Fortress REIT : Further operational update 08.06.2020

FORTRESS REIT LIMITED

(Incorporated in the Republic of South Africa) (Registration number 2009/016487/06)

JSE share codes:	FFA	ISIN: ZAE000248498
	FFB	ISIN: ZAE000248506
Bond company code: FORI

(Approved as a REIT by the JSE) ("Fortress" or "the Company")

FURTHER OPERATIONAL UPDATE

Shareholders are referred to the operational update and withdrawal of guidance announcement published on SENS on 17 April 2020. We hereby provide a further update on the impact of the COVID-19 pandemic on aspects of our business and operations.

Risk mitigation and liquidity

As at Friday, 5 June 2020:

• Fortress had a total of R2,3 billion available in cash and undrawn secured banking facilities. The reduction in available facilities from R2,5 billion per the previous announcement was due to the repayment of a R250 million note under our DMTN programme which matured on 3 June 2020.
• Fortress' loan-to-value ratio has decreased to 36,4% from 37,4% at 16 April 2020 primarily as a result of an increase in the traded price of NEPI Rockcastle plc.

No changes have been made to our facility profile, cross-currency interest rate swap position or our local interest rate hedging profile since the SENS of 17 April 2020.

Property disposals

We have continued with our investment property disposal programme and provide an update below:

• At 5 March 2020, the date of the 31 December 2019 interim results announcement, investment property with total sale proceeds of R389,0 million was held for sale, but had not yet transferred. Subsequently, transfers with a value of R234,5 million have been effected, with the balance not yet transferred.
• Subsequent to 5 March 2020, additional properties with a book value of R36,4 million and sales proceeds of R38,0 million have been sold, subject to transfer, bringing the total properties held for sale to R192,5 million as at 5 June 2020.

Our dedicated disposals team continues to receive enquiries for our non-core industrial and office properties. The reduction in interest rates by 275 basis points since the start of 2020 is encouraging and has led to increased interest from potential buyers.

Operational update

We have spent a considerable amount of time on engagements with our tenants, both directly and through collective industry initiatives, over the past two months to understand the impact of the COVID-19 related lockdown on their businesses.

The table below illustrates the extent of relief given and rental collected for April and May 2020, expressed as a percentage of a "normal" billing month, prior to the COVID-19 lockdown on 27 March 2020. As rentals are payable in advance, the May 2020 rental was invoiced and due while the lockdown was in effect and the regulations around the different levels were uncertain. However, it is pleasing to note that the negotiations post 1 May 2020 have been constructive, particularly in the retail segment.

April 2020

	Retail	Logistics	Industrial	Office	Other	Total
Rent collection (%)	51.3%	77.3%	78.8%	82.8%	100.0%	68.3%
Relief given to tenants (% of billings)	26.3%	20.0%	20.9%	12.7%	0.0%	21.5%
Rental write-offs	26.2%	4.0%	2.7%	3.4%	0.0%	12.4%
Rentals deferred	0.1%	16.0%	18.2%	9.3%	0.0%	9.1%
Deals under negotiation/arrears	22.4%	2.7%	0.3%	4.5%	0.0%	10.2%
	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%
May 2020
	Retail	Logistics	Industrial	Office	Other	Total
Rent collection (%)	70.8%	70.9%	63.0%	71.6%	99.6%	69.3%
Relief given to tenants (% of billings)	10.3%	19.8%	26.5%	14.6%	0.4%	16.5%
Rental write-offs	8.9%	1.7%	3.6%	3.1%	0.0%	4.8%
Deferrals	1.4%	18.1%	22.9%	11.5%	0.4%	11.7%
Deals under negotiation/arrears	18.9%	9.3%	10.5%	13.8%	0.0%	14.2%
	100.0%	100.0%	100.0%	100.0%	100.0%	100.0%

Donations and community initiatives

In addition to the donations made by Fortress, our executive and non-executive directors have, in their individual capacities, collectively pledged R2 million to various initiatives, in line with President Cyril Ramaphosa's announcement on 13 April 2020 that the entire South African cabinet will donate a third of their monthly salaries for the next three months to the Solidarity Fund.

The beneficiaries of the donations by the Fortress executive and non-executive directors are the Solidarity Fund, Food & Trees for Africa, Sparrow Schools, Kids Haven, Rays of Hope and the Denis Hurley Centre.

Management and the board of directors again would like to express our sincere appreciation to our staff, business partners, suppliers, property managers and all other stakeholders for the support during the COVID-19 pandemic. We also wish all the communities in which we operate and all our stakeholders well during these challenging times.

8 June 2020

Lead sponsor

Joint sponsor

Joint sponsor