DECEMBER INVESTOR PROSPECTUS

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DECEMBER ROUNDUP INVESTMENT PROSPECTUS

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R OVER R7BILLION IN COMMERCIAL PROPERTY SALES

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Terms & Conditions Apply R50 000 refundable bidders registration fee applies. Bidders must register and bring ID, proof of residence (FICA) and letter of authority to sign on behalf of a juristic entity. Rules of auction are available at www.broll.com and at our offices. The auction is conducted in terms of the regulations relating to auctions contained in The Consumer Protection Act 68 of 2008 and notices given thatall sales are subject to a minimum reserve unless otherwise stated. Disclaimer Whilst all reasonable care has been taken to obtain the correctinformation, neither Broll Auctions and Sales (Pty) Ltd, nor any of its subsidiaries and related companies, nor the Sellers, guarantee the correctness of the information, and none of the aforementioned will be held liable for any direct or indirect damages or loss, of whatsoever nature, suffered by any person as a result of errors or omissions in the information supplied, whether due to the negligence or otherwise of Broll Auctions and Sales and its subsidiaries and related companies, the Seller, or any other person.

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TRENDS & OPPORTUNITIES 2022 AUCTION SALES ROUND UP INTO 2021 WITH CEO NORMAN RAAD

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The country has ridden out one of its harshest economic downturns for decades, worsened by lockdown restrictions in response to the Covid-19 pandemic and load shedding. The National Treasury has predicted average real GDP growth of 1.7% a year for 2022 to 2024, however professional services firm PwC says the pace of jobs recovery continues to be slow, the debt bill high and that outlook for the year is “uncertain at best”. Payment holidays end \resulting in distressed sales Norman Raad, Broll Auctions and Sales Chief Executive Officer says that by the end of the first quarter of 2022, payment and interest holidays will start coming to an end. “As people start to realise that they need to deal with their true cash flow, innovation will be the key to all success. Landlords need to be thinking differently, keeping in touch with and listening to their tenants, providing tailor-made solutions to help them grow,” he said. This will result in many distressed properties coming to market, what Raad terms “Covid casualties”. “We are going to see the end of banks granting a reprieve - liquidators have been sitting on fence as they haven’t yet been given instructions from creditors or bond holders who were previously waiting until the pandemic is seen to have passed.” Raad said that while the market had gone through a corrective process, consumer alignment needed to be equally centred. “No better opportunity exists than the welcoming of creativity.”

Property owners over-valuing their assets Raad believes commercial property owners are still over-valuing most of their properties, resulting in vacancies which become liabilities. “Everybody wants more for less and unless we understand the new age philosophy, it could be easy to be left behind when the next market upturn happens.” In the residential housing market, there is demand in the under R5-million bracket and Raad believes that the pandemic has led to a change in the way homeowners see their homes. “Residential homes are more valuable with people not being able to travel, and spending more time in their houses. People are investing in their properties as a result.” However, with the amount of rental property available, in both commercial and residential, sellers need to make sure their pricing is correct as buyers are looking to seize opportunities that they find value in. We have seen a massive increase in buyers and they are looking for value. Covid-19 deaths leading to deceased estate disposals With close to 100 000 deaths relating to Covid-19, Broll has handled increased numbers of deceased estate disposals. “We are seeing this country-wide predict that this will continue for the next year or two as heirs decide to cash in the portfolios.” Interest rate fluctuations Interest rates will fluctuate, however Raad believes it is the sentiment that will ultimately drive rates. “The opportunities are happening right here, right now, and it is always best to marry a great idea with a reasonable interest rate. The key fundamental will be how quickly buyers and sellers can mobilise ideas to turn the tide.”

PROPERTY OUTLOOK FOR 2022 with John Loos

“Normalising the correction”

2022 is a year in which I expect the longer run property market correction to “normalise. By “normalise”, I am talking about a situation where all out decline in average capital values across the commercial property sector ends, and we revert to a situation of very low growth in capital values, but insufficient to keep up with general inflation in the economy. This would translate into ongoing correction in capital values in “real” terms, the way in which property markets often slowly correct over long periods.” I believe that, after a period of significant decline in average commercial property valuations, to the tune of –9.5% from the 2nd half of 2018 to the 1st half of 2021, according to MSCI half-yearly data recently released, we will likely move back into low positive growth territory in the All Property Average Capital Value in 2022. In the 1st half 2021 data we were already seeing a 2nd consecutive semester of a diminishing

rate of average property value decline after significant declines in 2020. How far are we into the multi-year correction in real property values?

But when did the broad multi-year property market value correction actually start, and how far are we into it? I put 2016 as the year in which the correction reallystarted, in a lagged response to broadly stagnating economic growth since around 2012. While actual (nominal) valuations weren’t yet declining significantly until much later, 9 out of 11 semesters from 2016 onward have shown real (GDP inflation-adjusted) declines in average values when compared with the preceding semester. So while actual valuations have dropped far less, in real terms (the proper way to assess a correction) the cumulative decline in the MSCI All Property Average Capital Value has been a significant -29% from the 1st half of 2016 to the 1st half of 2021.

2022 Outlook – “Normalised Correction”

While actual values are expected to stop their decline in 2022, the ongoing gradual correction is expected to continue throughout the FNB 3-year forecast horizon in “real” terms.

Firstly, what leads to the belief that, in the short term, actual value decline will come to an end? Its all about the expected path of the economy. After a severe real GDP (Gross Domestic Product) contraction to the tune of -6.4% in 2020, a subsequent recovery in growth in 2021 and beyond improves demand for commercial property as a whole, just reducing oversupplies somewhat, which I expect to end value decline in 2022.” However, the economic growth recovery expected doesn’t appear sufficient to bring about real inflation-adjusted value growth. This expectation is based on FNB’s GDP forecast that, although recovering, is only expected to reach a 2019 level (not growth, actual level of economy-wide output) in 2022. Given that 2019 was a year in which the rising All Property vacancy rate trend continued to rise, I don’t see the rising vacancy rate, almost in double digits recently, being turned downward just yet, and would thus expect market rentals and real operating incomes on property to remain under pressure. I would therefore expect the correction to continue more gradually in 2022, with real value correction continuing but no longer all out nominal decline This is what is meant when by the expected “normalisation of the correction” in 2022, with gradual real value decline being less of a concern to mortgage lenders than all out decline in the actual value of the security behind the loan. FNB forecasts real GDP growth to slow back to its pre-COVID-19 pedestrian rates following the 2021 post-lockdown surge. After an expected 4.7% growth in 2021, the result of an extremely low lockdown base created in the deep recession of 2020, 2022 is expected to see growth taper once more to 2.2%, and then further slowing to below 2% in the years thereafter. The reasoning behind the slow projected growth after the initial post-lockdown spike is South Africa’s well-documented myriad of structural constraints, severe capacity limits in the broader public sector and its parastatals, ageing infrastructure and ongoing capital expenditure weakness in that sector, being but 2 broad weaknesses to mention. The recent erratic electricity supply, and another severe hike in electricity tariffs being requested, is but one visible critical constraint on growth in the economy. And now, as the SARB starts its interest rate hiking cycle, interest rates become a further mild dampener on demand in what is a highly credit-dependent market. This long term stagnant growth in turn is behind the reasoning for ongoing valuations correction in real terms. We expect the SARB to “go easy” on us with interest rate hiking, mindful of how fragile the economy is. FNB thus only expects two 25 basis point interest rate hikes in 2022 following\ last week’s 1st hike in the current cycle.

LOOK OUT FOR JOHN’S NEWPAGE ON OURWEBSITE IN 2022!

INTRODUCING THE

PRIVATE TREATY How conventional real-estate transactions are concluded.

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LOT 1 2 3

PROPERTIES ON AUCTION

AREA

VEREENIGING

38 MARKET AVENUE

GRAHAMSTOWN

10 MARKET STREET

WILROW PARK

21 MIMOSA STREET

4 5 6

DUNKELD

61 - 63 HUME ROAD

FOURWAYS

72 TURACO STREET,WILLIAM NICOL

NORTHCLIFF

CNR BEYERS NAUDE DRIVE & MILNER AVENUE

7 8

FERNDALE

2 WEST SQUARE STREET

FERNDALE

337 SURREY AVENUE

9 10 11 12 13 14 15

FERNDALE

356 PRETORIA AVENUE

FERNDALE

359 PRETORIA AVENUE

BOOYSENS RESERVE

86 & 88 2ND STREET

NORTHCLIFF EXT 12

7 LOUIE AVENUE

SUNNINGHILL

1 SIMBA ROAD

MOZAMBIQUE

ANTONIO BARROSO ST

RUEVEN EXT

6 IVANSETH ROAD

RUEVEN

66 BOOYSENS ROAD & 36 MANDY ROAD

17 18 19 20 21 22 23

RUEVEN

34 MANDY ROAD

RUSTENBERG

FAISAL MAFA DRIVE, CASHAN

BELGRAVIA

3 OLD PAARL ROAD

WYNBERG

129 FIFTH STREET

AUCKLAND PARK

39 TWICKENHAM AVENUE

BRYANSTON

58 CUMBERLAND AVENUE

MOZAMBIQUE

ANTONIO BARROSO STREET

16 TH FEB

LOTS ON AUCTION

38 MARKET AVENUE - VEREENIGING

BLOCK OF FLATS - HEIDI HOF

LOT 1

• 30 Units in total | 19 x 1 bedroom; 10 x 2 bedroom; 1 x Bachelor • NAI of approx. R780k per annum when fully let • Extremely well maintained and neat block • One of the only blocks in the area which has not been sectionalised • All units have pre-paid electricity meters • Municipal Rates (Monthly): R4532,58 • ERF: 1983m²

Timothy Counsell | tcounsell@broll.com | +27 71 247 2338

10 MARKET STREET - GRAHAMSTOWN

LOT 2

THE COCK HOUSE - GUEST HOUSE

• Guest House • Top restaurant & Licensed Pub • 8 Double room suites

• Six – 2 Bedroom apartments (over 100sqm each) • Four – 1 Bedroom apartments (over 60sqm each)

• Improvements: 1500sqm (estimated) • Steeped in History – dating back to 1826 • ERF: 3805m²

Andre Potgieter | apotgieter1@broll.com | +27 82 555 3587

21 MIMOSA STREET - WILRO PARK

LOT 3 • Great tenant mix - 12 tenants • Ample parking and delivery space • Long standing tenants • Gross annual income: R4 859 619.08 • NAI: R2 565 832.40 • GLA: 2 771m² • ERF: 1.58ha NEIGHBOURHOOD RETAIL CENTRE Jayson-lee Collins | jcollins@broll.com | +27 72 112 8186 FEATURED PROPERTY

12:00PM

WANDERERS CLUB SANDTON

LOTS ON AUCTION

3 OLD PAARL ROAD, BELLVILLE, CAPE TOWN

FEATURED PROPERTY

• Landmark Property in the Heart of Bellville CBD, • Prime location situated directly opposite the Sanlam Head Office and in close proximity to major arterial road networks • Additional bulk available for further development • GLA: 19 701,5m² • ERF: 13 905m² LANDMARK SUNBEL BUILDING

LOT 4

Ismail Hendricks | ihendricks@broll.com | 082 908 6653 Matthew Counsell | mcounsell@broll.com | +27 74 618 2222

72 TURACO STREET, WILLIAM NICOL - FOURWAYS

LOT 5

MAGNIFICENT GUEST LODGE

• Excellent location, easy access to highways, schools, shopping centres and restaurants • Fully operational 4-star accommodation • Safe, secure location • Good investment with 14 rooms • ERF: 2 483m²

Marianna Toweel | mtoweel@broll.com | +27 82 447 9688

CNR BEYERS NAUDE DRIVE & MILNER AVENUE - NORTHCLIFF

• Combination of different uses • 650 parking bays • Easy access • Multiple levels • 6 entrances • Passenger lift, escalators and stairways • Storage and warehousing facilities NORTHCLIFF CORNER SHOPPING CENTRE

LOT 6

Ronald Raad | rraad@broll.com | +27 82 782 1134

2 WEST SQUARE STREET - FERNDALE

LOT 7

• Perfect for scaling down • Secure complex with on-site security • Dedicated parking • Rental income • GLA: 374m² SUPERB SECTIONAL TITLE OFFICE IN FERNDALE