LIBERTY TWO DEGREES - Cautionary announcement

Cautionary announcement

LIBERTY TWO DEGREES
JSE share code: L2D
ISIN: ZAE000230553
(Approved as a REIT by the JSE)
(“Liberty Two Degrees”)

a portfolio established under the Liberty Two Degrees Scheme, a Collective Investment Scheme
in Property established in terms of the Collective Investment Schemes Control Act, No 45 of
2002, as amended, and managed by STANLIB REIT Fund Managers (RF) Proprietary Limited
(Registration number: 2007/029492/07)
(“the Manager”)

CAUTIONARY ANNOUNCEMENT RELATING TO THE PROPOSED:

-       CANCELLATION OF THE LIBERTY GROUP LIMITED PUT OPTION;
-       ACQUISITION OF ADDITIONAL PROPERTIES FROM THE LIBERTY PROPERTY
        PORTFOLIO; AND
-       INTERNALISATION OF THE MANAGEMENT COMPANY OF LIBERTY TWO DEGREES
        AND CONVERSION OF LIBERTY TWO DEGREES TO A CORPORATE REIT.

Unitholders of Liberty Two Degrees (“Unitholders”) are advised that the board of directors of the
Manager (the “Board”) has resolved to put in place the necessary steps to fully align Liberty Two
Degrees with similar entities in the listed property sector.

Liberty Two Degrees, the Manager, Liberty Group Limited (“Liberty Group”) and Liberty Holdings
Limited have agreed in principle on the following proposals:

Cancellation of the existing put option and further acquisition of Liberty Property Portfolio
(“LPP”) assets

    -   The cancellation of the existing put option between Liberty Group and Liberty Two Degrees
        (in terms of which Liberty Group has the put option to sell further portions of its undivided
        shares in properties co-owned by Liberty Two Degrees and Liberty Group) for no
        consideration; and
    -   The acquisition by NewCo (Liberty Two Degrees’ successor as defined below) of a further
        R1.2 billion of properties from the LPP (the “Acquisition”).

Conversion and internalisation of the Manager

    -   The conversion of Liberty Two Degrees to a corporate REIT, to be listed on the JSE as a
        new company (“NewCo”) (the “Conversion”); and
    -   The internalisation of the management company of Liberty Two Degrees which will result in
        NewCo taking over from the Manager the asset management functions in relation to both
        the Liberty Two Degrees and the LPP co-owned property portfolios (the “Internalisation”),

collectively, the “Proposed Transaction”.

In terms of the Internalisation, it is anticipated that NewCo will purchase the business of the
Manager for R300 million (subject to a fair and reasonable opinion to be provided by an
independent expert and finalization of the long-term LPP management contract) and that such
Internalisation will be conditional on the Conversion and, in accordance with Board Notice 42 of
2014, be subject to, inter alia, the approval of the Financial Sector Conduct Authority and such
other regulatory approval as may be required.

The consideration in respect of the Internalisation and the Acquisition, which totals R1.5 billion, is
intended to be funded by debt.

The Board believes that the Proposed Transaction is in the best interests of Unitholders and that
these measures should assist in achieving a better correlation between the unit trading price and
the net asset value of Liberty Two Degrees’ underlying asset portfolio.

Furthermore, the Proposed Transaction represents an opportunity to introduce a conservative
level of debt to NewCo’s capital structure, serving to reduce its weighted average cost of capital,
whilst still providing Liberty Two Degrees with flexibility to execute on its investment objective and
strategy.

The Board currently does not expect the Proposed Transaction to require any change to the
distribution guidance for the year ended 31 December 2018 as announced previously.

Cautionary announcement

As the parties remain in negotiations regarding the definitive terms of the Proposed Transaction
and the conclusion of formal agreements, Unitholders are advised to exercise caution when
dealing in their Liberty Two Degrees units until a further announcement is made.

It is anticipated that the Proposed Transaction will be concluded during September 2018, subject
to any further updates in this regard.

Johannesburg
18 May 2018

Financial Adviser and Sponsor
The Standard Bank of South Africa Limited

Legal Advisers
Allen & Overy
Webber Wentzel

Investor Relations
Lizelle du Toit, Instinctif
Contact details: 011 447 3030 or 082 465 1244

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