Update In Relation To The Acquisition Of 2 Long Street Cape Town And Withdrawal Of Cautionary Announcement Spear REIT Limited (previously known as Arrow 2 Investments Proprietary Limited) Incorporated in the Republic of South Africa (Registration number: 2015/407237/06) Share code: SEA ISIN: ZAE000228995 (“Spear” or “the Company”) UPDATE IN RELATION TO THE ACQUISITION OF 2 LONG STREET CAPE TOWN AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1. INTRODUCTION Shareholders are referred to the announcement released by the Company on the Stock Exchange News Service of the JSE Limited (“SENS”) on 3 March 2017, in terms of which the Company advised shareholders that it had, through its subsidiary, Spear One Proprietary Limited, entered into an agreement (“Sale of Letting Business Agreement”) with Capital Propfund 1 Proprietary Limited (“Seller”) to acquire, as a going concern, the letting enterprise operated by the Seller on the property on Erf 9363 Cape Town, City of Cape Town, Western Cape, situated at 2 Long Street, Cape Town, Western Cape (“Property”) (“Acquisition”). As previously advised, Spear will hold a 70% interest in Spear One, with the balance being held by acquisition partners. The 30% interest that will be held by the acquisition partners will be funded by Spear at the prime interest rate plus 2% and will be secured by the acquisition partner’s interest in Spear One. 2. ADDENDUM TO THE SALE OF LETTING BUSINESS AGREEMENT Shareholders are hereby advised that the Company entered into an addendum to the Sale of Letting Business Agreement and that the terms of the Acquisition have been amended as follows: • the purchase consideration for the Acquisition has been reduced to R389 000 000; and • the Seller has provided an additional rental guarantee in respect of 87 parking bays on the Property that are unlet, limited to R1 000 (excluding VAT) per parking bay, per month, for a maximum period of 18 months from the Effective Date. 3. FORECAST FINANCIAL INFORMATION IN RESPECT OF THE ACQUISITION The forecast financial information relating to the Acquisition for the financial periods ended 28 February 2018 and 28 February 2019 are set out below. The forecast financial information has not been reviewed or reported on by a reporting accountant in terms of section 8 of the JSE Listings Requirements and is the responsibility of the Company’s directors. Forecast for Forecast for the 8 month the 12 month period ended period ended 28 February 28 February 2018 2019 Rental income 35 832 236 54 166 100 Straight-line rental accrual (191 043) (13 366) Gross income 35 641 193 54 152 734 Property expenses (10 625 390) (16 744 666) Net property income 25 015 803 37 408 068 Administration expenses (482 433) (923 316) Operating profit 24 533 370 36 484 752 Finance cost (13 104 291) (19 683 400) Finance income 4 370 255 6 564 375 Profit before taxation 15 799 334 23 365 727 Taxation - - Profit after tax 15 799 334 23 365 727 Adjusted for: Straight-line rental accrual 191 043 13 366 Total comprehensive income 15 990 378 23 379 093 Total comprehensive income attributable to: Distributable profit 12 504 341 18 334 677 Non-controlling interest 3 486 037 5 044 415 Total comprehensive income 15 990 378 23 379 093 Notes: a) Rental income includes gross rentals and other recoveries, but excludes any adjustment applicable to the straight lining of leases. b) Property expenses include all utility and council charges applicable to the Property. c) The forecast information for the 8 month period ended 28 February 2018 has been calculated from the anticipated Effective Date, being on or about 1 July 2017. d) The forecast distribution excludes straight-line rental accrual. e) Contracted revenue constitutes 68% of the revenue for the 8 month period ended 28 February 2018 and 43% of the revenue for the 12 month period ended 28 February 2019. f) Near-contracted revenue constitutes 32% of the revenue for the 8 month period ended 28 February 2018 and 57% of the revenue for the 12 month period ended 28 February 2019. g) Uncontracted revenue constitutes 0% of the revenue for the 8 month period ended 28 February 2018 and 0% of the revenue for the 12 month period ended 28 February 2019. h) Leases expiring during the forecast period have been assumed to renew at the future value of current market related rates. 4. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT Shareholders are advised that, as the forecast financial information relating to the Acquisition have now been published, caution is no longer required to be exercised by shareholders when dealing in the Company’s securities. 20 March 2017 Cape Town Sponsor PSG Capital Date: 20/03/2017 02:30:00 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.