New Europe Property Investments : Merger of NEPI and Rockcastle and Withdrawal of Joint Cautionary Announcement

Incorporated and registered in the Isle of Man with registered number 001211V

Registered as an external company with limited liability under the laws of South Africa, registration number 2009/000025/10 JSE share code: NEP BVB share code: NEP

ISIN: IM00B23XCH02 ("NEPI")

Incorporated in the Republic of Mauritius Registration number: 108869 C1/GBL JSE share code: ROC

SEM share code: ROCK.N0000 ISIN: MU0364N00003

("Rockcastle")

NEPI and Rockcastle shareholders are referred to the joint cautionary announcement released on the Stock Exchange News Service ("SENS") of the JSE Limited (the "JSE") and the websites of the Bucharest Stock Exchange (the "BVB") and the Stock Exchange of Mauritius Ltd (the "SEM") on 20 October 2016, as well as the joint renewal of cautionary announcement released on SENS and the websites of the SEM and the BVB on 2 December 2016, wherein they were advised that NEPI and Rockcastle (the "Parties") were in advanced negotiations in respect of an all-share transaction.

NEPI and Rockcastle are pleased to announce the conclusion on 13 December 2016 of a framework agreement (the "Framework Agreement"), pursuant to which their respective businesses will effectively be merged in an entity newly-incorporated in the Isle of Man, NEPI Rockcastle PLC ("NewCo") (the "Transactions"), to be implemented with reference to an effective share swap ratio of 4.5 existing Rockcastle shares for every 1 existing NEPI share (the "Swap Ratio").

NEPI is a commercial property investor and developer that owns, develops and manages dominant retail assets and A-grade offices in Central and Eastern Europe ("CEE"). Rockcastle is a commercial property investor and developer that owns, develops and manages dominant retail assets in the CEE region and invests in global real estate listed securities. The market capitalisation of NEPI is circa R49.0 billion (€3.4 billion) and of Rockcastle is circa R32.3 billion (€2.2 billion).

NewCo is expected to have a substantially enlarged market capitalisation, with all NEPI and Rockcastle shareholders benefitting from enhanced liquidity. The merged entity is expected to become the largest listed real estate player in CEE. Exposure to high- quality listed and liquid global real estate securities will lead to a diversified risk profile. The Transactions will also see the integration of two complementary management teams, positioned to unlock strategic synergies and create further value for both NEPI and Rockcastle shareholders.

Management's assessment of the envisaged Transactions indicates a strong operational and capital markets rationale, driven by the following factors:

Portfolios are complementary

• NEPI investors will gain immediate exposure to a significant portfolio in Poland, the most liquid and largest real estate market in the CEE region, with a positive economic outlook. Rockcastle shareholders will gain exposure to the largest retail real estate portfolio in Romania (which is the second real estate market in CEE by size and the fastest growing economy in Europe in 2016 and 2017, according to IMF forecasts), and the second largest retail real estate portfolio in Slovakia.

• NewCo will benefit from NEPI's operational expertise and both companies' strong track-record of completing value- enhancing acquisitions and developments, as well as from Rockcastle's highly-liquid listed securities portfolio, which provides growth resources in the medium-term.

  Scale

• NewCo is expected to become the largest CEE retail real estate company, and one of the top retail real estate companies in Europe.

• Geographically diverse management skills will allow NewCo to pursue CEE property opportunities more efficiently, giving it a strategic advantage in the acquisition, development and management of properties.

  Value creation

• NewCo is expected to benefit from a lower cost of capital, resulting from an anticipated improvement of the business and financial risk profile, driven by a larger scale, further geographical diversification, increased liquidity and access to capital.

• Material financial synergies are envisaged from a lower cost of debt, triggered by a better risk profile and a potential credit rating upgrade.

• Excellent performance is anticipated, driven by the growth of NEPI's best-in-class operating platform through gradually reducing the exposure to listed securities and increasing direct property investments.

• While there is limited operating synergy potential due to geographically complementary portfolios and existing efficient platforms, long-term synergies are expected to be achieved through knowledge and platform sharing.

  Liquidity and access to capital markets

• NewCo is anticipated to be highly liquid.

• NewCo is expected to be included in stock exchange indices, leading to enhanced visibility and liquidity of its shares, with exposure to a broader base of international investors.

Pursuant to the Framework Agreement, both NEPI and Rockcastle will transfer 100% of their respective assets and liabilities, including ownership interests in their respective subsidiaries (the "Sale Assets"), thereby each effectively transferring ownership of its entire business, to NewCo. In consideration, NewCo will issue a number of NewCo ordinary shares (together, the "NewCo Shares") to each of NEPI and Rockcastle, determined at the Effective Date (as defined below) with reference to the Swap Ratio. The Transactions will be implemented 3 business days following the fulfilment or waiver of the conditions precedent set out below (the "Effective Date").

The Transactions are conditional on the conditions precedent summarised below being satisfied or waived on or before 30 June 2017:

• the Transactions being approved by all relevant competition authorities, either unconditionally or subject to conditions acceptable to both NEPI and Rockcastle, or the Transactions being deemed to be so approved or deemed not to require approval, such that the Transactions may be implemented;

• all other necessary regulatory consents in relation to the Transactions in any jurisdiction whatsoever having been obtained;

• all shareholder and board approvals of the Transactions being obtained, whether in terms of any governing law, the rules of any recognised securities exchange or otherwise;

• all necessary consents, waivers and releases pursuant to the NEPI and Rockcastle funding facilities having been received, as may be required to complete the Transactions;

• no appraisal rights being exercised or other actions taken which could impede the completion of the Transactions;

• all third party consents in all relevant jurisdictions having been received, as may be required to complete the Transactions;

• the listing of the NewCo Shares on the JSE and Euronext Amsterdam having been formally approved by the relevant authorities; and

• either NEPI or Rockcastle not having given written notice to the other that it does not wish to proceed with the Transactions, where any matter, fact or circumstance has arisen which has or is likely to have a material adverse effect on the financial, legal or business condition of NewCo, the NEPI group or the Rockcastle group.

  As soon as reasonably practicable following the Effective Date:

• NEPI will effect a repurchase of the entire shareholding of Fortress Income Fund Limited ("Fortress") in NEPI, in consideration for the distribution to Fortress of their pro rata entitlement to the NewCo Shares held by NEPI (the "Fortress Share Repurchase");

• NEPI and Rockcastle will initiate a distribution in specie to their respective shareholders, whether by way of a dividend from retained earnings, a return of capital or in consideration for the buyback of shares, such that the shareholders of NEPI and Rockcastle as at the record date for participation in such distribution will receive, pro rata, a number of NewCo Shares determined with reference to the Swap Ratio; and

• following such distribution in specie, the NewCo Shares will be listed on the Main Board of the JSE and, to the extent not yet effected, on Euronext Amsterdam and any other stock exchange as agreed between the Parties.

It is intended that the implementation of the Transactions and those post-implementation corporate actions contemplated above be effected concurrently, or as close to concurrently as possible, having regard to the rules and requirements of the JSE, Euronext Amsterdam, the BVB and the SEM. NEPI and Rockcastle will each declare and distribute dividends for the period ending 31 December 2016 in the ordinary course.

Alexandru Morar and Spiro Noussis, the current chief executive officers of NEPI and Rockcastle, respectively, will be appointed as joint chief executive officers of NewCo, with Dan Pascariu appointed as independent non-executive chairman, on and with effect from the Effective Date. The remainder of the board of directors of NewCo will be constituted in due course in accordance with applicable corporate governance principles.

The total dividends per share declared and paid for the six months ended 30 June 2016 is 18.68 € cents for NEPI and 4.782 US$ cents for Rockcastle.

The Framework Agreement contemplates warranties, standstill arrangements and other provisions that are typical for transactions of this nature.

As at 30 September 2016, NEPI owned and operated 34 income producing properties, with 6 developments under construction (of which 4 are extensions of existing properties) and 7 developments under permitting and pre-leasing (of which 4 are extensions of existing properties). NEPI's total investment property portfolio (including investment properties at fair value, investment properties under development, and investment properties held for sale, each restated to include property held through joint ventures, on a pro rata basis) was valued at approximately €2.2 billion as at 30 September 2016.

Since 30 September 2016, NEPI has acquired Arena Centar in Zagreb, Croatia, together with 4.4ha of adjacent land, as well as concluded the acquisition of Aupark Shopping Centre in Piestany, Slovakia. In addition, Shopping City Piatra Neamt opened on 1 December 2016. The value of the investment property portfolio as at 30 November 2016 was approximately €2.5 billion.

All properties are managed internally by NEPI. Full details of the property portfolio as at 30 September 2016, weighted by ownership, are set out below.

PROPERTIES 941,950 2,003.7

FOR SALE 35,400 21.2

1. The valuation of investment properties in use and of the land bank reflects the value attributed to each of the properties by the directors of NEPI as at 30 September 2016, having regard to the valuation performed semi-annually by DTZ and Jones Lang LaSalle, being external independent property valuers and members of the Royal Institute of Chartered Surveyors. Buildings under development are valued at cost. The directors of NEPI are not independent and are not