Media Release



Cape Town – Cape-based Tower Property Fund delivered a resilient
performance in an extremely challenging operating environment in the year to
May 2017, increasing revenue by 19% to R447 million and distributable earnings
by 18% to R262 million.

During the year Tower further diversified its portfolio with the acquisition of a
R1 billion (€66.4 million) retail property portfolio in Croatia comprising four high-quality
shopping centres. This brings the value of Tower’s properties in the
country to R1.4 billion (€96 million). Tower’s Croatian office property, VMD,
continues to perform well and is widely regarded as the highest quality office
property in Zagreb.

Tower declared a distribution of 77.1 cents per share for the year, 16% lower
than the prior year mainly due to the decision to no longer distribute once-off
earnings to shareholders as well as the uncertainty around the payment of arrear
rental of its largest Croatian tenant, Konzum. The number of shares in issue
increased by 42%.

Chief executive Marc Edwards said the Tower board believes that the distribution
of once-off earnings is detrimental to the sustainable growth in core property
earnings, and this is in line with best practice recommendations of the SA Real
Estate Investment Trust (REIT) Association.

Tower internalised its asset management company earlier in the year, with
management and shareholders now directly aligned to grow Tower’s core
earnings in the future.

Tower’s R5 billion portfolio of 49 properties is spread across retail (46%), office
(47%) and industrial (7%). Nine non-core properties valued at R519 million are
currently being sold and the proceeds will be invested in the fund to maximise

Tower’s shopping centres in Croatia are anchored by Konzum, the largest retailer
in the country. The fund experienced unexpected problems when Konzum was
placed under tremendous financial pressure as a result of its parent company,
Agrokor, being placed under business rescue due to large debt levels. Tower is
co-operating with the commissioner of Agrokor to ensure the fund’s rights are
protected. Tower’s retail properties are strategically important to Konzum and
should deliver strong growth into the future, said Edwards.

“The tenant failure in Croatia and the deteriorating political landscape in South
Africa has made recent months particularly difficult for Tower. The slowing
consumer economy has negatively affected the performance of several large
retailers which is affecting the property market and sentiment in the country.”
“It is most encouraging, however, that Tower’s properties are performing above
the SA Property Owners Association benchmarks,” he said.

Tower expects to generate once-off capital profits in the next 6 to 36 months
through a range of asset management initiatives in the portfolio. This includes the
development of between 70 and 90 residential apartments at the Cape Quarter,
Tower’s largest asset in South Africa. The capital profits will be reinvested in the

The first phase of the project at 32 Napier Street, which includes 19 apartments,
has progressed well and is expected to be completed by mid-2018. A further 54
to 74 apartments will be developed at the adjacent Cape Quarter Piazza, with construction commencing in the second quarter of 2018.

For further information kindly contact

Marc Edwards
Tower Property Fund
082 885 8805