director of the Fund terminates at the end of the annual general meeting of the Fund convened for 16 August 2013, as a director of the Fund in accordance with the provisions of the Memorandum of Incorporation of the Fund.

Messrs Crawford and Ngoasheng and Ms Mashaba are due to retire by rotation, whereas Mr Giuricich is due to retire at the first annual general meeting of the Fund after his appointment by the board.

For brief biographical details of the directors to be elected or re-elected refer to page 20 of the 2013 annual report.

5. To elect Graham R Rosenthal as a member of the audit and risk committee, with effect from the end of this annual general meeting, in terms of section 94(2) of the Act.

6. To elect Michael P Crawford as a member of the audit and risk committee, with effect from the end of this annual general meeting, in terms of section 94(2) of the Act, subject of his re-election as a director pursuant to resolution No 1.

7. To elect Constance M Mashaba as a member of the audit and risk committee, with effect from the end of this annual general meeting, in terms of section 94(2) of the Act, subject to her re-election as a director pursuant to resolution No 3.

The members of the audit and risk committee have been nominated by the board of the Fund for election as members of the Fund’s audit and risk committee in terms of section 94(2) of the Act. The board has reviewed the proposed composition of the audit and risk committee against the requirements of the Act and the Regulations under the Act and has confirmed that if all the individuals referred to above are elected, the committee will comply with the relevant

requirements and have the necessary knowledge, skills and experience to enable it to perform its duties in terms of the Act.

8. To re-appoint Ernst & Young Inc., Wanderers Office Park, 52 Corlett Drive, Illovo 2196 South Africa (Private Bag X14, Northlands 2116, South Africa) as independent external auditors of the Fund, until such time as the conclusion of the next annual general meeting of the Fund.

In terms of section 90(1) of the Act, each year at its annual general meeting, the company must appoint an auditor who complies with the requirements of section 90(2) of the Act. Following a detailed review, which included an assessment of its independence, the current audit and risk committee of the company has recommended that Ernst & Young Inc. be reappointed as the auditors of the company.

9. To authorise any director or the company secretary of the Fund to do all things and sign all documents which may be necessary to carry into effect the resolutions contained in this notice to the extent the same have been passed and, where applicable, filed.

10. Ordinary resolution: Authorising the directors to allot and issue authorised but unissued linked units

Resolved that:

• to the extent required by and subject to the Memorandum of Incorporation of the Fund, and subject to the requirements of the debenture trust deed governing the variable rate, unsecured, subordinated debentures having a nominal value of R9.99 (nine rand ninety nine cents) per debenture issued by the Fund, the Act and the listings requirements of the JSE Limited (JSE Listings Requirements), each as presently constituted and as amended from time to time, the directors of the Fund are authorised, as they in their discretion think fit, to allot and issue the authorised but unissued linked units in the Fund to such person(s) and upon such terms and conditions as the directors may determine, such authority to expire at the next annual general meeting of the Fund.


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In terms of the company’s Memorandum of Incorporation, read with the JSE Listings Requirements, the linked unitholders of the company may authorise the directors to, inter alia, issue any unissued securities of the company, as the directors in their discretion think fit.

The directors have decided to seek annual renewal of this authority in accordance with best practice. The exercise of the authority will be subject to the provisions of the Act and the JSE Listings Requirements. The directors consider it advantageous to attain the authority to enable the company to take advantage of any business opportunity that may arise in future.

11. Special resolution No 1: Directors’ authority to allot and issue linked units for cash in respect of 47 583 000 (6.96%) of the unissued linked units

Resolved that:

• to the extent required by and subject to the JSE Listings Requirements, the Fund’s Memorandum of Incorporation and the Companies Act, No 71 of 2008, as amended, each as presently constituted and as amended from time to time, the directors of the Fund are authorised by way of a general authority, which authority shall not extend beyond the date of the next annual general meeting of the Fund to be held in 2014 or the date of the expiry of 15 (fifteen) months from the date of the annual general meeting of the Fund convened for 16 August 2013, whichever period is shorter, to allot and issue 47 583 000 (forty seven million five hundred and eighty three thousand) linked units of R10.00 (ten rand) each for cash (i.e. other than by way of rights offer, to the existing linked unitholders in proportion to their then existing holdings), subject to the limitations as required by the JSE Listings Requirements from time to time, it being recorded that as at 14 June 2013, the JSE Listings Requirements provide, inter alia, that:

(i) a press announcement giving full details, including the impact on net asset value and earnings per linked unit, will be published at the time of an issue of linked units for cash

representing, on a cumulative basis within 1 (one) financial year, 5% (five percent) or more of the number of linked units in issue prior to such issue;

(ii) the issue of linked units for cash in the aggregate in any 1 (one) financial year will not exceed 15% (fifteen percent) of the number of the Fund’s linked units in issue, including instruments which are compulsorily convertible;

(iii) in determining the price at which an allotment and issue of linked units may be made in terms of this authority, the maximum discount permitted will be 10% (ten percent) of the weighted average traded price of the linked units in question as determined over the 30 (thirty) business days prior to the date that the price of the issue is agreed to between the directors of the Fund and the party subscribing for the linked units, and

(iv) the linked units issued for cash must be issued to persons qualifying as ‘public shareholders’, as defined in the JSE Listings Requirements, and not to ‘related parties’.

The directors are seeking an authority to allot and issue up to 47 583 000 (6.96%) (six point nine six percent) of the number of unissued linked units for cash which represents 15% (fifteen percent) of the number of the Fund’s issued linked units as at the date o this notice of annual general meeting, which is in line with the 15% (fifteen percent) permitted in terms of the JSE Listings Requirements.

The authority will be exercised subject to the provisions of the Act, the Fund’s Memorandum of Incorporation and JSE Listings Requirements.

The directors consider it beneficial to obtain the authority to enable the company to take advantage of any business opportunity that may arise in future.

12. Special resolution No 2: Directors’ authority to acquire linked units

Resolved that:

• the Fund is authorised (to the extent required), by way of a general authority, which authority shall not extend beyond the date

of the next annual general meeting of the Fund to be held in 2014 or the date of the expiry of 15 (fifteen) months from the date of the annual general meeting of the Fund convened for 16 August 2013, whichever period is shorter, to acquire linked units issued by the Fund, from any person, upon such terms and conditions and in such number as the directors of the Fund may from time to time decide, but subject to the provisions of the Fund’s Memorandum of Incorporation, the Companies Act, No 71 2008, as amended and the JSE Listings Requirements, each as presently constituted and as amended from time to time, it being recorded that as at 14 June 2013, the JSE Listings Requirements provide, inter alia, that:

(i) any such acquisition of linked units shall be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and the counterparty;

(ii) an announcement containing full details of such acquisitions will be published as soon as the Fund has acquired linked units constituting, on a cumulative basis, 3% (three percent) of the number of the Fund’s linked units in issue (at the time that this authority is granted) and for each 3% (three percent) in aggregate of the initial number of such linked units acquired thereafter;

(iii) acquisitions of linked units by the Fund in aggregate in any 1 (one) financial year may not exceed 20% (twenty percent) of the Fund’s issued linked units as at the date of passing of this special resolution No 2;

(iv) in determining the price at which linked units issued by the Fund are acquired by it in terms of this general authority, the maximum price at which such linked units may be acquired will be 10% (ten percent) above the weighted average of the market value at which such linked units are traded on the JSE as determined over the 5 (five) business days immediately


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preceding the date of acquisition of such linked units, by the Fund;

(v) at any point in time, the Fund may only appoint 1 (one) agent to effect any acquisition on the Fund’s behalf;

(vi) a resolution is passed by the board of directors that it has authorised the acquisition, that the Fund (and where applicable, its subsidiaries) has passed the solvency and liquidity test and that, since the test was performed, there have been no material changes to the financial position of the Fund; and

(vii) the Fund may not acquire any linked units during a prohibited period as defined by the JSE Listings Requirements unless there is in place a repurchase programme where dates and quantities of securities to be traded during the prohibited period are fixed and full details of the programme have been disclosed in an announcement over SENS prior to the commencement of the prohibited period.

Special resolution No 2 is sought to allow the Fund by way of a general authority, to acquire its own linked units in issue from time to time, subject to the Fund’s Memorandum of Incorporation, the Act and the JSE Listings Requirements.

At the present time, the directors of the Fund have no specific intention of making any such acquisition, but believe that the Fund should retain the flexibility to take action if future acquisitions are considered desirable and in the best interests of linked unitholders, taking into account prevailing market conditions. The directors of the Fund are of the opinion that, after considering the effect of such acquisition of linked units, if implemented and on the assumption that the maximum of 20% (twenty percent) of the current issued linked units of the Fund will be acquired, using the mechanism of the general authority at the maximum price at which the acquisition may take place and having regard to the price of the linked units on the JSE at the last practical date prior to the date of the notice of annual general meeting of the Fund convened for 16 August 2013:

• the Fund will be able, in the ordinary course of business, to pay its debt for a period of 12 (twelve) months after the date of the notice of annual general meeting of the Fund convened for 16 August 2013;

• the assets of the Fund will be in excess of the liabilities of the Fund, each recognised and measured in accordance with IFRS, for a period of 12 (twelve) months after the date of the notice of annual general meeting of the Fund convened for 16 August 2013;

• the Fund will have adequate capital and reserves for ordinary business purposes for a period of 12 (twelve) months after the date of the notice of annual general meeting of the Fund convened for 16 August 2013; and

• the working capital of the Fund will be adequate for ordinary business purposes for a period of 12 (twelve) months after the date of the notice of annual general meeting of the Fund convened for 16 August 2013. The Fund will ensure that its sponsor will provide the necessary letter on the adequacy of the working capital in terms of the JSE Listings Requirements, prior to the commencement of any acquisition of the Fund’s linked units on the open market.

Litigation statement

In terms of section 11.26 of the JSE Listings Requirements, the directors, whose names appear on page 20 of the 2013 annual report, are not aware of any legal or arbitration proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 (twelve) months, a material effect on the Fund’s financial position, other than disclosed in the notes to the financial statements.

Directors’ responsibility statement

The directors, whose names appear on page 20 of the 2013 annual report, collectively and individually accept full responsibility for the accuracy of the information given pertaining to this special resolution No 2 and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any

statement false or misleading and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information required by law and the JSE Listings Requirements.

Material changes

Other than the facts and developments reported on in the 2013 annual report, there have been no material changes in the affairs or financial position of the Fund since the date of signature of the audit report and up to the date of this notice of annual general meeting of the Fund.

The following additional information is provided in terms of the JSE Listings Requirements for purposes of the general authority:

• Largest linked unitholders: annual report page 69 of the 2013 annual report

• Directors: annual report page 20

• Directors’ interests in linked units: annual report page 70

• Issued capital of the Fund: annual report page 56 note 14

13. Special resolution No 3: Directors’ remuneration

Resolved that:

• in terms of section 66(9) of the Companies Act, No 71 of 2008, as amended, payment of the remuneration of the directors of the Fund for their service as directors be approved as follows:

(i) for the period 1 April 2013 to 31 March 2014: as set out on page 25 of the 2013 annual report

(ii) thereafter but only until the expiry of a period of 24 (twenty four) months from the date of the passing of this special resolution No 3 (or until amended by a special resolution of linked unitholders prior to the expiry of such period), on the same basis as above, escalated as determined by the board of the Fund, up to a maximum of 10% (ten percent) per annum per amount set out as aforesaid.

Special resolution No 3 is proposed to enable the Fund to comply with the provisions of sections 65(11)(h), 66(8) and 66(9) of the Act, which stipulate


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that remuneration to directors for their service as directors may be paid only in accordance with a special resolution approved by the linked unitholders within the previous two years.

The remuneration proposed for approval has been determined mindful thereof that the role of non-executive directors is under increasing focus of late with greater accountability and risk attached to the position.

For further information on the proposed directors’ remuneration, please refer to page 25 of the annual financial report.

14. Special resolution No 4: Financial assistance to subsidiaries and other related and inter-related entities

Resolved that:

• to the extent required by the Act, the board of directors of the Fund may, subject to compliance with the requirements of the Fund’s Memorandum of Incorporation, the Companies Act, No 71 of 2008, as amended, and the JSE Listings Requirements, each as presently constituted and as amended from time to time, authorise the Fund to provide direct or indirect financial assistance by way of loan, guarantee, the provision of security or otherwise, to any of its future subsidiaries and/or any other company or entity that is or becomes related or inter-related to the Fund, for any purpose or in connection with any matter, including, but not limited to, the subscription of any option, or any securities issued or to be issued by the Fund or a related or inter-related company, or for the purchase of any securities of the Fund or a related or inter-related company, such authority to endure until the next annual general meeting of the Fund.

The Fund would like the ability to provide financial assistance to related or inter-related entities, such as its subsidiaries, if necessary. Furthermore, it may be necessary or desirable for the Fund to provide financial assistance

to related or inter-related companies and entities to subscribe for options or securities or purchase securities of the Fund or another company related or inter-related to it. Under sections 44 and 45 of the Act, the Fund will, however, require a special resolution to be adopted before such financial assistance may be provided. In the circumstances and in order to, amongst others, ensure that the Fund’s related and inter-related companies and entities have access to financing and/or financial backing from the Fund (as opposed to banks), it is necessary to obtain the approval of linked unitholders, as set out in special resolution No 4.

It should be noted that this resolution does not authorise financial assistance to a director or a prescribed officer of the company or any company or person related to such a director or prescribed officer.

By order of the board

B Coetsee Investec Bank Limited Company secretary

28 June 2013Sandton

Registered office 100 Grayston Drive Sandown Sandton 2196

PO Box 785700 Sandton 2146

Transfer secretaries Computershare Investor Services (Pty) Ltd 70 Marshall Street Johannesburg 2001

PO Box 61051 Marshalltown 2107

Please read the notes on the reverse hereof.


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Form of proxy

Investec Property Fund Limited (Incorporated in the Republic of South Africa) | (Registration Number 2008/011366/06) Share code: IPF | I SIN: ZAE000155099 (Investec Property Fund or the Fund or the company)

For use by certificated and ‘own name’ dematerialised linked unitholders only.

For use by certificated and ‘own name’ registered dematerialised linked unitholders of the Fund, recorded in the Fund’s securities register as at Friday, 2 August 2013, in the exercise of their voting rights in respect of the ordinary shares in the capital of the company, at an annual general meeting of the Fund to be held at 09:30 on Friday, 16 August 2013 at 2nd Floor Boardroom, Investec Bank Limited, 100 Grayston Drive, Sandown, Sandton 2196.

I/We: (please print names in full)

of (address)

being the holder/s of linked units of R10.00 each in the Fund, appoint (see note 1)

1. or failing him/her,

2. or failing him/her,

3. the chairman of the annual general meeting

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering, and if deemed fit, passing, with or without modification, the ordinary and special resolutions to be proposed thereat and at any adjournment thereof and to vote for and/or against such resolutions and/or abstain from voting in respect of the share component of the linked units registered in my/our name/s, in accordance with the following instructions (see note 3)

Number of votes(one vote per linked unit)

For Against Abstain

Ordinary resolution No 1: To re-elect Michael P Crawford as a director of the Fund

Ordinary resolution No 2: To re-elect Moses M Ngoasheng as a director of the Fund

Ordinary resolution No 3: To re-elect Constance M Mashaba as a director of the Fund

Ordinary resolution No 4: To elect Luigi LM Giuricich as a director of the Fund

Ordinary resolution No 5: To elect Graham R Rosenthal as a member of the audit and risk committee

Ordinary resolution No 6: To elect Michael P Crawford as a member of the audit and risk committee, subject to his re-election as a director pursuant to ordinary resolution No 1

Ordinary resolution No 7: To elect Constance M Mashaba as a member of the audit and risk committee, subject to her re-election as a director pursuant to ordinary resolution No 3

Ordinary resolution No 8: To re-appoint Ernst & Young Inc. as designated auditors of the Fund for the year to 31 March 2014

Ordinary resolution No 9: To provide the directors or the company secretary with the authority to take action in respect of the resolutions approved by linked unitholders

Ordinary resolution No 10: Authorising the directors to allot and issue authorised but unissued linked units

Special resolution No 1: To provide the directors with general authority to allot and issue 47 583 000 (6.96%) of the authorised but unissued linked units for cash

Special resolution No 2: To provide the directors with general authority to acquire linked units

Special resolution No 3: Directors’ remuneration

Special resolution No 4: Financial assistance

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Form of proxy

Certificated linked unitholders If you are a certificated linked unitholder or have dematerialised your linked units with ‘own name’ registration and you are unable to attend the annual general meeting of the Fund to be held at 09:30 on Friday, 16 August 2013 in the 2nd Floor Boardroom, Investec Bank Limited, 100 Grayston Drive, Sandown, Sandton 2196 and wish to be represented thereat, you are requested to complete and return this form of proxy in accordance with the instructions contained herein and to lodge it with, or post it to, the Transfer Secretaries, namely Computershare Investor Services (Pty) Ltd, so as to be received by them by no later than 09:30 on Wednesday, 14 August 2013.

Dematerialised linked unitholders other than those with ‘own name’ registration If you hold dematerialised linked units in the Fund through a CSDP or broker other than with an ‘own name’ registration you must timeously advise your CSDP or broker of your intention to attend and vote at the annual general meeting or be represented by proxy thereat in order for your CSDP or broker to provide you with the necessary letter of representation to do so, or should you not wish to attend the annual general meeting in person, you must timeously provide your CSDP or broker with your voting instruction in order for the CSDP or broker to vote in accordance with your instruction at the annual general meeting.

Signed at: on 2013

Signature: Assisted by me where applicable:

Name: Capacity: Signature:

Please read the notes that follow.


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Notes and summary of rights under section 58 of the Companies Act, 20081. A linked unitholder entitled to attend

and vote at the annual general meeting is entitled to appoint any one or more individual (who need not be a linked unitholder of the company) as a proxy to attend, speak and vote in his place at the annual general meeting, provided that, if more than one proxy is concurrently appointed by a linked unitholder, each proxy is appointed to exercise the rights attached to different shares held by that linked unitholder. Such linked unitholder may insert the name of a proxy or the names of two alternative proxies of the linked unitholder’s choice in the space provided, with or without deleting ‘the chairman of the meeting’, provided that any such deletion must be signed in full by the linked unitholder. The person whose name stands first on the proxy form and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow. Should a proxy not be specified, this will be exercised by the chairman of the annual general meeting.

2. A linked unitholder or his proxy shall have one vote for every share held. You are not obliged either to cast all your votes or to cast all your votes in the same way. Please instruct your proxy how to vote by either:

– marking the appropriate box with an ‘X’ next to the resolution (i.e. in favour of and/or against and/or by way of abstention), in which event the proxy will cast all your votes in the manner so specified; or

– setting out the number of votes to be cast in the appropriate box next to the resolution, provided that, if for any resolution the aggregate number of votes to be cast would exceed the total number of shares held, you will be deemed to have given no specific instruction as to how you wish your proxy to vote in respect of that resolution.

Your proxy will have discretion to vote in respect of your total holding on any resolution on which you have not (or are deemed not to have) given specific instruction as to how to vote and, unless instructed otherwise, on any business which may properly come before the meeting.

Notes to the form of proxy

3. The date must be filled in on this form of proxy when it is signed

4. If you are signing in a representative capacity, whether for another person or for an organisation, then, in order for this form to be valid, you must include a power of attorney or other written authority that authorises you to sign (or a certified copy of such power or authority).

5. In the case of a company, the proxy form should either be sealed by the company or signed by a director or an authorised signatory (and the provisions of paragraph 4 shall apply to such authorised signatory).

6. In the case of joint linked unitholders only one need sign. If more than one joint linked unitholder votes, whether in person or by proxy, only the most senior linked unitholder who casts a vote, whether in person or by proxy, will be counted. For this purpose, seniority is determined by the order in which linked unitholders’ names appear in the securities register for that linked unit.

7. Any alteration or correction made to this form of proxy must be signed in full and not initialled by the signatory or signatories.

8. A minor must be assisted by his/her parent/guardian and the relevant documentary evidence establishing his/her legal capacity must be attached to this form of proxy unless previously recorded by the company or waived by the chairman of the annual general meeting.

9. The chairman of the annual general meeting may reject or accept any proxy form which is completed and/or received other than in compliance with these notes.

10. The return of this form of proxy will not prevent you from attending the meeting and voting in person.

11. A proxy may not delegate his/her authority to act on behalf of the linked unitholder, to another person.

12. The appointment of a proxy or proxies:

• is suspended at any time to the extent that the linked unitholder chooses to act directly and in person in the exercise of any rights as a linked unitholder;

• is revocable in which case the linked unitholder may revoke the proxy appointment by:

– cancelling it in writing or making a later inconsistent appointment of a proxy; and

– delivering a copy of the revocation instrument to the proxy and to the company.

13. Should the instrument appointing a proxy or proxies have been delivered to the company, as long as the appointment remains in effect, any notice that is required by the Companies Act, 2008, or the company’s Memorandum of Incorporation to be delivered by such company to the shareholder, must be delivered by such company to:

• the linked unitholder; or

• the proxy or proxies, if the linked unitholder has directed the company to do so in writing and has paid any reasonable fee charged by the company for doing so.

14. The proxy appointment remains valid only until the end of the relevant meeting at which it was intended to be used (including any adjournment thereof), unless revoked as contemplated in section 58(5) of the Companies Act, 2008.

15. It is requested that this form of proxy be deposited at the company’s transfer secretaries:

Computershare Investor Services (Pty) Ltd

70 Marshall Street Johannesburg 2001

PO Box 61051 Marshalltown 2107

not later than 09h30 (South African time) on Wednesday, 14 August 2013.


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Notes

Investec Property Fund Lim

ited integrated annual review and financial statem

ents2013

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