1. DEUTSCHE BANK PRESENTATION 23/24 November 2015
Impact of new competition on existing shopping centre performance

2. Where are we? And 7.5% p.a. growth in shopping centre GLA since 2005
More than 2000 shopping centres
6th highest per capita shopping centre GLA in world
And
2.2mil m² shopping centres on drawing board
Mall of Africa, Ballito, Springs, Cornubia, Menlyn et al in the ground: additional 500k+ m2

3. The disconnect

8. Why the continuing development?
Extrapolation by retailers of “unusual” 2004 – 2007 trading performance
Retailer obsession with market share at expense of profitability
Retailer herd mentality
Relative low fixed costs in growing retailer space – labour & rental
Developers subsidizing store development costs
Long lag time between commitment and taking delivery
Poor market-demand research for both retailers and developers
Financial institutions eagerness to “grow” credit book
Availability of “put options” to listed REITS
REITS eagerness to increase exposure to retail assets
Poor/non-existent town planning and local authorities’ eagerness to grow tax base

9. Continuing decline in trading densities
Consequences:
Continuing decline in trading densities
Ongoing retailer cannibalization and margin compression
Increasing occupancy cost to turnover ratios leading to low rental growth
Increased operating costs at centre level – marketing
Over-capitalization in retail assets in order to compete
Declining values for owners and local authorities
“Dead Mall” syndrome & “still born” malls

10. PERFORMANCE RATING OF POST 1995 SHOPPING CENTRES
Excluding Rural and Township centres

11. PERFORMANCE RATING OF POST 1995 SHOPPING CENTRES

12. PERFORMANCE RATING OF POST 1995 SHOPPING CENTRES

13. COMPETING SHOPPING CENTRES: RUSTENBURG

14. Waterfall Mall & Value Centre
Analysis of competition impact: Growthpoint Portfolio
Waterfall Mall & Value Centre
Platinum Square
Date of Development
1998 & 2007
Nov-12
GLA - m2
59518
32300
Current Trading density
R2850/m2
Major Tenants
PnP, GAME, Woolworths, Clicks, Ster Kinekor, Truworths, Foschini, Mr Price, Corricraft, The Hub, Waltons
Checkers Hyper, Foodlovers Market, Sportsmans warehouse, MRP Home, Dion Wired, House & Home, Toys-R-Us, UFO Furniture

15. Performance also impacted by platinum mine strike in 2014
Level of Competition
Competition limited to non fashion retailers
Overall Trading Density change
Trading Density change excl PicknPay & GAME
Foot Counts Change
8.0%
7.0%
-8.0%
-3.5%
-5%
-5.0%
-4.2%
-6%
current
5.0%
7.1%
-2%
Trading Density change : to current
PicknPay
-32%
R80 mil p.a.
GAME
-30%
Incredible Connection
-25%
Identity
-18%
Ster Kinekor
-16%
Clicks
-9%
Edgars
-7%

16. COMPETING SHOPPING CENTRES: KRUGERSDORP/ROODEPOORT

17. Analysis of competition impact: Growthpoint Portfolio

18. Competition across all retailers
Level of Competition
Competition across all retailers
Overall Trading Density change
Trading Density change excl national retailers
Foot Counts Change
7.0%
7.4%
-3.0%
1.0%
-3%
current
6.0%
10.0%
Decline in Trading Density: Yr 1
Decline in Trading Density: Current year
GAME
-22%
Maxi's
-17%
Edgars
-11%
Foschini
-9%
Jewellery
-10%
-5%
-8%
Ackermans
-7%
PEP
Woolworths
-6%
PicknPay

19. COMPETING SHOPPING CENTRES: KLERKSDORP

20. Analysis of competition impact: Growthpoint Portfolio

22. Analysis of competition impact: Port Elizabeth

23. SIGNIFICANT TURNOVER CHANGE OVER PERIOD
Level of Competition
Competition across all retailers
WALMER PARK
GREENACRES
THE BRIDGE
Jun-15
-0.3%
-8.0%
-1.4%
Jul-15
7.0%
-10.0%
0.6%
Aug-15
-0.8%
-5.0%
4.5%
Sep-15
-1.3%
-4.0%
1.9%
SIGNIFICANT TURNOVER CHANGE OVER PERIOD
Edgars
-21%
-17%
Shoprite
-5.10%
Truworths
-9%
Jet
-7%
Cinemas
-18%
-29%
Cotton On
-26%
Duplicated stores
Lecreuset
-25%
Restaurants