CHAIRMAN’S STATEMENT

Growthpoint achieved the strategic undertaking of growing distributions and the value of our properties, and at the same time delivering on our projections. 7.4% compound average annual growth in distributions over the past five years   DELIVERING SHAREHOLDER VALUE I am pleased to report that Growthpoint delivered on its objective to grow distributions to shareholders and ensure the long-term capital appreciation of our assets. We achieved this despite an intensely challenging operating environment and a market that is more competitive than ever. We also significantly increased our investments with complementary and quality enhancing assets. This was achieved chiefly with a single large, defensive transaction, which has grown our property portfolio and our business. Our growth was strategic and disciplined. INCLUSION IN VARIOUS INDICES Our continued inclusion in the FTSE/JSE Top 40 Index (ALSI 40 Index) underscores Growthpoint’s sustained position as market leader in South Africa. It heightens our exposure to international investors and supports a flow of funds for Growthpoint. Increasing our exposure to international capital flows, we benefited from ongoing inclusion as a Top 10 constituent in the Morgan Stanley Capital International (MSCI) Emerging Markets Core REIT Index.

For a pleasing fifth consecutive year Growthpoint is in the JSE SRI (Socially Responsible Investment) Index. For the second year running Growthpoint was included in the Dow Jones Sustainability Index (DJSI), a benchmark for investors who integrate sustainability considerations into their portfolios that includes the top 10% to 20% of the best performing publicly traded companies on a sustainability level in the world. We have also been included in the FTSE EPRA/NAREITEmerging Index.

We significantly increased our investments with complementary and quality enhancing assets

TALENT RETENTION AND MANAGEMENT We are considered a breeding ground for good people and skills, which enables talent in our industry.

MATTERS OF IMPORTANCE

Besides our pillars of sustainable management — best practice governance, ethical conduct, risk management and performance — in this report, we’ve also emphasised several key focus areas for Growthpoint. These matters of importance include treasury management, environmental considerations, our people, remuneration philosophy and strategy, and future property focus. We are obsessed with applying the highest standards in all these fields. This year, we continued our good progress and accomplishments in each important matter.

TALENT RETENTION AND MANAGEMENT

Growthpoint is a leading property business and continues to attract talent. We are considered a breeding ground for good people and skills, which enables talent in our industry. Good skills are in high demand in our industry, which has only a small pool of talent. Besides addressing this through pay structures, we have various talent retention initiatives in place. For more detail on this, refer to the Our People and Remuneration Report in the Key Matters section.

ACCOLADES

We always strive to do the best in everything we do. We believe this is the right thing to do. However, it is pleasing when we receive external acknowledgement for our achievements. Growthpoint received numerous awards for its outstanding performance this year. These were achieved across almost the full gamut of our business. There are too many to list here, but more detail can be found in the performance highlights of the Performance section. However, among our most noteworthy achievements is winning the overall IPD Direct Property Investment Award for the second year in a row. Perhaps one of our most pleasing awards was again winning the Best Reporting and Communication Award by the Investment Analysts Society (IAS) for the Property Sector, underscoring the priority we place on providing transparent, comprehensive and timely market intelligence and our commitment to good governance.

PROSPECTS

Growthpoint’s operating environment has become even more challenging, and we expect this to continue. It’s going to be a difficult year ahead but, despite this, with our proven strategies and competent management, we are well placed to continue delivering growing income returns and capital appreciation.

The escalating challenges we faced in FY15 are set to prevail in the coming year. Factors contributing to this weak economic backdrop include high unemployment, low business and consumer confidence, labour issues and a rising interest rate environment, as well as load shedding and a commodities crisis. This all amounts to continued negligible economic growth. In addition, our market has become even more fiercely competitive on all fronts.

While we have effectively re-let vacancies occurring from the demise of Ellerines, we are still seeing business failures across all sectors and the threat of large corporate failures remains a concern. This is especially worrying in context of softer property fundamentals placing pressure on occupancies and rentals. Ineffectiveness at local government level, with inadequate delivery and climbing municipal costs, continues to place strain on property owners. This is further exacerbated by the electricity crisis, infrastructure failure and water provision.

Our access to liquidity remains good, from the capital and money markets, and banks. Our investment-grade Moody’s rating, which was upgraded during the year, favours our ability to raise funding and benefits our funding costs.

Our long-term sustainability is a business imperative for Growthpoint. We have management strategies in place for those dynamics which affect our performance that are within our control.

In addition to delivering on our strategy, our immediate and short-term objectives in South Africa are to bed down our remarkable growth. This includes focusing on consolidation and unlocking value and efficiencies from our newly acquired properties. We’ll continue to pursue suitable growth opportunities, driven by opportunity and demand.

Investing in sought-after properties in good locations will ensure the sustainability of inflation-beating rental revenues, optimised by innovative leadership and prudent financial management from our talented team. We’ll also create even more value at our V&A Waterfront investment as we roll out our exciting pipeline of development projects and continue to support the growth of GOZ. Growthpoint is in a confident position to deliver long-term sustainable performance.

BOARD CHANGES

Mr Colin Steyn retired as a non-executive director with effect from 18 November 2014. We thank Mr Steyn for his distinguished service and contribution to Growthpoint. Mr Estienne de Klerk was appointed as Managing Director of Growthpoint with effect from 3 March 2015.

ACKNOWLEDGEMENTS

We find ourselves in an unforgiving business environment. Yet, Growthpoint has delivered performance at the upper end of its market guidance, achieved significant defensive growth, made excellent strategic progress and shown remarkable innovation across all areas of our business. In addition to this, by focusing on our clients, we have upheld our market leading position. This is an immense achievement.

I thank Norbert Sasse and his executive team, who have again delivered a sterling performance, as well as every Growthpoint employee for contributing to a strong set of results in weak market conditions.

I am grateful to my fellow non-executive directors for their valued commitment, skill and insight on the Audit, Risk Management, Property, Social, Ethics and Transformation, Remuneration and Nomination committees, as well as on the Board where their astute judgement is underscored by resolute integrity.

JF Marais
Chairman

8 September 2015