The FTSE/JSE Listed Property Total Return Index recorded positive growth for the month of September and was up 2.05% following another strong performance in August, and was up 11.17% for six months and up 9.63% year to date. The Monetary Policy Committee decided to leave rates unchanged at the September meeting but the decision did not stop the market from gaining momentum.

Property fundamentals are still positive and we are more certain that the sector would maintain distribution growth through the current down cycle. However, certain companies, like Acucap, have shown that bad debts and arrears have actually started improving in recent months. The biggest risk, though, is still the possibility of a large tenant going bust, which could erode all sector growth. With leading SA economic indicators starting to improve, it seems less likely that a large company will go bankrupt. In the absence of that happening, low single-digit growth seems likely at the trough of this recession. Although vacancies have risen, they are still at decent levels of 5-6%.

On the corporate activity Growthpoint had a successful equity raising of R989m , at only a slight discount and was oversubscribed 2.3 times, and this indicates strong demand currently for listed property.

The following counters contributed to the positive returns during the month of September: Octodec 9.36%, Premuim 9.46% on the back of corporate action, Sycom 6.27%, Vukile 6.25%, Capitol 6.04% and Resilient 5.25%. SA Corporate was down - 4.88%, Hyrop -3.27% and Hospitality -3.27% after they went ex dividend.

The fund invests primarily for the medium to long term and invests in quality counters with sustainable cash flow that can grow and support a high dividend pay-out. The fund selects a core portfolio with long term out-performance and maximize the portfolio yield with lower than average risk.

The FTSE/JSE Listed Property Total Return Index was down -1.69% for the month of June 2009, down - 0.88% for the quarter, down -2.25% for six months.

The Monetary Policy Committee left the repo rate unchanged at 7.5% during the June meeting citing the stickiness of inflation at high levels.

Consumer Price Inflation number came in at 8.0% year on year for May 2009 versus 8.4% in April). This represents a 0.4% month on month rise in the consumer price index. The higher than forecast inflation reflects a manifestation of the upside risk in respect of car prices and to a smaller extent food prices.

Producer Price Inflation for May 2009 was at -3.0% year on year, against Reuters consensus of -1.8%. The number was materially lower than expected, continuing the sharp disinflationary trend at the producer level into deflationary territory (April: 2.9% year on year. This is supported by strong base effects as well as the collapse in commodity prices (in particular those of oil and metals) since a year ago.

Personal Consumption Expenditure growth for May was at 5.7% year on year against Reuter's consensus of 8.0%. This compares with a downwardly revised growth rate of 8.5% in April (previously 8.7%). Even after adjusting for possible distortions and temporary fluctuations, these numbers reflect a very weak economy. Today's numbers portray quite a stark picture of the domestic economy. The key culprit behind the decline in the total credit extended to the private sector is the "other loans and advances.

Despite successive interest cuts property fundamentals have weakened further and will remain under pressure for at least 12 months. New supply, easing replacement costs and weaker demand will place occupancies and rentals under pressure. Revival in growth is expected in 2010 coupled with more onerous supply constraints and should bring the sector back into equilibrium and vacancies are unlikely to spiral.

On a relative valuation basis the sector is still attractive compared to bonds and cash. The pullback in bonds year to date, after Minister of Finance Pravin Gordan that revenue estimate will be short of the budget, has increased the relative attractiveness of bonds versus cash. There is however significant volatility in the sector due to unclear property fundamentals. The sector is still trading at a deep discount to the peak in July 2007 and there is a case for property to rerate relative to bonds and cash over the next 18 months.

The market was negative for the month of June 2009 with most counters recording negative total returns. The worst counter was Hospitality (overweight in the fund), which announced a trading statement. The effect of the global financial crisis which is being felt across all sectors of the South African economy has become particularly evident in the hospitality sector since the latter part of last year. Demand from the corporate and conferencing market segments has been negatively impacted by a general decline in both corporate and government expenditure, exacerbated in the month of April by the number of public holidays and the National Elections.

While trading conditions for the remainder of the 2009 calendar year are likely to remain challenging, demand levels appear to be stabilising and the outlook for calendar year 2010 remains positive with the prospect of economic recovery and enhanced returns as a result of the lead up to and the event of the FIFA World Cup 2010.

Hospitality B was -29.90%, Sable down -12.82%, Vukile 10.66%, Acucap -5.69% ex dividend and ApexHi C -4.55%.

The fund invests primarily for the medium to long term and invests in quality counters with sustainable cash flow that can grow and support a high dividend pay-out. The fund selects a core portfolio with long term out-performance and maximize the portfolio yield with lower than average risk.

The FTSE/JSE Listed Property Total Return Index was up 4.69% for the month of March 2009, -1.39% year to date and for the quarter.

Economic data released during the course of March 2009 was mixed. The SARB cut rates by 100 basis points and also announced monthly monetary meetings for the rest of the year except for July 2009. Consumer inflation came in at 8.6% year on year higher than forecasts 8.2%. There was relatively broad-based pressure reflected in the data and increases the possibility that the pace of rate cuts will slow, with likely pauses along the way. There is a risk that the retreat to within the target range might be delayed relative to the SARB's expectation for sub-6% inflation by 3Q09. However, there is a strong expectation that inflation will be within the sub-6% forecasts after 1Q10.

PPI was lower-than-expected for February 2009 at 7.3% year on year, against consensus of 7.4%. This compares with 9.2% year on year in January 2009. On a month on month basis, PPI fell by 0.3%. Unfortunately, the relief that this offers is limited given the weakened relationship between consumer and producer inflation as well as ongoing data quality qualms. However, further signs of a moderation in food prices (which fell at both the agricultural and manufacturing levels) bode well for the downside risks to food inflation that we have been flagging for some time.

However, the property sector will initially experience some tough conditions because of the lagged affect of higher interest rates. Tenant defaults are likely to increase, resulting in higher vacancies, but investors must bear in mind that vacancies are still at a 10 year lows, providing some bargaining powers to landlords. There is also caution creeping with retailers experiencing longer collection period of rentals which leads to bad debts.

The market positive for the month of January with certain counters recording positive total returns. Vukile was up 12.37%, Ambit 6.74%, Octodec 4.56%, ApexHi 4.34% and Premium up 4%. Emira was down -4.47, Resilient -3.55%, Sycom -3.28%, Redefine -2.86% and SA Corporate -2.24%.

Hyprop released results during the course of March 2009, with dividends growing by 14% and Net Asset Value by 3%. The outlook going forward is poor and do not expect Hyprop to deliver superior results.

SA Corporate announced a corporate restructure with existing management replaced by an executive from Old Mutual. The move is viewed positive after years of underperformance by the fund.

The fund invests primarily for the medium to long term and invests in quality counters with sustainable cash flow that can grow and support a high dividend pay-out. The fund selects a core portfolio with long term out-performance and maximize the portfolio yield with lower than average risk.

It is with great pleasure we inform the unit holders that the ABSA Property Equity Fund was named as the "Best in Sector" Winner on a relative risk adjusted measure by Micropal Fund Awards in association with the Financial Mail for 2007 performance. The FTSE/JSE Listed Property Total Return Index was up 4.94% for the month of December 2008, up 6.30% for the quarter, up 33.49% for six months and down -4.47% for the year to date compared to the all share index which was down -23%.

The Monetary Policy Committee cut interest rates by 50 basis points and petrol price was down on the back of crude oil prices which averaged $40/barrel. Economic data released during December demonstrate that inflation pressure is evaporating. CPIX at 12.1% was in line with expectation and PPI at 12.6% was meaningfully below consensus. Looking to 2009 the bond markets have priced about 350 basis points rate reduction, which should support the listed property market.

However, the property sector will initially experience some tough conditions because of the lagged affect of higher interest rates. Tenant defaults are likely to increase, resulting in higher vacancies, but investors must bear in mind that vacancies are still at a 10 year lows, providing some bargaining powers to landlords. There is also caution creeping with retailers experiencing longer collection period of rentals which leads to bad debts.

On the office front some nodes show double-digit vacancies, including significant new committed developments on spec, others show virtually no vacancies at all. Office nodes that are in a strong position with low vacancies and relatively few new developments include Illovo, Hatfield, Rondebosch/Newlands, Menlyn, Umhlanga/La Lucia, and Pretoria CBD. One can expect continued solid market rental growth in the short-tomedium term.

Nodes that either have high current vacancies and/or where significant new, spec developments have been committed include Century City, Constantia Kloof, Centurion, Rosebank, Sandton and Claremont. Expect current or short- to medium-term rents to come under pressure.

Industrial sector is still resilient but expect smaller tenants to start feeling the strain, but on balance the positive outweigh the negative and we recommend sector overweight. The market was positive for the month of December with certain counters recording total returns in excess of of 10%. Sycom was up 17.70%, Ambit up 15.21%, Capital up 13.00%. The only counter that was negative was Growthpoint down (-0.74%).

The fund invests primarily for the medium to long term and invests in quality counters with sustainable cash flow that can grow and support a high dividend pay-out. The fund selects a core portfolio with long term out-performance and maximize the portfolio yield with lower than average risk.