The global economic recovery has faced a few bumps during the past quarter with some momentum being lost in markets such as the US. While there are risks to the sustainabilityof the global recovery, the probability of the global economy falling back into a recession appears low at this stage. US exports are expected to remain robust while some recovery in discretionary spending, which is at historical lows relative to GDp, should help to sustain positive economic growth. The falling away of tax related stimulus will impact economic growth in the short term but should be compensated to some extent by the introduction of infrastructure and capital investment related incentives and stimulus measures. Emerging markets are a significant force in the global economy and will dominate global economic growth in the years to come. In the short term, they have remained robust but measures are being implemented by their authorities to cool off various sectors of their economies and prevent pricing bubbles. Europe is currently a mixed bag with Germany recovering strong~ on the back of exports while continental Europe tries to address their sovereign debt and fiscal related issues. The significant movement in currencies noted over the past few weeks will assist in driving US exports while impacting negative~ the competitiveness of the Eurozone.

The operating fundamentals of commercial real estate, which tends to lag the global economy, is recovering and we have seen occupancy, rental levels and arrears stabilizing during 2010 with the outlook of gradual improvement in 2011. This improvement in the operating environment is supported by the lack of new speculative development for a number of years to come, due to the lack of debt funding. The listed REIT sector has proven over the past two years that it has a comparative advantage in terms of access to equity and debt relative to the private sector and this is where the most significant opportunity lies for the listed REIT sector. In Europe alone there is GBP1 00 billion of securitized debt consisting of the 5 to 7 year structures put in place during 2006 to 2008 maturing from 2011 to 2014. With listed REITS being very active in reducing their debt levels and increasing their maturity profiles, the bulk of these maturities relate to the private sector where loan to value ratios have remained high due to the inability to raise equity and new debt. These debt maturities should result in the private sector becoming forced sellers of good quality assets which provides the ideal opportunity for the listed REIT companies with strong balance sheets and astute management teams to make earnings enhancing acquisitions.

In contrast to the private sector, the listed REIT sector has raised GBP85 billion of new debt and equity since January 2009 and the current loan to value ratios of +/45% are based on property values that troughed in the US and UK during Q3 to Q4 2009 and in the EU in 1 H201O. In addition, the valuations of the global listed REITS remain attractive, especially relative to government bonds where the dividend yields of the listed European REIT sector are more than double the government bond yield. The Oasis Crescent Global Property Fund is well positioned to take advantage of these opportunities and it remains our focus to identify the companies that are well managed and well placed to take advantage of these opportunities. The average dividend yield of the Fund of 6.5% is very attractive relative to the average bond yield of 3.1 % and based on the gap to the average cash flow yield of 7.6% there remains upside for the dividends to grow.

While global economic growth has remained positive year to date, risks to the sustainability of the recovery are high. Robust emerging markets have supported global economic growth and are anticipated to grow faster and become a larger contributor to global economic growth in future. In the short term however, China and India are facing risks such as rising inflation and potential property bubbles. This has resulted in aggressive monetary measures starting to be implemented by the authorities in an effort to cool their economies. The US has been largely supported by an uptick in the manufacturing sector while the US consumers' recovery has been fairly slow due to weak job creation and high debt levels. The stringent austerity measures announced by various developed countries over the past few months to address their bloated debt levels and huge deficits, point towards a period of below trend line economic growth over the next few years.

Throughout the tough operating environment of the past 12 to 18 months the companies in the Global REIT sector have significantly improved their balance sheets and are now in an excellent position to make attractive and enhancing acquisitions. They have also proven that they have a comparative advantage in terms of access to equity and debt relative to the private sector. As indicated in the table below, the Global REIT sector has raised more than USD75bn of new equity during 2009 and combined with asset disposals and retention of dividends they are in a very good position to take advantage of opportunities. Property values in the US and UK troughed in Q3 to Q4 2009 and in the EU in 1 H 2010 which implies that the current low LTV ratio of 45% and strong balance sheets are based on very prudent trough property values. The recession has driven occupancy and rental levels lower but this will stabilize in 2010 and start improving in 2011 and earnings of Global REITS are expected to trough during Q2 to Q3 2010. Due to the lack of liquidity for developers over the past two years there is a very low level of new development and supply in the major markets and this will be a key driver of an improving operating environment going forward. This lack of supply will extend for a number of years in certain developed markets where planning approval is very cumbersome and time consuming.

Current Global REIT valuations are very attractive relative to bonds and cash with the EU REIT sector providing a dividend yield of 5.1 %, which is double the 10 year bond yield. In addition, the higher level of cash retention to reduce debt has resulted in current dividend yields being understated by up to 15%. This gap between current dividends distributed and property income will reduce over time and this will be a key driver of healthy returns going forward. Current Global REIT dividend yields are offering exceptional value and the growth of this income off the current low base and payout ratio is expected to be strong over the medium term. The issues highlighted above creates a market where active stock pickers like Oasis can add significant value through our detailed in-house research which allows us to identify the companies with the experienced management teams that will take advantage of opportunities, to identify sectors and companies where the recovery in rentals will lead the rest of the market and to identify the companies where there is the highest upside in dividends due to the gap between dividends and property income. The Oasis Crescent Global Property Fund is well positioned to take advantage of these opportunities while maintaining sufficient geographic and industry diversification. The average dividend yield of the Fund of 7.3% is very attractive relative to the average bond yield of 3.4% and based on the gap to the average property income yield (FFO) of 8.3%, there is substantial upside for the dividends to grow.

Over the past 12 months the impact of the global recession on the listed property sector has shifted from liquidity and refinancing to the operational drivers including occupancy levels and rentals. The more successful companies in this environment will be the ones with superior property management skills who are able to retain existing tenants through strong relationships and successful leasing strategies. In addition, the lack of funding over the past two years will result in occupancy and rentals stabilizing during 2010 due to the very low level of new property supply coming to the market. This lack of supply will extend for a number of years in certain developed markets where planning approval is very cumbersome and time consuming. This does provide downside protection to rentals in 2010 and improves the outlook for a recovery in rentals over the next couple of years.

Current valuations can be misleading due to the higher level of cash retention to reduce debt and the historic dividend yields indicated below are understated by up to 25%. With the improvement in liquidity and a reduction in refinancing risk this gap between dividends distributed and property income will reduce and this will be a key driver of returns going forward. The issues highlighted above creates a market where active stock pickers like Oasis can add significant value through our detailed in-house research which allows us to identify the companies with the experienced management teams, to identify sectors and companies where the recovery in rentals will lead the rest of the market and to identify the companies where there is the highest upside in dividends due to the gap between dividends and property income.

The Oasis Crescent Global Property Fund is well positioned to take advantage of these opportunities while maintaining sufficient geographic and industry diversification. The fund has a limited exposure to Japan where the refinancing risk remains high and to certain city office markets and secondary retail property where the recovery will lag due to oversupply. Elsewhere refinancing risk is lower with loan to value ratios declining from the peak levels above 60% to the current level of 45% despite lower asset values. It appears that property valuations have bottomed and liquidity is returning to the physical property market. The average dividend yield of the Fund of 7.1% is very attractive relative to the average bond yield of 3.8% and based on the gap to the average property income yield (FFO) of 9.1%, there is substantial upside for the dividends to grow.

The liquidity concerns that arose around the global listed property sector due to the global credit crisis have abated due to asset disposals, issue of new equity, retention of dividends and the stabilization of property values. These actions have resulted in the average loan to property value ratios of listed REITS reducing from a level of 55% to 60% to the current levels of 45%. The European and Australian property companies are ahead in terms of issuing equity while Asian companies have lagged. The positive impact from the crises and recession is that there has been a substantial reduction in the supply of new properties over the next two to three years which will offset some of the decline in demand from tenants and it will provide downside protection to rentals. The industrial sector will benefit the most from a reduction in supply during 2010 due to a much shorter development pipeline while the retail and office sector benefits less due to longer development pipelines.

Despite substantial positive returns over the past six months the dividend yields indicate that certain markets still offer substantial value especial~ if we take into consideration that these yields are based on the historic dividends paid over the past year and due to the higher level of retention of cash during 2009 to reduce debt, the historic dividend yields are understated by up to 20%. The Oasis Crescent Global Property Equity Fund is well positioned with an overweight exposure to European and Australasian companies offering exceptional value and despite some re-rating there remains substantial value to be unlocked with an average 20% discount to NAV and a dividend yield which is double the bond yield. We are overweight the industrial and healthcare sectors and the fund currently has no exposure to the US and UK office market where the risk remains high.

In line with our philosophy we continue to focus on property companies with good quality assets, top quality tenants, long lease expiry profiles, solid balance sheets and experienced management teams. These companies will deliver substantial Alpha through the cycle and there remains a large gap between the cash flow (FFO) and dividends of the underlying companies in the portfolio and the closing of this gap will drive strong dividend growth and returns over the medium term.