WWW.GROWTHPOINT.CO.

ZA

THE PLACE, 1 SANDTON DRIVE, SANDTON, GAUTENG, 2196,

SOUTH AFRICA TEL: +27 (0)11 944 6000 FAX: +27 (0)11 944 6005
PO BOX 78949, SANDTON, 2146, SOUTH AFRICA
DOCEX: 48 SANDTON SQUARE EMAIL: info@growthpoint.co.za

MEDIA STATEMENT FROM GROWTHPOINT PROPERTIES REGARDING SITE B

10 July 2019

In response to comments, questions, and inaccuracies recently raised in the media about the
City of Cape Town’s 2016 sale on public auction of Site B to Growthpoint Properties, which
despite being advertised by the City to have development rights of 17,500m2 has now been
ruled by the Municipal Planning Tribunal to have no development rights, we offer the
following details:

Growthpoint didn’t know that the property had more rights prior to buying it on auction

1. Growthpoint heard about the sale of the property through a newspaper article in the
Cape Times on 24 April 2015.

2. Growthpoint received a copy of a publicly available prospectus made available by

Aucor in August 2016 giving notice that the property was to be placed on auction and
giving details about the property. In it, they stated the property had 17,500m2 of
bulk.

3. The auction occurred on 7 September 2016 at 11am at the CTICC. It was a well-
attended public auction with several pre-qualified bidders who actively participated
in the auction. Growthpoint paid R86.5 million (excluding VAT at 14%) for the land.

4. Growthpoint were active and interested bidders as we own a number of properties in

the precinct, and we see this acquisition and development as adding to the value of
the precinct. For this reason, we believe we were willing and able to pay more than
others at the auction based on the strategic value of the property to ourselves.

5. Growthpoint took transfer of the land on 7 March 2017.

6. Our town planners Nigel Burls and Associates were appointed in approximately
November 2016, which was after the auction and before the transfer of the property.

7. After the acquisition, Growthpoint appointed a professional team, including

architects and planners, to conceive of a development scheme on the property.

8. The proposed scheme involves retail on the ground floor, offices and a three- and
four-star combination hotel.

9. A further planning consultant Japie Hugo was appointed on 22 March 2017. (Japie
previously worked for the City of Cape Town but had no involvement with the City’s
alienation of Site B).
GROWTHPOINT PROPERTIES LIMITED REG NO. 1987/004988/06
DIRECTORS: J.F. MARAIS (CHAIRMAN), J.C. HAYWARD (BRITISH) (LEAD INDEPENDENT DIRECTOR), *L.N. SASSE (GROUP CEO), *E.K.DE KLERK (CEO: SA), *O. CHAUKE (HR DIRECTOR),
M.G. DILIZA, P.H. FECHTER, L.A. FINLAY, S.P. MNGCONKOLA, R. MOONSAMY, N.B.P. NKABINDE, N. SIYOTULA, F.J. VISSER, *G. VÖLKEL (GROUP FD) (*EXECUTIVE)

REGISTERED ADDRESS: THE PLACE, 1 SANDTON DRIVE, SANDTON, GAUTENG, 2196, SOUTH AFRICA
 10. At a meeting of the professionals on 4 April 2017, when establishing what rights were
needed to accommodate the proposed scheme, it was established that the Site had
a GB7 zoning and 46,000m2 of bulk. This was supported by a zoning certificate
obtained from the City of Cape Town which confirmed the rights of approximately
46,000m2 bulk available on Site B.

11. Before acquiring the property at the auction, Growthpoint had no prior knowledge
that the property had 46,000m2 of bulk.

12. Growthpoint continued with the planning application, which involved a few setbacks
and other planning departures. A servitude right-of-way across the property was
moved in terms of a High Court application process. Pre-consultation meetings were
undertaken with the City planning department, as is the normal process.

13. The application was submitted to the City of Cape Town in June 2018 after extensive
pre-submission consultations in June 2018 with additional information provided on
request in July 2018, and accepted by them on 27 August 2018.

14. The application was advertised by the City on 7 September 2018 with the closing date
for comments being on 8 October 2018. By then, the application had received only
five objections. Some related to view, others to shade, an objection relating to social
justice and affordable housing was received, and an objection from the City was
received stating that the development site did not have the rights as envisaged.

15. Concurrently with the planning process, Growthpoint has approached the City of Cape
Town to acquire a servitude under Lower Loop Street adjacent to, and on the western
side of, Site B to create some underground basement parking and to facilitate
streamlined access to the precinct of properties. This is not a pre-requisite for the
development but makes for better urban planning, traffic flows, infrastructure
management and less visible structured parking, improving the precinct.

Growthpoint didn’t underpay for the property by R140 million

16. Following Growthpoint’s application stating that it has 46,000m2 of bulk, Ndifuna
Ukwazi has stated that the City “botched” the sale by stating in the prospectus that
the land had 17,500m2 of bulk.

17. By simply extrapolating the sale price as a bulk rate (R86,500,000 divided by
17,500m2 = R4,942.85 per bulk meter), and then taking that bulk rate of R4,942.85 x
46,000m2 of bulk, equals a value of R227,371,428. This valuation is inaccurate, yet
on the face of it indicates the property was undersold by some R140 million. The
inaccurate valuation stated by Ndifuna Ukwazi has been widely and repeatedly
published, despite our persistent assertions that the valuation calculation is wrong.
An explanation as to why their figure is wrong follows, but we urge you to get your
own independent verification of the facts from a professional, accredited property
valuer.
 18. Valuing a property based on a bulk rate is not a viable method of valuation. A correct
valuation is based on a residual value calculation and the full-and-best use of the
property. Based on the proposed development, the potential income and anticipated
costs, a valuation of R227 million is not remotely feasible or possible.

19. Growthpoint obtained an independent valuation for the property as at 1 December

2018 and based on appropriate valuation principles (based on 46,000m2 of bulk) the
valuation was R92 million. Making allowance for time (interest) it shows that
Growthpoint paid a fair value for the property.

20. It is also incorrect to say that one buys bulk. If the property had 17,500m2 of bulk,
we would have applied for more bulk and paid DC’s (bulk infrastructure
contributions), which is approximately R600 per bulk meter.

21. There is no factual basis to say that Growthpoint underpaid for the property.

Growthpoint wasn’t party to the City of Cape Town’s forensic investigation into Site B

22. The forensic investigation in question was an internal City process. We weren’t
consulted during the process and are not in a position to comment on the report. We
would welcome the report being made public.

The Municipal Planning Tribunal (MPT) Meeting on 2 July 2019 found the Site B property
zoning undetermined, with no vested rights for development

23. In the progression of Growthpoint’s planning application, the matter was tabled
before the MPT on 2 July 2019.

24. The MPT was principally asked by the City to determine if Growthpoint’s application
was a valid application, i.e. whether the property had the 46,000m2 of bulk as
envisaged in the application.

25. This particular property was part of Cape Town Old Power Station site, and previous
subdivisions of the property had been undertaken by the City as owner. The discussion
related to whether a subdivision in 1997 had been acted upon within a stipulated
five-year period.

26. The MPT was of the view that the subdivision had not been acted upon and therefore
lapsed and the property’s zoning is therefore not determined. In the MPT’s view, the
application accordingly failed. Growthpoint is considering the finding and has a
number of options available to it; one of them is to appeal the decision, which we
are likely to do.

27. Growthpoint paid a full and fair price for the property based on the fact that we own
other property in the precinct - Site B accordingly holds strategic value for us. We
disagree with the MPT findings that the property doesn’t have 46,000m² of bulk.

Growthpoint’s respects the decision of the court regarding the Site B protesters
 28. Several organisations have gained much exposure in the press by drawing as much
attention as possible to the view that the City has undersold Site B by R140 million.

29. One of the steps taken by groups of protesters was to take control of the property on
4 December 2018 and build structures on the property with mattresses, generators
and toilets placed onto the property without our permission.

30. Growthpoint obtained an ex parte court order to remove the occupants from the site.
On presentation of the order that evening, the property was vacated.

31. On the return day of the court proceedings, two interested parties (voluntary social
movements), while formally undertaking not to return to the property, argued that
we breached the duty of utmost good faith in not disclosing all material facts when
the ex parte application was brought.

32. Notwithstanding a copy of an email attached to the founding affidavit between our
attorney and the social movement’s attorney, and photos of the structures and
people on site that were taken during the course of the day in question, the court
found that there could have and should have been more disclosure relating to the
occupants of the property. The interim order was accordingly discharged, rather than
being made the final order.

33. Growthpoint respects the decision of the court.

Regarding the call for a Public Protector investigation

34. We are open to any and every investigation of the sale. Our involvement in the
transaction is a matter of public record – the property was sold on public auction -
the facts are easily accessible and self-explanatory.

35. Unfortunately, concocted insinuations of misconduct for ulterior political motives

detract from what otherwise should be a welcome investment into the City.

Growthpoint doesn’t have a relationship with any political party

36. It is Growthpoint’s policy not to fund, or support in any other way, political parties
or associations with political affiliations.

37. With transformation being an imperative for Growthpoint, it has completed a number
of significant BEE transactions, the second being in 2006 with black controlled and
managed property investment holding company Phatsima Properties, led by Herman
Mashaba. This transaction followed Growthpoint’s takeover of Metboard, with
Mashaba being the chosen empowerment partner for Metboard and a director at the
time. As part of the transaction, 2.3% of Growthpoint’s units then in issue were
acquired by Phatsima Properties. Mashaba, who held a 40% indirect beneficial
interest in Phatsima, became a non-executive director of Growthpoint and continued
to represent Phatsima in this position. He went on to serve as Deputy Chairman of
 Growthpoint before resigning with immediate effect on 27 January 2016, to pursue
his political ambitions.

What we hope to create on the property

38. Growthpoint is a significant investor in the Western Cape. We currently own R17.2
billion of property assets in the Western Cape and pay rates to the City of
approximately R500 million each year.

39. The development on Site B is for a proposed mixed-use building, with retail on the
ground floor, offices, collaborative workspace and a hotel. At a time when South
Africa sorely needs investment, the development is likely to constitute an
approximate investment of around R2.2 billion in the City.

40. Should the development progress there are additional benefits for the City;

a. 1,000 jobs during construction,

b. 300 long-term jobs within the hotel, and a total of up to 2,500 jobs on the
property
c. Potentially the introduction of an established international hotel brand not
yet in South Africa with the resultant increase in tourists,
d. Around R16 million will be added to the City’s tax base per year.

41. Growthpoint takes social responsibility very seriously. We believe that for
Growthpoint to thrive the city must thrive. Among other social initiatives by our CSI
team, Growthpoint plays a key role in education through the Growsmart initiative,
which we offer at 160 Western Cape primary schools. We create job opportunities
through Property Point, which is incubating growing Cape small businesses.

42. Also as part of our corporate social responsibility, Growthpoint provides premises to
several NGOs including Education Africa, Scatterlings Early Learning for South African
Children, Field Band Foundation, and Rise Against Hunger, positively contributing to
the lives of thousands of South Africans.

For now, we remain excited to create a great development that benefits the city and all
involved.

-END

Statement is issued by:

Growthpoint Properties Limited
Nadine Kuzmanich
Head, Marketing and Communication
Tel: 011 944 6251
NKuzmanich@growthpoint.co.za

For more information, or to book an interview, please contact Mahlatse Bojanyane on 083 453 6668
or email Mahlatse@marketingconcepts.co.za.