GROWTHPOINT RETAIL UPDATE

STEPHAN LE ROUX – Director: Retail

&

NEIL SCHLOSS – Head of Asset Management: Retail

INDEX

1. TRADING PERFORMANCE

2. GROWTHPOINT TRADING DENSITY GROWTH VS BENCHMARK

3. VACANCY, RENEWAL TRENDS AND LEASING UPDATE

4. RENEWAL SUCCESS RATE

5. ARREARS

6. IMPACT OF COMPETITION

7. DEVELOPMENTS

8. ACQUISITIONS AND DISPOSALS

9. EDCON EXPOSURE

10. ONLINE RETAIL

2,5662,442 2,497

3,467

1,905

2,4462,600

2,303

3,346

2,944

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Total Portfolio Large Regional Small Regional Community Centre Value Centre Retail Hyper

Growthpoint IPD

TRADING PERFORMANCE

12 MONTH ROLLING TRADING DENSITY BY CENTRE CLASSIFICATION – SEPTEMBER 2018

TRADING PERFORMANCE

12 MONTH ROLLING TRADING DENSITY BY LSM – SEPTEMBER 2018

2,566

2,194

2,428

3,371

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Total Portfolio Lower Income Middle Income Upper Income

TRADING PERFORMANCE

LIST OF CENTRES BY LSM GROUPS

CENTRELSM GROUP:

LOWER INCOME

CITY MALL Lower Income

VILLAGE SQUARE Lower Income

FESTIVAL MALL Lower Income

GOLDEN ACRE Lower Income

CENTRELSM GROUP:

MIDDLE INCOME

THE BRIDGE Middle Income

FOURWAYS CROSSING Middle Income

KOLONNADE Middle Income

VAAL MALL Middle Income

WOODMEAD Middle Income

KEY WEST Middle Income

N1 CITY MALL Middle Income

NORTHGATE Middle Income

GREENACRES Middle Income

LAKESIDE MALL Middle Income

14TH AVENUE Middle Income

HELDERBERG HYPER Middle Income

CENTRELSM GROUP:

MIDDLE INCOME

HILLCREST CORNER Middle Income

HOWARD CENTRE Middle Income

BAYSIDE MALL Middle Income

PAARL MALL Middle Income

RIVER SQUARE Middle Income

WATERFALL MALL Middle Income

LONGBEACH MALL Middle Income

ALBERTON CITY Middle Income

CITY VIEW Middle Income

EAST RAND VALUE Middle Income

CENTRELSM GROUP:

UPPER INCOME

CONSTANTIA VILLAGE Upper Income

GARDENS CENTRE Upper Income

BROOKLYN MALL Upper Income

LA LUCIA MALL Upper Income

WALMER PARK Upper Income

WATERCREST MALL Upper Income

TRADING DENSITY GROWTH – LARGE REGIONAL

1.4 0.2 0.8 0.5

-0.4 -0.4 -1.7

4.4

16.6

2.5

-6.3

-10

-5

0

5

10

15

20

BROOKLYN MALL FOURWAYSCROSSING

KOLONNADE VAAL MALL WOODMEAD FESTIVAL MALL KEY WEST N1 CITY MALL NORTHGATE GREENACRES LAKESIDE MALL

TRADING DENSITY GROWTH – SMALL REGIONAL

-5.2

7.5

13.6

-18.0

-0.8 -0.2

2.62.1

-1.6

0.4

-2.9

-20

-15

-10

-5

0

5

10

15

LA LUCIA MALL WALMER PARK WATERCRESTMALL

BAYSIDE MALL PAARL MALL RIVER SQUARE WATERFALLMALL

LONGBEACHMALL

ALBERTON CITY CITY VIEW GOLDEN ACRE

TRADING DENSITY GROWTH – COMMUNITY CENTRES

5.4

9.3

4.7 4.6

10.8

-2.2

0.8

-4

-2

0

2

4

6

8

10

12

CONSTANTIA VILLAGE GARDENS CENTRE HILLCREST CORNER HOWARD CENTRE CITY MALL THE BRIDGE VILLAGE SQUARE

1.6%

3.3%

2.2%

5.3%

0.5%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

Growthpoint

Redefine

Liberty two°Degrees

Attacq

Hyprop

GROWTHPOINT TRADING DENSITY GROWTH VS BENCHMARK

June 2018

September 2018

May 2018

June 2018

June 2018

0

1

2

3

4

5

6

7

8

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-

17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-1

7

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-

18

Aug-1

8

Sep-1

8

Average Renewal Lease Period Vacancy Factor Weighted Average Renewal Growth

Weighted Average Future Escalations on Renewals Poly. (Weighted Average Renewal Growth)

VACANCY, RENEWAL TRENDS AND LEASING UPDATE

Years

RENEWAL SUCCESS RATE84.6

5%

85.1

6%

86.7

5%

86.3

7%

86.2

2%

83.1

4%

81.1

8%

79.5

1%

80.8

7%

70.3

7%

73.6

0%

75.6

4%

79.7

5%

84.4

3%

84.3

2%

83.5

4%

81.4

0%

79.2

5%

76.9

0%

80.0

0%

81.8

2%

86.5

5%

84.7

9%

82.4

8%

Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18

Renewal Success Rate 2 per. Mov. Avg. (Renewal Success Rate)

ARREARS

9.62%9.34%

9.00%

11.27%

9.96%

8.79%8.50%

9.39%9.70%

8.84%

8.22%

7.38%

8.84%

36,309 37,768

35,835

44,919

40,949

35,734

33,746

38,001 39,438

35,463

32,346

28,736

35,240

11,154 11,593 11,579 12,15710,744 10,709 10,693 10,195

11,2009,803 10,368

9,224 9,757

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0%

2%

4%

6%

8%

10%

12%

14%

16%

Sep'1

7

Oct'17

Nov'1

7

Dec'1

7

Jan'1

8

Feb'1

8

Mar'18

Apr'18

May'1

8

Jun'1

8

Jul'1

8

Aug'1

8

Sep'1

8

Tota

l Arr

ears

and P

rovis

ion f

or

Arr

ears

(R'0

00)

Arr

ears

as

% o

f Tota

l Collecta

ble

s

Arrears as % of Total Collectables Total Arrears (R'000) Provision for Bad Debt (R'000)

IMPACT OF COMPETITION

1. Bayside Mall

▪ Competition – Table Bay Mall – Opened September 2017

▪ Full Competition in Primary Catchment Area

Opened Sep’17

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-

17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-1

7

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-

18

Aug-1

8

Sep-1

8

Month-on-Month Trading Density Growth Month-on-Month Growth in Footcount

-15%

-10%

-5%

0%

5%

10%

15%O

ct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-

17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-1

7

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-

18

Aug-1

8

Sep-1

8

Month-on-Month Trading Density Growth Month-on-Month Growth in Footcount

IMPACT OF COMPETITION

2. La Lucia

▪ Competition – Cornubia Mall – Opened October 2017

Opened Oct’17

DEVELOPMENTS

Development/ Redevelopment Tenancy Estimated Completion

Date

Capex Approval

(Rmil)

CO

MPLET

ED

PA

ST

3 Y

EA

RS

VAAL Mall Extension 12/2016 294.00

Greenacres Extension 07/2017 290.00

Fourways Crossing Refurbishment and Extension 06/2017 57.50

Northgate (50%)Downsizing of the 22 000m2 Pick n Pay Hypermarket

to accommodate a new flagship Pick n Pay10/2017 43.5

Kolonnade (50%)Development of outdoor piazza accommodating

casual dining12/2017 16.00

APPR

OV

ED

River Square Revamp and relocation of Tenants 12/2018 65.00

Festival Mall Refurbishment 04/2019 58.15

Lakeside Mall Refurbishment 04/2019 55.00

Walmer Park Redevelopment 06/2019 148.64

La Lucia Refurbishment 11/2019 55.00

Waterfall Mall Dischem Redevelopment 04/2021 19.00

PLA

NN

ED Paarl Mall Extension

Longbeach Mall Extension

Lakeside Mall Cinema Redevelopment

ACQUISITIONS AND DISPOSALS

DISPOSALS – PAST 3 YEARS

No BUILDING AREA DATE OF DISPOSAL GLA m²SELLING PRICE

Rm

1 Picbel Parkade KZN 02/03/2017 13,818 271.3

2 Grayston Shopping Centre Sandton, JHB 22/05/2014 4,346 138.0

3 Jet Bloemfontein Bloemfontein 26/09/2017 5,516 38.3

4 OK Bazaars Empangeni Empangeni, KZN 18/07/2017 13,660 172.5

5 Hatfield Plaza Hatfield, PTA 19/03/2018 19,332 285.3

6 Hatfield Mall Hatfield, PTA 19/03/2018 6,332 61.4

7 Campus Building Hatfield, PTA 19/03/2018 3,179 39.0

8 Standard Plaza Hatfield, PTA 19/03/2018 2,733 32.0

9 VAAL Mall – 11.19% Vanderbijl Park 11/04/2017 7,387 209.3

AQUISITIONS – PAST 3 YEARS

No BUILDING AREA DATE OF AQUISITION GLA m²PURCHASE PRICE

Rm

1 N1 CITY MALL – 58% Goodwood, CT 03/10/2017 36,794 922.1

EDCON EXPOSURE – BY BRAND

BRAND

EXPOSURE AS AT

30 JUNE 2018

GLA (m²)

Active 1,515

Boardmans 3,764

CNA 9,198

Connect 188

Edgars 76,965

Jet and Jetmart 19,722

Jetmart 4,315

MAC 46

Red Square 923

116,636

NUMBER OF STORES

EDCON EXPOSURE – EDGARS BY SIZE

EDGARS EXPOSURE AS AT 30 JUNE 2018

GLA (m²) NUMBER OF STORES

< 3,000m² 18,955 9

3,000m² - 5,000m² 33,155 9

> 5,000m² 24,855 4

76,965 22

BY GLA

EDCON EXPOSURE – EDGARS BY TRADING DENSITY

EDGARS EXPOSURE AS AT 30 JUNE 2018

AVERAGE TRADING DENSITY NUMBER OF STORES

< R1,500 / m² 1,091 15

> R1,500 / m² 1,783 3

1,214 18Excludes Edgars Bloem, Stanger, Watercrest

Mall (50%) and The Avenues

NUMBER OF STORES

< R1,500 / m² > R1,500 / m²

ONLINE RETAIL: SOUTH AFRICAN PERSPECTIVE

Globally online retail represents 11% of total sales with China at 20%

SOUTH AFRICA

R10bil 2017 (R15bil incl travel)

Amarex Global Shopper (cross border) 57% customer growth 2017

Crossborder purchases (46% apparel, 24% electronics, rest lower)

BIGGEST NON-SERVICE ONLINE SHOPS IN RSA

% Type

Takealot 12.5 General

Apple App Store 5.5 Electronics

Pick n Pay 5.1 Food

Woolworths 2.7 Food

Sportsmans Warehouse 2.2 Specialist

Incredible Connection 2.0 Electronics

Exclusive Books 1.8 Specialist

HomeChoice 1.6 General

Amazon 1.5 General

MRP 1.5 Fashion

Netflorist 1.5 Specialist

Spree 1.4 Fashion

Total 39.3

Effective Measure Survey“ E-Commerce Industry report 2017” (8751 respondents in RSA between July and August 2017)

Convenience and price are the primary reasons why respondents shop online. 42% stated convenience as a major benefit as

it saves them time and hassle of shopping in-store, including travel time and parking

19%

23%

11%

8%

3%

12%

8%

6%

6%

4%

0% 5% 10% 15% 20% 25%

Process convenience

Time Convenience

Choice

Access to product information

Access to consumer product reviews

Special offers

Comparing prices

Cheap alternative

Access to international stores

Other

ONLINE SHOPPING / Motivations

MAIN REASONS FOR SHOPPING ONLINE?

49 46

35

43

12

10

11

13

811

11

11

7 12

12

6

0

10

20

30

40

50

60

70

80

90

100

2013 2014 2016 2018

%

Convenience Cheaper prices Faster/saves time Variety of choices

7%

10%

10%

4%

11%

5%

10%

22%

5%

9%

8%

0% 5% 10% 15% 20% 25%

DVDs, Videos + Music

Books

Event Tickets

Toys + Games

Software + Computing

Electronics + Accessories

Clothing + Acessories

Travel Purchases

Food + Drink

Health, Beauty + Gifts

Other

Percentage

Item

Purc

hase

d

ONLINE SHOPPING / Recent Purchases

The most popular items bought online don’t require delivery and are available almost instantly after purchase.

These include travel tickets, books, shows/sporting event tickets and hotel reservations

16%

3%

13%

19%

10%

9%

14%

1%

6%

9%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Better availability of product information

Better packaging (to prevent damage during…

Easier to use product sites

Cheaper or free delivery

Short delivery periods

An existing and simple returns process

A payment method one can trust

If more of my family or friend do it

More information about special offers/promotions

Loyalty Rewards

ONLINE SHOPPING Improvements

HOW DO YOU NORMALL RECEIVE THE PRODUCTS BOUGHT ONLINE?

73

79

88 87

0

10

20

30

40

50

60

70

80

90

100

2013 2014 2016 2018

%

BY COURIER

CONCLUSION

– Main criteria for on-line shopping: Price and Convenience

– Fast and free delivery is biggest motivator for concluding sale

– Internationally, on-line clothing/fashion sales are expected to level out at 25% but expected to be

significantly lower in RSA

– Grocery purchases on-line showing slow uptake

– Cross-border sales are greater in developing countries as connected consumers purchase products

not locally available. In RSA Amazon’s support declined from 53% to 13% since 2016 due to exchange

rate, import duties and delivery costs (SACSC Research 2018)

– Internationally, 45% of on-line customers returned at least one item resulting in transactional loss

for retailer. In RSA, lower due to costs and inconvenience in returning

– In-store shopping increasing internationally - 2015 36% of respondents shopped instore weekly,

increasing to 40% (2016) and 44% (2017) (PWC 2018 Global Consumer Insights Survey)

THANK YOU