The Liberty Property Portfolio

LIBERTY PROPERTY PORTFOLIO Make it Work for You

LIBERTY PROPERTY PORTFOLIO How It Works - 1

UNPACKING THE PROCESS With all the Covid-related shifting valuations of the Liberty Property Portfolio, we think it’s worth unpacking the process and methodology we use to establish its value for you.

NOT AN ORDINARY STOCK The LPP is not a market-linked investment and is not subject to the rise and fall of real time trading values of ordinary shares on the stock exchange. This is one reason it is such a stable investment in normal times.

THE ANNUAL REVIEW Typically, we establish the value of the portfolio at the beginning of a year, with more frequent valuations being done only in response to extraordinary circumstances (read Covid-19).

ESTIMATING THE VALUE Let's picture all of the properties in the portfolio as one mixed-use retail, rental and manufacturing property. Think of a small mall with shops, offices, apartments and a widget factory.

Liberty Group Limited is an Authorised Financial Services Provider in terms of the FAIS Act. (FSP license no. 2409).

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WHAT'S IT WORTH? At the beginning of the year, the independent valuers look at the value of the underlying property itself – what the mall might be worth if they were to sell it on the open market.

WHAT'S THE INCOME? They then look at the rentals received at the time and estimate a reasonable increase in line with market conditions for the year ahead.

THE ANNUAL REVIEW They also look at the number of shoppers that visit the mall – and predict an increase or decrease depending on the appeal of the shops, and how the projected economic forces might influence consumer trends.

ADJUSTING THE VALUE In a typical year, the property value and rentals go up. But if something bad (like a global pandemic and a national lockdown) negatively impacts the mall, then the values need to be adjusted.

Liberty Group Limited is an Authorised Financial Services Provider in terms of the FAIS Act. (FSP license no. 2409).

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MANUFACTURING SHUTS DOWN Let’s say, the widget factory closes down because its staff can't go to work. It defaults on its rent or asks for a reduction in rent. Predicted rental income drops.

THE SHOPS CLOSE Many of the shops close down because of the lack of customers.

They also default on their rent or ask for a rental holiday or reduction. Predicted rental income drops.

TENANTS LEAVE OR DEFAULT Some of the tenants in the apartments are retrenched and can no longer pay their rent or their levies. Predicted rental income and levies drop.

RECESSION HITS The national economy enters a lockdown induced recession, and the value of everything falls – including the underlying value of fixed property. Predicted value increase drops.

Liberty Group Limited is an Authorised Financial Services Provider in terms of the FAIS Act. (FSP license no. 2409).

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IT ALL ADDS UP The relatively stable future scenario predicted at the beginning of the year is suddenly a tsunami of unexpected disasters, and all valuations have to be urgently reconsidered.

REALITY HITS HARD This is the terrible reality for every property linked investment in South Africa at the moment – including the Liberty Property Portfolio..

BUT IT'S NOT ALL BAD The good news for investors in the LPP is that Liberty is such a mighty financial powerhouse that it can afford to stand by its tenants and investors and mitigate the losses.

WE'RE IN THIS TOGETHER We have helped by providing financial relief to tenants and by injecting our own money into the portfolio to cap the losses.

Liberty Group Limited is an Authorised Financial Services Provider in terms of the FAIS Act. (FSP license no. 2409).

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RENTAL REDUCTIONS This means we can give commercial and retail tenants rental reductions or payment holidays so they can ride out the storm.

INVESTOR SUPPORT It also means we can cushion our investors against the worst of the market related impact of the temporary setback.

IN IT WITH YOU Both these decisions not only reflect the principles and the purpose of Liberty, they also support our brand promise.

SIDE BY SIDE As an investor in the LPP, you are in a property valuation earthquake.

Fortunately, we are here with you, preserving the value of your investment, minimising your losses and protecting your future returns.

Liberty Group Limited is an Authorised Financial Services Provider in terms of the FAIS Act. (FSP license no. 2409).

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SO HERE WE ARE We hope this goes some way to explaining what is happening right now, and how we are making every effort to support you through these difficult times.

LOCATION IS EVERYTHING Location is the most reliable indicator of a property’s likelihood to increase in value. Be assured that every one of the properties in your Liberty Property Portfolio has been purchased and developed in prime locations.

SOLID FOUNDATIONS Your Liberty Property Portfolio is built on sound principles that have stood the test of time. Our advice is you sit tight until we see the back of the Covid crisis together.

GET QUALITY ADVICE For more details and deeper insights on this, and any other life or investment decision, speak to an accredited Liberty adviser.

Liberty Group Limited is an Authorised Financial Services Provider in terms of the FAIS Act. (FSP license no. 2409).