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INVESTEC PROPERTY FUND LIMITED - Reviewed condensed consolidated interim results 2018

Release Date: 13/11/2018 07:06
Code(s): IPF     PDF:  
 
Wrap Text
Reviewed condensed consolidated interim results 2018

Investec Property Fund Limited
(Incorporated in the Republic of South Africa)
(Registration number 2008/011366/06)
Share code: IPF       ISIN: ZAE000180915
(Income tax reference number 9332/719/16/1)

Reviewed condensed consolidated interim results 2018  

Key highlights for the period ended 30 September 2018

INTERIM DISTRIBUTION OF 68.81 (cents per share)

5.4% increase in normalised DPS year-on-year

SOUTH AFRICAN MACROECONOMIC ENVIRONMENT
remains challenging and has continued to deteriorate since last
reporting date. Conditions are not expected to improve in the short term.

BASE NET PROPERTY INCOME 
growth of 1.7% year-on-year

VACANCY REDUCED
to 3.1% (March 2018: 4.0%).
(Excluding development vacancy)

91% of space expiring in the period renewed or re-let at an
average WALE of 3.8 years

EUR71.9m invested into the
PAN-EUROPEAN LOGISTICS INVESTMENT
taking offshore exposure to 13.7%

11.6% income return and 14.7% capital 
return since deployment

NET ASSET VALUE
per share growth of 2.9%
attributable to the offshore investment performance

R0.6 billion of capital to be recycled through the
DISPOSAL OF SEVEN PROPERTIES with an average yield of 7.5%

Key financial indicators

All in cost of funding
significantly reduced from
8.6% to 8.0% as a result of Euro funding

Weighted average swap expiry
3.3 years
(March 2018: 3.8 years)

Corporate rating
upgraded to A+(za) from A(za)

Refinancing of R3 billion post 30 September 2018
increases the weighted average debt expiry to 3.7 years

Gearing
36.3% increased to fund Pan-European investment
(March 2018: 32.6%)

Hedged percentage at 83%
(March 2018: 84%)

In-force escalations
stable at 7.6%

Cost to income increased to 19.3% from 16.8% at March 2018
(mostly due to increased costs of letting and rates increases)

Consolidated statement of comprehensive income

                                                                                             Reviewed         Reviewed
                                                                                           Six months       Six months       Audited
                                                                                                ended            ended    Year ended
                                                                                         30 September     30 September      31 March
R'000                                                                           Notes            2018             2017          2018
Revenue, excluding straight-line rental revenue adjustment                                    892 917          888 535     1 810 542
Straight-line rental revenue adjustment                                                        23 626           16 475        52 698
Revenue                                                                                       916 543          905 010     1 863 240
Property expenses                                                                           (172 256)        (147 152)     (303 356)
Net property income                                                                           744 287          757 858     1 559 884
Other operating expenses                                                                     (46 050)         (37 454)      (72 604)
Operating profit                                                                              698 237          720 404     1 487 280
Fair value adjustments and foreign exchange gains/(losses)                          2         372 175          (4 024)       230 684
(Loss)/profit on disposal of investment property                                              (4 999)            4 886         2 655
Income from other investments                                                                  56 799           49 975       107 530
Finance costs                                                                               (309 884)        (299 503)     (590 360)
Finance income(#)                                                                               9 552            7 331        19 771
Finance income from associate(#)*                                                              14 587                -             -
Finance income from loans to associates at fair value through profit and loss*                 61 747                -             -
Profit before taxation                                                                        898 214          479 069     1 257 560
Taxation                                                                            6         (7 169)          (5 501)       (9 870)
Total comprehensive income attributable to equity holders                                     891 045          473 568     1 247 690
Distribution reconciliation
Total comprehensive income attributable to equity holders                                     891 045          473 568     1 247 690
Less:  Straight-line rental revenue adjustment                                               (23 626)         (16 475)      (52 698)
        Fair value adjustments and foreign exchange (gains)/losses                          (372 175)            4 024     (230 684)
        Loss/(profit) on disposal of investment property                                        4 999          (4 886)       (2 655)
        Izandla mezzanine interest not received                                               (6 005)                -         (800)
Add:  Investment dividend accrual (net of withholding tax ('WHT'))(1)                           1 937           29 094        30 124
        Notional cost of funding the Ingenuity acquisition(2)                                   4 372            3 402         7 576
        Deferred taxation                                                                       4 514            2 291         2 765
        Antecedent dividend(3)                                                                  1 554                -         2 867
Less: Final dividend paid                                                                           -                -     (513 167)
Interim dividend                                                                              506 615          491 018       491 018
Number of shares
Shares in issue                                                                           736 290 993      718 150 167   731 400 437
Weighted average number of shares in issue                                                734 270 981      718 150 167   722 796 837
Cents
Total dividend per share                                                                        68.81            68.37        138.53
Final dividend per share                                                                            -                -         70.16
Interim dividend per share(4)                                                                   68.81            68.37         68.37
Basic and diluted earnings per share                                                           121.35            65.94        172.62
Headline earnings per share                                                         1          129.07            52.68        106.41

(1) The Fund considers the expected future Investec Australia Property Fund ('IAPF') dividend and the expected future Investec Argo Property Fund
    ('U.K. Investment') dividend, relating to the earnings from the current period, to be part of the distributable earnings for the current period. 
    Accordingly an adjustment is made to match the anticipated income of the distribution to the period to which the distribution relates.
(2) The Fund's investment into Ingenuity Property Investments Limited ('Ingenuity') was made on a total return basis. From a distribution perspective,
    the Fund's policy in relation to total return is to add back the funding cost of the investment, net of dividends received.
(3) The antecedent dividend arose from the share issue of 4 890 556 shares at R16.60 in June 2018.
(4) Excluding the once-off antecedent dividend received from IAPF of R22.2 million in FY2018, the normalised dividend per share for the prior year is
    65.27 cents per share, resulting in growth of 5.4% year-on-year.
(#) Finance income is calculated using the effective interest rate method.
*   Refer to the segmental investment portfolio for further details on the source of this income.

Consolidated statement of financial position

                                                                                              Reviewed       Audited        Reviewed
                                                                                          30 September      31 March    30 September
R'000                                                                             Notes           2018          2018            2017   
ASSETS                                                                                                        
Non-current assets                                                                          20 383 392    19 085 578      18 571 990   
Investment property                                                                   3     16 527 208    17 004 260      16 524 114   
Straight-line rental revenue adjustment                                                        501 748       476 955         446 656   
Derivative financial instruments                                                      4        106 533        39 141             227   
Investments                                                                           4      1 590 178     1 357 987       1 600 993   
Equity accounted investment in and loans to associate                                 5        227 209       207 235               -   
Loans to associates at fair value through profit and loss(1)                          4      1 430 516             -               -   
Current assets                                                                                 467 199       749 642         319 560   
Trade and other receivables                                                                    285 138       218 866         170 568   
Cash and cash equivalents(2)                                                                   180 295       507 338         143 578   
Current portion of derivative financial instruments                                   4          1 766        23 438           5 414   
Non-current assets held-for-sale                                                      7        604 461       117 654         606 779   
Total assets                                                                                21 455 052    19 952 874      19 498 329   
EQUITY AND LIABILITIES                                                                                                                 
Shareholders' interest                                                                      13 102 770    12 643 769      12 162 405   
Stated capital                                                                              10 267 710    10 186 582       9 988 322   
Retained earnings                                                                            2 835 060     2 457 187       2 174 083   
Non-current liabilities                                                                      5 896 814     6 032 267       6 173 702   
Long-term borrowings                                                                  8      5 725 980     5 917 743       5 991 282   
Derivative financial instruments                                                      4        158 169       106 373         174 744   
Deferred taxation                                                                     6         12 665         8 151           7 676   
Current liabilities                                                                          2 455 468     1 276 838       1 162 222   
Trade and other payables                                                                       391 169       401 397         385 155   
Current portion of long-term borrowings(3)                                            8      2 044 504       839 000         744 876   
Current portion of derivative financial instruments                                   4         19 795        36 441          32 191   
Total equity and liabilities                                                                21 455 052    19 952 874      19 498 329   
Shares in issue                                                                            736 290 993   731 400 437     718 150 167   
Net asset value per share (cents)                                                                1 780         1 729           1 694   

(1) Loans to associates have arisen in the current year due to the investment into the Pan-European logistics portfolio. Investec Property Fund Offshore
    Investments (Pty) Limited ('IPFO') is a wholly owned subsidiary of Investec Property Fund Limited. IPFO consolidates AREG Hexagon Co-Invest Vehicle II,
    L.P. ('AREG L.P.') which in turn owns 42.9% of the share capital of two associate entities in Luxembourg, namely Hexagon Holdco S.a.r.l and Hexagon
    Holdco S.a.r.l. 2 ('Hexagon'). These entities hold property companies which invest into direct real estate in various jurisdictions across Europe. The loans to
    Hexagon earn variable interest returns based on the returns in the underlying property companies. The loan amount also includes a convertible loan granted
    to Izandla Property Fund (Pty) Limited ('Izandla') of R51.4 million. 
(2) The cash balance includes restricted cash relating to tenant deposits of R50.0 million as well as cash received in advance for October 2018 rentals of
    R50.9 million. 
(3) Post 30 September 2018, the Fund will conclude refinance agreements with certain lenders which extends the debt expiry profile to 3.7 years and reduces
    the short-term portion of debt to R931 million.

Consolidated statement of cash flows

                                                                                            Reviewed          Reviewed
                                                                                          Six months        Six months       Audited
                                                                                               ended             ended    Year ended
                                                                                        30 September      30 September      31 March
R'000                                                                                           2018              2017          2018 
Cash generated from operations                                                               604 561           655 575     1 320 763   
Finance income received                                                                        9 552             7 331        18 971   
Finance costs paid                                                                         (309 792)         (304 308)     (593 255)   
Dividend income from investments (net of WHT)                                                 54 145            46 764       100 425   
Finance income from associates                                                                31 606                 -             -   
Dividends paid to shareholders                                                             (513 172)         (479 090)     (979 167)   
Net cash outflow from operating activities                                                 (123 100)          (73 728)     (132 263)   
Capital expenditure and acquisitions of investment property                                 (88 839)         (257 933)     (358 103)   
Proceeds on disposal of investment property                                                   21 225           163 619       672 444   
Investment in IAPF                                                                                 -           (4 037)             -   
Investment in Ingenuity                                                                            -           (8 473)      (20 755)   
Investment in the U.K. Fund                                                                 (11 744)         (173 329)     (173 329)   
Investment in Izandla                                                                       (71 303)                 -     (188 988)   
Loans to Hexagon                                                                         (1 105 059)                 -             -   
Net cash outflow from investing activities                                               (1 255 720)         (280 153)      (68 731)   
Shares issued, net of costs                                                                   81 128                 -       207 319   
Term loans raised                                                                            669 153           200 000       200 000   
Revolving credit facilities and general banking facilities drawn down                        150 496           416 301     (121 432)   
Commercial paper issued and repaid (net)                                                     201 000             5 000        12 000   
Corporate bonds repaid                                                                      (50 000)         (426 000)     (526 000)   
Corporate bonds issued                                                                             -           150 000       800 000   
Derivative financial instruments settled                                                           -           (7 219)      (22 932)   
Net cash inflow from financing activities                                                  1 051 777           338 082       548 955   
Net (decrease)/increase in cash and cash equivalents                                       (327 043)          (15 799)       347 961   
Cash and cash equivalents at the beginning of the period                                     507 338           159 377       159 377   
Cash and cash equivalents at the end of the period                                           180 295           143 578       507 338   

The negative cash flow from operations is largely caused by the increase in tenant incentives and letting commission paid, which is held on balance sheet and
amortised over the period of the lease, as well as the accrual for interest income from the Pan-European logistics portfolio received after period end.

Consolidated statement of changes in equity

                                                                                           Stated            Retained          Total
R'000                                                                                     capital            earnings         equity
Balance at 31 March 2017                                                                9 999 838           2 168 089     12 167 927   
Total comprehensive income attributable to equity holders                                       -           1 247 690      1 247 690   
Shares issued net of costs                                                                207 319                   -        207 319   
Dividends declared and paid                                                                     -           (979 167)      (979 167)   
Transfer between reserves*                                                               (20 575)              20 575              -   
Balance at 31 March 2018                                                               10 186 582           2 457 187     12 643 769   
Total comprehensive income attributable to equity holders                                       -             891 045        891 045   
Shares issued net of costs                                                                 81 128                   -         81 128   
Dividends declared and paid                                                                     -           (513 172)      (513 172)   
Balance at 30 September 2018                                                           10 267 710           2 835 060     13 102 770   

* Relates to antecedent dividends in relation to shares issued in March 2017 and November 2017.

Condensed consolidated segmental information

SOUTH AFRICAN PROPERTY PORTFOLIO

For the six months ended 30 September 2018
R'000                                                                                   Office   Industrial      Retail        Total 
Statement of comprehensive income extract                                                                                              
Revenue, excluding straight-line rental revenue adjustment                             345 828      203 427     343 662      892 917   
Straight-line rental revenue adjustment                                                  4 565       11 569       7 492       23 626   
Revenue                                                                                350 393      214 996     351 154      916 543   
Property expenses                                                                     (73 349)     (34 612)    (64 295)    (172 256)   
Net property income                                                                    277 044      180 384     286 859      744 287   
Statement of financial position extracts                                                                                               
Investment property opening balance at 1 April 2018                                  6 415 678    4 061 897   7 003 640   17 481 215   
Net additions, acquisitions and disposals                                                8 030       15 363      57 987       81 380   
Fair value adjustment and straight-lining                                             (56 637)     (17 136)      40 909     (32 864)   
Transfer to non-current assets held-for-sale                                          (24 675)    (476 100)           -    (500 775)   
Fair value of investment property at 30 September 2018                               6 342 396    3 584 024   7 102 536   17 028 956   

For the six months ended 30 September 2017                                                                                             
R'000                                                                                   Office   Industrial      Retail        Total   
Statement of comprehensive income extract                                                                                              
Revenue, excluding straight-line rental revenue adjustment                             343 569      211 702     333 264      888 535   
Straight-line rental revenue adjustment                                                    621        2 087      13 767       16 475   
Revenue                                                                                344 190      213 789     347 031      905 010   
Property expenses                                                                     (54 163)     (30 098)    (62 891)    (147 152)   
Net property income                                                                    290 027      183 691     284 140      757 858   
Statement of financial position extracts                                                                                               
Investment property opening balance at 1 April 2017                                  6 362 854    3 735 045   6 502 978   16 600 877   
Net additions, acquisitions and disposals                                               18 511      230 475     109 562      358 548   
Fair value adjustment and straight-lining                                               55 347       96 377     391 100      542 824   
Transfer to non-current assets held-for-sale                                          (21 034)            -           -     (21 034)   
Fair value of investment property at 31 March 2018                                   6 415 678    4 061 897   7 003 640   17 481 215   

Condensed consolidated segmental information

INVESTMENT PORTFOLIO

For the six months ended
30 September 2018                                                                                     
R'000                                                           Australia(1)     Europe(2)     U.K.(3)   South Africa(4)       Total   
Statement of comprehensive income extract                                                                                            
Income from other investments                                         50 706             -       6 093                 -      56 799   
Finance income from associate                                              -             -           -            14 587      14 587   
Finance income from loans to associates at fair                                                                                        
value through profit and loss                                              -        61 747           -                 -      61 747   
Fair value adjustments(#)                                            200 294       235 519      19 004             1 150     455 967   
Foreign exchange translation losses on items not                                                                                       
at fair value                                                              -      (42 554)           -                 -    (42 554)   
Investment earnings at 30 September 2018                             251 000       254 712      25 097            15 737     546 546   
Statement of financial position extracts                                                                                               
Investments                                                        1 251 838             -     222 548           115 792   1 590 178   
Equity accounted investment in and loans to                                                                                            
associate                                                                  -             -           -           227 209     227 209   
Loans to associates at fair value through profit                                                                                       
and loss                                                                   -     1 379 124           -            51 392   1 430 516   
Investments at 30 September 2018                                   1 251 838     1 379 124     222 548           394 393   3 247 903   

For the six months ended
30 September 2017                                                                                             
R'000                                                              Australia        Europe        U.K.      South Africa       Total   
Statement of comprehensive income extract                                                                                              
Income from other investments                                         49 975             -           -                 -      49 975   
Fair value adjustments(#)                                             15 463             -       8 428             (310)      23 581   
Investment earnings at 30 September 2017                              65 438             -       8 428             (310)      73 556   
Statement of financial position extracts                                                                                               
Investments                                                        1 051 544             -     191 800           114 643   1 357 987   
Equity accounted investment in and loans to                                                                                            
associate                                                                  -             -           -           207 235     207 235   
Investments at 31 March 2018                                       1 051 544             -     191 800           321 878   1 565 222   

(1) Investment in IAPF.
(2) Investment in AREG L.P./Hexagon.
(3) Investment in the U.K. Fund.
(4) Investment in Ingenuity and Izandla.
(#) Included in fair value adjustments are foreign exchange gains and losses on items measured at fair value.

This segmental breakdown of investments by geography has been included for the first time as the geographical spread of the business has increased
significantly from prior years.

Notes to the reviewed condensed consolidated financial results

                                                                                            Reviewed         Reviewed
                                                                                          Six months       Six months        Audited
                                                                                               ended            ended     Year ended
                                                                                        30 September     30 September       31 March
R'000                                                                                           2018             2017           2018
1.  Headline earnings per share                      
    1.1  Reconciliation of basic earnings
         to headline earnings                                                                        
         Total comprehensive income attributable to equity holders                           891 045          473 568      1 247 690   
         Less: Fair value adjustment on investment property                                   51 695         (90 378)      (475 868)   
         Loss/(profit) on disposal of investment property                                      4 999          (4 886)        (2 655)   
         Headline earnings attributable to shareholders                                      947 739          378 304        769 167   
         Headline earnings per share                                                          129.07            52.68         106.41   
    1.2  Reconciliation of total dividend per share
         to normalised dividend per share                                                             
         Interim dividend/final dividend                                                     506 615          491 018        513 167   
         Less: IAPF antecedent dividend                                                            -         (22 277)              -   
         Normalised dividend                                                                 506 615          468 741        513 167   
         Shares in issue at interim reporting period                                     736 290 993      718 150 167    731 400 437   
         Normalised dividend per share                                                         68.81            65.27          70.16   
2.  Fair value adjustments                                                                                                             
    Fair value adjustments on derivative instruments                                          10 457        (117 983)       (12 610)   
    Fair value adjustments on investment property                                           (51 695)           90 378        475 868   
    Fair value adjustments on investments(#)                                                 220 448           23 581      (232 574)   
    Fair value adjustments on Hexagon loans*(#)                                              235 519                -              -   
    Foreign exchange translation losses on items not at fair value                          (42 554)                -              -   
                                                                                             372 175          (4 024)        230 684   

    *   The value of this loan is linked to the value of the properties in the underlying European logistics portfolio. Therefore, the movement in the value of
        the loan is driven by the change in values of the properties.
    (#) Included in fair value adjustments are foreign exchange gains and losses on items measured at fair value.

3.  Fair value of investment property
    The Fund's policy is to assess the valuation of investment properties at each reporting period. At interim reporting periods a
    directors' valuation is carried out and properties are revalued if there are significant changes in value. During the six months
    ended 30 September 2018, changes to revenue and risk forecasts since year-end resulted in a decrease of R51.7m
    (March 2018: R475.9m revaluation, September 2017: R90.4m revaluation). The directors' valuation method is the income
    capitalisation method which is a generally accepted methodology used in the industry.

4.  Financial instruments
    Financial instruments held at fair value by the Fund include the investment in IAPF, the investment in Ingenuity, the U.K. Investment,
    the loans to Hexagon, the Izandla convertible loan, derivatives and certain long-term borrowings.

    *  The valuations of IAPF and Ingenuity are based on the closing share price times the number of shares held at the reporting date,
       which is a level 1 valuation.

    *  The U.K. investment is an unlisted company and their shares are not traded on a regulated exchange, therefore there are
       significant unobservable inputs used to determine the fair value, making it a level 3 valuation.

    *  The profit participating loans ('PPL') receivable and payable are valued based on the value of the underlying investment
       properties. There are significant unobservable inputs used to determine the fair value of these loans, making them
       level 3 valuations.

    *  The Izandla convertible loan is based on the present value of future cash flows plus the value of the option to convert, making it
       a level 3 valuation.

    *  Derivative financial instruments hedge interest rate and foreign exchange risk. Interest rate hedging instruments are valued by
       discounting future cash flows using the market rate indicated on the interest rate curve at the dates when the cash flows will
       take place. Foreign exchange hedging instruments are valued by making reference to market prices for similar instruments and
       discounting for the effect of the time value of money. Derivatives are considered to be level 2 valuations.

    *  Refer to note 4.4 for detail on the fair value hierarchy.

    Cash and cash equivalents, trade and other receivables, trade and other payables and variable rate loans are carried at amortised
    cost and the carrying value is a reasonable approximation of fair value.

                                                                                               Reviewed                     Reviewed
                                                                                             Six months      Audited      Six months
                                                                                                  ended   Year ended           ended
                                                                                           30 September     31 March    30 September
R'000                                                                                              2018         2018            2017   
    4.1  Listed investments                                                                             
         Investment in IAPF                                                                   1 251 838    1 051 544       1 311 926   
         % holding                                                                                20.9%        20.9%           22.9%   
         Investment in Ingenuity                                                                115 792      114 643         107 310   
         % holding                                                                                 9.2%         9.2%            8.7%   
         Total fair value                                                                     1 367 630    1 166 187       1 419 236   
    
         The Fund carries its investments in IAPF and Ingenuity at fair value through profit and loss. IAPF is classified as an associate
         and Ingenuity is classified as an investment.

                                                                                               Reviewed                     Reviewed
                                                                                             Six months      Audited      Six months
                                                                                                  ended   Year ended           ended
                                                                                           30 September     31 March    30 September
R'000                                                                                              2018         2018            2017
    4.2  Unlisted investments                                                                        
         U.K. Investment                                                                        222 548      191 800         181 757   
         % holding                                                                                10.0%        10.0%           10.0%   

         The Fund carries its U.K. investment at fair value through profit and loss and classifies it as an investment.

                                                                                               Reviewed                     Reviewed
                                                                                             Six months      Audited      Six months
                                                                                                  ended   Year ended           ended
                                                                                           30 September     31 March    30 September
R'000                                                                                              2018         2018            2017

    4.3  Loans to associates at fair value through
         profit and loss
         AREG L.P. investment
         Finance income accrual                                                                  38 660            -               -
         Loans to Hexagon                                                                     1 340 464            -               -
                                                                                              1 379 124            -               -

         IPFO has invested into AREG L.P. which has advanced PPLs to Hexagon. The return and repayment of PPLs owed by
         the Hexagon entities comprises 42.9% of the net rental income earned on leasing the investment properties held by the
         underlying property companies.
         
         The Hexagon entities have an obligation to deliver all returns to AREG L.P. via the PPLs and therefore the equity of this
         associate is valued at nil.
         
         Izandla
         Convertible shareholder loan                                                            51 392            -               -
         
         The convertible shareholder loan was provided to part fund the Sasol development, with the option of conversion to equity
         upon completion of the development.
         
         Total                                                                                1 430 516            -               -

                                                                                                                          Carried at
At 30 September 2018                                                       Carried at                                      amortised
R'000                                                                      fair value     Level 1   Level 2     Level 3         cost
    4.4  Fair value hierarchy                                                                                                         
         Assets                                                                                                                       
         Investment in IAPF                                                 1 251 838   1 251 838         -           -            -  
         Investment in Ingenuity                                              115 792     115 792         -           -            -  
         Investment in the U.K. Fund                                          222 548           -         -     222 548            -  
         Equity accounted investment in and                                                                                           
         loans to associate                                                         -           -         -           -      195 860  
         Loans to associates at fair value                                                                                             
         through profit and loss                                            1 430 516           -         -   1 430 516            -   
         Other investments                                                                                                             
         Derivative financial instruments                                     108 299           -   108 299           -            -   
         Trade and other receivables(1)                                             -           -         -           -      167 440   
         Cash and cash equivalents                                                  -           -         -           -      180 295   
         Total financial assets                                             3 128 993   1 367 630   108 299   1 653 064      543 595   
         Derivative financial instruments                                     177 964           -   177 964           -            -   
         Long-term borrowings (including current)                              54 991           -         -      54 991    7 715 493   
         Trade and other payables(2)                                                -           -         -           -      336 388   
         Total financial liabilities                                          232 955           -   177 964      54 991    8 051 881   

         Assets
         Investment in IAPF                                                 1 051 544   1 051 544         -           -            -
         investment in Ingenuity                                              114 643     114 643         -           -            -
         Investment in U.K. Fund                                              191 800           -         -     191 800            -
         Equity accounted investment in and
         loans to associate                                                         -           -         -           -      188 988
         Other investments
         Derivative financial instruments                                      62 579           -    62 579           -            -
         Trade and other receivables(1)                                             -           -         -           -      133 456
         Cash and cash equivalents                                                  -           -         -           -      507 338
         Total financial assets                                             1 420 566   1 166 187    62 579     191 800      829 782
         Derivative financial instruments                                     142 814           -   142 814           -            -
         Long-term borrowings (including current)                                   -           -         -           -    6 756 743
         Trade and other payables(2)                                                -           -         -           -      332 454
         Total financial liabilities                                          142 814           -   142 814           -    7 089 197

         (1) Trade and other receivables exclude prepayments which are non-financial instruments.
         (2) Trade and other payables exclude revenue received in advance and value added tax as these are non-financial instruments.

R'000
    4.5  Level 3 valuations
                                                                                               Izandla
                                                                                  U.K.     convertible       Hexagon       Long-term
         The level 3 valuations are reconciled as follows:               investment(1)         loan(2)       loan(3)   borrowings(4)
         Balance at the beginning of the period                                191 800               -             -               -
         Acquisition                                                            11 744          51 392     1 105 059        (54 991)
         Fair value and forex gain                                              19 004               -       235 405               -
         Finance income accrual                                                      -               -        38 660               -
         Balance at the end of the period                                      222 548          51 392     1 379 124        (54 991)

         (1) As at 30 September 2018, there is no revaluation on the underlying investment. The gain is a forex revaluation of the GBP position.
             If the value of the underlying properties changed by 5% the investment value would move by R20.1 million.
         (2) The fair value of the loan is linked to the value of Izandla. If this changed by 5% the value of the loan would move by R0.1 million.
         (3) The fair value gain on the Hexagon loans arose from the revaluation of the underlying properties in the Pan-European portfolio. The entire
             property portfolio was externally valued at 30 September 2018 by CBRE Limited. The fair value gain on the loan receivable and loan
             payable is R157.1 million. If the fair value of the underlying properties was 5% higher or lower, the fair value of the Hexagon loans would
             be R152.5 million higher/lower than the reported closing balance.
         (4) Long-term borrowings includes other Euro funding of EUR3.3 million. The value of the loan is linked to the performance of the underlying
             properties in the Pan-European portfolio. If the fair value of underlying properties changed by 5% the value of the loan would move by
             R10.8 million.

         Valuation techniques used to derive level 3 fair value

         The significant unobservable inputs used to derive the fair value measurements are those relating to the valuation of
         underlying investment properties. The table below includes the following descriptions and definitions relating to key
         unobservable inputs made in determining fair value:
         
         Expected rental value        The rent at which space could be let in the market conditions prevailing at the date of
         ('ERV')                      valuation.
         
         Equivalent yield             The equivalent yield is defined as the internal rate of return of the cash flow from the property,
                                      assuming a rise to ERV at the next review, but with no further rental growth.
         
         Long-term vacancy rate       The ERV of the expected long-term average structural vacant space divided by the ERV of the
                                      whole property. Long-term vacancy rate can also be determined based on the percentage of
                                      estimated vacant space divided by the total lettable area.
         
         Significant                  Relationship between unobservable inputs and
         unobservable inputs          fair value measurement

         Expected rental value        Increases in ERV would increase estimated fair value.
         ('ERV')
         
         Equivalent yield             Increases/decrease in the equivalent yield would result in decreases/increases in the
                                      estimated fair value.
         
         Long-term vacancy rate       Increases/decreases in the long-term vacancy rate would result in decreases/increases in the
                                      estimated fair value.
         
         The fair value of the underlying property portfolio has been determined using the income capitalisation method.

                                                                                                 Reviewed                   Reviewed
                                                                                               Six months                 Six months
                                                                                                    ended    Audited           ended
                                                                                             30 September   31 March    30 September
R'000                                                                                                2018       2018            2017

5.  Equity accounted investment in and loans
    to associate
    Izandla
    Equity                                                                                         31 349     18 247               -
    Loans                                                                                         195 860    188 988               -
    Senior mezzanine                                                                              117 658    110 786               -
    Junior mezzanine                                                                               78 202     78 202               -
                                                                                                  227 209    207 235               -

                                                                                  Reviewed                                  Reviewed
                                                                                Six months              Audited           Six months
                                                                                     ended           Year ended                ended
                                                                              30 September             31 March         30 September
R'000                                                                                 2018                 2018                 2017
6.  Deferred taxation
    Balance at the beginning of the period                                           8 151                5 386                    -
    Gain on fair value of investments                                                4 514                2 765                7 676
    Balance at the end of the period                                                12 665                8 151                7 676

    A deferred tax liability arose on the fair value gain through profit and loss on Ingenuity and the U.K. investment as a result of these
    investments not being classified as REITs. The Fund holds less than 20% of Ingenuity and the U.K. investment and therefore these
    investments do not meet the definition of a property company as defined under S25BB of the Income Tax Act. On disposal of the
    investments the Fund would be subject to capital gains tax, as such deferred tax has been recognised on the unrealised fair value
    gains.

                                                                                 Reviewed                                   Reviewed
                                                                               Six months                                 Six months
                                                                                    ended               Audited                ended
                                                                             30 September              31 March         30 September
R'000                                                                                2018                  2018                 2017
7.  Non-current assets held-for-sale
    Office                                                                         38 000                21 034              264 587
    Industrial                                                                    559 552                81 066              198 971
    Retail                                                                          6 909                15 554              143 221
    Balance at the end of the period                                              604 461               117 654              606 779

    The Fund will be selling seven buildings with settlement taking place within 12 months of reporting date for a consideration of
    R604.5 million and has presented those assets as non-current assets held for sale.

                                                                                 Reviewed                                   Reviewed
                                                                               Six months                                 Six months
                                                                                    ended              Audited                 ended
                                                                             30 September             31 March          30 September
R'000                                                                                2018                 2018                  2017
8.  Long-term borrowings
    The balance at the end of the period comprises:                             7 825 308            6 811 119             6 792 486
    Long-term borrowings                                                        5 725 980            5 917 743             5 991 282
    Short-term borrowings                                                       2 044 504              839 000               744 876
    Interest accrual on borrowings*                                                54 824               54 376                56 328

    * Included in trade and other payables.

                                                                                             Reviewed                       Reviewed
                                                                                           Six months                     Six months
                                                                                                ended      Audited             ended
                                                                                         30 September     31 March      30 September
R'000                                                                                            2018         2018              2017  
9.  Related parties                                                                                                        
    The Fund has entered into the following related party transactions                                                     
    during the six months:                                                                                                 
    Investec Property Proprietary Limited                                                                                              
    Asset management fees                                                                    (38 184)     (60 702)          (29 400)   
    Letting commissions                                                                      (10 633)     (14 078)           (8 073)   
    Property acquisitions(1)                                                                        -    (154 949)         (154 949)   
    U.K. Investment                                                                                                                    
    Additional acquisition of 10% of the equity of a joint venture within                                                              
    the Investec Group(2)                                                                    (11 744)    (173 329)         (173 329)   
    Izandla Property Fund                                                                                                              
    Net proceeds from sale of properties                                                            -      314 111                 -   
    Movement in equity investment                                                              13 102       18 247                 -   
    Movement in loans receivable                                                               58 264      188 988                 -   
    Finance income                                                                             14 587        2 338                 -   
    AREG.L.P/Hexagon                                                                                                                   
    Loans to Hexagon entities                                                               1 379 124            -                 -   
    Finance income                                                                             61 747            -                 -   
    Investec Bank Limited Group                                                                                                        
    Cash and cash equivalents(3)                                                              124 178      128 083            87 062   
    Borrowings3                                                                             (441 482)    (441 615)         (739 377)   
    Fair value of derivative instruments(3)                                                  (80 170)     (60 292)         (186 320)   
    Nominal value of swap derivatives                                                     (4 521 750)  (4 678 057)                 -   
    Nominal value of FECs                                                                   1 449 119      515 232                 -   
    Rentals received                                                                           32 855       61 724            30 401   
    Interest received(4)                                                                        4 419        7 859             3 641   
    Sponsor fees paid                                                                           (193)        (170)              (85)   
    Corporate advisory and structuring fees paid                                              (1 455)      (1 250)           (1 380)   
    Interest paid on related party borrowings                                                (23 479)     (52 881)          (28 423)   
    Interest received/(paid) on swap derivatives                                                1 494     (21 825)           (9 141)   
    Settlement of swap derivatives                                                                  -     (16 933)                 -   

    (1) Property acquisitions were concluded at market value.
    (2) Direct equity investment, not acquisition of equity from Investec Bank Limited Group.
    (3) Included in carrying values as per the statement of financial position.
    (4) Interest is earned at the overnight safex call rate of 6.30% (FY2018: 6.55%).

10. Subsequent events
    Post 30 September 2018, the Fund has rolled R451 million of three-month commercial paper at margin of 45.5 basis points.

    The Fund also rolled a five-year unsecured note of R85 million at 3-month JIBAR plus 167 basis points.

    Relating to the refinance of R3 billion of bank debt, the Fund has finalised R1.3 billion with Nedbank at an average margin of 1.75%
    and an average expiry of 4.5 years.

Commentary

Introduction

Investec Property Fund Limited ('the Fund' or 'IPF') is a South African Real Estate Investment Trust and currently comprises an investment
portfolio of direct and indirect real estate investments in South Africa, Australia, the U.K. and Europe. The direct investments comprise
104 properties in South Africa with a total gross lettable area ('GLA') of 1 243 331m2 valued at R17.6bn (March 2018: R17.6bn). The Fund's
local investment portfolio comprises a R0.1bn (March 2018: R0.1bn) investment in Ingenuity Property Fund Limited (Ingenuity) and R0.3bn
(March 2018: R0.2bn) investment into the empowerment fund, Izandla Property Fund Proprietary Limited (Izandla).

The Fund's offshore investments include Investec Australia Property Fund ('IAPF') of R1.3bn (March 2018:R1.0bn), Investec Argo UK
Property Fund ('U.K. Investment') of R0.2bn (March 2018: R0.2bn) and an investment into a Pan-European logistics portfolio of R1.4bn,
entered into in May 2018. The investments provide geographic diversification and exposure to quality real estate in developed markets,
providing attractive returns in a period of muted growth in South Africa. All of the offshore platforms are well established with teams on the
ground who have local expert knowledge. These investments have underpinned the growth in the current period (details of this and other
investments are given in the 'Investments' section of this announcement).

During the first six months of the year, the Fund continued to focus on its four strategic objectives:

Strategic pillar                    The Fund's progress

1) Revenue security and growth      The Fund let 91% of space expiring for the period and 42% of opening vacancy with 63% of
                                    space expiring in the full year already let. IPF continues to engage with clients to re-negotiate
                                    leases as early as possible in order to de-risk future income.

2) Client service excellence        The Fund's continual client engagement strategy and formal client feedback programme aims
                                    to ensure that the Fund timeously addresses clients' needs and that service delivery remains
                                    relevant. The Fund's feedback programme and scoring mechanisms provide measurable,
                                    actionable objectives and ensure ongoing improvement and delivery of an 'out of the ordinary'
                                    service offering. Although the feedback to date has shown progress, there is still room for
                                    improvement.

3) Value add asset management and   The Fund's strategy continues to focus on providing a relevant and efficient core offering,
capital allocation                  a differentiated level of service and ensuring efficient capital allocation to maximise long-term
                                    risk adjusted returns.

                                    The Fund's objective of increasing its offshore balance sheet exposure to 20% remains a
                                    core objective. Following the conclusion of the Pan-European logistics transaction the Funds
                                    balance sheet now comprises 13.7% offshore exposure, all focused to developed markets.
                                    The Fund continues to explore opportunities to allocate up to 10% of the balance sheet into
                                    'broken core', value add and specialised asset opportunities.

4) Cost efficiency and system       The Fund is committed to maintaining fixed operating expenses below inflation as was
   optimisation                     achieved for the majority of fixed operating expenses. However, the Fund is willing to spend
                                    more in areas that benefit client service and/or enhance the safety and security of the offering.
                                    Variable expenses increased due to higher tenant incentives offered to retain existing and
                                    attract new clients in this competitive environment.

Financial results

The board of directors is pleased to announce an interim dividend of 68.81 cents per share ('CPS') for the six months ended 30 September
2018 (September 17: 68.37 cps, normalised 65.27 cps). The prior year interim dividend included a once-off antecedent dividend received
from IAPF relating to the final H2 dividend for FY2017 received on the shares subscribed for in the February 2017 rights offer. On a
normalised basis, year-on-year dividend per share ('DPS') growth is 5.4%.

The South African landscape remains challenging and is not expected to improve in the short term. The environment of little to no growth
has resulted in a lower demand for space, downward pressure on rentals, longer void periods, a higher cost to attract and retain clients,
and no local acquisition activity. Recent proactive reforms and initiatives by government in the form of the jobs and investment summits are
welcome and inform our positive views on South Africa for the medium- to long-term.

Against this backdrop, the growth from the South African property portfolio has been limited with base(1) net property income ('NPI') growth
at historically low levels of 1.7%. The remainder of the growth in DPS stems from the Fund's investments into its offshore platforms,
specifically and most recently, its investment into the Pan-European logistics portfolio.

(1) Base portfolio refers to R16.8bn of properties that have been held by the Fund for the full comparative periods.

The contributors to the base NPI growth in South Africa were:

1.  3.4% core rental growth which is lower than contractual escalations due to void periods and lower rental reversions;
2.  An increase in gross recoveries of 14.1% caused by the increase in rates costs following revised municipal valuations; and
3.  An increase in gross costs of 16.7%. This increase in costs was driven by the abovementioned increase in rates as well as increased
    costs of letting. Fixed costs have been well controlled with an increase of only 6.2%. Within the fixed costs, security costs have
    increased above inflationary rates as the Fund places high importance on the safety and security of clients and was able to make
    improvements in this area with additional spend.

The impact is that the total portfolio cost to income ratio increased from 16.8% at March 2018 to 19.3% at period-end. This margin level is
expected to remain in the short- to medium-term as a result of lower revenue growth and elevated variable costs.

Revenue for the total portfolio was almost static year-on-year due to the disposals that took place towards the end of FY2018 and no acquisition 
activity on the current year.

Despite the challenging environment, vacancy has decreased since last reported, from 4.0% down to 3.1%. This vacancy excludes pockets
of space held vacant for development, (if included, the vacancy ratio would be 3.8%, decreased from 4.8%). The decrease in vacancy in a
market that favours tenants rather than landlords is testament to the quality of the assets and the relationships the Fund's management has
nurtured with its client base.

The Fund has re-let or renewed 113 573m2 (91%) of space expiring in the period, as well as 25 137m2 (42%) of opening vacancy. The letting
concluded was at an average negative reversion of 5.6%, reflective of the current letting environment. The weighted average lease expiry 
('WALE') on letting concluded was 3.8 years and the average contractual escalation was 7.4%.

For the full year to March 2019, the Fund has let 139 495m2 (65%) of the space expiring, as well as 27 830m2 (46%) of opening vacancy.
The remaining space to be let is 101 658m2 and is largely in the industrial portfolio.

The total arrears as a percentage of collectables has remained flat since March 2018 at 3.1%. This ratio includes tenants that are subject
to legal proceedings, (if excluded, the ratio is 1.0%, decreased from 1.1%). The smaller industrial and retail tenant base remains under
pressure.

There has been limited local acquisition activity during the period, with R71.3 million invested into Izandla to fund development opportunities.

The Fund is in the process of recycling capital through the sale of seven properties valued at R0.6 billion at an average yield of 7.5% which
are classified as held-for-sale. The proceeds are earmarked to reduce debt levels, and to be deployed into the European platform that
generates cash on cash returns in excess of 10% or other value enhancing investment opportunities. As noted in the year-end results, the
Fund deployed EUR71.9 million into a Pan-European logistics portfolio in May 2018. The investment has outperformed the initial acquisition
budgeted income return of 10.5%, delivering 11.6% during the period. This is due to stronger leasing activity than initially forecast.
At 30 September 2018, the underlying properties in the portfolio were revalued by 7.4% in Euro (equating to 13.9% capital return on IPF's
initial investment in Euro), further underpinning the Fund's investment into the platform. This equates to a ZAR capital return of 14.7%.

The Fund continues to be a strong supporter of its 20.9% investment in IAPF and its intention to dual-list on the ASX. Distributions received
in the period (post WHT) were flat year-on-year, in line with market guidance. IPF achieved 4% growth on its net returns, post funding.
100% of the income for FY2019 is now fully hedged.

The U.K. Fund added to its portfolio with the acquisition of an industrial property in North London. IPF funded its pro rata share
(R11.7 million) of this acquisition. The existing portfolio is underpinned by secure income with potential growth in the reversionary rental
uplift from the industrial portfolio.

Balance sheet and risk management remains a fundamental focus area for the Fund. During the period, the Fund entered heads of terms
with existing banks to refinance R3.0 billion of debt maturing in the next two years. The refinance is for a blended period and margin
of 4.7 years and 1.75 basis points respectively. This represents 66% of total existing bank debt (and 33% of total debt). The refinance
significantly reduces liquidity risk going into a period of further market uncertainty and increases the Fund's weighted average debt expiry 
to 3.7 years (March 2018: 2.7 years). The Fund expects to have concluded final agreements before the end of November 2018.

Net asset value per share has increased by 2.9% since the last reporting date. This was primarily driven by a fair value increase of the
IAPF investment, (R201 million or 19.0%), and the Fund's share of the revaluation of the underlying buildings in the European portfolio
(R157 million or 14.7%).

Property portfolio

The Fund's current property portfolio consists of a diverse base of 104 quality properties with an average value per property of R169m
(March 2018: R167m).

The table below presents a snapshot of the property portfolio as at 30 September 2018:

                                                                                              Total    Office   Industrial    Retail   
Portfolio                                                                                                                              
Number of properties                                                                            104        32           39        33   
Asset value (Rbn)                                                                              17.6       6.4          4.1       7.1   
Base NPI growth                                                                                1.7%      0.2%       (3.8%)      5.6%   
Cost to income                                                                                19.3%     21.2%        17.0%     19.1%   
GLA(m2)                                                                                   1 243 331   251 722      573 404   418 205   
Vacancy(1)                                                                                     3.1%      6.5%         3.4%     0.8%1   
WALE (years)                                                                                    3.3       3.1          3.5       3.2   
In-force escalations                                                                           7.6%      8.1%         7.9%      7.1%   

(1) The vacancy ratio excludes development vacancy of 8 636m2.

Letting activity

The Fund began the interim period with an opening vacancy of 59 902m2 (4.8% including development vacancy), with 124 460m2 expiring
during the six months. The Fund has renewed or re-let 113 573m2 (91%) of space expiring in the period at an average negative reversion of
5.6%. A further 25 137m2 of opening vacancy was also let.

On a full year basis the Fund has let 139 495m(2) (65%) of the 215 053m(2) that expires. After taking into account GLA adjustments and
month-to-month letting, there is 101 658m2 remaining to be let in the second half of the year. A marginal increase in vacancy is expected
for the remainder of the financial year with key risks in the leasing of large office and industrial spaces that expire in the next six months.
This has been taken into account in its guidance for the full year distribution growth.

The table below reflects the letting activity for the year to date:

                                                 Renewals    Gross    Gross                                                            
                                  Expiries and    and new   expiry      new      Rental      Average               
                                 cancellations       lets   rental   rental   reversion   escalation    WALE      Retention   
                                           GLA        GLA     R/m2     R/m2           %            %   years              %   
Office                                  26 339     22 696    183.9    154.8    15.8)(1)          7.4     4.6           77.6   
Industrial                              49 831     43 755     50.7     48.0    (5.2)(2)          8.0     2.0        40.0(4)   
Retail                                  48 290     47 122    157.1    157.1      0.0(3)          6.9     4.7           92.5   
Subtotal                               124 460    113 573    121.4    114.6       (5.6)          7.4     3.8           68.3   

(1) Negative reversion driven by the competitive letting environment and supply exceeding demand.
(2) Long-term leases where expiry rentals had escalated above current market, renewed at market.
(3) Reversion subdued due to renewals concluded with two national tenants where five and seven years were concluded respectively. Excluding these
    renewals, the balance of letting activity reflected growth of 6.8%.
(4) Low retention due to two clients not renewing 8 549m2 and 21 441m2 respectively. The first was acquired by a large multi-national with multiple facilities
    and the operations were consolidated and the second, due to consolidated business operations and reduced space.

Lease expiry profile by revenue

2019              Percentage     2020            Percentage     2021            Percentage     2022            Percentage     April 2022 onwards    Percentage 
Office                     5     Office                   5     Office                   6     Office                   7     Office                        14    
Industrial                 2     Industrial               8     Industrial               3     Industrial               1     Industrial                    12    
Retail                     1     Retail                   8     Retail                   8     Retail                   5     Retail                        18    
Total                      8     Total                   18     Total                   17     Total                   13     Total                         44    

Sectoral performance

Office

The office sector has experienced significant pressure as a result of the supply/demand imbalance across the major office nodes, specifically
Sandton and Bryanston. Rosebank is anticipated to soften in the next 18 months given the number of developments currently under
construction and limited demand-led drivers evident in the current market. Letting activity is driven by tenants looking to capitalise on a
tenant-favoured market by relocating to better quality buildings at similar or better rentals. The high levels of competition in the market has
resulted in downward pressure on rentals and higher associated incentive costs to retain or acquire new clients.

Like-for-like NPI growth was 0.2% year-on-year. The lack of growth was caused by negative rental reversions and an increase in variable
costs, specifically those relating to letting (tenant installations and letting commission). Fixed costs were well controlled with security
costs being the only significant increase in this category. The base cost to income ratio has increased to 21.2% (September 17: 15.8%),
due to subdued growth in the revenue line, and has been further impacted by a significant increase in rates valuations on five properties.

The office sector's vacancy has increased to 6.5% at 30 September 2018 (March 2018: 5.4%) but remains below the national average.
The increase in vacancies is attributable to vacancies at Nicol Main in Bryanston, 3 and 4 Sandown Valley Crescent and the Firs. The Firs
vacancy will remain due to planned refurbishment works that will be complete before calendar year-end, after which vacancy is expected to
reduce. The Fund expects vacancy to increase further by financial year-end due to a large expiry in the portfolio in February 2019 which may
not be re-let by 31 March 2019.

On a year to date basis, 86% of the 26 339m2 expiring during the period was renewed or re-let at a negative reversion of 15.8%,
with an average WALE of 4.6 years. On a full year basis, the portfolio has 27 198m2 remaining to be let. The majority of the space is located
in quality assets situated within Sandton (c.9 200m2), Bryanston (c.6 700m2) and Rosebank (c.6 100m2). Given the quality, the Fund is
confident of concluding renewals and securing new clients, however, this is likely to take longer given the current market conditions.

Industrial

The industrial sector has continued to be negatively impacted by the current economic climate, with smaller business, specifically in the
manufacturing sector, being the worst affected.

A lack of business confidence and economic uncertainty has translated into tenants being unwilling or unable to commit to long-term leases
and therefore a sizable portion of the letting activity has been short term. Furthermore, rentals remain under pressure due to expiry rentals at
the end of long-term leases having enjoyed the benefit of compound contractual escalations, which have outstripped market rental growth
resulting in negative rental reversions.

Base NPI has contracted by 3.8% year-on-year due to negative reversions and void periods. The sector's cost to income ratio remains
under pressure with the weak tenant demand resulting in longer void periods (resulting in a decline in rental revenue of 1.3%), and the
expense base continuing to be impacted by costs not being recovered during these void periods.

Despite the weak demand environment the industrial sector vacancy has decreased to 3.4% (March 2018: 5.7%) driven largely by the letting
of opening vacancy.

On a year-to-date basis, 88% of the 49 831m2 expiring has already been renewed or re-let at a negative reversion of 5.2%, and with an
average WALE of 2.0 years. The short WALE results from two short-term deals where the Fund retains full cancellation flexibility should a
long-term deal arise. 22 057m2 of opening, vacancy was also let. For the remainder of the year there is 62 777m2 still to be let. The Fund is
in advanced negotiations with clients for the renewal of c.39 000m2 which is anticipated to be concluded imminently. Furthermore, proposals
have been submitted to prospective clients for c.19 000m2, of which c.8 500m2 has been accepted on a conditional basis. This will result in
a further improvement of the vacancy ratio by March 2019.

Retail

The retail portfolio comprises retail assets that are well located in their respective nodes or are niche in relation to a specific product offering
or category. The current percentage of national clients across the portfolio is approximately 82% that ensures that the assets are able to
trade through periods impacted by the sluggish macroeconomic conditions.

The portfolio like-for-like NPI growth was positive at 5.6%, being the Fund's strongest sector, with pressure from a decline in escalations on
renewals. The cost increase of 9.7% was largely due to variable expense increase of 37% (mainly letting commissions). Other expenses are
tightly controlled and growing below inflation.

Year-on-year turnover growth continues to show a recovery from a low in January 2018 of 1.9% to 3.0% in September 2018. Balfour Mall
remains under pressure because of the Rea Vaya roadworks that obstruct access to the mall, with Design Quarter currently undergoing a
redevelopment. If these two centres are excluded, turnover growth would have been 5.4% at 30 September 2018.

Although foot traffic has been fairly static during the period, the positive turnover growth achieved by the Fund's malls,is evidence of each
centre's appeal. The declining foot traffic is believed to be a result of high transport costs and consumers purchasing a larger basket of
goods less frequently. The marketing strategy has been adjusted accordingly. To date, the portfolio has been resilient through the subdued
trading conditions and malls like Zevenwacht Mall, Kriel Mall, Dhilabeng Mall and Fleurdal Mall all growing sales above inflation. The strong
trading results are underpinned by a low vacancy of 0.8% (excluding development vacancy) and the strong national retailer tenant base.

The quality of the retail portfolio was reflected through the positive letting activity during the period. Cost of occupation for portfolio was 
healthy at 6.4% at September 2018 (March 2018 6.8%). The Fund continues to monitor this closely due to a tough macro environment. 98% of the 48 290m(2)
that expires during the year has been renewed or re-let, as well as 3 080m(2) of opening vacancy being let.

Total geographical spread

Asset value (%)
Australia             6%
Europe                7%
U.K.                  1%
South Africa         86%

SA sectorial spread

Asset value (%)
Office               37%
Industrial           21%
Retail               42%

SA geographical spread

Asset value (%)
Gauteng              59%
KwaZulu-Natal        14%
Western Cape         10%
Free State            9%
Limpopo               4%
Other                 4%

Local investments

Ingenuity

There has been no further investment into Ingenuity during the period and the Fund's average cost of acquisition remains at R0.84 per
share (representing a 36% discount to Ingenuity's last reported NAV of R1.32 per share at 28 February 2018). Ingenuity offers an attractive
investment opportunity into a Western Cape focused portfolio with significant development opportunity.

Izandla

During the period, the Fund invested a further R71m into Izandla to support its acquisition of an office property in Hatfield and the
development of a logistics facility for Sasol on the back of a 15 year lease.

As disclosed at year-end, interest on the mezzanine loans will only be included in distributable income to the extent serviced.

Offshore investments

Australia (listed)

The Fund's investment in IAPF amounts to R1.3bn, representing 20.9% of IAPF (March 2018: 20.9%). There has been no change to the
Fund's holding in the investment during the period. The increase in the IAPF share price to R12.50 reflects a 19% increase from year-end
and positively contributed to the net asset value ('NAV') growth of the Fund for the interim period. The share price still reflects a c.10%
discount to NAV in AUD.

The shareholders gave consent via a vote in August 2018 to list IAPF on the ASX within 12 months. Management is seeking out acquisition
opportunities to underpin the listing. Looking forward, IAPF has informed shareholders that they will be adjusting their distribution pay-out
ratios to align with other ASX listed REITs and best practice in Australia. The Fund is supportive of this change as it has only a short-term
dilutionary effect on yield but does not impact total return to investors as the reduced distribution will increase NAV. This change also
enhances IAPF's ability to secure Australian capital at a value closer to NAV, thereby potentially increasing total returns to South African shareholders.

United Kingdom (unlisted)

During the period, the U.K. Fund added GBP19.5 million to its portfolio with the acquisition of an industrial property in North London.
IPF funded its pro rata share of this acquisition, keeping its equity investment at 10%.

The underlying portfolio comprises GBP234 million of high quality assets, underpinned by a weighted average unexpired lease term ('WAULT')
of 10.5 years and a vacancy ratio of 2.3% (excluding development vacancy). The weighted average debt expiry of the U.K. Fund is 4.1 years
and swap expiry is 8.2 years.

Pan-European logistics portfolio (unlisted)

Between 4 May 2018 and period end, the Fund invested EUR71.9 million into the Pan-European logistics portfolio through a co-investment
vehicle AREG Hexagon Co-Invest Vehicle II, L.P.

The initial investment was funded through a combination of existing ZAR debt facilities and a EUR40 million secured term loan at a margin of
1.75%. The Fund entered into a four-year Euro interest rate swap at a rate of 0.35% for 100% of the floating rate exposure.

100% of the expected income from the investment has been hedged for a period of five years at rates between R15.39 and R20.6 to the Euro.

The investment has outperformed the initial acquisition budgeted income return of 10.5%, delivering an 11.2% income return (11.6% in ZAR)
during the period resulting from stronger leasing activity than initially forecast.

The underlying properties in the portfolio were externally revalued during September 2018 resulting in an increase in direct asset value of
7.4% and an increase in the Fund's investment of 13.9% (14.7% in ZAR).

A further EUR7m will be deployed into the platform during FY2019 to support the acquisition of two further logistics properties in
France and Poland. The returns from these acquisitions are in line with those of the initial transaction and will be part funded with
Euro-denominated debt.

In terms of capital allocation across both the local and international portfolio, the Fund believes that this investment platform offers
shareholders the best risk adjusted return based on the current universe of opportunities and will continue to actively deploy
capital into this strategy.

Balance sheet and risk management

Balance sheet and risk management remains a fundamental focus area for the Fund.

                                                                                                             September         March
                                                                                                               2018(1)          2018  
Average all in cost of funding                                                                                    8.0%         8.60%   
Average debt margin - ZAR                                                                                        1.65%         1.64%   
Average ZAR swap rate                                                                                            7.57%         7.56%   
Average all in fixed rate - AUD                                                                                  4.71%         4.71%   
Average all in fixed rate - GBP                                                                                  2.36%         2.32%   
Average all in fixed rate - EUR                                                                                  1.98%           n/a   
Debt maturity (years)(2)                                                                                           3.7           2.7   
Interest rate swap maturity (years)                                                                                3.3           3.8   
Hedged %(3)                                                                                                      83.2%         84.0%   
Gearing %(4)                                                                                                     36.3%         32.6%   
Encumbrance ratio(5)                                                                                             38.4%         33.5%   
% debt unsecured(6)                                                                                              59.4%         65.4%   
% CCS of AUD investment                                                                                          43.7%         51.0%   
% CCS of GBP investment                                                                                          36.4%         50.0%   
% Euro denominated debt of EUR investment                                                                        54.8%           n/a   
Sources of funding                                                                                                                     
DMTN                                                                                                               31%           42%   
Commercial paper                                                                                                    5%            4%   
Bank debt                                                                                                          34%           54%   
HQLA(7)                                                                                                            23%            0%   
Foreign debt (Euro-denominated)                                                                                     7%            0%   

(1) All metrics are shown post the R3.0bn bank debt refinance to be concluded post-balance sheet date.
(2) Based on drawn debt and shown post the refinance of R3.0bn bank debt.
(3) Hedged percentage includes all interest rate swaps and cross currency swaps over total debt.
(4) Gearing shown net of cash.
(5) Secured assets as a percentage of total investments.
(6) Secured debt as a percentage of total debt facilities.
(7) Bonds issued to banks which qualify as 'High Quality Liquid Assets'.

The Fund's balance sheet is geared at 36.3% (March 2018: 32.6%) with the increase due to the investment into the Pan-European logistics
portfolio in May 2018. The balance sheet remains significantly unencumbered, with only 38.4% (March 2018: 32.6%) of investments
secured, providing significant flexibility in terms of future funding initiatives particularly as debt markets remain attractive.

The Fund's weighted average cost of funding reduced to 8.0% (March 2018: 8.6%) as a result of the Euro debt introduced to fund the
Pan-European investment. On a like-for-like basis this would have remained at similar levels reported at year-end.

Including cross currency interest rate swaps ('CCIRS'), the Fund's interest rate exposure is 83% hedged at 30 September 2018
(March 2018: 84%) with a weighted average term of 3.3 years (March 2018: 3.8 years).

Post reporting date, the Fund will conclude the refinance of R3.0bn of debt maturing in the next two years. This represents 66% of total
existing bank debt (and 33% of total debt), significantly reducing liquidity risk going into a period of further market uncertainty and increasing
the Fund's weighted average debt expiry to 3.7 years (March 2018: 2.7 years).

During the period, the Fund raised R81.1 million of equity through the DRIP offered to shareholders at year-end at R16.60 per share.
The Fund also increased its commercial paper programme to R475 million (March 2018: R274 million) in line with previous funding rates
and settled R50 million of corporate bonds in July 2018. Post period end, the Fund rolled a note of R85 million at 3-month JIBAR plus
167 basis points ('bps') (previously 173 bps) and rolled R451 million of its commercial paper at 45.5 bps.

Bank/HQLA/DMTN expiry

                   
2019               Percentage    2020               Percentage    2021               Percentage    2022               Percentage
Bank                        0    Bank                        7    Bank                        3    Bank                       16
HQLA                        0    HQLA                        0    HQLA                        0    HQLA                        0
DMTN                        4    DMTN                        7    DMTN                        7    DMTN                        4
Commercial paper            5    Commercial paper            0    Commercial paper            0    Commercial paper            0

2023               Percentage    2024               Percentage    2025               Percentage    2026               Percentage
Bank                       12    Bank                        0    Bank                        0    Bank                        2      
HQLA                        0    HQLA                       12    HQLA                       11    HQLA                        0      
DMTN                        3    DMTN                        3    DMTN                        4    DMTN                        0      
Commercial paper            0    Commercial paper            0    Commercial paper            0    Commercial paper            0      


Debt and swap expiry profile
                               
2019    Percentage    2020     Percentage    2021     Percentage    2022     Percentage   
Debt             9    Debt             14    Debt             10    Debt             20   
Swaps            2    Swaps             6    Swaps            23    Swaps            24   

2023    Percentage    2024     Percentage    2025     Percentage    2026    Percentage
Debt            15    Debt             15    Debt             14    Debt             3 
Swaps           25    Swaps            17    Swaps             3      

Tables shown post the debt refinance to be concluded post period-end.

Capital allocation

Capital allocation is a fundamental focus of the business. To date, the Fund has R0.6bn of assets held for sale at an average yield of 7.5%.
The majority of the proceeds relate to the Brandhouse disposal which was sold (subject to Competition Commission approval at period end)
at a yield of 7%. The proceeds are earmarked to pay down debt, as well as to be deployed into the European platform commitment that
generates cash on cash returns in excess of 10% or similar investment enhancing acquisitions.

The Fund has a budget of R209 million for FY2019 for projects delivering a return on investment ('ROI'). R104 million is for the extension of
Fleurdal Mall and R105 million relates to sustainability projects.

The Fleurdal project is under way with completion expected during August 2019. The extension creates space for national retailers such as
Woolworths, Dischem and Mr Price Sport which have already committed to taking space. This development will most likely close out the
potential for similar competing developments in the area.

The ROI sustainability projects include further rooftop solar installations and energy efficiency upgrades. The two solar projects already live
(Fleurdal Mall and Musina Mall) are generating a yield of approximately 12%.There are an additional nine sites earmarked for roll-out during
the remainder of the financial year.

In addition to the ROI projects the Fund has allocated R29 million to upgrade the Firs and give the centre a contemporary look and feel and
to provide the patrons with an improved experience.

The Fund is still finalising plans to refurbish the Design Quarter Centre. The refurbishment will improve vertical communication, maintain the
d�cor offering and grow the lifestyle and convenience offering which will vastly improve the shopper experience.

Financial assistance

Shareholders are advised that at the annual general meeting of the Fund held on 20 August 2018, shareholders approved and passed
a special resolution in terms of section 45 of the Companies Act, No. 71 of 2008, as amended (the Act) authorising the Fund to provide
financial assistance to among others, related or inter-related companies of the Fund.

Shareholders are hereby notified that in terms of S45(5)(b) of the Companies Act, No. 71 of 2008, as amended, the board of directors of the
Company authorised the issue of guarantees and suretyships to third parties for finance and other facilities granted by those third parties to
wholly-owned subsidiaries of the Company during the period 1 April 2018 to 30 September 2018.

The board has confirmed that, after considering the reasonable foreseeable financial circumstances of the Company, it is satisfied that
immediately after providing such financial assistance, the Company would satisfy the solvency and liquidity test, as contemplated in terms of
section 4 of the Act, and that the terms under which such financial assistance was given were fair and reasonable to the Company.

Shareholding

At 30 September 2018, Investec Limited, Coronation Fund Managers, Public Investment Corporation, STANLIB Asset Management and
Investec Asset Management are the only shareholders holding in excess of 5% of the Fund's total shares in issue.

                                                                                         Shareholding at    Shareholding at
                                                                                            30 September           31 March          
Rank   Beneficial shareholder:                                                                      2018               2018   Change   
1.     Investec Limited                                                                           26.57%             26.80%   (0.23)   
2.     Coronation Fund Managers                                                                   15.03%             16.44%   (1.41)   
3.     Investec Asset Management                                                                   6.75%              5.41%     1.34   
4.     STANLIB Asset Management                                                                    5.89%              5.87%     0.02   
5.     Public Investment Corporation                                                               6.57%              6.36%     0.21   

Change in management

Nick Riley will be stepping down as chief executive officer of the Fund effective 1 December 2018. He will be taking on a broader role
within Investec Bank Limited, however, will remain on the board as a non-executive director. Andrew Wooler and Darryl Mayers have been
appointed as joint chief executive officers of the Fund effective 1 December 2018. Both Andrew and Darryl are experienced and respected
members of the Investec property team, and the Fund will continue to benefit from their vast experience in finance, the listed environment,
as well as in direct real estate management and development.

The Board extends its appreciation to Nick and Andrew for their contribution and commitment in their current roles and looks forward to
working with Andrew and Darryl in their new capacities.

Prospects and guidance

As indicated in the pre-close trading update on 28 September 2018, due to the continued deterioration of market dynamics, specifically
within the South African office and industrial sectors, the Fund expects to deliver normalised DPS growth of between 5% and 5.5% for the
year ended 31 March 2019. In providing this guidance, the Fund has assumed no material change to the operating environment and that no
material tenant failures take place in the second half of the year.

This or any other reference to future financial performance forecast has not been reviewed or audited on by the Fund's independent external
auditors.

On behalf of the Board of Investec Property Fund Limited.

Sam Hackner                                                     Nicholas Riley
Non-executive Chairman                                          Chief executive officer

12 November 2018

Basis of accounting

The reviewed interim condensed consolidated financial results for the six months ended 30 September 2018 has been prepared in
compliance with International Financial Reporting Standards ('IFRS'), the presentation and disclosure requirements of IAS 34, Interim
Financial Reporting, the SAICA Financial Reporting Guide as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the Companies Act, (71 of 2008, as amended) of South Africa
and the JSE Listings Requirements.

The accounting policies applied in the preparation of the results for the six months ended 30 September 2018 are consistent with those
adopted in the financial statements for the year ended 31 March 2018, other than the adoption of those standards that became effective in
the current period, (including IFRS 9 Financial Assets and Financial Liabilities and IFRS 15 Revenue for Contracts with Customers), which
had no material impact on the financial results. These reviewed interim condensed consolidated financial statements have been prepared
under the supervision of Andrew Wooler, FCA.

Review conclusion

Ernst & Young Inc., the Fund's independent auditor, have reviewed the consolidated statement of comprehensive income, consolidated
statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity, condensed consolidated
segmental information and notes to the reviewed condensed consolidated financial results, as set out on pages 1 to 13 of the interim
condensed consolidated financial results, and have expressed an unmodified review conclusion. A copy of their review conclusion is
available for inspection at the company's registered office.

Interim dividend

Notice is hereby given of the declaration of interim dividend number 16 ('Cash dividend') of 68.80645 cents per share for the period
1 April 2018 to 30 September 2018.

Other information

- The dividend has been declared from income reserves.
- A dividend withholding tax of 20% will be applicable on the dividend portion to all shareholders who are not exempt.
- The issued share capital at the declaration date is 736 290 993 ordinary shares of no par value.

In accordance with Investec Property Fund's status as a REIT, shareholders are advised that the dividend meets the requirements of a
'qualifying distribution' for the purposes of section 25BB of the Income Tax Act, No. 58 of 1962 ('Income Tax Act'). The dividends on the
shares will be deemed to be dividends for South African tax purposes in terms of section 25BB of the Income Tax Act.

Tax implications for South African resident shareholders

Dividends received by or accrued to South African tax residents must be included in the gross income of such Shareholders and will not be
exempt from income tax in terms of the exclusion to the general dividend exemption contained in section 10(1)(k)(i)(aa) of the Income Tax Act
because they are dividends distributed by a REIT. These dividends are, however, exempt from dividend withholding tax ('Dividend Tax') in the
hands of South African resident Shareholders provided that the South African resident Shareholders have provided to the CSDP or broker,
as the case may be, in respect of uncertificated Shares, or the Fund, in respect of certificated Shares, a declaration by the beneficial owner
(in such form as may be prescribed by the Commissioner) that the dividend is exempt from dividends tax in terms of section 64F and a
written undertaking (in such form as may be prescribed by the Commissioner) to forthwith inform the CSDP, broker or the Fund, as the case
may be, should the circumstances affecting the exemption change or if the beneficial owner ceases to be the beneficial owner.

If resident Shareholders have not submitted the abovementioned documentation to confirm their status as South African residents, they are
advised to contact their CSDP, or broker, as the case may be, to arrange for the documents to be submitted prior to the date determined by
the regulated intermediary, or if no date is determined, by the date of payment of the dividend.

Tax implications for non-resident shareholders

Dividends received by non-resident Shareholders from a REIT will not be taxable in South Africa as income and instead will be treated as
ordinary dividends which are exempt from income tax in terms of the general dividend exemption in section 10(1)(k)(i) of the Income Tax
Act. It should be noted that up to 31 December 2013 dividends received by non-residents from a REIT were not subject to Dividend Tax.
With effect from 22 February 2017, any dividend received by a non-resident from a REIT will be subject to Dividend Tax at 20%, unless the
rate is reduced in terms of any applicable agreement for the avoidance of double taxation ('DTA') between South Africa and the country
of residence of the non-resident Shareholder. Assuming Dividend Tax will be withheld at a rate of 20%, the net dividend amount due to
non-resident Shareholders is 55.04516 cents per share. A reduced dividend withholding rate in terms of the applicable DTA may only
be relied on if the non-resident Shareholder has provided the following forms to their CSDP or broker, as the case may be, in respect of
uncertificated Shares, or the Fund, in respect of certificated Shares:

- A declaration by the beneficial owner (in such form as may be prescribed by the Commissioner) that the dividend is subject to a reduced
  rate as a result of the application of the DTA; and
- A written undertaking (in such form as may be prescribed by the Commissioner) to forthwith inform, the CSDP, broker or the Fund, as the
  case may be, should the circumstances affecting the reduced rate change or if the beneficial owner ceases to be the beneficial owner.

If applicable, non-resident Shareholders are advised to contact the CSDP, broker or the Fund, as the case may be, to arrange for the
abovementioned documents to be submitted prior to the date determined by the regulated intermediary, or if no date is determined, by the
date of payment of the dividend, if such documents have not already been submitted.

A worked example illustrating the impact for resident and non-resident Shareholders will be announced as part of the finalisation information
on SENS on the Finalisation Date.

Other information

- As at the date of this circular, the ordinary issued share capital of Investec Property Fund is 736 290 993 ordinary Shares of no par value
  before any election to reinvest the cash dividend.
- Income Tax Reference Number of Investec Property Fund: 9332/719/16/1.
- Shareholders are encouraged to consult their professional advisors should they be in any doubt as to the appropriate action to take.

Summary of the salient dates relating to the Cash Dividend:                     2018   
Declaration date                                                Tuesday, 13 November   
Last day to trade ('LDT') cum dividend                          Tuesday, 11 December   
Shares to trade ex dividend                                   Wednesday, 12 December   
Record date                                                      Friday, 14 December   
Payment date                                                    Tuesday, 18 December   

1.  Shares may not be dematerialised or rematerialised between commencement of trade on Wednesday, 12 December 2018 and close of trade on Friday,
    14 December 2018.
2.  The above dates and times are subject to change. Any changes will be released on SENS.

Investec Bank Limited
Company Secretary

12 November 2018

Company information

Directors                                        Registered office
S Hackner (Chairman)(#)                          C/o Company Secretarial, Investec Limited
SR Leon (Deputy Chairman)(#)                     100 Grayston Drive, Sandown, Sandton, 2196
NP Riley (Chief Executive Officer)
AR Wooler (Financial Director)
LLM Giuricich(#)                                 Transfer secretary
S Mahomed(#)*                                    Computershare Investor Services Proprietary Limited
CM Mashaba(#)*                                   (Registration number 2004/003647/07)
MM Ngoasheng(#)*                                 Rosebank Towers, 15 Biermann Avenue
KL Shuenyane(#)*                                 Rosebank, Johannesburg, 2196
PA Hourquebie(#)*

(#) Non-executive                                Sponsor
* Independent                                    Investec Bank Limited
                                                 100 Grayston Drive, Sandown, Sandton, 2196




Date: 13/11/2018 07:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
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