The SA Listed Property Index delivered a total return of 10.5% for the third quarter of 2012, compared with 7.4% from the All Share Index, 5.0% from the All Bond Index and 1.3% from cash. For the 9 months to the end of September, SA Listed Property delivered a total return of 31.1%, the All Share Index 12.1%, the All Bond Index 13.1% and cash 4.1%. The 3rd quarter performance from listed property was generated during July, caused by a combination of falling bond yields and the 50 basis points cut in the REPO rate. During August and September the Index displayed a sideways trend. Results reported from listed property companies during the quarter showed a 5% increase in income distributions on average. The office market that has been weak for some time has stabilised, with slight declines in vacancy levels and increases in tenant retentions on expiry of leases. This has a positive impact on leasing costs. Management has been very focused in this arena and the results are encouraging. Of particular interest to the fund is that Emira Property Fund, a significant holding, recently reported excellent leasing progress as a result of a strong management initiative to reduce vacancies. This will have a meaningful impact during the course of the next 12 months. The industrial components of the portfolios continue to perform well as they are exposed to distribution and not manufacturing which is very weak . In the retail portfolios, the management teams are focused on selling shopping centres that are vulnerable and refurbishing or expanding well located centres in order to remain competitive. Several companies have identified areas for growth that will benefit the underlying quality of the portfolios in terms of sustainable income growth into the future. New listings continue, with one more expected before the end of the year. They have varying degrees of merit and the fund has only invested in those with solid fundamentals. The major criterion for participating in new listings is the strength of the management team. New listings tend to be small and the initial initiative is to grow the portfolio. Good track records of the individuals comprising the management team prior to listing are of primary importance. Management interviews in order to assess operational efficiency and level of investment analysis of new capital projects are a key focus. Looking ahead, labour unrest and political uncertainty will continue to cause volatility in the bond market which will impact listed property. GDP forecasts for 2013 have been lowered to below 3% which means that there will be very little stimulus for rental growth. However, given how much more focused listed property managers are now compared with a year ago, the prospects for income growth of 5% over the next 12 months remain achievable. The focus of the fund is the generation of a growing income stream over time which will underpin capital growth. This is typical of a long term value investment style and will be achieved by investing in quality portfolios with experienced management and the ability to generate consistently superior growth in income distributions. Cyclical and clear price arbitrage opportunities are also acted on. The composition of the fund is constantly monitored in order to meet its objective.

The SA Listed Property Index delivered a total return of 9.8% for the second quarter of 2012, compared with -0.3% from the All Share Index, 4.9% from the All Bond Index and 1.3% from cash. For the 6 months to the end of June, SA Listed Property delivered a total return of 18.2%, the All Share Index 4.5%, the All Bond Index 7.6% and cash 2.7%. The strong performance from listed property was largely during June on the back of falling bond yields as well as results reported from listed property companies that were as expected. Growth in income distributions for quality portfolios are in the region of inflation on average, with expectations over the next 12 months being similar.

The prime office market is holding steady with low, static vacancy rates. While the secondary office market remains weak with high vacancy rates, encouraging signs continue that this year will see the bottom of the cycle. Recent results confirm that tenant enquiries are stronger and the proportion of tenants retained on expiry of leases is increasing. However, this has not yet translated into falling vacancies. Although retail sales growth has slowed, regional shopping centres continue to generate real growth in income. It is the second tier shopping centres that are under pressure. The fund is focussed on the former and has minimal exposure to the latter. Good quality industrial properties continue to perform well.

The focus of the fund remains the generation of a growing income stream over time which will underpin capital growth. This is typical of a long term value investment style. Given the current market cycles at play, this will be achieved by investing in quality portfolios with experienced management and the ability to generate consistently superior growth in income distributions. The composition of the fund is constantly monitored in order to meet this objective. Inflation expectations have moderated which is expected to underpin bond yields and listed property yields for the balance of this year. Therefore capital volatility in the listed property sector for the balance of this year is expected to be less than has been experienced in recent years.

There have been a number of new listings over the past year. Most of these have now reported their first set of results and sufficient time has lapsed in order to evaluate track record and liquidity. The fund participated in only two of these where there are experienced management teams with good track records in previous endeavours. This mitigates the liquidity risk which is almost always associated with new property listings. As these expand and mature there will be lower risk opportunities for participation going forward.

The SA Listed Property Index delivered a total return of 2.1% for the month of March, compared with -1.4% from the All Share Index, 0.1% from the All Bond Index and 0.45% from cash. For the 3 months to end March, SA Listed Property delivered a total return of 8.0%, the All Share Index 6.0%, the All Bond Index 2.4% and cash 1.4%. While the secondary office market remains weak, encouraging signs continue that this year will see the bottom of the cycle. Tenant enquiries are stronger and the proportion of tenants retained on expiry of leases is increasing. Regional shopping centres are generating real growth in income and good quality industrial properties are performing well. The focus of the fund remains the generation of a growing income stream over time which will underpin capital growth. Given the current market cycles at play, this will be achieved by investing in defensive portfolios with experienced management. The composition of the fund is constantly monitored in order to meet this objective. However, continued concerns over rising inflation will impact negatively on the bond market and this has, as expected, resulted in capital volatility in the listed property sector this year.

The SA Listed Property Index delivered a total return of 2.10% for the month of December, compared with -2.45% from the All Share Index, 0.70% from the All Bond Index and 0.45% from cash. For the 12 months to end December 2011 the Listed Property Index has delivered a total return of 8.93%, the All Share Index 2.57%, the All Bond Index 8.80% and cash 5.71%.

During 2011 Listed Property was characterised by high volatility on the back of volatility in the bond market. It is anticipated that this will also be a feature during 2012. Similarly, 2011 trends in property fundamentals are expected to continue into 2012, being divergent on macro and micro levels. This will result in a wide spread of returns within the sector which will be a good opportunity for astute share selection. Depth of management experience will remain of profound importance in minimizing the impact of fundamental market weakness on portfolio performance. This was very evident last year.

The focus of the fund is to generate a growing income stream over time, which will underpin capital growth, and the composition of the fund is constantly monitored in order to meet this objective. However, continued concerns over rising inflation will impact negatively on the bond market and cause capital volatility in the listed property sector over the shorter term.