Notice of General Meeting and Withdrawal of Cautionary in relation to the Encha Transaction VUKILE PROPERTY FUND LIMITED (Incorporated in the Republic of South Africa) (Registration number 2002/027194/06) JSE Share code: VKE NSX Share code: VKN ISIN: ZAE000056370 (Granted REIT status with the JSE) (“Vukile” or “the company”) NOTICE OF GENERAL MEETING AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT IN RELATION TO THE ENCHA TRANSACTION INTRODUCTION Unitholders are referred to the previous announcements released on SENS relating to Vukile’s proposed empowerment transaction (“the transaction”) with the Encha Property Group (“Encha”). The transaction will involve the acquisition by Vukile of four to five investment grade substantially national government tenanted buildings for an aggregate acquisition cost of approximately R1.335 billion of which: - four of the buildings being Navarre Wachthuis, the Koedoe Arcade (Pretoria), De Bruyn Park (Pretoria) and the Bloemfontein Fedsure Building (the “Acquisition properties”) will be acquired with effect from the earlier of 1 August 2013 or the first day of the calendar month following the month in which the last of the suspensive conditions to the transaction are fulfilled; and - the Pretoria Momentum building (the “Option Property”) will be acquired subject to the exercise of an option, the exercise of which is conditional on the conclusion of a minimum five year lease renewal with the Department of Public Works (“DPW”) as tenant (“the Option”). This deal structure protects Vukile against the risks of acquiring the Momentum Pretoria building without a minimum five year lease with the DPW having been secured over the Momentum Property building and facilitates the determination of the purchase price payable for the Momentum Pretoria building with reference to the agreed contractual net property income to be derived from the lease extension; - the Encha group will invest its approximate R490 million (assuming the Option is exercised) of ungeared net equity into Vukile as part of a broader long term and sustainable transformation transaction; - an equity funding platform (the “equity funding platform”) will be established to facilitate the acquisition by Encha of up to R1 billion additional equity in Vukile which will both entrench the Encha group’s strategic equity holding in Vukile and enhance Vukile’s empowerment credentials. NOTICE OF GENERAL MEETING Unitholders are advised that a circular (“the circular”) has today been posted to unitholders and which circular contains a notice of general meeting of Vukile unitholders (the “general meeting”). The general meeting will be held at 11:00 on 5 July 2013 at the registered offices of Vukile (One-on-Ninth, Corner Glenhove Road and Ninth Street, Melrose Estate, 2196). FINANCIAL EFFECTS AND FORECASTS Pro forma financial effects The unaudited pro forma financial effects of the transaction on Vukile’s net asset value and net tangible asset value per linked unit, as at 31 March 2013 are set out below. The unaudited pro forma financial effects are the responsibility of the directors of Vukile and have been prepared for illustrative purposes only, to provide information on how the transaction may have impacted on the historical financial results of Vukile for the year ended 31 March 2013. Due to its nature, the pro forma financial information may not give a fair reflection of Vukile’s financial position, changes in equity, results of operations and cash flows subsequent to the transaction. The table below reflects the unaudited pro forma financial effects of the transaction on a Vukile unitholder: As at 31 After acquisition % change After acquisition % change After equity funding % change March 2013 of Acquisition of Pretoria platform specific properties Momentum issue for cash building Net asset value per 13.69 13.78 0.7% 13.85 0.5% 14.37 3.7% linked unit (R) et tangible asset 13.19 13.31 0.9% 13.40 0.7% 13.96 4.2% value per linked unit (R) Net asset value per 13.71 13.79 0.6% 13.86 0.5% 14.38 3.7% linked unit excluding deferred tax (R) Net tangible asset 13.20 13.33 1.0% 13.41 0.6% 13.97 4.2% value per linked unit excluding deferred tax (R) Notes and assumptions: - The amounts set out in the “As at 31 March 2013” column have been extracted, without adjustment, from the audited results of Vukile for the year ended 31 March 2013. - The adjustments reflect the impact on the historical financial position of Vukile as at 31 March 2013 assuming that the transaction was implemented on 31 March 2013. - The pro forma financial effects of the acquisition on Vukile’s earnings and headline earnings per linked unit have not been disclosed as Vukile has published a distribution forecast of (i) the Acquisition properties and (ii) the Acquisition properties and the Option Property. - The pro forma financial effects of the specific issue of units for cash under the equity funding platform on Vukile’s earnings and headline earnings per linked unit have not been disclosed as Vukile has received a dispensation from showing the pro forma statement of comprehensive income and effects of such specific issue of units for cash in terms of paragraph 11.13 (note 2) of the JSE Listings Requirements. Distributable income forecasts The distributable income forecasts of the Acquisition properties and the Option Property have been set out on the following two scenarios: - Scenario 1 assumes only the Acquisition properties are acquired during the forecast period and with effect from 1 August 2013; and - Scenario 2 assumes the Acquisition properties are acquired with effect from 1 August 2013 and the Option Property is acquired with effect from 1 November 2013. Vukile unitholders are advised that such forecasts should be read in conjunction with the reporting accountants report thereon set out in Annexure 7 to the circular. General notes and assumptions to the forecasts: - The forecasts have been prepared under IFRS, using the accounting policies of the issuer in the manner as outlined in the SAICA Revised guide on forecasts issued in September 2005. - Leases expiring during the periods have been forecast on a lease-by-lease basis, with particular regard as to the likelihood of existing tenants renewing their leases. Where appropriate, a vacancy provision has been allowed based on the expected lettability of the particular premises. Revenues forecast for the period after the expiry of the leases have been included in uncontracted revenue and have been based on current market-related rentals. The annual escalations in rental income (including recoveries and other income) are forecast as follows: i. Once-off escalation post expiry of existing lease 6% to 7% ii. Expected escalation rates on new leases 8% to 10%; and iii. Operating cost and rates recoveries are based on the existing contracted arrangements. Scenario 1 Forecast for the eight Forecast for the year months ending ending 31 March 2014 31 March 2015 R'000 R'000 Total revenue 107 215 166 170 Forecast net profit from property operations 78 604 120 115 (Loss) /Profit after taxation (88 008)* 62 103* Debenture interest 48 386 80 841 Initial yield 9.5% 9.5% Rental income is calculated on the following bases: - Contracted rental income for the 8 months to 31 March 2014 is 88% and for the 12 months to 31 March 2015 is 86% based on existing signed lease agreements; and - Uncontracted rental income for the 8 months to 31 March 2014 is 12%; and for the 12 months to 31 March 2015 is 14%. Total revenue includes straight-line rental accruals of R11.2 million for the 8 months to 31 March 2014 and R11.0 million for the year ending 31 March 2015. Scenario 2 Forecast for the eight Forecast for the year months ending ending 31 March 2014 31 March 2015 R'000 R'000 Total revenue 126 170 213 624 Forecast net profit from property operations 86 263 138 566 (Loss) /Profit after taxation (97 806)* 81 208* Debenture interest 51 310 92 197 Initial yield 9.5% 9.5% Rental income is calculated on the following bases: - Contracted rental income for the 8 months to 31 March 2014 is 94% and for the 12 months to 31 March 2015 is 95% based on existing signed lease agreements; and - Uncontracted rental income for the 8 months to 31 March 2014 is 6%; and for the 12 months to 31 March 2015 is 5%. Total revenue includes straight-line rental accruals of R11.6 million for the 8 months to 31 March 2014 and R11.9 million for the year ending 31 March 2015. * The loss after taxation for the eight months ending 31 March 2014 arises from a fair value adjustment of the Acquisition properties and, if applicable, the Option Property, as the directors’ valuations of the respective properties are lower than the purchase price payable for the respective properties. WITHDRAWAL OF CAUTIONARY Following the publication of the financial effects of the transaction unitholders are no longer required to exercise caution when dealing in their Vukile units in relation to the transaction. Unitholders are however referred to the announcement released on SENS on 26 April 2013 in relation to the potential acquisition by Vukile of the Wingspan property portfolio and are advised that discussions in this regard are ongoing and as such unitholders are advised to continue to exercising caution when dealing in their Vukile units. Johannesburg 5 June 2013 Corporate adviser and JSE sponsor: Java Capital Reporting accountants: Grant Thornton Legal advisor: Bowman Gilfillan Incorporated NSX sponsor: IJG Securities (Pty) Ltd Date: 05/06/2013 05:11:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.