Copyright © PSG

Resilient REIT Ltd8 January 2018

2

Copyright © PSG

Contents

1. Nature of business

2. Recommendation

3. Financial review

4. Portfolio review

5. Company guidance

6. Portfolio guidance

3

Copyright © PSG

Nature of business01

4

Copyright © PSG

Nature of business

• Real Estate Investment Trust (REIT)• Portfolio of dominant regional malls and shopping centres• Owns a portfolio of listed property securities• Portfolio consists of:

• Jubilee Mall, Irene Mall, The Galleria, The Grove Mall etc.

Source: Resilient Portfolio

5

Copyright © PSG

Cross Holding Structure

6

Copyright © PSG

Recommendation02

7

Copyright © PSG

Recommendation

• Trading at a 33% premium to its NAV of 7 180cps (with listed investments adjusted to market value)

- Below its long-term average

• Expect that share price will remain under pressure

- Uncertainty around the group’s reason behind cross holdings in other listed property companies

• Group’s listed assets contribute approximately 3 917cps to current share price

• NAV growth at year-end was supported by growth in listed investments

- Unlisted portion of NAV remained flat

• Reversed since year-end with all related listed investments coming under severe pressure

• Large share price movements in the group’s listed assets

• Could materially impact the group’s NAV

- Given the large weight (55.5% on 31 Dec 2017) of listed assets in portfolio

8

Copyright © PSG

Recommendation

• Each of group’s listed assets contribute the following to Resilient’s share price: - Fortress (FFB) contributes 9.3% (892cps) - NEPI Rockcastle (NRP) contributes 22.6% (2 165cps) - Greenbay (GRP) contributes 7.8% (746cps) and - Hammerson (HMN) contributes 1.2% (114cps)

• Large exposure to offshore assets• Rand movements likely to have an impact on value of portfolio • Focus on upgrading and redevelopment of asset base• Direct property portfolio not diversified across sectors

- Solely of retail assets- Can pose a risk for the group

• Management indicated a 13.0% dividend growth for FY18 and a 12.0% growth in FY19• Higher end of sector average• Dividend yield of 6.3% - below the sector average

9

Copyright © PSG

Financial review03

10

Copyright © PSG

Financial review

• Net rental revenue rose by 14.8% to R846.0m

• Gross property expense ratio declined to 36.1% (2016: 36.3%)

• Net property expense ratio increased to 18.5% (2016: 16.9%)

• Dividends declared of 306.46cps (13.4% increase)

• Resilient’s loan-to-value (LTV) ratio improved to 20.1% (2016: 23.8%)

• On the release LTV increased to 22.5%

• Updated LTV based on current market prices

- No adjustment made to the value of investment property

11

Copyright © PSG

Portfolio Review04

12

Copyright © PSG

Portfolio Review

• South Africa – 40.1%

• Portugal – 3.2%

• Nigeria – 1.2%

• Listed Portfolio – 55.5%

13

Copyright © PSG

Divisions

• South Africa:• Accounts for majority (95.0%) of the portfolio’s rental revenue • Malls experienced retail sales growth of 5.3%

• Limpopo:• Group’s largest South African region based on value• Sales growth of 4.9%

• Kwa-Zulu Natal:• Retails sales growth of 10.5%, • Strong performance by Boardwalk Inkwazi and The Galleria

• Vacancy rates improved marginally from 1.9% to 1.7% • The largest vacancy -Arbour Crossing - improved to 12.5% from 17.2%

• Negotiations to introduce gym at Arbour Crossing, • Will reduce most of vacant space

14

Copyright © PSG

Divisions

• Portugal: • Retail assets like-for-like sales growth:

• Forum Columbia 5.1%

• Forum Viseu 1.1%

• Vacancies deteriorated marginally to 3.1% (Jun 2017: 2.8%)

• Nigeria:• Exposure relatively small at R663.0m

• Strong retail sales growth offset by a stronger rand against the naira

• Vacancies improved to 8.1% (Jun 2017: 13.5%)

• Management expects vacancies to decline to 5.0%

15

Copyright © PSG

Company guidance05

16

Copyright © PSG

Company guidance

• South African portfolio to benefit from recovery in local market and improved commodity prices.

• European portfolio expected to be impacted by rising interest rates

- However, strong economic growth is projected across Europe

• Increase direct and indirect offshore asset exposure to 60.0% from 46%

• Suitable acquisitions and development opportunities.

• Focused on owning dominant, regional, retail centres & redevelopment of existing centres to maintain their relevance.

• Challenges for the group:

- Adoption of online shopping

- Volatile political and economic environment

- Competitive international markets

17

Copyright © PSG

Portfolio guidance06

18

Copyright © PSG

Portfolio Guidance

Source: Bloomberg

• JSE Capped Swix weight of 0.74%

• We recommend a portfolio exposure of 0%

19

Copyright © PSG

Disclaimer

The information and content made available through this webinar is provided by PSG as general information about the companies and their products and/or services. PSG does not guarantee the suitability or value of any information or particular investment source. Any information in this webinar is provided "as is" and not intended nor does it constitute financial, tax, legal, investment, or other advice. Nothing contained in this webinar constitutes a solicitation, recommendation, endorsement or offer by PSG. You should consult your financial adviser before relying on any information in this webinar. This webinar may contain views or opinions that are not necessarily those of PSG.

Copyright © PSG

FAIS Affiliates of the PSG Konsult Group are authorised financial services providers.