PROPERTY · 2018-02-22 · 7.3 Property management Property management of the fund has been...

PROPERTYANNUAL REPORT 2005

PROPERTY FUND

(A property fund created under the Emira Property Scheme, registered in terms of the Collective Investment Schemes Control Act)Share code: EMI ISIN: ZAE000050712 (“Emira”)

Cover (from left to right):

● 267 West – Currently fully let, this multi-tenanted 9,800 m2 office building overlooks Centurion Lake and is ideally

located near the proposed location for Centurion’s Gautrain station.

● Sanlam Gables – Primarily occupied by Securicor until 2014, this property measures 2 851 m2 and has excellent exposure

to Schoeman Street in Hatfield, Pretoria.

● Umgeni Road A – 98/102 Intersite – A building situated in the the popular light industrial node of Umgeni Business

Park, occupied by a single tenant.

CONTENTS

Executive summary 5 Manager’s report 7 Directorate 23 Corporate governance 24

Financial statements 27 Segmental analysis 47 Administration 58

Corporate structureEmira Property Fund (“the fund”) is a property unit trust in terms of the Collective Investment Schemes Control Act, No. 45 of 2002. The fund is managed by Strategic Real Estate Managers (Pty) Ltd (“STREM”), which is approved by the Registrar of Collective Investment Schemes to manage the Fund.

In terms of the Collective Investment Schemes Control Act, No. 45 of 2002 (“CISC Act”) the fund is obliged to distribute all income earned to its participatory interest holders. As a result of its distribution obligations, no income tax or capital gains tax is payable by the Fund.

PROPERTY FUND

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HIGHLIGHTS HIGHLIGHTS

Distributions per PI

67,55cannualised growth of

+15,9%Net asset value per PI

624can increase of

+18,6%12-month total return

268cor

51,5%

Investment strategy, objectives and prospectsThe Fund’s principal objective is to grow earnings from a quality based property portfolio. Growth will be sought by making strategic investments where yields are enhancing in the medium to long term. Management will further maintain the quality of the portfolio by disposals of assets, which no longer meet the strategic objectives of the Fund.

The strategic objectives of the fund are to:

● Optimise net income and growth in distributions;

● Apply gearing to the portfolio to the extent that it enhances returns, limited to 30% as provided for in the Collective Investment Schemes Control Act;

● Increase market capitalisation, liquidity and spread of investors through selective acquisitions and capital raising;

● Selectively recycle assets;

● Broaden the Fund’s geographic exposure to KwaZulu-Natal, the Western and Eastern Cape;

● Increase exposure to the retail sector;

● Dispose of non-performing or potentially under-performing properties; and

● Reduce vacancies and smooth the lease expiry profile of the portfolio.

PORTFOLIOEm

ira P

rope

rty

Fund

Ann

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05

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PORTFOLIO

Deloittes –

Fully occupied by Deloitte

South Africa this 4 000 m2

office building is located

within walking distance of

Brooklyn Mall.

East Coast Radio House –

Multi tenanted modern

commercial property

totalling 5 700 m2,

accommodating retail and

office tenants. Major

tenants include East Coast

Radio and Strauss Daly Inc.

1059 Schoeman Street –

Primarily occupied by SABC

until 2012, the property is

located on a prominent

corner in Hatfield, Pretoria

and measures 6 048 m2.

Faerie Glen –

A newly developed single

tenanted office building,

located in a secure park

measuring 3 710 m2, facing

Atterbury Road, east of

Pretoria.

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Gift Acres –

A newly developed

convenience shopping

centre, located diagonally

across from Lynnridge Mall,

anchored by Woolworths

and Mr Price Weekend.

Rentworks –

Fully let prime office space

with excellent exposure on

the corner of Grosvenor

and Cumberland Avenues,

Bryanston.

Boskruin Shopping Centre –

A 6 752 m2 convenience

shopping centre in Boskruin

on the busy President

Fouché Avenue, anchored

by Woolworths Foods and

Clicks.

Lynnridge Mall –

Situated in the thriving,

upmarket residential area

of Lynnwood Ridge east of

Pretoria, anchor tenants

include Pick ’n Pay, Mr Price

and ABSA Bank.

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Mitek South Africa –

This single tenanted

property is located in

Midrand and offers excess

bulk for expansion for the

current tenant. Mitek – a

subsidiary of Berkshire

Hathaway – has a lease

until 2012.

Aeroport - Fulcrum –

Triple Net, single tenanted

warehouse and office

building in Spartan,

measuring 3,805 m2 with

good yard space and

additional land for

expansion.

Oracle House –

Located in Midrand with

excellent exposure to the

N1 highway between

Johannesburg and Pretoria,

this property is fully

occupied by Oracle

Corporation SA.

Westway –

A fully let 2 283 m2 office

complex situated in the

popular Westway Office

Park in Westville.

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SUMMARYfor the year ended 30 June 2005

Results for the Results for the seven months year ended ended % 30 June 2005 30 June 2004 Change

Financial highlights

Distributions per participatory interest (cents) 67,55 34,01 15,9*

Headline earnings per participatory interest (cents) 74,37 33,28 30,4*

Average vacancy factor (%) 6,0 6,1 0,2

Portfolio valuation analysis

Market value (R’000) 2 259 774 1 901 027 18,9

Net asset value per participatory interest (cents) 624 526 18,6

Listed market price (cents) 720 520 38,5

Premium/(discount) to net asset value (%) 15,4 (1,1) —

Capital and funding resources

Maintenance fund investment (R’000) —# 24 104 —

Debt funding facility available (R’000) 220 400 272 500 —

Salient features

Participatory interests in issue 286 828 772 285 293 684 0,5

Market capitalisation (R’000) 2 065 167 1 483 527 39,2

Long-term borrowings (R’000) 364 141 310 978 17,1

Long-term borrowings to total assets (%) 15,8 16 —

Property acquisitions (Rm) 90,5 181,0 (50,0)

Number of properties 84 84 —

*Annualised

#Whereas at June 2004 the maintenance fund was held separately, earning interest at short-term rates, it has now been used to reduce our access facility.

EXECUTIVE SUMMARY

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SUMMARY PORTFOLIO SUMMARYat 30 June 2005

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REPORTfor the year ended 30 June 2005

MANAGER’S REPORT

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“The financial year to June 2005 was an extremely successful one for Emira.”

The directors of STREM are pleased to present their report

on Emira’s performance for the year ended 30 June 2005,

which represents the fund’s first full financial year of

operation.

Overview of performance

1. Summary of the fund’s performance

The financial year to June 2005 was an extremely

successful one for Emira, with healthy growth in

distributions and total returns being delivered to

unitholders, the portfolio being bedded down post-

listing, numerous enhancing acquisitions being made

and the fund’s debt profile being restructured.

● Distributions for the year amounted to 67,55

cents per PI. If this is compared to an annualised

distribution for the seven months to 30 June

2004 (34,01 cents for the seven months, or 58,3

cents on an annualised basis) this represents

exceptional growth of 15,9%;

● Emira’s PI price rose from 520 cents in June 2004

to 720 cents as at 30 June 2005, a rise of 38,5%

and the fund’s market capitalisation rose from

R1,48 billion to R2,07 billion over the same

period. Together with the distributions of 67,55

cents, PI holders therefore received a total return

of 51,5% over the past twelve months;

● Net asset value grew from 526 cents to 624

cents, representing growth of 18,6%;

● The fund concluded a number of attractive

acquisitions during the year: two buildings

totalling R22 million were transferred into Emira

during the period at yields of in excess of 12,5%

pre-gearing, one building of R25 million has been

transferred subsequent to year-end at a yield in

excess of 11% and three other properties totalling

R150 million are awaiting transfer, all having been

purchased at yields of approximately 12%;

● Two buildings were sold during the period, while a

further three are awaiting transfer. The majority of

these properties represented non-core investments

for Emira, while one of them, which was not on

the disposal list, was sold at a significant premium

to book value, with the funds being reinvested at

a more attractive yield;

● During the year Emira entered into certain swap

arrangements, which resulted in the fund’s debt

being restructured. Whereas at 30 June 2004

Emira’s had approximately half of its debt at

floating rates, by 30 June 2005 the fixed

component had increased to approximately 80%,

with staggered maturity dates ranging from

October 2007 to November 2011. This has

significantly reduced the interest rate risk to PI

holders;

● Vacancies declined from 6,1% in June 2004 to

6,0% in June 2005.


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MANAGER’S REPORT (continued)

2. Overview of the property market

2.1 Listed property sector

2.1.1 Total returns to June 2005

Listed property handsomely outperformed other

asset classes over the past year. In the twelve-

months to June 2005 PUTs and PLSs delivered pre-

tax total returns of 54,2% and 56,1% respectively,

well ahead of the All Share index at 42,8%. Long

bonds lagged considerably, showing a total return of

only 15,8%.

The three-month and six-month performance from

the listed property sector was equally impressive, as

seen in the table below.

TOTAL RETURNS (PRE-TAX)

Period

All Share

FINDI 30

PLSs

PUTs

R 153

3 months 7,1% 5,3% 11,6% 10,9% 3,7%

6 months 13,2% 5,8% 18,3% 13,9% 3,4%

12 months 42,8% 42,8% 56,1% 54,2% 15,8%

Source: Inet-Bridge

With this healthy performance over the past year,

the sector continues to boast an impressive

performance over one, three and five years. Using

after-tax numbers, the following table illustrates

why the sector is currently in vogue with investors.

COMPOUND ANNUAL TOTAL RETURNS (POST-TAX)

PeriodAll

ShareFINDI

30 PLSs PUTs R 153

1 Year 42,8% 42,8% 53,4% 51,7% 13,4%

3 Years 12,5% 15,5% 29,7% 29,8% 11,0%

5 Years 14,7% 7,6% 21,2% 20,5% 11,0%

Source: Inet-Bridge

*Assuming 29% corporate tax rate applied to the income portion of the total return.

Compound annual total after-tax returns over the

past five years from the PUT and PLS sectors were

20,5% and 21,2% respectively. This was well ahead

of the All Share index at 14,7% and long bonds at

11,0%.

Such impressive total returns illustrate why we

believe that property forms an important part of

any balanced portfolio and is also a useful substitute

for bonds for investors looking for a (growing)

income yield.

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2.1.2 Listed property fund results

As anticipated, growth in dividends from the listed

sector accelerated over the past twelve months.

Whereas market commentators had anticipated

growth in dividends of 4,5% to 5%, we believe

actual growth came in even higher than this, as

long-term interest rates continued to decline and

property fundamentals remained healthy.

Assuming that the economic environment remains

stable going forward, we believe that distribution

growth from the listed property sector will be between

5% and 10% in the next twelve months.

2.1.3 The listed property and bond yield

differential

With the improving listed property sector dividend

growth mentioned above, the yield differential

between listed property and the R153 long bond

(listed property yield less the yield on R153 long

bond) has remained relatively narrow over the past

year, currently well below the 1% level.

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Source: Inet-Bridge

Rather than investing in long bonds, at say 8%, investors

have been attracted to listed property stocks at yields

around 9%, with in the region of 5% growth in distributions.

Should the growth in distributions continue over the short

to medium term, we believe that this differential could

remain at current levels or even narrow further.

2.1.4 Summary

The listed property sector has performed

exceptionally well in recent years:

● Total returns have been in excess of the rest of

the asset classes;

● Healthy dividend growth is finally returning to

the sector;

● The sector is trading at a healthy premium to net

asset value of in excess of 30%;

● The market capitalisation of South African listed

property stocks has grown to close to R40 billion

from R7 billion ten years ago;

● The number of listed PUTs and PLSs has grown to

in excess of twenty-five counters.

Assuming the economic environment remains stable,

we believe that the sector should be able to show

solid returns for the foreseeable future.

2.2 Physical property market

In line with what has been experienced in the listed

property market, the physical property market has

also been extremely buoyant over the past twelve

months.

Nowhere is this more apparent than in the SAPOA/

IPD South Africa Property Index results for calendar

year 2004. The total return from the IPD Universe in

2004 was 22,6%. This was significantly higher than

the annualised return over the past ten years of

13,2%. It was also higher than the five-year average

of 13,6%.

“Assuming the economic environment remains stable, we believe that the listed property sector should be able to show solid returns for the foreseeable future.”


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Whereas a year ago the most competitive markets

were the national retail market and the Cape Town

market in general, this has now extended to all types

of commercial property. Properties of an average

standard are now being offered to Emira for purchase

at yields of below 10%, which we believe is

demanding.

The significant rise in capital values and resultant

decline in yields has meant that many property

owners have resorted to either developing for their

own account or refurbishing existing assets.

2.3 Rentals and vacancies

2.3.1 Rentals

2.3.1.1 Office market

The IPD universe of direct property shows that total

returns from offices (both decentralised and CBD)

showed a vast improvement in 2004. The chart

below shows the weighted average total returns

from the entire office sector since 1995. Total

returns from the office sector jumped from 9,2% in

2003 to 17,7% in 2004. This improved performance

was not only the result of declining cap rates but

also firming rentals.

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Empirical evidence from Emira’s portfolio supports

the view that fundamentals in the office market in

South Africa have improved over the past year,

although the extent of this improvement differed

from region to region. The Pretoria, Durban and Cape

Town markets were extremely strong with rentals

generally in the region of 10% to 20% higher year-

on-year, driven by declining vacancies in these areas.

In contrast, however, the Johannesburg market has

lagged (flat).

This evidence is supported by Rode’s March 2005

report, which shows that Sandton office rentals

were flat to lower over a twelve-month period,

compared to nodes such as Faerie Glen in Pretoria,

Westway and La Lucia in Durban and Claremont in

Cape Town, which showed good growth.

2.3.1.2 Retail market

The retail market has experienced a few years of

unprecedented growth thanks to buoyant consumer

spending, which has in turn resulted in higher

turnover rentals for landlords. Average real growth in

private consumption expenditure (PCE) has been

6,1% since the beginning of 2004, compared to a

ten-year average of 3,8%.

The beneficial impact of this run in PCE in the past

two years has further cemented retail’s position as

the best performer in recent years according to the

IPD. The table below shows that retail categories

occupy three of the five best performing market

segments over the past five years.

Source: IPD

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Average annual total return by market segment

5 Years

Gauteng regional shopping centres 16,8%

Industrial rest of SA 16,3%

Other retail shopping centres 15,4%

Other regional shopping centres 15,2%

Other* 14.2%

Other shopping centres 13,7%

Offices – Decentralised 11,5%

Industrial – Gauteng 11,1%

Offices – Gauteng CBD 8,8%

Offices – Provincial 6,9%

Offices – Other Metro CBD 5,9%

Source: IPD

* Other is made up of a range of property types, but is dominated by

hotels.

2.3.1.3 Industrial market

The second half of calendar year 2004 saw industrial vacancies decline significantly and the demand for industrial land increase. This squeeze in the industrial market has resulted in rentals in this market firming as illustrated below.

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According to Rode, nominal rentals for 1 000 m2 of

industrial space on the Witwatersrand rose by 19%

in the twelve months to March 2005. In real terms

this represents a rise of 14%. Although the rise is

impressive in both real and nominal terms, real

rentals remain well below those pertaining ten

years ago.

2.3.2 SAPOA office vacancies

SAPOA office vacancies continued to show a

declining trend over the past year, declining from

13,7% in June 2004 to 11,4% in June 2005. At the

same time, the level of office development has

remained at relatively low levels despite rising

fractionally in the first half of 2005.

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“National office vacancies continued to show a declining trend over the past year.”

Source: Rode

Source: SAPOA


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The nodes to have contributed to this decline in

vacancies include:

● The Johannesburg CBD, which saw a reduction in

vacancies of 46 868 m2 (2,7%);

● Randburg, where vacancies declined by 34 846 m2

(6,6%);

● Parktown, which saw a reduction in vacancies of

19 545 m2 (5,9%) and;

● Claremont, where vacancies declined by

17 846 m2 (16,1%).

3. Emira’s performance and property portfolio

3.1 Emira’s price performance and tradability

In the twelve months since 30 June 2004 Emira’s

price has risen from 520 cents to 720 cents, or

38,5%. This compares to the PUT index’s rise of

45,5% over the same period, implying an

underperformance of 7%.

Liquidity has been good, with 99,6 million PI’s

trading during the same period. This equates to

34,7% of the PI’s in issue.

3.2 Emira’s portfolio

The property portfolio comprises good quality

properties, selected for their abilities to deliver

sustainable growth in income and diversify risk.

3.3 Sectoral exposure

By income, 50,1% of the portfolio is comprised of

office space, mainly located in Gauteng. A further

34,5% of income is from retail properties and the

remaining 15,4% is from industrial space. A more

detailed breakdown of the portfolio by value and

income can be found on page 48.

Using the IPD portfolio as a benchmark to determine

a suitable market weighting for commercial property

in South Africa, Emira is underweight retail properties.

For this reason, management believes that there is

scope for selectively increasing the fund’s exposure

to the retail sector.

3.3.1 Offices

The forty commercial properties in the fund comprise

49% of the fund’s investment properties by value.

Two acquisitions were made in the financial year,

namely Nimas House and Derby Downs both located

in Durban. This increased the fund’s exposure in

KwaZulu-Natal from 10% in 2004 to 11%.

3.3.2 Retail

Emira’s exposure to the retail sector as at the end of

the financial period stood at 36% by value with the

average size of the fund’s retail properties being

approximately R60 million.

3.3.3 Industrial

The industrial component is the smallest within the

fund, totalling 15% by value. The average size of the

fund’s industrial properties is just over R10 million.

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3.4 Vacancies and letting

Over the past year vacancies have shifted down

slightly, moving from 6,1% in June 2004 to 6,0%

(33 624 m2) in June 2005.

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Within the overall figure the largest improvement

has come from the industrial sector, which declined

from 7,7% in June 2004 to 4,7% by June 2005.

Retail vacancies also declined from 2,8% to 1,5%.

The underperforming sector was the office portfolio,

which saw a rise in vacancies from 6,9% to 9,7%.

It is important to note that although the vacancy

rate was 6,0% at June 2005, Emira has sold Grinaker

Electronics (deposits have already been received),

which accounted for 1 851 m2 of the total vacancies

in the fund. Furthermore, at Epping Warehouse

(WGA) a new lease has been concluded whereby all

of the vacant space (4 307 m2) will be occupied by

August 2005. Taking the aforesaid in account,

vacancies in the fund would decline to 4,9%.

3.4.1 Offices

Office vacancies rose from 6,9% to 9,7% over the

past year, representing an increase in vacancies of

6 559 m2. Major vacancies at year-end were:

● Epsom Downs Office Park – 4 230 m2;

● Woodmead Office Park – 3 938 m2;

● Grinaker Electronics – 1 851 m2.

Management is investigating the alternatives to

reduce the vacancies at both Epsom Downs and

Woodmead, which could include refurbishment of

these assets, while Grinaker Electronics is in the

process of being disposed of.

3.4.2 Retail

Retail vacancies declined from 2,8% to 1,5% over

the past year, representing a decline in vacancies of

1 696 m2. Major vacancies at year-end were:

● Lynnridge Mall – 603 m2;

● Epsom Downs – 388 m2;

● Randridge Mall – 351 m2.

3.4.3 Industrial

Industrial vacancies declined from 7,7% to 4,7%

over the past year, representing a decline in vacancies

of 5 745 m2. Major vacancies at year-end were:

● Epping Warehouse (WGA) – 4 307 m2;

● Cambridge Park – 1 457 m2;

● Admiral House – 1 233 m2.

As stated above, the vacant space at Epping

Warehouse (WGA) has been taken up effective

August 2005.

“Retail and industrial vacancies declined significantly over the past year.”


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3.5 Lease expiry profile

As can be seen in the table below, approximately 64% of the fund’s leases expire in the next three years. This is

representative of the fact that leases in the office and industrial portfolios are typically between three and five years.

FY06 FY07 FY08 FY09 FY10 FY11

Offices 11,8% 13,2% 7,4% 2,4% 1,0% 1,8%

Retail 3,9% 4,9% 3,0% 6,8% 3,8% 4,5%

Industrial 8,3% 6,3% 5,1% 3,4% 3,0% 3,6%

Total 24,0% 24,4% 15,5% 12,6% 7,8% 9,9%

3.6 Acquisitions

Properties worth close to R200 million were either transferred or were in the process of being transferred during the

financial year. The new investments will contribute to enhancing the quality and performance of the fund in the future

and will also further diversify the geographical spread of the portfolio.

The two properties that were actually transferred are both located in Durban, increasing the KwaZulu-Natal exposure

from 10% in 2004 to 11%. These acquisitions were funded through a combination of debt and the placing of PIs.

Property details are as follows:

Purchase Forward

New GLA price yield Effective

purchases Sector Location (m2) (Rm) (%) date Tenants

Nimas House Office Westway Office National Independent

Park, Westville 1 372 9,8 12,6 11 Oct 2004 Medical Aid Society

Derby Downs Office Derby Downs Office

Park, Westville 2 205 12,5 12,7 28 Feb 2005 Lafarge, Ivory Systems

Total 3 577 22,3 12,7

In addition to the above, the property known as 100 Armstrong in La Lucia Ridge, Durban was transferred during July

2005 at a purchase price of R25 million yielding 11,1%.

Purchase Forward

New GLA price yield Effective

purchases Sector Location (m2) (Rm) (%) date Tenants

100 Office Armstrong Drive, Imperial Bank, SAP,

Armstrong La Lucia 2 880 25,0 11,1 11 July 2005 RMB Asset Management

Total 2 880 25,0 11,1

Currently, we are awaiting transfer of the following properties into Emira:

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Purchase Forward

price yield

Property Sector Location (Rm) (%) Tenants

Gift Acres Retail Lynnwood Ridge, Woolworths, Mr Price Group,

Pretoria East 78,68 11,8 First National Bank

122 Pybus Road Office Sandton CBD, 15,75 11,1

Lincolnwood Office Park Office Woodmead, Sandton 55,75 12,2 SA Rail Commuter Corporation

Total 150,18 11,9

Note that although Emira is still awaiting the transfer of Gift Acres, the development consideration has been paid

according to the agreement with RMB Properties and income from the centre has been accruing to the fund since

opening in May 2005.

3.7 Disposals

In accordance with the strategy of the fund, certain properties that are underperforming or pose excessive risk to the

fund are earmarked and disposed of. In addition, should an offer be received reflecting a value substantially in excess

of the book value and management believes that this money can be reinvested at a more attractive yield, the fund will

consider disposing of an asset.

With this strategy in mind, Emira disposed of Electron Place in Isando – a mixed office/industrial building with limited,

specialised use – and Waterford Place – an office building in Century City at a yield of below 9% and in excess of

replacement cost – during the period.

Valuation at Sale

GLA June 2004 price Yield Effective

Buildings sold Sector Location (m2) (Rm) (Rm) (%) date

Waterford Place Office Century City 3 800 24,1 35,0 8,9 7 Jun 2005

Electron Place Industrial Isando 9 221 5,2 6,9 2,6 2 Dec 2004

Total 13 021 29,3 41,9

“Properties worth close to R200 million were either transferred or were in the process of being transferred during the financial year.”


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Motorola was transferred out of Emira subsequent to year-end.

Valuation at Sale

GLA June 2004 price Yield Effective

Buildings sold Sector Location (m2) (Rm) (Rm) (%) date

Motorola Office Midrand 719 2,4 3,0 11,1 11 Aug 2005

Total 719 2,4 3,0

Agreements for the disposal of Mafikeng Game and Grinaker Electronics, neither of which meets the fund’s investment

criteria, have also been signed and the fund is waiting for the fulfilment of certain suspensive conditions.

Valuation at

GLA June 2004 Price Yield

Awaiting transfer Sector Location (m2) (Rm) (Rm) (%)

Mafikeng Game Retail Mafikeng 5 218 20,1 20,7 15,9

Grinaker Electronics Office Samrand 3 261 3,8 7,0 1,6

Total 8 479 23,9 27,7

3.8 Valuations

The fund elected to have independent valuations of its entire portfolio at least every three years. To achieve this, the

fund has decided to have approximately one-third of the portfolio valued by independent valuers each year.

Four external companies were selected to undertake the valuations of 26 properties as at 30 June 2005, namely:

Mills Fitchet, Old Mutual Properties, The Property Partnership and Motseng Marriott.

The valuation movements on these 26 properties were as follows:

RMB Properties Independent

valuations valuations

June 2004 June 2005 Difference Difference

(R’000) (R’000) (%) (R’000)

Office 320 751 391 675 22,1 70 924

Retail 204 445 253 000 23,7 48 555

Industrial 111 541 130 960 17,4 19 419

636 737 775 635 21,8 138 898

17PAGE

Valuations of the remaining 56 properties were undertaken as at 30 June 2005 by qualified valuers employed by

RMB Properties (Pty) Ltd.

RMB Properties RMB Properties

valuations valuations


(R’000) (R’000) (%) (R’000)

Office 612 064 719 971 17,6 107 907

Retail 441 473 557 277 26,2 115 804

Industrial 179 465 206 658 15,2 27 193

1 233 002 1 483 906 20,3 250 904

As a result of the firming in capitalisation rates, advantageous renewals in a number of properties and rising rentals in

a number of areas, property values improved in all three sectors since June 2004.

Total portfolio movement


(R’000) (R’000) (%) (R’000)

Office 956 891 1 111 646 16,2 154 755

Retail 645 918 810 277 25,4 164 359

Industrial 296 206 337 618 14,0 41 412

General* 2 012 233 (88,4) (1 779)

Portfolio value 1 901 027 2 259 774 18,9 358 747

Adjustment to fair value as per IAS17/IAS40 — (32 669) — (32 669)

As reported 1 901 027 2 227 105 17,2 326 078

* General comprised of capitalised listing costs at the end of June 2004 and were subsequently reallocated to properties. June 2005 amount relates to costs

incurred on Gift Acres and Unilever properties.

The office sector improved by 16,2% (R155 million), retail by 25,4% (R164 million) and the industrial properties

improved by 14,0% (R41 million). Overall the fund increased in value by 18,9% or R359 million since June 2004.

4. Net asset value of the fund

The valuation of R2 260 million has given rise to a change in fair value in the income statement totalling R280,8

million. The net asset value of the fund at 30 June 2005 was 624 cents per participatory interest. The fund’s listed price

at the same date was 720 cents per participatory interest, which reflects a 15,4 % premium to net asset value.

“As a result of firming cap rates, advantageous renewals and rising rentals, property values improved in all three sectors.”


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5. Gearing

5.1 Current debt profile

As at June 2005 Emira had a total debt facility available of R585 million, of which R522 million had been utilised, split

into five tranches.

The breakdown is as follows:

Rate Term Amount % of debt

1 Debt – Floating Prime – 2% N/A 107,4 20,6%

2 Debt – Fixed 9,35% September 2005 100,0 19,2%

3 Debt – Fixed 9,76% November 2006 126,1 24,2%

4 Debt – Fixed 10,21% November 2008 100,0 19,2%

5 Debt – Fixed 11,26% October 2009 88,5 17,0%

TOTAL 9,76%* 522,0 100%

*Weighted average cost of debt assuming prime at 10,5%

Emira has entered into additional interest rate swaps to further extend the maturities of the nearest-dated facilities

2 and 3 above:

Old New New

Term Amount Rate amount New term rate

Sep 2005 100,0 9,35% 100,0 8 Sep 2005 – 10 Sep 2007 9,24%

Nov 2006 126,1 9,76% 63,0 30 Nov 2006 – 30 Nov 2011 10,76%

63,1 30 Nov 2006 – 30 Nov 2011 10,41%

The net effect of these swaps is that Emira’s current debt profile can be illustrated below.

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In summary: the majority (79%) of the fund’s debt had been fixed for periods of between 28-months and in excess of

six years, with the remaining portion (21%) at rates linked to prime. Favourable interest rates on certain of these

tranches give the fund an effective weighted average cost of debt of 9,76%, which is amongst the lowest in the sector.

19PAGE

5.2 Future debt requirements

After an abnormally long delay in their transfer due

to the signing of a lease at Lincolnwood by the

major tenant, management expects that the

registration of Lincolnwood and Pybus Road into

Emira’s name is imminent. The suspensive conditions

for the transfer have been met and Competition

Commission approval has been received. The total

cost of these two properties is R71,5 million, which

could be funded out of the remaining debt facility of

R63 million, and proceeds from the disposal of

properties mentioned above.

The fund’s debt facility is expected to be raised as a

result of the increased valuations at June 2005.

Using the total assets as at June 2005 of R2,30 billion,

Emira’s potential debt facility could increase to

R690 million from the current R585 million. This

additional facility plus the cash realised from the

sale of the properties mentioned above will be

utilised to fund acquisitions, as well as refurbishments

of and extensions to the existing portfolio.

6. Prospects

Rand Merchant Bank economists believe that the

outlook for the economy for the remainder of 2005

and into 2006 is positive. Real GDP growth is

expected to be 4,1% in 2005, softening slightly to

3,8% in 2006. Inflation as measured by CPIX is

expected to remain within the target of 3% to 6%

set by the Reserve Bank, with the result that prime

interest rates should remain stable.

Against the economic outlook above, market

conditions in the retail and industrial property

sectors are expected to remain buoyant with

vacancies being maintained at current low levels.

There is continued demand for space from retailers,

while healthy economic growth is benefiting the

industrial sector. Vacancies in the office market

should continue their downward trend if the

economy continues to grow at levels in excess of 3%

and the supply of new office space from developers

remains moderate.

In the absence of any major shocks to the South

African economy the listed property sector is

expected to continue to show solid returns over the

next twelve months. Certain commentators believe

that growth from the listed sector could average

between 6% and 7%. We believe that Emira should

deliver market related growth in distributions in the

coming year.

7. Management of the fund

7.1 STREM and sub-contract of asset management

STREM has been approved by the Registrar of

Collective Investment Schemes to manage the

Emira Property Scheme. STREM has entered into an

asset management agreement with RMB Properties

to administer the affairs of the scheme.

STREM will receive an amount equal to 0,5% of the

total market capitalisation of the fund, calculated

monthly on the average daily closing price of the

fund as recorded by the JSE Limited, plus the total

long-term borrowings.

Fees paid for the period amounted to R10,59 million

(2004: R5,24 million).


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7.2 Changes to the STREM board

● Louisa Forrester resigned as an executive director

of STREM effective August 2004.

● Ron van der Bos resigned as CEO and executive

director of STREM effective July 2004.

● Bryan Jackson resigned as a non-executive director

of STREM effective January 2005.

The board wishes to thank all three for their

contribution to the fund’s success.

● James Templeton was appointed as CEO and

executive director effective July 2004.

7.3 Property management

Property management of the fund has been

outsourced to RMB Properties (Pty) Limited, a

subsidiary company of FirstRand. Property

management and commissions paid for the period

were R22,7 million (2004: R9,76 million).

8. Directorate

Details of the directors are set out on page 23 of this

report. According to the articles of association of

STREM, the executive and non-executive directors

shall retire at the following annual general meeting

of STREM and will be eligible for re-election.

9. Secretary of the fund

The secretary is Claire Middlemiss who was appointed

on 15 September 2003. Her business and postal

addresses, which are also the fund’s registered and

business addresses, are set out on page 58.

10. Auditors

PricewaterhouseCoopers Inc. has been appointed as

the fund’s auditors.

11. Directors of STREM interests in

participatory interests

The directors’ holdings in the participatory interests

of the fund as at 30 June 2005 were as follows:

Beneficial

Direct Indirect

Director 2005 2005

Executive directors:

Warren Schultze 301 000

James Templeton 89 800

Non-executive Directors:

No non-beneficial participatory interests were held

by any of the directors.

21PAGE

12. PI Holders’ profile and JSE information at 30 June 2005

Participatory Number of % of % of

Non-public interests holders capital holders

Directors

(of Management Company) 89 800 1 0,0 0,2

Directors’ associates 301 000 2 0,1 0,4

TOTALS 390 800 3 0,1 0,6

Participatory Number of % of % of

Non-public interests holders capital holders

Insurance companies 142 636 252 12 49,7 2,2

Investment trusts 4 349 148 66 1,5 12,2

Pension funds 25 824 041 48 9,0 8,9

Unit trusts 83 505 461 31 29,1 5,7

Other 30 123 070 380 10,5 70,4

TOTALS 286 437 972 537 99,9 99,4

286 828 772 540 100 100,0

Range analysis as at 24 June 2005 % of % of

Range Holders holders Number of PI capital

1 – 5 000 194 35,9 435 588 0,1

5 001 – 10 000 63 11,7 480 773 0,2

10 001 – 100 000 169 31,3 5 822 935 2,0

100 001 – 500 000 70 13,0 17 992 768 6,3

500 001 – 1 000 000 17 3,1 11 994 492 4,2

Over 1 000 000 27 5,0 250 102 216 87,2

540 100 286 828 772 100,0


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The following holders of PI’s hold, directly or

indirectly, at 24 June 2005, in excess of 5% of the

ordinary issued capital

Participatory % of issued

Holder interests capital

Momentum Life Assurers Limited 130 823 444 45,6

List of managers managing more than 5% of the

ordinary issued capital

Number of % of issued

Manager funds capital

RMB Asset Managers 77 62,1

Stanlib 17 12,4

Marriott Asset Management 7 12,3

13. Major interest holder

Momentum is the majority interest holder in Emira

with 45,6% of the participatory interests in issue.

14. Special resolutions

A full list of the special resolutions passed by the

fund during the year will be made available to

participatory interest holders on request.

15. Subsequent events to the balance sheet

date

Subsequent to year-end the building known as 100

Armstrong, which was purchased for R25 million

earlier in the year was transferred to Emira. Moreover,

Motorola has been transferred out of the portfolio,

for which Emira has received a cash lump sum. For

further details refer to the sections on acquisitions

and disposals.

16. Directors’ remuneration

The directors of STREM are remunerated from the

management fee payable by the fund.

23PAGE

DIRECTORATE DIRECTORATE

Directors of the management company, Strategic Real Estate Managers (Pty) Ltd (STREM)

The full names, ages, qualifications, occupations and profiles of the directors of STREM are as follows:

1. Benedict James van der Ross (57) (Non-executive Chairman)

Qualifications: Dip Law Occupation: Company director

Mr van der Ross was admitted to the Cape Bar as attorney in 1970 and practiced law in his own capacity until 1988. He has served as director of various companies including Executive Director for the Urban Foundation and Independent Development Trust.

He was appointed Commissioner to the First Independent Electoral Commission by the State President on the advice of the Transitional Executive Council and subsequently served as Deputy Chief Executive Officer of the Independent Development Trust.

He currently serves on the boards of FirstRand, Naspers, Momentum Group, and is the chairman of RMB Asset Management.

2. Warren Kirkwood Schultze (45) (Executive director)

Qualifications: BCom, BAcc, CA(SA) Occupation: Chief Executive Officer of RMB

Properties

Prior to joining RMB Properties, Mr Schultze served his articles with Arthur Young and was later appointed as financial director for two property financing and property trading companies and during this time he gained extensive experience in property asset management, property financing and property trading activities.

He was appointed as Chief Operating Officer of RMB Properties in 2000 and Chief Executive Officer in 2004.

3. James William Andrew Templeton (32) (Chief Executive Officer)

Qualifications: BCom (Hons), CFA Occupation: Chief Executive Officer of

Strategic Real Estate Managers (Pty) Ltd

Mr Templeton joined RMB Properties in April 2004 as Business Development Executive. Previously he was employed at Barnard Jacobs Mellet Securities as an Equities Analyst for seven years.

He was the top-ranked analyst in the Real Estate sector according to the Financial Mail in 2002 and 2003 and was appointed CEO of STREM in July 2004.

4. Liliane Barnard (41) (Independent non-executive director)

Qualifications: BCom Occupation: Consultant

Ms Barnard has 17 years experience in the asset management industry. She headed the asset management of Old Mutual Properties (Pty) Ltd and had 11 years experience in managing listed property portfolios for Old Mutual Asset Managers (Pty) Ltd. She now acts as consultant and independent advisor to the listed property industry and its investors.

She is also an independent non-executive director of Redefine Income Fund.

5. Mattys Stefanus Benjamin Neser (49) (Independent non-executive director)

Qualifications: BSc (Building Management), MBA Occupation: Director

Mr Neser has been involved with the Abcon group of companies since 1981 and has acted as Chief Executive Officer for the various companies in the group since the early 1990’s. He is active in the residential and commercial property field as well as in the juice, mushroom, flower and service station industries.

6. Leon Basson (36) (Non-executive director)

Qualifications: BCom (Hons), CTA, CA(SA) Occupation: Chief Financial Officer of

Momentum Retail Insurance

Mr Basson has been with Momentum since January 1995. He served his articles at Price Waterhouse from 1991 to 1993 and subsequently worked for Price Waterhouse until the end of 1994.

7. Bryan Terence Jackson (59) (Non-executive director)

Qualifications: BCom, LLB Occupation: Non-executive director of RMB

Properties

Mr Jackson was the Managing Director of RMB Properties (Pty) Ltd from 1992 and Chief Executive Officer from 2002, and retired in 2004. He has extensive experience in all facets of property development, management and investment. He has been a partner in property development companies and has been involved in excess of 100 retail and commercial property developments.

Mr Jackson resigned from the STREM board effective 3 January 2005.

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GOVERNANCEThe directors of STREM acknowledge the importance of

the principles of good corporate governance and support

the Code of Corporate Practices and Conduct contained in

the King II report. They recognise their responsibility to

conduct the affairs of Emira with integrity, openness and

accountability in accordance with generally accepted

corporate practices.

Although Emira is listed on the JSE Limited (“JSE”) and

therefore subject to the code, it is not a legal entity and is

regulated in terms of the Collective Investments Schemes

Control Act of 2002 (“CISC Act”). Certain requirements of

the code are therefore not directly applicable to the Fund.

However, the Managers have adopted the principles of the

code, being fairness, accountability, responsibility and

transparency.

The Fund has complied with the code to the following extent:

The board of directors

Structure

As at 30 June 2005 the board consisted of six members:

Director

Date

appointed

Date

resigned

No of board

meetings

Meetings

attended

Executive directors

J W A Templeton (CEO)* July 2004 4 4

W K Schultze* September 2003 4 4

Non-executive directors

B J van der Ross (Chairman)* September 2003 4 4

L Barnard September 2003 4 4

L Basson** September 2003 4 3

M S B Neser* September 2003 4 4

B T Jackson September 2003 January 2005 4 1

*Audit committee

** Audit committee chairman

CORPORATE GOVERNANCE

25PAGE

The capacity of the directors may be categorised as

follows:

Executive directors

Messrs J W A Templeton and W K Schultze are employed

by RMB Properties (Pty) Limited, and remunerated out of

the service charge payable by the Fund to STREM.

Non-executive directors

Mr L Basson represents Momentum Group Limited at

board level, which is a significant participatory interest

holder. Mr B J van der Ross is a director of FirstRand

Limited and Momentum Group Limited.

Independent non-executive directors

Mr M S B Neser and Ms L Barnard are not significant

holders of Emira participatory interests, as defined in the

code.

The roles of Chairman and Chief Executive Officer are

completely separated. The directors have a wide range of

skills, all with property experience in common.

The board schedules to meet at least four times per year.

In addition, seven asset performance committee meetings

were held during the year and were attended by the

executive members of the board.

All directors have unrestricted access to the advice and

services of the fund’s secretary and to the fund’s records,

information, documents and property. Non-executive

directors also have unfettered access to management at

any time.

The board will ensure that it has the expertise,

independence and diversity it needs to function

independently. Independence of the board from the

management team will be maintained by:

● maintaining a non-executive chairperson;

● maintaining a balance of executive and non-executive

directors;

● the remuneration of the non-executive directors being

unrelated to the financial performance of Emira; and

● all directors being entitled to seek independent

professional advice concerning the affairs of Emira at

the fund’s expense.

The board sets the strategic objectives of the fund and

determines the investment and performance criteria as

well as being responsible for the proper management,

control compliance and ethical behaviour of the business

under its direction.

Committees

Audit committee

The audit committee comprises five members of which

the chairman is non-executive. The committee meets at

least three times per year with the fund’s external

auditors and executive management as well as the

executives responsible for finance, the compliance officer

and internal auditors.

The primary objectives of the committee are to provide

the board with additional independent and objective

assurance regarding the efficacy and reliability of the

financial information used by the directors, to assist them

in the discharge of their duties. The audit committee is

required to provide reasonable assurance to the board

that adequate and appropriate financial and operating

controls are in place; that significant business, financial

and other risks have been identified and are being suitably

managed; and that satisfactory standards of governance,

reporting and compliance are in operation. The committee

also monitors proposed changes in accounting policies,

and discusses and advises the board on the accounting

implications of major transactions.

The board is responsible for the group’s system of internal

and operational control. The executive directors will be

charged with the responsibility of ensuring that assets are

protected, systems operate effectively and all valid

transactions are recorded properly. Comprehensive reviews

and testing of the effectiveness of the internal control

systems in operation will be performed by internal

auditors, who report to the audit committee. The internal

audit function will co-ordinate with other internal and

external providers of assurance to ensure proper coverage

of financial, operational and compliance controls.

The committee has the co-operation of all directors,

management and staff and is satisfied that controls and

systems within the fund have been adhered to and, where

necessary, improved during the period under review.

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GOVERNANCERemuneration committee

Due to the minimal staff employed by the manager, it is

not deemed necessary for the board to establish a

remuneration committee.

Investment committee

An investment committee comprises two executive

directors, and four senior staff employed by RMB Properties

(Pty) Limited. with the appropriate skills and experience.

The committee meets on an ad-hoc basis during the

period under review to assess acquisitions and disposals,

and makes recommendations to the board.

Managing and financial control

During the year independent internal auditors performed

a management and financial control review. No significant

weaknesses were identified and the overall conclusion was

that the:

● directors had maintained an adequate system of

internal controls and accounting records;

● the fund’s assets are safeguarded and appropriately

insured;

● the fund should remain a going concern for the

foreseeable future; and

● management understood the fund’s policy and

employed the appropriate strategy.

Risk management

The STREM management philosophy on risk recognises

that managing risk is an integral part of generating

sustainable unit holder value and enhancing stakeholder

interest. It also recognises that an appropriate balance

should be struck between entrepreneurial endeavour and

sound business practice.

The management of STREM operate a risk management

framework, which is based on COSO’s Enterprise Risk

Management Framework. The underlying premise of

enterprise risk management is that every entity exists to

provide value for its stakeholders. All entities face

uncertainty, and the challenge for management is to

determine how much uncertainty to accept as it strives to

grow stakeholder value.

Value is maximised when management sets strategy and

objectives to strike an optimal balance between growth

and return goals and related risks, and efficiently and

effectively deploys resources in pursuit of the entity’s

objectives.

Enterprise Risk Management in STREM encompasses:

● Aligning risk appetite and strategy which considers the

risk appetite in evaluating strategic alternatives, setting

related objectives, and developing mechanisms to

manage related risks.

● Enhancing risk response decisions by selecting

alternative risk response, which includes risk avoidance,

reduction, sharing or acceptance.

● Reducing operational surprises and losses by gaining

enhanced capabilities to identify potential events and

establish responses.

● Identifying and managing multiple cross-enterprise

risks.

● Seizing opportunities by identifying a full range of

potential events.

● Improving deployment of capital by obtaining robust

risk information to allow management to effectively

assess overall capital needs and enhance capital

allocation.

These capabilities inherent in enterprise risk management

help management achieve the fund’s performance and

profitability targets and prevent loss of resources.

Enterprise risk management helps to ensure effective

reporting and compliance with laws and regulations, and

helps avoid damage to the fund’s reputation and

associated consequences.

Directors’ dealings

The board has adopted policies prohibiting dealings by

directors and certain other managers in periods

immediately preceding the announcement of its interim

and year-end financial results and at any other time

deemed necessary by the board or as required in terms of

the JSE regulations.

CORPORATE GOVERNANCE (continued)

STATEMENTS

27PAGE

for the year ended 30 June 2005

ANNUAL FINANCIAL STATEMENTS

CONTENTS

Statement of directors’ responsibilities 28

Approval of annual financial statements 28

Report of the independent auditors 29

Report of the trustee 29

Income statement 30

Balance sheet 31

Cash flow statements 32

Statement of changes in equity 33

Notes to the annual financial statements 34

Properties listing 49

Notice to participatory interest holders 54

Administration 58

Form of proxy 59

FINANCIAL STATEMENT OF DIRECTORS’ RESPONSIBILITIES

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The directors of STREM are responsible for the preparation, integrity, and fair presentation of the financial statements of the

fund. The financial statements presented on pages 30 to 54 have been prepared in accordance with Statements of Generally

Accepted Accounting Practice (“GAAP”) in South Africa, and include amounts based on judgments and estimates made by

management.

The directors consider that in preparing the financial statements they have used the most appropriate accounting policies,

consistently applied and supported by reasonable and prudent judgments and estimates, and that all Statements of GAAP that

they consider to be applicable have been followed.

The directors are satisfied that the information contained in the financial statements fairly presents the results of operations

for the period and the financial position of the fund at year-end. The directors also prepared the other information included in

the report and are responsible for both its accuracy and its consistency with the financial statements.

The directors have responsibility for ensuring that accounting records are kept. The accounting records should disclose with

reasonable accuracy the financial position of the fund to enable the directors to ensure that the financial statements comply

with the relevant legislation.

The fund operated in a well-established control environment, which is well documented and regularly reviewed. This

incorporates risk management and internal control procedures, which are designed to provide reasonable, but not absolute,

assurance that assets are safeguarded and the risks facing the business, are being controlled.

The going-concern basis has been adopted in preparing the financial statements. The directors have no reason to believe that

the fund will not be a going concern in the foreseeable future, based on forecasts and available cash resources. These financial

statements support the viability of the fund.

The fund’s external auditors, PricewaterhouseCoopers Incorporated, audited the financial statements, and their report is

presented on page 29.

B J van der Ross J W A Templeton

Chairman Chief Executive Officer

The annual financial statements of the fund, incorporating statutorily required information in respect of the fund, for the year

ended 30 June 2005 set out on pages 30 to 54 were approved by the board of directors of STREM on 22 August 2005 and are

signed on its behalf by:

B J van der Ross J W A Templeton

Chairman Chief Executive Officer

APPROVAL OF ANNUAL FINANCIAL STATEMENTS

STATEMENTS

29PAGE

TO THE PARTICIPATORY INTEREST HOLDERS OF EMIRA PROPERTY FUND

We have audited the financial statements set out on pages 30 to 54 for the year ended 30 June 2005. These financial

statements are the responsibility of STREM’s directors. Our responsibility is to express an opinion on these financial statements

based on our audit.

Scope

We conducted our audit in accordance with Statements of South African Auditing Standards. Those standards require that we

plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement.

An audit includes:

● examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;

● assessing the accounting principles used and significant estimates made by management; and

● evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

Audit opinion

In our opinion, the financial statements fairly present, in all material respects, the financial position of Emira Property Fund and

of its operations and cash flows for the year ended 30 June 2005 in accordance with South African Statements of Generally

Accepted Accounting Practice and in the manner required by the Collective Investment Schemes Control Act, No. 45 of 2002.

PricewaterhouseCoopers Inc.

Registered Accountants and Auditors Johannesburg

Chartered Accountants (SA) 22 August 2005

In terms of Section 70(I)(f) of the Collective Investment Schemes Control Act, No. 45 of 2002

TO THE PARTICIPATORY INTEREST HOLDERS OF THE EMIRA PROPERTY FUND

During the period as set out above during which the Collective Investment Schemes Control Act, No. 45 of 2002 has been in

effect the Trust has been administered in accordance with

i. The limitations imposed on the investment and borrowing powers of the Manager by the Act; and

ii. The provisions of the Act and the deed.

ABSA Bank Ltd Johannesburg

Trustee 19 August 2005


REPORT OF THE TRUSTEE

REPORT OF THE INDEPENDENT AUDITORS

FINANCIALEm

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Ann

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30PAGE

INCOME STATEMENTfor the year ended 30 June 2005

2005 2004

Notes R’000 R’000

REVENUE 2 407 088 179 669

Property expenses (121 309) (60 843)

Administration and management expenses (22 740) (10 940)

Depreciation (6 464) (3 004)

Net income from property rental operations 3 256 575 104 882

Fair value adjustments 248 141 86 906

Change in fair value of investment properties 280 810 86 906

Change in fair value of investment properties as a

result of future rental escalations (32 669) —

Profit on disposal of investment property 11 179 —

Maintenance fund expenses (1 827) (1 330)

Listing costs (104) (345)

Operating profit 513 964 190 113

Financing costs 4 (45 662) (20 669)

Interest received 4 3 554 8 046

Net profit for the period 471 856 177 490

Earnings per participatory interest (cents) 165,1 65,22

Headline earnings per participatory interest (cents) 5 74,37 33,28

Distribution per participatory interest (cents) 5 67,55 34,01

STATEMENTS

31PAGE

BALANCE SHEETas at 30 June 2005

2005 2004


ASSETS

Non-current assets

Investment properties 6 2 227 105 1 901 027

Allowance for future rental escalations 32 669 —

2 259 774 1 901 027

Current assets

Trade and other receivables 7 31 757 4 269

Maintenance fund 8 — 24 104

Cash 9 9 252 4 027

41 009 32 400

Total assets 2 300 783 1 933 427

EQUITY AND LIABILITIES

Participatory interests 10 1 425 094 1 416 344

Reserves 11 363 512 85 403

Equity capital and reserves 1 788 606 1 501 747

Non-current liabilities

Borrowings 12 364 141 310 978

Current liabilities

Short-term portion of borrowings 12 1 867 1 867

Trade and other payables 13 34 257 39 121

Derivative liabilities 14 11 757

Distributions payable to participatory interest holders 100 155 79 714

148 036 120 702

Total equity and liabilities 2 300 783 1 933 427

FINANCIALEm

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Ann

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05

32PAGE

CASH FLOW STATEMENTfor the year ended 30 June 2005

2005 2004


CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 15.1 196 087 141 063

Interest received 3 554 8 046

Interest paid (33 905) (20 669)

Distributions to participatory interest holders 15.2 (173 306) (12 373)

(7 570) 116 067

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of investment properties (104 693) (1 779 893)

Acquisition of furniture and fittings (8 984) (37 232)

Proceeds on sale of investment properties 40 455 —

Decrease/(increase) in maintenance fund 24 104 (24 104)

(49 118) (1 841 229)

CASH FLOWS FROM FINANCING ACTIVITIES

Issue of participatory interests 8 750 1 426 468

Cash utilised for listing expenses — (10 124)

Increase in borrowings 53 163 310 978

Increase in short-term portion of borrowings — 1 867

61 913 1 729 189

Net increase in cash and cash equivalents 5 225 4 027

Cash at the beginning of the period 4 027 —

Cash at the end of the period 9 252 4 027

STATEMENTS

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STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2005

Partici- Non-

patory distributable Retained

interest reserve earnings Total

R’000 R’000 R’000 R’000

2004

Issue of participatory interest 1 426 468 — — 1 426 468

Listing costs (10 124) — — (10 124)

Net profit for the period — — 177 490 177 490

Distribution to PI holders — — (92 087) (92 087)

Maintenance fund expenses — (1 330) 1 330 —

Fair value adjustment — 86 906 (86 906) —

Balance at 30 June 2004 1 416 344 85 576 (173) 1 501 747

2005

Balance at 1 July 2004 1 416 344 85 576 (173) 1 501 747

Issue of participatory interest 8 750 — — 8 750

Net profit for the year — — 471 856 471 856

Distribution to PI holders — — (193 747) (193 747)

Transfer of allowance for future

rental escalations to non-

distributable reserve — 32 669 (32 669) —

Fair value adjustments — 248 141 (248 141) —

Profit on sale of investment property — 11 179 (11 179) —

Unrealised loss on interest rate swaps — (11 757) 11 757 —

Maintenance fund expenses — (1 827) 1 827 —

Balance at 30 June 2005 1 425 094 363 981 (469) 1 788 606

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NOTES TO THE FINANCIAL STATEMENTSfor the year ended 30 June 2005

1. ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below:

Basis of presentation

The preparation of financial statements in conformity with Statements of Generally Accepted Accounting Practice

requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and the

disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of

revenue and expenses during the reporting period based on management’s best knowledge of current events and actions.

Actual results may ultimately differ from these estimates. The financial statements have been prepared in accordance

with South African Statements of Generally Accepted Accounting Practice using the historical cost convention as modified

by the revaluation of investment property.

1.1 Investment properties

1.1.1 Freehold properties

Investment properties held for the purpose of earning rental income and for capital appreciation.

Investment properties are treated as long-term investments and are initially recognised at cost and subsequently carried

at fair value. The fair value of an asset is the amount for which that asset could be exchanged between knowledgeable

willing parties in an arm’s length transaction. Properties are valued annually by accredited valuers at fair value.

Independent valuations are obtained on a rotational basis so as to ensure that external independent valuation

professionals have valued each property every three years.

Any gains or losses arising from changes in fair value are included in the net income or loss for the year. The net gains or

losses are transferred to a non-distributable reserve and are not available for distribution, as set out in the trust deed of

the fund.

Gains or losses arising from the disposal of investment properties, being the difference between the net disposal proceeds

and the carrying value, are brought to account in the determination of the net income/loss for the year. The net gains or

losses are transferred to a capital reserve and are not available for distribution in accordance with the fund’s trust deed.

1.1.2 Leasehold properties

Leasehold properties comprise buildings erected on land secured by means of long-term land leases. These leases are

classified as operating leases and have varying expiry dates from 15 to 45 years.

1.2 Furniture and fittings

Furniture and fittings are stated at historical cost less accumulated depreciation. Cost comprises the purchase price as

well as all costs incurred in order to bring the asset to working condition.

Depreciation is calculated on the straight-line method.

Repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Furniture and fittings are linked to specific properties. Consequently, any gains or losses on disposal are not separately

accounted for.

35PAGE

1. ACCOUNTING POLICIES (continued)

1.3 Allowance for future rental escalations

Allowance for future rental escalations represents the difference between the actual cash rentals received to date and the

rental income recognised on a straight-line basis over the period of the lease contracts.

1.4 Trade receivables

Trade receivables are carried at original invoice amounts less provision made for impairment of these receivables. A

provision for impairment of trade receivables is established when there is objective evidence that the fund will not be

able to collect all amounts due according to the original term of the receivables. The amount of the provision is the

difference between the carrying amount and the recoverable amount, being the present value of the expected cash flows,

discounted at the market rate of interest for similar borrowers.

1.5 Maintenance fund

The maintenance fund is accounted for at cost and comprises a diversified portfolio of money market instruments with

maturities of less than one year, for the replacement of retired fixed assets and for refurbishments required from time to

time. The expenses financed from the fund are transferred to a non-distributable reserve and do not form part of the

distributions to participatory interest holders.

1.6 Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and

cash equivalents comprise cash on hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are

included within borrowings in current liabilities on the balance sheet.

1.7 Borrowings

Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred, when the fund

becomes party to the contractual provisions. Borrowings are subsequently stated at amortised cost using the effective

interest rate method; any difference between proceeds (net of amortised costs) and the redemption value is recognised

in the income statement over the period of the borrowings as interest.

Financial liabilities are removed from the balance sheet when the obligation specified in the contract is discharged,

cancelled, or expires.

1.8 Derivative instruments

The fund uses derivative financial instruments to hedge its exposure to interest rate risks arising from financing and

investment activities. The fund does not hold or issue derivative financial instruments for trading purposes. However,

derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative financial

instruments are stated at fair value. The gain or loss on re-measurement to fair value is recognised immediately to profit

or loss. The fair value of interest rate swaps is the estimated amount that the group would receive or pay to terminate

the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the

swap counterparties.

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1.9 Trade payables

Trade payables are carried at the fair value of the consideration to be paid in future for goods or services that have been

received or supplied and invoiced or formally agreed with the supplier.

1.10 Revenue and expense recognition

1.10.1 Revenue

Comprises rental income and operating cost recoveries from tenants, but excludes value-added tax. Rental income is

accounted for on a straight-line basis over the period of the lease contracts.

1.10.2 Interest and other investment income

Interest income is recognised on a time proportion basis, taking into account the principal amount outstanding to the

effective rate over the period to maturity when it is determined that such income will accrue to the fund.

1.10.3 Operating leases

Leases under which the lessor effectively retains the risks and benefits of ownership are classified as operating leases.

Obligations incurred under operating leases are charged to the income statement in equal instalments over the period

of the lease.

1.10.4 Management fees

Management fees payable to STREM are equal to 0,5% of the total market capitalisation of the fund, calculated monthly

on the average daily closing price of the fund as recorded by the JSE Limited, plus the total long-term borrowings.

1.10.5 Property management fees

Property management fees payable to RMB Properties are calculated based on the rental collections using the market-

related rates applicable to the type and occupancy of buildings.

1.11 Distributions to participatory interest holders

Distributions to participatory interest holders are recognised in the period in which income is earned. The accrued income

arising as a result of the difference between actual cash rental received and the amortised amount on a straight-line basis

over the periods of the lease contracts is not distributable until realised.

1.12 Segment reporting

Business segments provide services that are subject to risks and returns that are different from those of other business

segments. Geographical segments provide services within a particular economic environment that is subject to risks and

returns that are different from those components operating in other economic environments.

NOTES TO THE FINANCIAL STATEMENTS (continued)


37PAGE


1.13 Financial risk management

Financial risk factors

The fund’s activities expose it to a variety of financial risks, including the effects of changes in the debt and equity market

prices and interest rates. The fund’s overall risk management programme focuses on the unpredictability of financial

markets and seeks to minimise potential adverse effects on the financial performance of the fund.

Interest rate risk management

The fund’s policy is to maintain a significant portion of borrowings in fixed rate instruments. At year-end, 79% of total

borrowing facilities were at fixed rates.

Credit risk management

The fund has no significant concentration of credit risk due to a large number of widespread tenants.

The fund has policies in place to ensure that lease agreements concluded are with tenants with an appropriate credit

history. The fund has policies that limit the amount of credit exposure to any one financial institution, and cash

transactions are limited to high credit quality financial institutions. The debts are monitored on a continuous basis in

order to maintain a low default rate on trade receivables.

Liquidity risk management

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of

funding through an adequate amount of secured credit facilities and the ability to close out market positions. Due to the

dynamic nature of the fund, management aims at maintaining flexibility in funding by keeping secured credit lines

available.

1.14 Taxation

No taxation is accounted for in the fund as all distributable income is distributed to participatory interest holders and

taxable in their hands. As a result no deferred taxation has been raised.

FINANCIALfor the year ended 30 June 2005


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2005 2004

R’000 R’000

2. REVENUE

Revenue from:

Operating lease rental income on investment properties 260 356 128 820

Operating lease rental income on leasehold properties 13 686 4 484

Allowance for lease rental income (accrued on straight-line basis) 32 669 —

Recoveries of operating costs from tenants 100 377 46 365

407 088 179 669

3. NET INCOME FROM PROPERTY RENTAL OPERATIONS

Net income from property rental operations is arrived at after taking

into account the following items:

Expenses

Auditors’ remuneration

Audit fee 439 453

Expenses 16 28

Depreciation of fixed assets

Furniture and fittings 6 464 3 004

Management fee

Asset management 10 590 5 240

Property management 12 150 5 699

Operating lease payments – leasehold properties 1 603 823

4. INTEREST

Financing costs

Interest paid on long-terms loans (33 562) (20 435)

Unrealised loss on interest rate hedge (11 757) —

Amortised borrowing costs (296) (173)

Interest paid other (47) (61)

Total financing costs (45 662) (20 669)

Interest received

Interest received on cash balances 1 987 7 325

Interest received on maintenance fund investment 1 567 721

Total interest received 3 554 8 046

39PAGE

2005 2004

R’000 R’000

5. EARNINGS PER PARTICIPATORY INTEREST

Reconciliation between earnings and headline earnings:

Net profit for the year 471 856 177 490

Adjusted for:

Profit on sale of investment property (11 179)

Change in fair value of investment properties (280 810) (86 906)

Change in fair value of investment properties as a result of future

rental escalations 32 669 —

Headline earnings 212 536 90 584

Headline earnings per participatory interest 74,37 33,28

The calculation of headline earnings per participatory interest is based

on net profit for the year of R471,8 million (2004: R177,5 million), adjusted

for the profit on disposal and change in fair value of investment properties

divided by the weighted average number of participatory interests in issue

during the year of 285 805 380 (2004: 272 133 684).

Reconciliation of headline earnings to distribution per

participatory interest:

Headline earnings 212 536 90 584

Adjusted for:

Allowance for future rental escalations (32 669) —

Unrealised loss on interest swaps 11 757 —

Maintenance fund expenses 1 827 1 330

Amortised borrowing costs 296 173

Distribution payable to participatory interest holders 193 747 92 087

Distribution per participatory interest 67,55 34,01

The calculation of distribution per participatory interest is based on

headline earnings adjusted for non-distributable items, divided by the

number of participatory interests in issue at the end of the period of

286 828 772 (2004: 285 293 684).



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Furniture

Freehold Leasehold and

buildings buildings equipment Total

R’000 R’000 R’000 R’000

6. INVESTMENT PROPERTIES

Year ended 30 June 2005

Opening net book value 1 803 900 62 899 34 228 1 901 027

Additions 104 327 366 8 984 113 677

Disposals (29 276) — — (29 276)

Depreciation — — (6 464) (6 464)

Surplus on revaluation 276 444 4 366 — 280 810

Change in fair value of investment

properties on future rental escalations (32 669) — — (32 669)

Closing net book value 2 122 726 67 631 36 748 2 227 105

At 30 June 2005

Cost 1 878 951 63 265 46 153 1 988 369

Accumulated depreciation — — (9 405) (9 405)

Revaluation 243 775 4 366 — 248 141


Year ended 30 June 2004

Opening net book value — — — —

Additions 1 725 137 54 756 37 232 1 817 125

Depreciation — — (3 004) (3 004)

Surplus on revaluation 78 763 8 143 — 86 906


At 30 June 2004

Cost 1 725 137 54 756 37 232 1 817 125

Accumulated depreciation — — (3 004) (3 004)

Revaluation 78 763 8 143 86 906


Investment properties pledged as security

Investment properties have been pledged as security by means of collateral mortgage bonds (refer note 12) to secure

borrowing facilities totalling R584,5 million.

Property valuation

One third of the property portfolio were valued by Mills Fitchet, Old Mutual Properties, The Property Partnership and

Motseng Marriott. Directors’ valuations were performed by RMB Properties (Pty) Limited who employ registered valuers

using mainly the discounted cash flow of the future income stream method. For a listing of investment properties, refer

to pages 49 to 53.

41PAGE

2005 2004

R’000 R’000

7. TRADE AND OTHER RECEIVABLES

Trade receivables 916 589

Less: Provision for non-recoverable receivables (2 283) (475)

Net trade receivables (1 367) 114

Prepayments 1 420 758

Other receivables 31 704 3 397

31 757 4 269

Concentrations of credit risk with respect to trade receivables are limited as

the fund covers a wide spectrum of clients across a diverse property portfolio.

Due to these factors, management believes that no additional credit risk

beyond amounts provided for collection losses is inherent in the fund’s

trade receivables.

Included in the other receivables for 30 June 2005, is the guarantee amount

issued for the purchase of 100 Armstrong of R25 million. The property was

transferred in July 2005.

8. MAINTENANCE FUND

Opening balance 24 104 —

Raised on listing — 22 297

Add: Contributions 5 026 2 118

Add: Maintenance fund acquired with property — 1 603

Add: Capitalised interest 1 567 721

Less: Utilised to replace furniture and fittings (3 094) (1 305)

Less: Maintenance fund expenses (1 827) (1 330)

Less: Amount transferred to access facility (25 776) —

— 24 104

9. CASH

Cash at bank 9 252 4 027

10. PARTICIPATORY INTERESTS

Authorised and issued

Opening balance 1 416 344 —

285 293 684 participatory interest of 500 cents each — 1 426 468

1 535 088 participatory interest of 570 cents each 8 750 —

Participatory interests issue costs — (10 124)

1 425 094 1 416 344



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2005 2004

R’000 R’000

11. RESERVES

11.1 Non-distributable reserve

Opening balance 85 576 —

Fair value adjustments 248 141 86 906

Profit on sale of investment property 11 179 —

Transfer of allowance for future rental escalations from distributable reserve 32 669 —

Unrealised loss on interest rate swaps (11 757) —

Transfer of maintenance fund expenses (1 827) (1 330)

363 981 85 576

11.2 Accumulated loss

Opening balance (173) —

Net profit for the year 471 856 177 490

Distribution to participatory interest holders (193 747) (92 087)

Fair value adjustments (248 141) (86 906)

Transfer of allowance for future rental escalations to non-distributable reserve (32 669) —

Profit on sale of investment property (11 179) —

Unrealised loss on interest rate swaps 11 757 —

Transfer of maintenance fund expenses to non-distributable reserve 1 827 1 330

(469) (173)

Total reserves 363 512 85 403

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2005 2004

R’000 R’000

12. LONG-TERM LIABILITIES

12.1 Borrowings

12.1.1 FirstRand Bank – fixed rate three-year funding term with a capital

repayment upon termination. 126 125 126 125

The loan is secured in terms of a first mortgage bond over fixed

property with a carrying value of R2 260 million (note 6). The loan

terminates on 30 November 2006. Interest is payable at a fixed

interest rate of 9,76% nominal compounded monthly (nacm)

12.1.2 FirstRand Bank– fixed rate five-year funding term with a capital

repayment upon termination. 100 000 100 000


property with a carrying value of R2 260 million (note 6). The Loan

terminates on 30 November 2008. Interest is payable at a fixed interest

rate of 10,21% nominally adjusted compounded monthly (nacm)

12.1.3 FirstRand Bank – floating rate five-year funding term with a capital

repayment upon termination. — 85 919



terminates on 30 November 2008. During the current financial year,

this loan was syndicated to Standard Bank.

12.1.4 Standard Bank – floating rate five-year funding term with a capital

repayment upon termination. 139 495



terminates on 30 November 2008. Interest is payable monthly at

a floating interest rate of prime less 2%. All surplus cash is applied

to the floating facility to reduce gearing and interest costs.

12.2 Amortised borrowing cost

Opening balance (1 066) —

Mortgage bond costs capitalised to borrowings (709) (1 239)

Less: Amounts amortised 296 173

(1 479) (1 066)

Borrowings 364 141 310 978

Short-term portion of borrowings 1 867 1 867

Total borrowings 366 008 312 845

12.3 Debt funding

In terms of the trust deed, the fund’s aggregated indebtedness may not exceed an amount equal to 30% of the gross

value of the underlying assets of the fund. At 30 June 2005, the aggregate indebtedness amounted to 15,8% of the gross

value of the underlying assets.



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2005 2004

R’000 R’000

13. TRADE AND OTHER PAYABLES

Trade payables 1 130 3 281

Tenant deposits 13 351 8 431

Accrued expenses 11 412 7 826

Other payables 8 364 19 583

34 257 39 121

Other payables at 30 June 2004 included amounts payable to settle the purchase price of the Gateview property, transferred on 30 June 2004. The consideration was settled on 1 July 2004.

14. Derivative liabilities

Net fair values of derivative liabilities at the balance sheet date were:

Interest rate swap contracts 11 757 —

11 757 —

Interest rate swaps

The notional principal amount of the outstanding interest rate swap contracts at 30 June 2005 was R226 million (2004: nil).

At 30 June 2005 the fixed interest rate was 9,76% and the floating rate was 8,5%.

15. NOTES TO THE CASH FLOW STATEMENT

15.1 Cash generated from operations

Net profit for the year adjusted for: 471 856 177 490

Fair value adjustments (248 141) (86 906)

Allowance for lease rental income (straight- line basis) (32 669) —

Profit on sale of investment properties (11 179) —

Interest received (3 554) (8 046)

Amortised borrowing costs 296 173

Depreciation 6 464 3 004

Unrealised loss on interest rate swaps 11 757 —

Interest paid 33 609 20 496

Operating profit before working capital changes 228 439 106 211

(Increase) in trade and other receivables (27 488) (4 269)

(Decrease)/increase in trade and other payables (4 864) 39 121

Cash generated from operations 196 087 141 063

15.2. Distributions to participatory interest holders

Distribution payable at the beginning of the year (79 714) —

Distributions per income statement (193 747) (92 087)

Distribution payable at the end of the year 100 155 79 714

Distribution paid to participatory interest holders (173 306) (12 373)

45PAGE

2005 2004

R’000 R’000

16. RELATED PARTIES AND RELATED PARTY TRANSACTIONS

The fund is controlled by Momentum Group Ltd and ultimately by

FirstRand Limited. At 30 June 2005, Momentum owned 45,6 % of the

fund’s participatory interest and the remaining 54,4% is widely held.

The following transactions were carried out with related parties:

Strategic Real Estate Managers (Proprietary) Limited 10 590 5 240

Expenditure comprising: asset management fee

Relationship: Fellow subsidiary company of the FirstRand Group companies

Rand Merchant Bank, a division of FirstRand Bank Limited

Expenditure comprising: advisory fee — 1 500

Borrowings 226 125 312 845

Net finance costs 23 166 12 450


RMB Properties (Proprietary) Limited 90 855 13 762

Expenditure comprising: property management fee and letting commissions 22 683 9 762

Promoter’s fees — 4 000

Development of Gift Acres Shopping Centre 68 172 —


Momentum Group Limited

Purchase of properties at listing — 43 208

Purchase of Boundary Terraces — 56 100

Relationship: Major PI holder

Hawley Road Developments (Proprietary) Limited



Momentum Property Investments (Proprietary) Limited


Purchase of Strathmore Park — 16 300

Purchase of Safecash Technologies — 1 500


The above transactions were carried out on commercial terms and conditions

and are not more favourable than those available in similar arm’s-length

dealings at market-related rates.



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2005 2004

R’000 R’000

17. COMMITMENTS AND CONTINGENCIES

Authorised capital expenditure

– Already contracted for 6 000 8 000

– Not yet contracted for — —

Total 6 000 8 000

This expenditure will be financed out of available cash resources and the

maintenance fund.

Leasehold land is secured by means of land leases in terms of which the

fund has the following commitments:

Not later than one year 1 585 1 661

Later than one year and not later than five years 7 300 7 444

Later than five years 83 544 109 597

18. POST-BALANCE EVENTS

There are no other post-balance sheet events other than those detailed in

section three of the Manager’s Report.

19. DISTRIBUTION DETAILS

No. (cents) (cents)

Distributions to PI holders

One month to 31 December 2003 1 — 4,72

Six months to 30 June 2004 2 — 29,29

Six months to 31 December 2004 3 32,63 —

Six months to 30 June 2005 4 34,92 —

For the year 67,55 34,01

47PAGE

20. SEGMENT INFORMATION

The fund’s activities are divided into three main categories, namely:

● Retail Comprise shopping centres

● Office Comprise decentralised commercial properties

● Industrial Comprise industrial properties

June 2005

Retail Office Industrial Other Total Primary R’000 R’000 R’000 R’000 R’000

Revenue 141 458 202 024 63 606 407 088

Revenue 129 259 187 613 57 547 — 374 419

Accrued rental on straight-line basis 12 199 14 411 6 059 — 32 669

Segmental result

Net income from property rental operations 88 651 134 295 45 356 (11 727) 256 575

Depreciation 1 188 4 466 810 — 6 464

Change in fair value of investment properties 83 212 152 984 44 614 — 280 810

Other information

Investment properties 798 078 1 097 235 331 559 233 2 227 105

Trade and other receivables 3 606 2 559 340 25 252 31 757

Total assets 813 889 1 114 207 337 958 34 729 2 300 783

Trade and other payables 11 387 13 619 4 176 5 075 34 257

Capital expenditure 82 416 30 226 2 794 (1 759) 113 677

June 2004

Retail Office Industrial Other Total Primary R’000 R’000 R’000 R’000 R’000

Revenue

Revenue 55 935 92 165 31 569 — 179 669

Segmental result

Net income from property rental operations 31 987 55 289 24 662 (7 056) 104 882

Depreciation 420 2 160 424 — 3 004

Change in fair value of investment properties 37 704 35 962 13 240 — 86 906

Other information

Investment properties 645 937 953 046 300 051 1 993 1 901 027

Trade and other receivables 1 946 1 972 (1 080) 1 431 4 269

Total assets 648 058 955 149 299 207 31 013 1 933 427

Trade and other payables 5 509 10 761 2 795 20 056 39 121

Capital expenditure 42 669 21 712 900 — 65 281



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20. SEGMENT INFORMATION (continued)

Unallocated costs represent corporate expenses. Segment assets consist mainly of investment properties and fixed assets and exclude investments. Segment liabilities comprise operating liabilities. Capital expenditure comprises additions to investment properties and fixed assets (Note 6).

June 2005

Retail Office Industrial Other Total R’000 R’000 R’000 R’000 R’000

Geographical segments

Revenue

– Gauteng 98 980 164 582 36 956 — 300 518

– Western and Eastern Cape 13 365 15 249 9 380 — 37 994

– KwaZulu-Natal — 22 193 17 270 — 39 463

– Free State 24 643 — — — 24 643

– North West 4 470 — — — 4 470

141 458 202 024 63 606 — 407 088

Total assets

– Gauteng 587 273 888 425 195 365 32 499 1 703 562

– Western and Eastern Cape 78 467 67 581 55 957 1 251 203 256

– KwaZulu-Natal — 158 201 86 636 403 245 240

– Free State 128 049 — — 576 128 625

– North West 20 100 — — — 20 100

813 889 1 114 207 337 958 34 729 2 300 783

June 2004

Retail Office Industrial Other Total R’000 R’000 R’000 R’000 R’000

Geographical segments

Revenue

– Gauteng 38 176 81 380 18 857 138 413

– Western and Eastern Cape 4 132 7 404 4 817 16 353

– KwaZulu-Natal — 3 381 7 895 — 11 276

– Free State 13 251 — — — 13 251

– North West 376 — — — 376

55 935 92 165 31 569 — 179 669

Total assets

– Gauteng 442 431 757 753 173 775 26 146 1 400 105

– Western and Eastern Cape 75 301 78 015 49 222 2 987 205 525

– KwaZulu-Natal — 119 381 76 210 734 196 325

– Free State 110 189 — — 1 146 111 335

– North West 20 137 — — — 20 137

648 058 955 149 299 207 31 013 1 933 427

49PAGE

PROPERTIESType Property Location Major tenant GLA

Valuation (R’000)

% of sector

% of portfolio

Offices 1059 Schoeman Street

1059 Schoeman Street, Hatfield

The Embasy of IrelandUnited Nations Office for Drug Control and Crime PreventionSABC, TV News

6 048 29 000 2,6% 1,3%

Offices 11 Park Lane (Ridgewild)

11 Park Lane, Parktown Headache Clinic (Pty) Ltd Micro Finance Regulatory CouncilNetcare Gauteng Two (Pty) Ltd

3 676 11 275 1,0% 0,5%

Offices 267 West 267 West Avenue, Centurion

Firstrand Bank Limited Afgri Operations Limited T/A OTK

9 799 58 000 5,2% 2,6%

Offices Bank Forum 337 Bronkhorst Street, New Muckleneuk, Pretoria

Firstrand Bank LimitedNewtons Incorporated

7 687 35 515 3,2% 1,6%

Offices Boundary Terraces 1 Mariendahl Lane, Newlands, Cape Town

Coronation Asset Management (Pty) LtdCitadel Investment Service Ltd African Harvest Fund Managers (Pty) Ltd

8 276 67 700 6,1% 3,0%

Offices Braamfontein Centre

23 Jorissen Street, Braamfontein

CTH Legal Administration Trust Jet Education Services (Pty) LtdJohannesburg Propcom (Pty) LtdThe Ford Foundation

21 308 72 900 6,6% 3,2%

Offices Bradenham Hall Mellis Avenue, Rivonia Khula Enterprise Finance Ltd

4 569 17 330 1,6% 0,8%

Offices Brooklyn Office Park

Nicolson Street, Brooklyn Moores Rowland 5 364 25 077 2,3% 1,1%

Offices Contact Centre Winborne

8 Sherborne Road, Parktown

Rossouws Inc 1 184 4 430 0,4% 0,2%

Offices Dalefern 284 Oak Avenue, Ferndale

Professional Pharmaceutical Marketing Services

3 792 14 385 1,3% 0,6%

Offices Deloittes Cnr Fehrsen Street and Waterkloof Road, Brooklyn

Deloitte 4 094 26 785 2,4% 1,2%

Offices Derby Downs 9 Derby Place and 4 Sookhai Place, Derby Downs

Ivory Systems Kzn (Pty) LtdLafarge South Africa (Pty) Ltd

2 205 13 275 1,2% 0,6%

Offices Dorbyl Parktown 16 Jan Smuts Avenue, Parktown

Dorbyl Limited 2 346 17 350 1,6% 0,8%

Offices East Coast Radio House

314/7 Umhlanga Rocks Drive, Umhlanga Rocks

Absa Bank Limited Strauss Daly Inc East Coast Radio (Pty) Ltd

5 714 42 140 3,8% 1,9%

PROPERTIES LISTING as at 30 June 2005

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LISTINGType Property Location Major tenant GLA

Valuation (R’000)

% of sector

% of portfolio

Offices East Rand Junction Cnr North and K90, Boksburg

Hammond Pole & Dixon IncTelkom SA Ltd

6 710 28 292 2,5% 1,3%

Offices Epsom Downs Office Park

13 Sloane Street, Bryanston

Standard Bank of SA LtdPatrick Bernard Smith T/A Ikat Computing

9 841 33 440 3,0% 1,5%

Offices Faerie Glen 291 Sprite Avenue, Faerie Glen

V.I.P. Personnel & Payroll Systems

3 710 28 385 2,6% 1,3%

Offices FNB Midrand Cnr 16th and Old Pretoria Roads, Midrand

FirstRand Bank Limited 2 532 6 800 0,6% 0,3%

Offices Gateview 3 Sugar Close, Umhlanga

Crawford ThqAlmar Agencies as a Division of Almar Container Group (Pty) Ltd

2 714 16 450 1,5% 0,7%

Offices Grinaker Electronics

35 Waterloo Road, Samrand, Midrand

Logitek 17 (Pty) Limited 3 261 7 000 0,6% 0,3%

Offices Knightsbridge Manor

33 Sloane Street, Bryanston Ext 4

Afgri Operations Limited (Block B)Managed Healthcare Systems (Pty) Ltd

9 589 50 987 4,6% 2,3%

Offices Lake Buena Vista 1 Gordon Hood Avenue, Centurion

Pebble Bed Modular Reactor (Pty) Ltd

5 735 23 405 2,1% 1,0%

Offices Lone Creek Cnr Mac Mac and Howick Close, Midrand

Rockwell Automation (Pty) Ltd

5 659 23 185 2,1% 1,0%

Offices Lynnridge Mews Cnr Hibiscus Street and Jacobsen

EPI Use Systems (Pty) Ltd 3 533 15 362 1,4% 0,7%

Offices Menlyn Square Cnr Lois and Gobie Streets, Menlyn

First National Bank LimitedAbsa Bank LimitedStandard Bank of South Africa

9 850 59 015 5,3% 2,6%

Offices Midrand Business Park

563 Main Road, Halfway House, Midrand

Construction Education & Training Authority T/A CetaMolapo Technology (Pty) LimitedOrbtech Holdings Limited

13 373 27 500 2,5% 1,2%

Offices Momentum House Cnr Stanger, Prince Albert and Dunford Roads, Kingsmead, Durban

Momentum Group LimitedAuto & General Insurance Company LtdSteinhof Manufacturing (Pty) Ltd

6 249 33 670 3,0% 1,5%

Offices Motorola 410 Janedel Avenue, Halfway Gardens, Midrand

21st Century Funeral Brokers (Pty) Ltd

719 3 001 0,3% 0,1%

Offices Nimas House 5 The Boulevard, Westway Office Park, Westville

1 372 11 470 1,0% 0,5%

Offices Oracle House Smuts Drive, Midrand Oracle Corporation SA (Pty) Ltd

5 202 32 655 2,9% 1,4%

PROPERTIES LISTING (continued)as at 30 June 2005

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Valuation (R’000)

% of sector

% of portfolio

Offices Pilrig 5 Eton Road, Parktown Centre For Development & EnterpriseGlover Inc

2 027 5 990 0,5% 0,3%

Offices Podium House Cnr Atterbury and Lois Avenues, Menlyn

Beget Solutions (Pty) Ltd Randbond Finance (Proprietary) Limited

4 832 17 770 1,6% 0,8%

Offices Rentworks 48 Grosvenor Road, Bryanston

Rentworks (Pty) Ltd 3 027 22 500 2,0% 1,0%

Offices Rigel Park 446 Rigel Avenue, Erasmusrand, Pretoria

Financial Services Board 4 534 25 280 2,3% 1,1%

Offices Sandgate Park 16 Desmond Street, Eastgate

Griffiths and Griffiths CCSymetrix (Pty) Ltd

12 120 31 337 2,8% 1,4%

Offices Sanlam Gables 1209 Schoeman Street, Hatfield

Sanlam Trust The British Council

2 851 14 562 1,3% 0,6%

Offices Strathmore Park 305 Musgrave Road, Durban

Orion Telecom South Africa (Pty) LtdAdcorp Holdings Limited

3 762 21 100 1,9% 0,9%

Offices Tuinhof 265 West Avenue, Centurion

Swiftnet (Pty) Ltd Trans Caledon Tonnelowerheid

8 955 42 250 3,8% 1,9%

Offices Westway 17 The Boulevard, Westway Office Park, Westville

First National Asset Management

2 283 19 175 1,7% 0,8%

Offices Woodmead Office Park

145 Western Services Road, Woodmead

South African Revenue Services DB Thermal (Pty) Ltd Young and Rubicam Hedley Byrne (Pty) Ltd

17 514 75 895 6,8% 3,4%

Subtotal 0ffices 238 016 1 111 638 100,0% 49,2%

Retail Boskruin Shopping Centre

Cnr of President Fouche and Hawken Avenue, Bromhof

Woolworths (Pty) Ltd 6 752 65 820 8,1% 2,9%

Retail Brandwag Melville Drive, Brandwag, Bloemfontein

Pick ’n Pay Stores Limited 12 118 64 620 8,0% 2,9%

Retail Cresta Corner Cnr Beyers Naude Drive and Pendoring Street, Cresta

Virgin Active (Pty) Ltd Nedbank LimitedKempster Sedgewick (Pty) Ltd

8 056 40 700 5,0% 1,8%

Retail Epsom Downs Shopping Centre

13 Sloane Street, Bryanston


Retail Fourways Game Cnr Fourways Boulevard and Short Street, Fourways

Masstores (Pty) Ltd 8 000 43 470 5,4% 1,9%

Retail Gateway 1319 Pretoria Street, Hatfield

Umkhombe Investments No 11 Cc T/A SparMcDonalds SA (Pty) Ltd

1 768 8 200 1,0% 0,4%

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LISTINGType Property Location Major tenant GLA

Valuation (R’000)

% of sector

% of portfolio

Retail Gift Acres Lynnwood Road, Lynnwood Ridge

Woolworths (Pty) Ltd First National Bank LimitedMr Price Group Limited

9 363 68 396 8,4% 3,0%

Retail Linksfield Road Linksfield Road, Linksfield Woolworths (Pty) Ltd 4 090 19 160 2,4% 0,8%

Retail Lynnridge Mall Cnr Freesia and Mayflower, Lynnwood Ridge

Pick ’n Pay Stores Limited Mr Price Group Limited T/A Mr Price HomeTruworths Ltd 285

14 220 108 000 13,3% 4,8%

Retail Mafikeng Game Cnr Nelson Mandela and Victoria Streets, Mafikeng

Masstores (Pty) Ltd 5 218 20 060 2,5% 0,9%

Retail Market Square Beacon Way, Plettenberg Bay

Woolworths (Pty) Ltd Mr Price Group Limited

13 294 77 685 9,6% 3,4%

Retail Quagga Centre Cnr Church and West Street, Pretoria West

Pick ’n Pay Stores Limited Shoprite Checkers

22 611 85 575 10,6% 3,8%

Retail Randridge Mall John Vorster Drive, Randpark Ridge

Pick ’n Pay Stores Limited Woolworths (Pty) Ltd

18 957 100 000 12,3% 4,4%

Retail Southern Sentrum Benade Drive, Bloemfontein


Subtotal retail 151 057 810 256 100,0% 35,9%

Industrial Admiral House 151 Lechwe Street, Randjiespark

AGI Africa (Pty) Ltd 5 117 9 685 2,9% 0,4%

Industrial Aeroport – Fulcrum

96 Loper Avenue, Spartan

Sturrock & Robson Industries Ltd

3 805 8 125 2,4% 0,4%

Industrial Aeroport – Grenco 98 Loper Avenue, Spartan Grenco (Sa) (Pty) Ltd 1 672 4 376 1,3% 0,2%

Industrial Arjo Wiggins – Mahogany Ridge

1 Monte Carlo Road, Mahogany Ridge, Pinetown

Antalis (Pty) Limited 6 907 21 440 6,4% 0,9%

Industrial Barracuda 82 Lechwe Street, Randjiespark

Glass Decorations CC 6 698 13 175 3,9% 0,6%

Industrial Cambridge Park Witkoppen Road, Paulshof

Danfoss (Pty) Ltd Exact Mobile Phones (Pty) Ltd

12 788 30 055 8,9% 1,3%

Industrial Electrocom Indianapolis Crescent, Kyalami

RS Components Limited 3 856 7 970 2,4% 0,4%

Industrial Epping Warehouse (WGA)

1 Bofors Circle, Epping

Nampak Products Ltd T/A Nampak Bonerts Motor Spares (Pty) Ltd

24 075 20 980 6,2% 0,9%

Industrial Evapco Cnr Quality and Barlow Streets, Isando

Evapco Sa (Pty) Ltd 5 294 7 765 2,3% 0,3%

Industrial Flexitainer 59 Lechwe Street, Randjiespark

Bryant Technology Limited 1 714 2 558 0,8% 0,1%

Industrial Fosa Park 570 Inanda Road, Durban Adcock Ingram Limited 4 200 10 550 3,1% 0,5%

PROPERTIES LISTING (continued)as at 30 June 2005

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Valuation (R’000)

% of sector

% of portfolio

Industrial Freeway Park Cnr Barkley and Camp Roads, Maitland

Gerber Goldschmidt Group (Pty) LtdFreefall Trading 199 (Pty) Ltd

7 935 26 500 7,9% 1,2%

Industrial Goodyear Tycon Cochrane Avenue, Epping Super Move (Pty) Ltd 5 870 8 570 2,5% 0,4%

Industrial Greenfields 1455 North Coast Road, Durban North

Longlife Tyres (Pty) LtdStandard Fireworks SA (Pty) Ltd

9 398 17 640 5,2% 0,8%

Industrial Industrial Village Jet Park

Cnr Kelly Street and Ackerman Road, Jet Park

Gomes Construction (Pty) LtdTablebay Holdings (Pty) Ltd

11 613 19 000 5,6% 0,8%

Industrial SL Ind Village Kya Sands

Cnr Elsecar and Bernie Streets, Kya Sands

Aqua-Touch (Pty) LtdPoli-Film South Africa (Pty) Ltd

16 659 24 705 7,3% 1,1%

Industrial Inspectorate Data Street, Ormonde Inspectorate M&L (Pty) Ltd 2 704 5 140 1,5% 0,2%

Industrial Johnson & Johnson

1 Medical Road, Midrand

Johnson & Johnson Professional

3 561 7 450 2,2% 0,3%

Industrial Mitek South Africa 16th Street, Midrand Mitek South Africa (Pty) Ltd 6 604 17 040 5,1% 0,8%

Industrial Morgan Creek 38 Mahogany Road, Mahogany Ridge, Pinetown

Simba (Pty) Ltd 4 644 13 000 3,9% 0,6%

Industrial New Zealand Milk Products

Cnr 16th and Douglas Roads, Midrand

New Zealand Milk Products Sa (Pty) Ltd

2 756 5 615 1,7% 0,2%

Industrial One Highveld 5 Bellingham Street, Centurion

C.I.E Group (Pty) Ltd 6 012 16 790 5,0% 0,7%

Industrial QD House 91 – 94 Silverstone Crescent, Kyalami

Alchemy Technologies (Pty) Ltd

3 470 9 110 2,7% 0,4%

Industrial Rinaldo Park 50 Moreland Road, Redhill Industrial Park

Mr Price Group Ltd 1 650 2 640 0,8% 0,1%

Industrial Siliconics Cnr Precision & Silicon Streets, Kya Sands

Control Techniques SA (Pty) Ltd

1 452 2 490 0,7% 0,1%

Industrial The Wolds A 82 Intersite Avenue, Umgeni Business Park

Clipsal SA (Pty) Ltd 1 710 4 130 1,2% 0,2%

Industrial The Wolds B 56 Intersite Avenue, Umgeni Business Park

Heidelberg Graphic Systems SAOptiplan (Pty) Limited

830 1 940 0,6% 0,1%

Industrial Umgeni Road A 98 – 102 Intersite Avenue, Umgeni Business Park

Honeywell South Africa (Pty) Ltd

1 886 3 750 1,1% 0,2%

Industrial Umgeni Road B 19 – 23 Intersite Avenue, Umgeni Business Park

Kinesis Logistics (Pty) Ltd 6 021 11 320 3,4% 0,5%

Industrial Xpanda 918 Morkels Close, Halfway House, Midrand

Xpanda Security (Pty) Ltd 2 384 4 070 1,2% 0,2%

Subtotal Industrial 173 285 337 579 100,0% 14,9%

Total Investment properties 562 358 2 259 473 100,0% 100,0%

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N O T I C E NOTICE TO PARTICIPATORY INTEREST HOLDERS

EMIRA PROPERTY FUND

(Participatory interest code: EMI, ISIN: ZAE000050712)

(“Emira” or “the fund”)

Notice is hereby given that the first annual general meeting of the members of Emira will be held in the boardroom, Third Floor,

3 Gwen Lane, Sandton at 14:00 on Tuesday, 1 November 2005 for the purposes of considering, and if deemed fit, passing with

or without modification the resolutions set out below:

1. ORDINARY RESOLUTIONS

1.1 Ordinary resolution number 1

”Resolved that the annual financial statements for the financial year ended 30 June 2005 including the management

company’s report and the report of the auditors thereon be received, considered and approved.”

1.2 Ordinary resolution number 2

“Resolved that, the directors of Strategic Real Estate Managers (Proprietary) Limited, the manager of Emira, are hereby

authorised, by way of a renewable general authority, to issue units in the authorised but unissued capital of the fund

for cash, as and when they in their discretion deem fit, subject to the Listings Requirements of the JSE Limited Africa

(“JSE”), provided that:

● this general authority shall be valid until the fund’s next annual general meeting or for 15 months from the date of

this resolution, whichever period is the shorter;

● the units must be of a class already in issue, or where this is not the case, must be limited to such securities or rights

that are convertible into a class already in issue;

● a press announcement giving full details, in accordance with the Listings Requirements of the JSE including the

impact on net asset value and earnings per unit, will be published at the time of any issue representing, on a

cumulative basis within one financial year, 5% or more of the number of units prior to the issue;

● issues for cash may not exceed 15% in the aggregate in any one financial year of the number of the fund’s units

already in issue;

● in determining the price at which an issue of units will be made in terms of this general authority, the maximum

discount permitted will be 10% of the weighted average traded price of the units measured over the 30 business

days prior to the date that the price of the issue is determined or agreed to by the directors of Strategic Real Estate

Managers (Proprietary) Limited, the manager of Emira; and

● any such issue will only be made to public participatory interest holders as defined in the Listings Requirements of

the JSE and not to related parties.

Approval for this ordinary resolution is obtained by achieving a 75% majority of the votes cast in favour of this

resolution at the annual general meeting by all participatory interest holders of Emira present or represented by

proxy.

2. SPECIAL RESOLUTION

2.1 Special resolution number 1

“Resolved that the directors of Strategic Real Estate Managers (Proprietary) Limited, the manager of Emira, be hereby

authorised by way of a renewable general authority, to approve the repurchase of its own participatory interests by the

fund, provided that:

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● this general authority shall be valid until the fund’s next annual general meeting or for 15 months from the date

of this resolution, whichever period is shorter;

● the repurchase of participatory interests will be effected through the order book operated by the JSE trading system

and done without any prior understanding or arrangement between the fund and the counterparty;

● an announcement complying with the Listings Requirements of the JSE be published by the fund when (i) the fund

has cumulatively repurchased 3% of the participatory interests in issue as at the time the general authority was

given (“the initial number”) and (ii) for each 3% in aggregate of the initial number of participatory interests

acquired thereafter by the fund;

● the general repurchase by the fund of its own participatory interests shall not in the aggregate in any one financial

year exceed 20% of the fund’s issued capital of that class;

● repurchases must not be made at a price more than 10% above the weighted average of the market value of the

participatory interests for the five business days immediately preceding the date on which the transaction is

effected;

● at any point in time the fund may only appoint one agent to effect any repurchase on the fund’s behalf;

● the fund will, after a repurchase, still comply with the provisions of the Listings Requirements of the JSE regarding

unit spread;

● the fund will not repurchase participatory interests during a prohibited period (as defined by the Listings

Requirements of the JSE); and

● such repurchases shall be subject to the trust deed of the fund, the provisions of the Collective Investment Schemes

Act and the JSE Listings Requirements, when applicable.

It is the intention of the directors of Strategic Real Estate Managers (Proprietary) Limited, the manager of Emira, that

they use such general authority should prevailing circumstances in their opinion warrant it.

The directors of Strategic Real Estate Managers (Proprietary) Limited, the manager of Emira, undertake that they will

not implement any such repurchases while this general authority is valid, unless:

● the fund and the group will be able, in the ordinary course of business, to pay its debts for a period of 12 months

after the date of the notice of the annual general meeting at which this resolution is proposed (“the annual general

meeting”);

● the assets of the fund and the group will exceed the liabilities of the fund and the group for a period of 12 months

after the date of the notice of the annual general meeting. For this purpose, the assets and liabilities will be

recognised and measured in accordance with the accounting polices used in the fund’s latest audited annual group

financial statements;

● the fund and the group will have adequate PI capital and reserves for ordinary business purposes for a period of

12 months after the date of the notice of the annual general meeting;

● the working capital of the fund and the group will be adequate for ordinary business purposes for a period of

12 months after the date of the notice of the annual general meeting; and

● upon entering the market to proceed with the repurchase, the fund’s sponsor has confirmed the adequacy of

Emira’s working capital for the purposes of undertaking a repurchase of participatory interests in writing to

the JSE.

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N O T I C E Reason for and effect of the special resolution

The reason for and effect of the special resolution is to grant the fund’s directors a general authority to approve the

fund’s repurchase of its participatory interests in itself.

For the purposes of considering special resolution number 1 and in compliance with the JSE Listings Requirements,

the information listed below has been included in the annual report, to which this notice forms part, on the pages

indicated:

● Directors and management (page 23)

● Major participatory interest holder’s details (page 21)

● Subsequent events to balance sheet date (page 22)

● Directors’ interests (page 20)

● Participatory interest capital of the fund (page 33)

● Directors’ responsibility statement (page 28)

The directors, whose names are set out on page 23 of this report, collectively and individually accept full

responsibility for the accuracy of the information contained in this special resolution number 1 and certify that, to

the best of their knowledge and belief, there are no other facts, the omission of which would make any statement

false or misleading and that have made all reasonable queries in this regard.

● Litigation statement

There are no legal or arbitration proceedings (including any such proceedings that are pending or threatened of

which the company is aware), which may have or have had a material effect on Emira’s financial position over the

last 12 months.

3. TO TRANSACT ANY OTHER BUSINESS WHICH MAY BE TRANSACTED AT AN ANNUAL GENERAL MEETING

Strategic Real Estate Managers (Proprietary) Limited

Secretary

30 September 2005

NOTICE TO PARTICIPATORY INTEREST HOLDERS (continued)

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VOTING AND PROXIES

Members who have not dematerialised their participatory interests or who have dematerialised their participatory interests

with “own name” registration are entitled to attend and vote at the meeting and are entitled to appoint a proxy or proxies to

attend, speak and vote in their stead. The person so appointed need not be a member.

Proxy forms must be forwarded to reach the company’s transfer secretaries, Computershare Investor Services 2004

(Proprietary) Limited, Ground Floor, 70 Marshall, Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by no later

than 14:00 on Wednesday, 26 October 2005.

Proxy forms must only be completed by members who have not dematerialised their participatory interests or who have

dematerialised their participatory interests with “own name” registration.

On a show of hands, every member of the company present in person or represented by proxy shall have one vote only. On a

poll, every member of the company shall have one vote for every participatory interest held in the company by such

member.

Members who have dematerialised their participatory interests, other than those members who have dematerialised their

participatory interests with “own name” registration, should contact their CSDP or broker in the manner and time stipulated

in their agreement:

● to furnish them with their voting instructions; and

● in the event that they wish to attend the meeting, to obtain the necessary authority to do so.

PO Box 786130

Sandton

2146

Tel: (011) 775-1000

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ADMIN ADMINISTRATION

REGISTERED ADDRESS

3 Gwen Lane

Sandton

2196

PO Box 786130, Sandton, 2146

MANAGER

Strategic Real Estate Managers (Pty) Limited

3 Gwen Lane

Sandton

2146


PROPERTY AND ASSET MANAGER

RMB Properties (Pty) Limited

3 Gwen Lane

Sandton

2146


TRUSTEES

ABSA Bank Limited

2nd Floor, Block E

Flora Park Office Block

Corner of Ontdekkers and Conrad Roads

Florida, 1709

PO Box 1132

Johannesburg, 2000

MERCHANT BANK AND JOINT SPONSORS

Rand Merchant Bank, a division of

FirstRand Bank Limited

1 Merchant Place

Fredman Drive

Sandton

2196


TRANSFER SECRETARIES

Computershare Investor

Services 2004 (Pty) Limited

70 Marshall Street

Johannesburg, 2001

PO Box 61051, Marshalltown, 2107

AUDITORS

PricewaterhouseCoopers Inc.

2 Eglin Road

Sunninghill

2157

Private Bag X36, Sunninghill, 2157

BANKERS

FirstRand Bank Ltd t/a First National Bank

Wierda Valley Sandton Outlet

Wierda Valley


ATTORNEYS

Hofmeyr Herbstein & Gihwala Inc

6 Sandown Valley Crescent

Sandown

Sandton

2196

Private Bag X40, Benmore, 2010

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PROXY EMIRA PROPERTY FUND(Participatory interest code: EMI ISIN: ZAE000050712)

(“Emira” or “the fund”)

FORM OF PROXY

THIS FORM OF PROXY IS ONLY FOR USE BY:

– registered members who have not yet dematerialised their Emira participatory interests; and

– registered members who have already dematerialised their Emira participatory interests and are registered in their

own names in the fund’s sub-register.

For completion by the aforesaid registered members of Emira and who are unable to attend the 2005 annual general meeting

of the fund to be held in the boardroom, Third Floor, 3 Gwen Lane, Sandton at 14:00 on Tuesday, 1 November 2005 (“the annual

general meeting”).

I/We (name/s in block letters)

of (address)

being the registered holder/s of units in Emira, as at 14:00 on Tuesday, 25 October 2005

hereby appoint (see instruction 1 overleaf)

1. or, failing him/her,

2. or, failing him/her

3. the chairman of the annual general meeting, as my/our proxy to attend, speak and vote for me/us and on my/our behalf or

to abstain from voting at the annual general meeting of the fund and at any adjournment thereof, as follows (see note 2

and instruction 2 overleaf):

ORDINARY RESOLUTIONS FOR AGAINST ABSTAIN

1.1 To receive, consider and adopt the annual financial statements for the

financial year ended 30 June 2005.

1.2 To vote on a general authority to issue units for cash.

SPECIAL RESOLUTION NUMBER 1

2.1 To vote on a general authority to repurchase units.

Signed at on 2005

Signature(s)

Assisted by (where applicable)

Please read notes and instructions overleaf.

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PROXYNOTES

1. A participatory interest holder entitled to attend and vote at the meeting may appoint a proxy to speak and vote in this capacity.

A proxy need not be a participatory interest holder of the fund. Proxy forms should be forwarded to reach the Fund’s transfer secretary

Computershare Investor Services 2004 (Proprietary) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051,

Marshalltown, 2107) by no later than 14:00 on Wednesday, 26 October 2005. The appointment of a proxy will not preclude a member

from attending the meeting.

2. A participatory interest holder may insert the name of a proxy or alternative proxy of the ordinary participatory interest holder’s choice

in the space provided with or without deleting “the chairman of the annual general meeting”. The participatory interest holder must

initial any such deletion. The person whose name appears first on the form of proxy and has not been deleted will be entitled to act

as a proxy to the exclusion of those whose names follow.

3. A participatory interest holder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable

by that participatory interest holder in the appropriate space provided. Failure to comply with the above will be deemed to authorise

the chairman of the annual general meeting, if he is an authorised proxy, to vote in favour of the resolutions, or any other proxy to

vote or abstain from voting at the annual general meeting as he/she deems fit, in respect of the participatory interest holder’s vote

exercisable thereat. A participatory interest holder or his/her proxy is not obliged to use all the votes exercisable by the participatory

interest holder or by his/her proxy, but the total of votes cast and in respect whereof abstention is recorded may not exceed the total

of the votes exercisable by the participatory interest holder or his/her proxy.

4. An alteration or correction must be initiated by the signatory/ies.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached

to this form unless previously recorded by the transfer secretaries of the fund or waived by the chairman of the annual general

meeting.

6. His/Her parent or guardian, as applicable, must assist a minor or any other persona under legal incapacity unless the relevant

documents establishing his/her capacity are produced or have been registered by the fund.

7. The completion and lodging of this form will not preclude the relevant ordinary shareholder from attending the annual general meeting

and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such participatory interest

holder wish to do so.

8. The chairman of the annual general meeting may accept or reject a proxy which is completed and/or received other than in accordance

with the instructions, provided that he shall not accept a proxy unless he is satisfied as to the manner in which a participatory interest

holder wishes to vote.

9. If participatory interest holder have dematerialised their units with a CSDP or broker, other than own name dematerialised participatory

interest holder, they must arrange with the CSDP or broker concerned to provide them with the necessary authorisation to attend the

general meeting and vote thereat or the participatory interest holder concerned must instruct their CSDP or broker as to how they

wish to vote in this regard. This must be done in terms of the agreement entered into between the participatory interest holder and

the CSDP or broker concerned.

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