sa corporate real estate fund annual report 2008 corp_ar_08.pdf · sa corporate real estate fund...

SA CORPO

RATE REAL ESTATE FUN

D Annual Report 2008

www.sacorp.co.zaTel: +27 31 366 1111Fax: +27 31 366 1364e-mail: [email protected]

Design: Design Insight, Printing: Fishwicks

199 North Ridge Road, Durban, KwaZulu NatalPinecrest Shopping Centre, Pinetown,KwaZulu Natal

34 Yaldwyn Road, Jet Park, Gauteng

Contents

Annual Report theme picture: 96,15th Road, Randjespark, Midrand, GautengFront cover property pictures from top to bottom: Tygerberg Business Park, Western Cape

36 Wierda Road West, Sandton, GautengMusgrave Centre, Durban, KwaZulu Natal

Page

Profile 1

Fund History 2

Strategic Objectives 2

Key Indicators 2

Financial Summary And Highlights 3

5 Year Financial Summary 4

Chairman's Report 5

Management Company's Review

Strategic Review 8

Financial Review 9

Portfolio Review 12

Directorate 20

Accountability

Fund Governance 25

Corporate Governance 28

Risk Report 35

Corporate Responsibility And Sustainability Report 38

SA Corporate Real Estate Fund Annual Financial Statements 42

Property Portfolio 74

SA Corporate Real Estate Fund Managers Limited Annual Financial Statements 88

Terms And Definitions 103

Unitholders' Information

Unitholders' Diary

Distribution Declaration 106

Distribution Plan Dates 106

Unit Price And Tradeability 106

Unitholder Profile 107

Notice Of Annual General Meeting 109

Proxy Form 113

Administration inside back cover

This report together with additional information on the property portfolio is available at: www.sacorp.co.za

Profile

A n n u a l R e p o r t 2 0 0 81

SA Corporate Real Estate Fund (“SA Corporate” or “the Fund”) is a diversified real estate investment fund, invested in retail, industrialand office property primarily in the major metropolitan centres of South Africa. Its portfolio consists of 190 properties, covering 1,4million square metres of lettable area, which has been independently valued at R8,8 billion as at 31 December 2008. The Fund islisted on the JSE Limited (“the JSE”) under Real Estate Investment Trusts (“REITs”).

The Fund has developed a robust tenant profile, with a high tenant retention ratio and a low vacancy rate. With an impressive industrialportfolio, strong balance sheet, low gearing and no refinancing risk over the medium term, it offers an attractive investment to investorslooking for a balanced, moderate risk investment in quality real estate through an easily tradeable instrument.

Industrial35%

R3,06bn105 props729 661m2

Offices & other9%

R0,85bn32 props86 803m2

Retail56%

R4,92bn53 props

606 538m2

Sectoral Spread

SA Corporate is a collective investment scheme in property, also known as a Property Unit Trust (“PUT”) registered under the CollectiveInvestment Schemes Control Act, No. 45 of 2002 (“the Act”).

Due to its legal structure as a PUT, the Fund acts as a conduit for pre-tax net property income to flow through to unitholders. TheFund is required to distribute 100% of its distributable earnings to its unitholders and this is done each year in March and Septemberfor the six months ending 31 December and 30 June, respectively. In terms of this legal structure, the only expenditure incurred bythe Fund is that relating to its property investments, audit fees, service fees and costs incurred as a consequence of being listed onthe JSE. As prescribed in the Act, the Fund is required to have an external management company (SA Corporate Real Estate FundManagers Limited, “the Manco”), which is approved by the Registrar of Collective Investment Schemes and governed by the TrustDeed. The Manco conducts all the affairs of the Fund and incurs all other expenses on behalf of the Fund. The board of directors (“theBoard”) of the Manco is therefore deemed to be the Board of the Fund and acts as such. The Manco has outsourced the day to dayoperational management to an appointed asset manager (Old Mutual Property Investments) and all staff required to manage the Fundare employed directly by the asset manager.

A list of terms and definitions is available on page 103 of this report.

A Grade - local, provincial and nationalgovernment, parastatals, listed tenants andnational retailersB Grade - professional firms and other mediumsized companiesC Grade - any other type of tenant

C Grade19% A Grade

66%

B Grade15%

Tenant profile by gross monthly rental

2

Fund History

Strategic Objectives

1995

UkhoziProperty Fundestablished asa PUT.ManagementCompanyrequired bylegislatureestablishedand owned byMarriott.

Propertyassets: R68m

1998

2002

2003

2004

2005

2006

2007

2008

Ukhoziacquires theassets ofUmdoni,Tamboti,Higate andHighstone andchanges itsyear end toJuly. Ukhozichanges itsname toMarriottProperty Fund.

R1,2bn

Fund namechanged toMartpropProperty Fund.Unit TrustControl Actreplaced bythe CollectiveInvestmentSchemesControl Actwhich permitsgearing.

R1,2bn

Debtintroducedamounting toR66 million.

R1,3bn

Propertiesacquireddirectly by theFund for thefirst time.

R1,4bn

Focus onincreasing theweighting tothe retailsector.

R2,0bn

The Fundname ischanged to SACorporate RealEstate Fundand year endto December.Old MutualGroup acquiresMarriottbusinessincluding themanagementcompany.

R3,1bn

Fund acquiresSA RetailProperties Ltdand portfoliosof Sharemaxand Buffcol.Change of sizeof portfolio andweighting fromindustrial toretail.BEE dealannounced.

R8,5bn

BEE equityownership lostdue to fall inunit price.Fundannouncesselectivedisposalstrategy tostreamlinepropertyportfolio andimprove qualityof earnings.

R8,8bn

• Providing unitholders with an easily tradeble moderate risk investment in the real estate asset class in South Africa• Managing a balanced, well diversified portfolio of retail, industrial and office property primarily in major metropolitan areas• Delivering superior investment returns by constantly improving the quality of the Fund's property portfolio and earnings• Fulfilling the Fund's social and environmental responsibilities

For a detailed discussion of these objectives, readers are referred to page 9 of the Management Company's Review.

Key Indicators

Indicator

Number of propertiesPortfolio composition

Retail exposureIndustrial exposureOffice & other exposure

South African exposureAfrican exposureExposure to any single tenantExposure to A grade tenantsTenant retention rateDebt to total investment portfolio valueInterest exposureAverage vacancy factor

Current status

190

56%35%9%98%2%5%67%87%17%

100% fixed3,5%

Medium term target

< 150

55%25%20%

>75%<10%<5%>66%>80%

20%-50%>70% fixed rate

Below industry average (2,9% atJune 2008)

Financial Summary and Highlights

Group2008 2007 % change

Key statistics

Weighted headline earnings (cents per unit) 30,10 29,71 1Distributions (cents per unit) 29,75 32,00 (7)Historic yield (%) 11,4 8,0 3,4 Units in issue (millions) 2 104 2 089 1Market capitalisation at end of period (Rm) 5 472 8 357 (35)Market value of property portfolio (Rm) 8 832 8 469 4Listed market price (cents per unit) 260 400 (35)Net tangible asset value (cents per unit - including final 369 377 (2)distribution yet to be paid)(Discount)/premium to net tangible asset value (30) 6 (36) Capital and funding resources

Long term borrowings (net of rentals paid into facility) (Rm) 1 570 668 135Long term borrowings to total investment portfolio value (%) 17 8 9Debt funding capacity available after commitments (Rm) 996 1 120 (11)Interest cover (times) 6,4 6,5 1Percentage of debt covered by fixed interest rates (%) 100 90 10 Portfolio activities

Number of properties 190 188 1Lettable area (000m2) 1 423 1 386 3Property acquisitions at cost (Rm) 207 4 800* (96)Disposals at book value (Rm) 58 376 (85)Developments (Rm) 359 68 428Bad debt write offs (Rm) 1,2 4,4 (72)Provisions as a percentage of arrears (%) 36 16 20

Efficiency ratios

Average vacancy factor (based on lettable area) (%) 3,5 2,7 0,8Tenant retention (renewal rate) (%) 87 94 (7)Net property expenses to rental (%) # 6,2 7,8 (1,6)

* Includes the acquisition of SA Retail Properties Limited, the Sharemax portfolio and the Buffcol portfolio# Certain costs such as tenant installation and letting commissions have been excluded from this calculation

A n n u a l R e p o r t 2 0 0 83

4

5 Year Financial Summary

Income statement items 2008 2007 2006 2005 2004 (17 months)

Rental income (without applying straight-lineadjustments) (R000) 798 164 579 946 385 086 239 086 212 948Net property expenses (R000) 63 920 54 709 40 199 30 184 32 588Ratio of net property expenses to rental income (%) 8,0 9,4 10,4 12,6 15,3Distributable income (R000) 627 016 619 378 275 570 184 922 179 483Units in issue (000) 2 104 469 2 089 336 725 184 725 184 725 184Distributions per unit (cents) 29,75 32,00 38,00 25,50 24,75Interim 14,50 14,60 12,50 12,50 12,25Interim SA Retail once off contribution 2,40 Second interim 13,50 Final 15,25 15,00 12,00 13,00 12,50 Balance sheet items

Property value (Rm) 8 832 8 469 3 103 1 961 1 447Investment in associate (Oryx) (Rm) 173 169 - - -Acquisitions (Rm) 207 4 800 406 188 80Disposals (Rm) 58 376 70 106 116Expenditure on developments (Rm) 359 68 165 45 103Borrowings (Rm) 1 570 668 653 155 -Ratio of borrowings to total investment portfolio value (%) 17 8 21 8 -Net tangible asset value (cents per unit) (incl. finaldistribution yet to be paid) 369 377 340 258 205

JSE related items

Closing price (cents per unit) 260 400 340 291 225(Discount)/premium to net tangible asset value (%) (30) 6 - 13 10(Reduction)/growth in unit price (%) (35,0) 17,6 16,8 29,3 5Total return per annum (%) (27,7) 26,5 31,3 42,4 16,8 Property items

Lettable area (000m2) 1 423 1 386 852 756 753Vacancy (000m2) 49 37 9 15 30Vacancy factor (%) 3,5 2,7 1,0 2,0 4,0Number of properties 190 188 133 127 145Sectoral spread - market value (%) - Retail 56 59 27 27 20 - Industrial 35 33 61 65 70 - Offices & other 9 8 12 8 10

A n n u a l R e p o r t 2 0 0 85

INTRODUCTION

At the start of 2008 the signs of a weakening economy and expectations of tougher trading conditions, especially in the retail sector,were noted. Recent global financial events have further impacted domestic economic growth and investment markets. As expected,these conditions are influencing retail spend, tenants' profitability, the demand for space, the cost of funding and the pricing ofinvestment property.

SA Corporate's total distribution for 2008 was 29,75 cents per unit. This was 2,7% lower than the circular forecast made in March2007. However the Fund's total return (distribution yield plus price movement) was -27,7%, due to a reduction in the unit price from400 cents at the beginning of the year to 260 cents at year end.

There has been ongoing review of the Fund's strategy and performance by management and the deliberations of the Board in thisarea have been extensive and robust. As announced in October 2008, the executive and management team are pursuing a clear setof objectives aimed at improving the overall quality of the Fund's property portfolio and earnings, thereby enhancing investmentperformance for the benefit of unitholders.

BUSINESS ENVIRONMENT

During the second half of last year the significance of the global financial and banking crisis became clearer, although South Africaappeared to be somewhat shielded from the global storm. However, in recent months there have been strong messages of concernfrom both National Treasury and the Reserve Bank about the knock-on impact of global conditions on domestic growth and this hasbeen evidenced in the recent National Budget and the indication of aggressive interest rate cuts to come.

The stages of the different property sectors anticipated for 2009 are illustrated below. The factors affecting the different sectors aremore fully dealt with in the Management Company's Review.

Chairman’s Report

The historically low vacancy levels across all sectors have undoubtedly helped to keep rental levels firm and the local property markethas, to date, held up comparatively well.

The fact that the foreign ownership of JSE listed property is very low has also shielded domestic funds from widespread global andemerging market fund withdrawals. Local listed property investors saw a return of -4,5% for 2008, while global investors saw a returnof close to -50% for the year.

Trough

PeakHigh property

income.

Low cap rates.

Frenzy of

activity.

Short - lived

for 12 months.

Low property income.

High capitalisation rates.

Falling prices can last 12 - 18 months

after a boom.

Pick-up to boom - longer period.

Price increases occur across

different areas.

Flat period - period of stagnation.

Small price movements upwards.

Economic conditions determine how

long the flat period will last.

Industrial

Offices

Retail

Source: Old Mutual Property Investments

6

Chairman’s Report (continued)

An analysis of listed property performance with other broad asset classes is set out below:

Although bonds outperformed listed property in 2008, investors in listed property fared significantly better than those in equities.The investment performance of listed property in recent years has been impressive with consistent outperformance of other assetclasses.

BBBEE AND TRANSFORMATION

SA Corporate has made positive progress in terms of various BBBEE transformation initiatives during the year under review, in particularin the category of preferential procurement. This is discussed in further detail in the Corporate Responsibility and Sustainability Reporton pages 39 and 40.

SA Corporate concluded a BEE transaction in 2007, in terms of which the Wipken Trust acquired a stake in the Fund. Unfortunately,due to the lower unit price and a consequent breach of funding covenants, the ownership of the Wipken Trust transferred from theBBBEE parties to the funders of the Trust in April 2008. Under current legislation the Fund was not able to provide financial assistanceto support the transaction. I am pleased that Mr Musa Ngcobo and Ms Louisa Mojela have remained on the Board as independentdirectors.

GOVERNANCE AND RISK MANAGEMENT

The Board and management team is committed to ensuring that sound corporate governance and ethical behaviour is adhered toand further detail is set out in the Corporate Governance Report on pages 28 to 34. There has been a particular emphasis on improvingdisclosure in the results announcements and in this annual report.

60

50

40

30

20

10

0

-10

-20

-30

2003 2004 2005 2006 2007 2008

J253T SA Property Index ALBI All Bond IndexJ203T All Share Index

Tota

l ret

urns

(%

)

2002

Source: INET

A n n u a l R e p o r t 2 0 0 87

OUTLOOK

Property investment and rental markets are likely to be challenging during the course of 2009. The effects of a further slowdown ineconomic growth are expected to impact smaller retailers and tenant failure and vacancies in this category pose the greatest risksto distributable earnings growth. Further aggressive cutting of local interest rates will be important in terms of both stemming businessfailures and improving consumer confidence - two key factors for commercial property.

I remain confident that the strategy which has been approved by the Board to improve the quality of the Fund's property portfolioand earnings is being actively pursued by the executive and management teams. There are early signs of progress and it is encouragingthat the Fund's unit price has shown consistent relative outperformance during the last quarter of 2008 and into 2009. Based uponcurrent indications, modest growth in distributions is expected in 2009.

The Fund has a net tangible asset value of 369 cents per unit which is well above current trading prices. Even with the risk of slowdistribution growth, the Fund's current historic yield of over 12% is attractive when compared to that of the sector average and cashyields.

During uncertain economic times, quality and transparent cash earnings and balance sheet strength should continue to benefit investors.

APPRECIATION FOR BOARD, MANAGEMENT AND STAFF

There have been no changes to the Board during the year under review and I record my appreciation to our board members for theirguidance and counsel.

I also wish to recognise the effort and commitment of the executives, management and staff during what has been a challengingyear for the Fund. Their determination to improve Fund performance for the benefit of investors is unquestioned.

BM KodisangChairman6 March 2009

Umlazi Mega City, Umlazi, KwaZulu Natal

8

Management Company’s Review

INTRODUCTION

The investment and property market changed markedly over the past twelve months and this was felt in the performance of the Fund'sproperty portfolio. Operating conditions were considerably tougher and more challenging than in 2007, when considerable progresshad been achieved in growing and repositioning the Fund. The impact of the changed conditions was two-fold. The higher cost offunding, coupled with direct property investment yields remaining firm, curtailed fund expansion opportunities. In addition propertyrental growth was muted, particularly in the retail sector where consumer spending constraints became more evident and the demandfor space declined as the year progressed.

The curtailing of fund expansion activities did, however, provide the ideal opportunity to review and realign the current portfolio afterthe steep pace of acquisitions of the previous year.

STRATEGIC REVIEW

SA Corporate currently has a high exposure to community and neighbourhood shopping centres and it is the intention to reduce thisexposure and to increase the Fund's investment in larger, dominant retail centres of high quality over the medium term. The industrialportfolio is extremely well let and of the highest quality. These properties continue to attract strong tenancies, resulting in healthyrental and capital growth. The office portfolio constitutes a small proportion of the Fund's portfolio and is a sector that has beenearmarked for increased investment as and when attractive opportunities arise.

During 2007, SA Corporate acquired SA Retail Properties Limited, which incorporated the opportunistic acquisition of the Sharemaxportfolio, as part of a strategy to expand and position the Fund as a diversified portfolio. In addition, the Fund acquired the R964million Buffcol portfolio, consisting of primarily single tenanted industrial properties, and concluded a number of further individualacquisitions and developments. These acquisitions resulted in the portfolio investment value increasing from R3,1bn to R8,5bn, with59% of the portfolio being invested in the retail sector, of which two thirds were in centres of less than 25 000m2. It also resulted ina substantial portfolio in terms of the number of properties managed and in portfolio weightings that were not fully aligned with theFund's long term investment objectives and, in some cases, property size and quality requirements.

During 2008, managements' in-depth analysis and performance grading of each building within the portfolio resulted in specificstrategies being agreed and implemented in respect of those properties which present the greatest challenges to sustained rentalgrowth. These actions ranged from specific leasing strategies, to redevelopments and property disposals where management was ofthe view that future income growth was limited or that the Fund is over exposed to certain categories of properties.

To reduce the number of properties in the portfolio and optimise management expertise and focus, a decision was made to sell thelower value properties in the portfolio through a managed disposal programme to ensure that the best exit value is achieved. 41properties have been identified, constituting less than 3% of portfolio value but more than 20% in number. Other properties, whichhave been identified as non-core due to their specialised nature and hence potential tenancy risk, will also be realised from the portfolioin due course. The Fund has an overweight position to smaller retail properties and management has identified properties in thiscategory which are being marketed for sale.

As at year end, there were a total of eight unconditional sales concluded, with a total property value of R177,1 million. A further eightsales to the value of R270,0 million have been transacted, but these remain subject to suspensive conditions in favour of the buyers.

A n n u a l R e p o r t 2 0 0 89

STRATEGIC REVIEW (continued)

The Fund's strategy aims to:

• Provide unitholders with an easily tradeable moderate risk investment in the real estate asset class in South AfricaThe risk in the portfolio is reduced through the following measures:• The portfolio exposure is spread across different regions, property sectors, classes and types of property;• The fund will only consider taking development risk if a minimum pre-let position of 70% can be attained;• Exposure to any single tenant is limited to 5%;• At least 66% of the portfolio is to be leased to listed companies and national tenants;• Investment in real estate in South Africa will be directly in property, except for short term tactical considerations; and• Debt funding shall not be more than 50% of the total investment portfolio value and at least 70% of debt is to be at fixed

interest rates with a spread of maturities up to 10 years.

• Manage a balanced, well diversified portfolio of retail, industrial and office property in major metropolitan areasThe portfolio will maintain weightings across the retail, industrial and office sectors. Not less than 75% of the portfolio will beinvested in South Africa with a maximum exposure of 10% elsewhere in Africa. The portfolio will comprise no more than 150properties of sufficient size and quality to ensure long term sustained rental growth.

• Deliver superior investment returns by constantly improving the quality of the Fund's property portfolio and earningsThis strategy entails the disposal of non-core properties referred to earlier, realising smaller value properties, reducing exposureto smaller retail property types and improving the quality of portfolio and sustainable long term earnings growth.

• Fulfill the Fund's social and environmental responsibilitiesSA Corporate is committed to managing its portfolio in a way that takes cognisance of social and environmental considerations.Readers are referred to the Corporate Responsibility and Sustainability Report on page 38 to 41 for a more detailed discussion ofthe Fund's efforts in this regard.

FINANCIAL REVIEW

Distributable earnings for the twelve months amounted to R627m (2007: R619m, which included R44m once off income). This equatesto a distribution of 29,75 cents per unit for the year under review. The distribution for the previous year was 32,0 cents and includeda once off amount of 2,4 cents relating to the SA Retail Properties Limited acquisition.

SA Corporate Team

10

Management Company’s Review (continued)

Group 2008 2007 %R000 R000 change

Property portfolio Standing portfolio - properties held for 12 comparative months 329 967 295 413 12Rent (excluding straight line adjustment) 379 497 334 591 13Net property expenses (49 530) (39 178) 26 Property expenses (134 099) (113 630) 18 Recovery of property expenses 84 569 74 452 14

Additions - properties acquired or developed in the currentor comparative year 397 776 205 149Rent (excluding straight line adjustment) 413 396 217 986Net property expenses (15 620) (12 837) Property expenses (148 648) (70 383) Recovery of property expenses 133 028 57 546

Disposals - properties disposed of in the current orcomparative year 6 501 24 675Rent (excluding straight line adjustment) 5 271 27 369Net property expenses 1 230 (2 694) Property expenses (1 751) (6 935) Recovery of property expenses 2 981 4 241

Net operating income from property portfolio 734 244 525 237 40

Fund costs and administrative expenses (44 516) (38 880) 14Accounting and secretarial fees (9 227) (7 934) 16Audit fees (1 116) (1 109) 1Administrative fees (4 675) (2 958) 58Service fees (29 498) (26 879) 10

Profit from operations 689 728 486 357 42

Interest income received from associate company (Oryx) 12 511 6 310

Net funding cost (75 385) (64 895) 16Interest paid (115 206) (77 620) 48Interest income 39 821 12 725 213

Distribution contributions 162 191 606Pre-acquisition dividend received (SA Retail pre-acquisition earnings) - 124 476Prepaid distribution received in advance on unit issues 162 67 130

Distributable earnings 627 016 619 378

units units Units in issue at the end of the year (000) 2 104 469 2 089 336

cents cents Distribution (cents per unit) 29,75 32,00 (7) - Interim 14,50 14,60 (1) - Interim SA Retail once off contribution - 2,40 - Final 15,25 15,00 2

FINANCIAL REVIEW (continued)

A n n u a l R e p o r t 2 0 0 811

Due to the SA Retail, Sharemax and Buffcol properties being included in the Fund for the full 2008 year, revenue and expenses areboth significantly higher than in 2007. The previous table splits out the properties held for the full 12 months in each year so thata comparison of growth can be done.

The cost to income ratios are as follows:

Retail Industrial Office & other Group % % % %

2007 (Revised) Net property costs to rental 7,6 6,2 16,9 7,8 Gross property costs to rental 29,3 18,3 27,8 25,4

2008 Net property costs to rental 5,8 5,3 11,6 6,2 Gross property costs to rental 31,3 18,0 21,3 26,5


Note: Letting commissions and tenant installation costs have been excluded in the calculation of the above ratios.

Although gross property costs to rental have increased due to higher expenses in 2008, the recovery of expenses has improvedand net property costs to rental have decreased in all sectors.

As a PUT, the Fund distributes all net income from its investment properties, after deducting funding costs, and fund and administrativeexpenses as set out on the previous table. The largest administrative cost is the service fee which is 0,4% of enterprise value(calculated as market capitalisation plus debt) and is paid to the Manco. The increase in this cost is due to the larger fund size forthe 2008 year.

Detail on the management of funding costs, including detail of loans, fixes and debt maturity dates is set out in the Risk Reporton pages 35 to 37.

Distributable earnings are reconciled to the net (loss) / profit as detailed below:

2008 2007 R000 R000

Distributable earnings 627 016 619 378Share of Oryx post acquisition reserves 4 196 -Effective interest rate adjustment (1 283) -Capital profit/(loss) on disposals 3 589 (5 388)Goodwill/investment impairment (1 009 094) -Revaluations (223 882) 743 924Taxation 76 849 (77 665)Distribution contributions (162) (191 606)

Net (loss)/ profit (522 771) 1 088 643

The goodwill which arose on the acquisition of the SA Retail Properties Limited in 2007, was tested for impairment and written offin the year under review. The impairment was due to the change in the yield on the Fund's units from 8% at 31 December 2007to 11,4% at 31 December 2008.

12


The property portfolio was written down by R224 million due to the change in capitalisation rates and higher risk premiums in discountrates. The write down and the reclassification of properties held for disposal resulted in a reversal of deferred tax previously provided.The goodwill and revaluations resulted in the Fund showing a net loss for the year of R523 million. This did not, however, affectdistributable earnings, or distributions to unitholders, which were 29,75 cents per unit. This distribution was lower than the prior year's32 cents per unit, however the 2007 distributions included some once off income and the current year distributions were higher thanthe annuity income in the prior year.

PORTFOLIO REVIEW

• Portfolio compositionThe increase in the size of the portfolio and the relative weightings of each sector are set out below. The graph illustratesthe move from an industrial weighted fund to a retail biased fund.

• The regional and sectoral composition of the property portfolio is depicted in the following diagrams:

Industrial35%

Offices& other

9%

Retail56%

Sectoral spread by market value

Retail43%

Industrial51%

Sectoral spread by lettable area

Offices& other

6%


2004 2007

Offices & other

Mar

ket

Val

ue (

R00

0)

Portfolio composition

2008

Years

RetailIndustrial

20062005

10 000

9 000

8 000

7 000

6 000

5 000

4 000

3 000

2 000

1 000

-

A n n u a l R e p o r t 2 0 0 813

• Portfolio performanceRetailThe retail portfolio under-performed in terms of property income as the deteriorating economic environment continued toweigh heavily on the retail market, influencing demand for space and being directly felt in the slow leasing take-up of vacantspace and lower turnover rentals. While the bulk of expiring leases were renewed at higher base rentals, in most cases thesewere merely catching up to turnover-linked rates and there was an increase in the number of leases where the rental wasunchanged or else had declined. There was an oversupply of space in the market, with new centres coming on stream, andthis clearly had an impact on vacancies and rental levels in competing existing centres.

In the SA Corporate portfolio, retail rentals achieved on renewals in the 2008 financial year were on average 7% higherthan closing. This has been offset, however, by an increase in the retail vacancies, which are detailed more fully later inthis report.

Turnover rental from the retail portfolio fell by 9% to R13,2 million. This is generally indicative of the declining retail outlook,but it is informative to note that while sales in the high end fashion and luxury stores experienced the greatest drop-off,essentials such as food and value fashion continued to trade well. Turnover growth amongst the grocery anchors acrossthe Fund's retail properties matched that of prior years.

IndustrialThe industrial rental market performed particularly well in the first half of the year, although the rate of rental growth slowedin the second half. Average rentals of new leases concluded in the year were 21,5% higher than the expiring rentals andthis growth will continue to generate strong property earnings from the industrial portfolio. Industrial vacancies have largelybeen maintained at historic lows, particularly in the prime nodes, although there is increasing evidence that the slowingeconomy is curtailing demand in secondary locations.

Regional spread by revenue

Gauteng37%

Other5% Western Cape

9%

KwaZulu Natal49%

Sectoral spread by revenue

Offices& other

9%

Industrial31%

Retail60%

Western Cape9%

Western Cape9%

Gauteng41%

Other6%

KwaZulu Natal44%

Regional spread by market value

Gauteng44%

Other5%

KwaZulu Natal42%

Regional spread by lettable area

• Portfolio composition (continued)

14


Date Property name Proceeds/ December 2008 Exit yield contracted sale valuations (%) price (Rm) (Rm)

Disposals 59,8 n/a24 June 2008 2 Nereide Street - Paarden Eiland 18,0 n/a 16,127 November 2008 238 Church Street - Pietermartizburg 10,8 n/a 8,028 November 2008 Cnr Anvil & Industry Roads - Isando 31,0 n/a 8,0Contractedunconditional sales 177,1 171,38 December 2008 Queensburgh Mall 89,0 87,4 8,615 December 2008 15 Tedstone Road, Wadeville 22,0 21,8 8,018 December 2008 Widah Bird Investments 1,5 1,5 15,018 December 2008 Forktailed Drongo Investments 3,5 3,5 17,06 January 2009 16 Nourse Avenue # 7,8 7,6 10,222 January 2009 24 Chancery Lane # 25,9 25,9 8,522 January 2009 Cnr Chancery Lane & Crompton Street # 4,4 4,1 8,530 January 2009 20 Commercial Street # 23,0 19,5 Vacant

possesion

Portfolio performance (continued)The Fund's industrial portfolio is very well let, with strong tenant demand for space. The focus on prime locations and flexibledesign criteria in the investment process has positioned the portfolio well for sustained growth into the future.

Offices & otherOffice rentals remained robust during the year, with significant rentals achieved in the prime space sector. There is, however,cause for caution in certain nodes, where speculative office development has given rise to an oversupply of space, a largeproportion of which remains unlet. The prime decentralised nodes and office parks have generally maintained current marketrental levels, with a levelling off in the B-grade office category. In the Fund's office portfolio, average rentals in recent leasesconcluded in 2008 were on average 10,7% up on closing.

• Review of portfolio activity over the past yearAs mentioned earlier, the Fund has embarked on a disposal strategy to improve the quality of the portfolio and earnings.As part of this strategy the smaller properties within the portfolio will be realised with the objective of maintaining a portfolioof not more than 150 properties in order to improve management focus. Another objective is to reduce the weighting ofsmaller retail centres and a number of these properties together with other non-core assets have been identified for sale.Several sale agreements have already been concluded, some of which are now unconditional with others pending thefulfillment of suspensive conditions. The sales process mentioned earlier in this report will see a marked increase in disposalactivity in the coming financial year, as the portfolio is realigned with the Fund strategy.

# Deals contracted subsequent to 31 December 2008 year end

There are a further eight properties to the value of R270million which are contracted but subject to suspensive conditions.In terms of SA Corporate's ongoing disposal strategy, a further R1,47bn of property has been identified for sale and themarketing thereof is underway.

The proceeds from this disposal activity will in the first instance be utilised to fund existing capital commitments and plannedretail refurbishments and extensions. Surplus proceeds from property disposals will be directed towards the buy back ofthe Fund's units, subject to the investment parameters at the time. The alternatives of repaying debt and holding cash forproperty investment will continue to be monitored.

A n n u a l R e p o r t 2 0 0 815

Acquisition/ Property Cost of Yield Sector Region completion date acquisition/ forecast development 1st 12 (Rm) months (%) February 2008 13 Wellington Road ^ 38,2 8,1 Offices GautengApril 2008 1 Holwood Park 120,1 10,9 Offices KZNMay 2008 Nzhelele Valley Shopping Centre* 41,7 9,4@ Retail OtherJuly 2008 Philani Valley Shopping Centre* 127,3 7,0 $ Retail KZNSeptember 2008 37 Yaldwyn Road - Jet Park 57,0 9,25@ Industrial GautengOctober 2008 3 Wankel Street 8,8 10,0 Industrial GautengDecember 2008 9 Milner Road - Paarden Eiland 82,3 8,7 # Industrial Western Cape

(Tableview Industrial Park)December 2008 Beryl Street - Jet Park 184,0 9,5@ Industrial GautengMarch 2009 Unipark Offices 56,6 11,2 Offices Other

Total 716,0

^Final Buffcol portfolio transfer* Denotes investments into under-resourced areas@ Guaranteed yield# Assuming fully let at a reduced gross rental of R42/m2

$ Assuming 5% vacancy and market rentals

• ValuationsThe Fund's portfolio was independently valued at 31 December 2008 by CBRE. The valuations are carried out on a discountedcash flow basis. The value of the portfolio at year end was R8,8bn which reflected a 1% decrease over the comparablestanding portfolio value at 31 December 2007.

The standing retail portfolio declined in value by 3%, adversely impacted by weaker discount and capitalisation rates togetherwith lower contractual and market rental growth. The office and industrial portfolios increased in value by 5% and 2%respectively, boosted by higher rental growth but similarly affected by higher risk premiums in the applicable discount rates.

• Review of portfolio activity over the past year (continued)The table below sets out the acquisition and development activity during the year under review. These investments, althoughdilutionary at current funding rates, are quality properties and will enhance the overall portfolio.

The last development committed to in 2007 was Renbro Shopping Centre, in Hammanskraal near Pretoria, which is expectedto transfer to the Fund in March 2009. This R108,6m turnkey development has a 9% guaranteed yield.

With the exception of Philani and Paarden Eiland, which are dealt with below, the above investments are performing in linewith original viabilities.

Philani Valley Shopping Centre, which opened in July 2008 in Umlazi, Durban, is currently experiencing difficult tradingconditions. Management is proactively seeking suitable tenancy for the vacant 1 941m2 (15% of the lettable area). TheFund's other investments in previously under-resourced areas have performed at or ahead of expectations and managementremains confident of the medium to long term success of this centre.

In December 2008 SA Corporate completed the construction of a 15 900m2 high tech industrial development in PaardenEiland, Cape Town. There is currently favourable tenant interest being shown in a number of the individual units andmanagement is positive about the leasing of this investment in the short to medium term.

16

• Tenant profile and top 20 tenantsThe Fund's tenant base is also categorised into A,B and C grade. Grade A is defined as local, provincial and nationalgovernment, parastatals, listed tenants and national retailers, grade B as professional firms and other medium sizedcompanies and grade C as any other type of tenant.

The breakdown of tenants according to these categories is depicted below:


Building profile by rentable area (m2) Building profile by revenue

C Grade10%

A Grade33%

B Grade57% C Grade

8%

A Grade40%

B Grade52%

Tenant profile by gross monthly rental

C Grade19%

A Grade66%

B Grade15%

Property type Initial (forward) yield % IRR %

Retail 9,0 14,7Industrial 9,3 15,6Offices & other 9,7 15,0

Total 9,2 15,0

• Valuations (continued)The portfolio has a weighted average forward yield of 9,2% and reflects a weighted IRR of 15,0% (2007: 8,6% and 14,2%respectively). The sector analysis is set out in the table below:

The portfolio valuation gives rise to a net tangible asset value (which excludes goodwill and part of the deferred taxationliability) of 369 cents per unit, inclusive of the distribution to be paid (2007: 377 cents per unit).

• Quality of portfolio and property gradingsThe portfolio is analysed and graded (A, B or C) by management on an ongoing basis, through the application of a rangeof criteria which measures not only the quality of the rental income, but also the physical attributes of the individual buildings.These attributes range from location, design flexibility, quality of improvements and future maintenance demands to longterm desirability and relevance. This grading process in turn informs the investment and disposal strategy of the Fund.

The following charts depict the breakdown of the portfolio according to management's grading matrix:

A n n u a l R e p o r t 2 0 0 817

• Tenant profile and top 20 tenants (continued)The twenty largest tenants, which are listed below, account for 44% of the area occupied and 34% of rentals:

Tenant Sector % area occupied

The Fuel Group Industrial 7,9Grindrod group Industrial 5,3Pick 'n Pay Retail 4,6Spar Group Retail 3,5Shoprite group Retail 3,1Massmart Retail 1,9Mr Price Group Retail 1,9Nampak Tissue Industrial 1,8Universal Print Group Industrial 1,6Woolworths Retail 1,6Midas Group Industrial 1,3Global Roofing Solutions Industrial 1,3Edcon group Retail 1,1Busaf Industrial 1,1JD Group Retail 1,1Pepkor group Retail 1,0Chep SA Industrial / Offices 0,9Bell Equipment Industrial 0,9Bosch Industrial / Offices 0,8Hyundai Automotive Industrial 0,8

• Leasing analysis including lease expiries, lease expiry profile and tenant retentionsThe lease expiry profile of the portfolio depicts a steady and predictable turnover of leases in coming years, reflecting thediversified nature of the properties. The proportion of expired leases carried forward has reduced significantly over 2008,with meaningful progress made in finalising outstanding lease documentation by the property managers. In the currentchallenging economic environment, management perceive there to be some risk in the retail leases which are expiring in2009, particularly in respect of those with independent line shop tenants. This said, there is still rental uplift expected fromthe renewal of leases with the national retailers and particularly from the renewal of the leases in the industrial portfolio.

The lease expiry of the respective components of the property portfolio by area is as follows:

Property type Total area Vacant or 2009 2010 2011 2012 Thereafter(m2) expired (%) (%) (%) (%) (%) (%)

Retail 606 538 12 19 12 15 12 30Industrial 729 661 5 14 29 15 20 17Offices & other 86 803 2 11 30 21 13 23Total 1 423 002 7 16 22 15 16 24

The terms of approximately two thirds of these leases which have expired have been agreed and are subject to the furnishingof final documentation.

The 2009 retail lease expiries of 19% represent 114 000m2 of retail space. Approximately 25% of this space is in respectof units greater than 500m2 where there is a high probability of renewal and a reasonable prospect of upliftment on closingrentals. The balance, being smaller shops, carries greater risk both in terms of renewal and achievement of asking rentals.

18

As depicted above, vacancies in the Fund have increased in the last year and this has been experienced predominantly inthe retail portfolio, where the vacancy by area has increased from 4,0% at the end of 2007 to 6,1% at the 2008 year end.A large proportion of this increase has come about through the decision to refurbish a number of shopping centres orreconfigure existing space in order to attract strategic tenants. The centres currently undergoing such alterations areNorthpark Mall in Pretoria, Comaro Crossing in Johannesburg and St Georges Square in George. On completion of this work,management is confident that these vacancies will be significantly reduced.

The vacancies in the industrial portfolio have increased marginally, with these properties having been fully let at the endof 2007, and office vacancies have decreased marginally. Office vacancies are predominantly in the offices adjoined toshopping centres.


Property type Expiries Retention (%) No. of No. (%) m2 m2 retained expiries retained retainedRetail 90 129 68 569 76 478 351 73Industrial 115 750 110 421 95 46 43 94Offices & other 10 839 10 195 94 23 18 78

Total 216 718 189 185 87 547 412 75

• Vacancies and vacancy trends

Vacancies by sector 2008

12.0%

10.0%

8.0%

4.0%

6.0%

2.0%

0.0%

Dec - 0

7

Mar - 0

8

Jun - 0

8Se

p - 08

Dec -

08

2.7%2.2% 2.4% 3.5%

3.5%

Offices & otherRetailIndustrial Overall (% of total portfolio)

• Leasing analysis including lease expiries, lease expiry profile and tenant retentions (continued)The industrial expiries represent 98 000m2 and 213 000m2 of space in 2009 and 2010 respectively. Renewal terms in respectof a property comprising 35 000m2 have already been concluded with a resultant 25% increase on closing rentals.

Based on current market rental levels there is good probability of positive reversion on renewals given a current R31/m2

average gross rental in industrial leases expiring during 2009 and 2010.

The tenant retention ratios across the different sectors in 2008 are set out below. While there has been a slight decreasein retentions, particularly in the retail portfolio, these levels remain high and underscore the quality of the Fund's propertiesand the demand for the space.

A n n u a l R e p o r t 2 0 0 819

Property type % of area % of total rental

Retail 6,1 4,9Industrial 0,5 0,2Offices & other 9,8 0,6

Total 3,5 5,6

Property Lettable area (m2) % Sector RegionNorthpark Mall 7 212 23 Retail / Offices GautengMusgrave Centre 3 225 8 Retail / Offices KZNComaro Crossing 3 043 18 Retail GautengSt Georges Square 2 698 24 Retail Western CapeForest Road Design & Décor Centre 2 130 19 Retail Gauteng

18 308

Largest 5 vacancies:

• Investment in associate (Oryx Properties Limited)Oryx has performed in line with expectations and has shown a 7% increase in distributions in its latest results. Oryx's flagshipproperty is Maerua Mall, the only regional mall in Namibia. Maerua Mall has shown excellent trading statistics, with December2008 showing a 40% increase in turnover on 2007.

• Arrears, bad debt, provisions and provisioning methodologyDespite the deteriorating market conditions, arrears at R50,3 million were marginally down on the previous year (2007:R53,1 million). This was as a result of a strong focus on arrears management. During the year under review, bad debts ofR1,2 million were written off (2007: R4,4 million) while the impairment of debtors increased from R7,6 million to R16,1million. This equates to 36% of arrears, whereas in 2007 the impairment equated to 16% of arrear rentals. Arrears areimpaired on a line by line specific basis with no general impairments being made. The increase in the impairment is indicativeof the economic environment and the greater risk surrounding tenant default in this market. The fund is comfortable thatthe level is prudent and is taking cognisance of prevailing conditions.

PROSPECTS

Looking ahead to 2009 and beyond, the global environment is a significant risk to the local economy, although government infrastructurespend and expected lower inflation and interest rates should provide some support. The fundamentals of the property market will beimpacted by general economic conditions although the historically low vacancy levels across all sectors remains a positive factor.

Constraining the increase in vacancies is paramount and, given the value of lost rental that can be ascribed to the existing vacantspace, there is an opportunity to bolster property earnings with a concerted leasing effort. Management is of the view that the Fund'scurrent rentals continue to offer upside relative to market rentals and filling vacant space is an area of key focus.

The property portfolio is well positioned to deliver rental growth in line with current escalations and market expectations. The retailenvironment, however, remains a concern and this element of the portfolio will undoubtedly be impacted by any significant improvementor deterioration in trading conditions. Property earnings will be influenced by the performance of this key aspect of the economy.Based upon current indications, modest growth in distributions is expected.

Further growth will be influenced by the successful execution of the disposals strategy mentioned earlier and the appropriateredeployment of the capital realised.

• Vacancies and vacancy trends (continued)The overall vacancy factor is 3,5% of lettable space or 5,6% of total income (2007: 2,7% and 3,9% respectively) and isset out in detail below:

20

Directorate

Chairman, Non-Executive Director (not independent due to beingManaging Director of Old Mutual Property Investments)Chairman of the BEE & Transformation CommitteeMember of the Nomination & Remuneration Committee

Ben was appointed Managing Director of Old Mutual InvestmentGroup Property Investments in 2005. He is President of the SouthAfrican Property Owners Association (SAPOA). Ben serves onother boards linked to his role as Managing Director of Old MutualInvestment Group Property Investments.

Chief Executive Officer, Executive DirectorChairman of the Investment CommitteeMember of the BEE & Transformation CommitteeInvited to attend the Nomination & Remuneration CommitteemeetingsInvited to attend the Risk, Audit & Compliance Committee meetings

Craig has 19 years property experience with particular emphasison the listed real estate sector. He is currently Head, Listed RealEstate - Old Mutual Property Investments, a director of OryxProperties Limited and is a past Chairman of the Association ofProperty Unit Trust Management Companies.

Benjamin Monaheng Kodisang(38 years)CA(SA)South African

Craig John Ewin(48 years)CA(SA)South African

Non-Executive Director (independent)Chairman of the Risk, Audit & Compliance Committee

Mike has over 35 years business experience in the shippingindustry. He is a director of, inter alia: Grindrod Limited, GrindrodBank Limited and Value Group Limited and is the past ChiefExecutive Officer of Grindrod Limited.

Non-Executive Director (independent)Member of the Investment Committee

Ken has over 24 years experience in the township developmentbusiness, mostly in the industrial, commercial and retail sectors.He is currently The Resorts Development director of Tongaat HulettDevelopments (Pty) Limited.

Kenneth John Forbes(59 years)CA(SA)South African

Ian Michael Groves(64 years)CA(SA)South African

A n n u a l R e p o r t 2 0 0 821

Non-Executive Director (independent)

Ipeleng is the Chief Operations Officer of Motseng InvestmentHoldings.

A pioneering entrepreneur, she established the first black womanowned CCTV business and subsequently co-founded MotsengInvestment Holdings, a diversified group in 1998.

She sits on all boards of Motseng group subsidiaries and variousother boards, amongst them: KAP International, Ambit Properties,Old Mutual Property Investments, South African Women'sEntrepeneurs Network, is a Council member of the DurbanUniversity of Technology and is the National Chairperson ofWomen's Property Network.

Ipeleng Nonkululeko Mkhari(34 years)B. Soc. ScienceSouth African

Non-Executive Director (independent)Member of the BEE & Transformation Committee

Louisa is a founder member and Group CEO of Women InvestmentPortfolio Holdings Limited (WIPHOLD), which was the first womenowned company to be listed on the JSE. She was honoured inMay 2000 in Venice, Italy as one of 40 women from differentcontinents and countries as "The Leading Women Entrepreneurof the World" for 2000. She is a director of several boards including:ABB South Africa (Pty) Limited, Distell Group Limited, SouthAfrican Airways and Sun International Limited.

Louisa Madiako Mojela(52 years)B.Comm (NUL)South African

Non-Executive Director (independent)Member of the BEE & Transformation CommitteeMember of the Investment CommitteeMember of the Nomination & Remuneration Committee

Musa is Chairman of the South African Property Owners Association(SAPOA) Transformation Committee, and serves on the PropertySector Charter Council. His foundation in property was gained atDTZ Leadenhall both at operational and strategic levels. He is theformer CEO and co-founder of Kensani Properties - a subsidiaryof Kensani Capital a leading diversified BBBEE investment holdingcompany. Musa is also a Non-Executive Director of SAPOA.

Executive Director: ManagingMember of the Investment Committee

Roger is a qualified attorney and has 14 years of diverse propertyexperience and is a director of the underlying SA Corporate fixedproperty companies. He is a past Chairman of the Association ofProperty Unit Trust Management Companies.

Musa Moses Ngcobo(34 years)South African

Roger Rundle Perkin(44 years)B.A. LLBSouth African

22

Directorate (continued)

Non-Executive Director (independent)Member of the Nomination & Remuneration CommitteeMember of the Risk, Audit & Compliance Committee

Ebrahim has extensive local government experience of which thelast 12 years have been in property with particular emphasis onthe listed real estate sector. He is currently the Finance Manager(Investments) of eThekwini Municipality.

Ebrahim Suleman Seedat(57 years)F.I.M.F.O. CA(SA)South African

Executive Director: InvestmentsMember of the Investment Committee

Former Managing Director of SA Retail Properties Limited untilthe merger with SA Corporate, Peter has 14 years diverse propertyexperience and is a member of SA Council of Town and RegionalPlanners and the Royal Institute of Chartered Surveyors. He is afounding member and past executive committee member of theAssociation of Property Loan Stock Companies and past executivecommittee member of SAPOA-KZN.

Andrew Peter Walsh Sparks(40 years)B.Sc (Hon), MTRP RICSSouth African

Executive Director: FinanceMember of the BEE & Transformation CommitteeInvited to attend the Investment Committee meetingsInvited to attend the Risk, Audit & Compliance Committee meetings

Lauren has over 14 years property experience with particularemphasis on the listed real estate sector. She is also a directorof Oryx Properties Limited. Lauren was instrumental in the mergerof the five funds into Martprop Property Fund, now SA Corporate.

Non-Executive Director (independent)Chairman of the Nomination & Remuneration CommitteeMember of the Risk, Audit & Compliance Committee

John is a director of Mr Price Group Limited and Chairman of TheSharks (Pty) Limited. Other previous listed company directorshipsheld include BOE Limited, Commercial Finance Company Limitedand Congella Federation Limited. He is a past partner of Ernst &Young.

William John Swain(68 years)CA(SA)South African

Lauren Carole Tapping(38 years)CA(SA)South African

A n n u a l R e p o r t 2 0 0 823

Non-Executive Director (not independent, due to being employedby the PIC, the Fund's largest unitholder)

Wayne is Head of the Property Investment Division of the PublicInvestment Corporation (PIC) which manages a growth portfolioof properties owned by the Government Employees Pension Fund(GEPF). He is a member of the PIC's Executive Committee andserves in a non-executive capacity on a number of corporateboards, including ACSA, Community Property Company, AdventAsset Management and Pareto Limited.

Alternate to B.M. KodisangMember of the Investment Committee

Amelia is Chief Operating Officer of Old Mutual Property Investments.She has ten years experience in the property business and is onthe National Executive of Women's Property Network and regionalcouncil for SAPOA. She also serves on the boards of PrimediaLifestyle and Primedia Interactive and is a director of PioneerProperty Zone, a joint venture company of Old Mutual PropertyInvestments in India.

Wayne Clifford van der Vent(44 years)B.A. (Law)South African

Amelia Beattie(38 years)B.CommSouth African

Alternate to M.M. Ngcobo

Nic is a director and shareholder of Kensani Properties (since2005) and has been instrumental in refining and executing thecompany's strategy. He has had 26 years experience in the SouthAfrican property industry gaining considerable knowledge andexperience at board level in property finance, investment,development and asset management.

Nic Corbishley(54 years)B.A. (Geography & Economics);Master of City and RegionalPlanningSouth African

Alternate directors

24

Alternate to L.M. Mojela

Gugu is the Investment Executive of WIPHOLD. She is a non-executive board member of Distell Group Limited, ABB SouthAfrica (Pty) Limited, MCG Industries (Pty) Limited and Landis+Gyr(Pty) Limited. She is also an audit committee member of DistellGroup, ABB South Africa and Landis+Gyr.

Gugu Patricia Dingaan (neeMthethwa)(33 years)CA (SA)South African

Alternate to W.C. van der Vent

Panos is an Investment Manager in the PIC's Property InvestmentDivision, having joined the company in 2004 as a developmentmanager. He holds a B.Sc in Quantity Surveying and a Mastersin Real Estate Investment from the University of the Witwatersrand.He trained as a Quantity Surveyor, gaining experience in a broadrange of development, finance and investment aspects bothnationally and internationally. He serves on the board of CBSProperty Group and JIA Piazza Park. He also serves on theCommercial Board Committee of ACSA.

Panos Zagaretos(32 years)B.Sc (QS), M.Sc (QS): RealEstate InvestmentSouth African


The Quarry Shopping Centre, Hilton, KwaZulu Natal

A n n u a l R e p o r t 2 0 0 825

Accountability

Fund governance

CORPORATE STRUCTURE

• SA Corporate Real Estate Fund is a collective investment scheme in property registered in terms of the Collective Investment Schemes Control Act, No. 45 of 2002 (“the Act”).

• The Fund is listed on the JSE Limited under Real Estate Investment Trusts (REITs).(Share code: SAC, ISIN code: ZAE 000083614)

• As legally required for a PUT, SA Corporate is managed by SA Corporate Real Estate Fund Managers Limited, a company approvedby the Registrar of Collective Investment Schemes to manage the Fund.

• In terms of the Act the Fund is obliged to distribute to its unitholders all net revenue profit earned and received. As a result of itsdistribution obligations, no income tax is generally payable by the Fund. Distributions are made in March and September for the six months ending 31 December and 30 June respectively.

Accountability

STRUCTURE

FUNDREGULATORY BODIES MANAGEMENT

JSE Limited

Ensures compliance with JSE regulations;provides market for trading of units

Registrar of CollectiveInvestment Schemes

(Financial Services Board)

Ensures compliance with Collective InvestmentSchemes Control Act, No. 45 of 2002; Monitors

operation of the property scheme

Trustee:Absa Bank Limited

Protects unitholders' interests; actsas custodian of Fund's assets and

securities; ensures compliance with Trust Deed

Auditors:Deloitte & Touche

Report on fair presentationof financial position and results

Unitholders

Effective ownership in property portfolio;2 104 468 612 units listed on the JSE

SA Corporate Real Estate Fund

Listed on the JSE Limited;Distributions declared in August & February;

Distributions paid in September & March

Fixed property companies/propertiesInvestment in associate (Oryx)

190 properties: 106 industrial, 53 retail, 31 offices & other(50 properties held via 16 trading companies);

25,47% interest in Oryx Properties Limited

Ultimate Shareholders of ManagementCompany:

Old Mutual Property Investments – 95%;

Durban Pension Fund – 5%

SA Corporate Real Estate FundManagers Limited

“Manco”Manages the Fund and its assets;

Reports to unitholders

Old Mutual Property Investments

Asset managerProperty management

Group secretary

Assetmanagement fee of 0.4%

ofenterprise

value

(market capplus debt)

Manco outsources to:

26

Accountability (continued)

COVENANTS OF THE FUND

As a PUT, SA Corporate is governed by the provisions of the Act, as well as the terms of the Trust Deed entered into between theFund's Manco and ABSA Bank Limited. The Registrar of Collective Investments may, by notice, approve amendments to the governinglegislation and regulations.

In South Africa, the Fund is permitted to invest in direct property assets, fixed property companies (assuming 100% of the sharesin the company are owned by the Fund) and other listed property funds (PUT's and property loan stock companies). The total investmentexposure to the last mentioned assets may not exceed 25% of the market value of all the assets comprised in a portfolio with amaximum investment of 10% of any other fund. Offshore investments may be in immovable property, property shares or in participatoryinterests in a foreign collective investment scheme in property, provided that the foreign country has a foreign currency sovereignrating by a rating agency.

In terms of the Trust Deed, the Fund is limited to a maximum borrowing level of 30% of the total investment portfolio value. TheRegistrar of Collective Investments has, however, granted approval for the gearing limit to be increased to 60%, subject to unitholderapproval.

21 Fricker Road, Illovo, Gauteng

1 Holwood Park, La Lucia Ridge, KwaZulu Natal

A n n u a l R e p o r t 2 0 0 827

MANAGEMENT COMPANY

The Act requires that the Fund be managed by an approved and licensed Manco. In SA Corporate's case the Manco is SA CorporateReal Estate Fund Managers Limited which is owned 95% by Old Mutual Property Investments and 5% by the Durban Pension Fund.

PUTs are required to be listed on a licensed exchange which, in the case of SA Corporate, is the JSE. The JSE considers the board ofa PUT Manco to be the board of the Fund, which is the listed entity. The Manco Board and committee structure is set out in moredetail on pages 20 to 24 and 28 to 31.

The Manco is remunerated at 0,4% per annum of enterprise value (defined as market capitalisation plus debt, calculated daily), whichis low compared to the industry norm of 0,5%. In addition, a number of expenses which would be incurred by the Fund are incurredby the Manco, bringing this fee down to an effective 0,36% per annum.

For the past year the fee was R29,5 million (2007: R26,9 million). The increase was due to the larger fund size.

ASSET MANAGEMENT

The Manco has concluded an asset management agreement with Old Mutual Property Investments, which is part of the Old MutualInvestment Group SA. This agreement covers the provision of full asset management functions to the Fund and the property portfolio,including the formulation and implementation of fund and investment strategy.

The agreement provides for an annual fee payable by the Manco to the asset manager calculated as 0,3% per annum of enterprisevalue. This fee is drawn entirely from the service fee payable to the Manco by the Fund. The management team are remunerated byOld Mutual Property Investments. The incentivisation of the executive management is strongly linked to the performance of the Fundthereby creating alignment with unitholders. For the past year the fee was R19,6 million (2007: R19,9 million).

The asset management agreement endures for a period of ten years, determined from 1 January 2007 and is subject to terminationin the event of material breach.

PROPERTY MANAGEMENT

The Fund has concluded a property management agreement with Old Mutual Property Investments. The management agreementregulates the provision of property and building management services to the property portfolio, including leasing and lease management,rental collections, tenant liaison, maintenance and the payment of expenses.

The performance of the property management is measured quarterly, on a balanced scorecard approach, with the following specificareas of assessment: vacancies, lease documentation, rental collections, net income variances and procurement. In the event ofunder-performance, the Fund (through the Manco) has the sanction of reviewing the terms of the management agreement and,ultimately, the right to terminate.

The fees payable by the properties are applied on a sliding scale, dependent on the nature of the property and the number of tenantsin occupation. These fees range from 1,0% of gross income for single tenanted buildings to 4,5% of gross income for regional shoppingcentres. All property management staff costs, including centre management, are now borne by Old Mutual Property Investments outof these fees.

The property management agreement commenced on 1 July 2008 and endures for five years.

28


Corporate governance

GOVERNANCE PHILOSOPHY

The board of directors (“the Board”) of SA Corporate Real Estate Fund Managers Limited is committed to King II (Code of CorporatePractice and Conduct) as well as compliance with the JSE Listings Requirements and the requirements of the Financial Services Boardas the regulator of Collective Investment Schemes.

BOARD RESPONSIBILITIES

The directors subscribe to a code of ethics which states that the Board is committed to high ethical standards and undertakes thatit, as well as its agents, will conduct business honestly, scrupulously and with integrity, applying moral standards which are supportedby values of Integrity, Respect, Accountability and Pushing beyond Boundaries in all business operations.

The Board's Charter, which is reviewed on an annual basis, regulates how the business is to be conducted by the Board in accordancewith the principles of good corporate governance, allowing for the specific responsibilities to be discharged by board members collectively,whilst at all times acting in the best interest of unitholders.

The Charter confirms that the Board is ultimately responsible for ensuring that the business is a going concern, and to this end iteffectively controls the Group and its management and is involved in all decisions that are material for this purpose.

The Charter seeks to put measures in place that will:-• Ensure compliance with all relevant laws, regulations and codes of business practice• Ensure compliance with the rules of the JSE• Ensure compliance with the requirements of the Financial Services Board (Registrar of Collective Investment Schemes)• Promote transparent and material communication with stakeholders• Promote responsible environmental commitment and practices• Eliminate any conflicts of interest, and ensure that they are appropriately disclosed and managed should they arise• Ensure director dealings in units are only permitted (a) with prior approval (b) in open periods and (c) with required disclosures

being timeously made on SENS

In addition the Charter defines the functions and responsibilities of the Board as follows:-• Retains full and effective control and annually approves the Fund's strategy, operating and capital budgets and its performance

criteria• Considers and approves, subject to regulatory requirements, all material investments, acquisition and disposals of business

activities or properties in terms of the approvals framework• Defines and monitors levels of materiality reserving specific power to itself and delegating other matters with the appropriate

written authority to Board committee and/or recognised management• Protects the Group's assets and reputation, by satisfying itself that appropriate policies, procedures and practices are in place

and are duly observed• Identifies and monitors the non-financial issues relevant to the business of the Group• Ensures that the Group maintains and develops good corporate governance standards, with due consideration to striking an

appropriate balance between performance and conformance• Satisfies itself with regard to its performance and effectiveness as a whole, and that of the individual directors• Monitors management in implementing the Group's Strategy, and in operating against approved budgets and performance criteria• Reviews its operation in terms of its Charter at least once a year• Prescribes measures to ensure that the Group complies with all relevant laws, regulations and codes of business practice• Is responsible for the preparation and integrity of the Group's annual financial statements, and shall ensure that the disclosures

contained in the Annual Report are both adequate and meet regulatory requirements

A n n u a l R e p o r t 2 0 0 829

BOARD RESPONSIBILITIES (continued)

• Is responsible for approving the Results and Distribution Announcements and determining distributions payable to unitholders and approving the declaration thereof in terms of the Trust Deed

• With the guidance of the Nomination and Remuneration Committee, satisfies itself that the remuneration levels of the executivedirectors are appropriately determined

• Ensures there is effective communication with unitholders and its internal and external stakeholders in terms of Regulatory guidelines

A copy of the Board Charter is available from the Company Secretary and on the website at www.sacorp.co.za.

BOARD STRUCTURE AND COMPOSITION

Board of directorsThe Board consists of 13 directors of which seven are independent non-executive, two are non-executive (including the Chairman)and four are executive. Details of the Board composition are set out on pages 20 to 24 of this report.

The roles of the Chairman and the Chief Executive Officer are separate and operate independently of each other, and the Chairmanis a non-executive director. Directors shall retire by no later than the age of 65 years. In certain circumstances non-executive directorsover the age of 65 may be requested by shareholders to remain on the Board on an annual basis. No appointment shall be madefor any director over the age of 70 years.

The composition of the Board and the various Board appointed committees is reviewed on an annual basis. Consideration is givento, amongst other criteria, qualifications and experience. Any new appointees to the Board undergo an induction programme managedby the Company Secretary and Nedbank Capital, the Fund's appointed Sponsors. In addition, Old Mutual Property Investments, asowners of the Manco, provide ongoing training for directors when required.

The Board meets four pre-scheduled times a year and may call additional meetings on an ad-hoc basis for specific approvals thatmay require Board consideration. The Board committees also meet on a pre-scheduled basis with additional meetings being called ifrequired. The committees' pre-scheduled meetings are Risk, Audit & Compliance (three), Nomination & Remuneration (two), BEE &Transformation (two) and Investment Committee (two).

Board changesDuring the year under review no changes were made to the Board.

John Swain and Wayne van der Vent are directors that have been appointed by unitholders and will retire at the forthcoming annualgeneral meeting of SA Corporate. Both, being eligible, offer themselves for re-election.

Management and administrationAs detailed on page one, under the profile of the Fund, SA Corporate Real Estate Fund Managers Limited is the Manco approved bythe Registrar of Collective Investment Schemes. Key performance areas are agreed by the Board and are reported by managementto the Board on a quarterly basis.

Directors and secretaryDetails of the directors and secretary can be found on pages 20 to 24 and 33 respectively.

CONFLICTS OF INTEREST

As legally required, members of the Board must make full and timely disclosures of their other business interests, and particularlythose that conflict or might conflict with those of the Group. The members annually confirm these disclosures to the Company Secretaryand the Board and in addition individual declarations are made on a meeting by meeting basis in respect of any “affected” decisionstaken. Members recuse themselves from “affected” decisions where necessary.

30


GOVERNANCE STRUCTURE

Committees established by the Board and which assist the Board in discharging its duties and responsibilities are set out below.

The Board is responsible for determining, and amending as may be necessary, the scope and responsibility and appointment of themembers of such committees. In addition the Board annually reviews their compliance with their responsibilities. The members ofeach committee are set out under the Directorate section on pages 20 to 24.

a) BEE & Transformation CommitteeComposition• Currently five members of which two are executives, two are independent non-executive and one is non-independent non-

executive• To meet twice a year with a quorum of three directors

Scope and Responsibilities• To encourage meaningful BEE transformation in the Group in line with the national transformation agenda envisaged for BBBEE

as set out in the Department of Trade and Industry Black Economic Empowerment Codes (“DTI BEE Codes”) and proposed in the Property Sector Charter (“PSC”), which is visible and based on moral motivation and sound economic rationale

• To periodically monitor the Group's PSC and DTI BEE Codes scorecards and maintain relationships with the respective authorities• To communicate and obtain media leverage from the transformation activities• To assist with the Group's transformation reporting in its Annual Report

b) Investment CommitteeComposition• Currently six members of which three are executives, two are independent non-executive and one is non-independent

non-executive• To meet at least twice per annum with a quorum of 50% plus one member including at least two non-executive directors

Scope and Responsibilities• Recommending appropriate investment strategy and guidelines to the Board to ensure the appropriate investment of unitholder

funds• Approving the list of properties identified for disposal and recommending it to the Board for approval• Recommending and/or effecting disposals within the approved investment policy and authority limits• Recommending and/or effecting acquisitions and developments within the approved investment policy and authority limits• To deal with all items under this committee's responsibility in terms of the approval framework

c) Nomination & Remuneration CommitteeComposition• Currently four members of which three are independent non-executive and one is non-independent non-executive• Majority of the members are independent non-executive directors• Chaired by an independent non-executive director• To meet at least twice per annum with a quorum of two members

Scope and Responsibilities• Assisting the directors in ensuring that the structure, size and composition of the Board and committees are regularly reviewed

and maintained at levels which are deemed appropriate• Assessing the mix of skills, experience and diversity of the Board and recommending nominations to the Board• Considering succession planning• Recommending to unitholders the remuneration for non-executives• Reviewing the remuneration of executives and giving guidance to the Board

A n n u a l R e p o r t 2 0 0 831

GOVERNANCE STRUCTURE (continued)

d) Risk, Audit & Compliance Committee (RA&CC)Composition• Currently three members all of which are independent non-executive directors• Chaired by an independent non-executive director, not the Chairman of the Board. The Chairman and the Chief Executive

Officer can be invited to attend meetings• Comprises entirely non-executive members with sufficient financial literacy and a majority of independent directors• To meet at least three times per annum with a quorum of two independent non-executive directors

Scope and Responsibilities• Review of internal controls and systems• Monitoring compliance of the Group with Trust Deed, JSE Listings Requirements, Collective Investment Schemes Control Act,

Companies Act, King II Code on Corporate Governance and other applicable legislation, SA GAAP and IFRS• Review the audit management letter• Review and recommend other documentation for Board approval• Review and recommend approval of annual report to the Board• Review and recommend approval of JSE announcements to the Board (including results and valuations)• Agree and recommend accounting policies to the Board• Review directors and officers liability insurance policy• Review auditors' audit approach and scope document• Reporting to the Board on proceedings of the committee• Monitor the corporate risk assessment process• Update and monitor compliance of the risk framework• Review property and associated insurance policy - extent of cover and risks• Review risks related to investment strategy• As regards the external audit, the RA&CC should:

o approve their appointment and fee;o review letters of representation;o be satisfied with their independence especially where non-audit services are performed;o agree the principles with the external auditors without limiting their statutory obligations;o decide on the extent of external verification of non-financial information without limiting their statutory obligations;o decide on the external review of interim results (reasons for not recommending such review should be given to

the Board)• Consider problems identified in the going concern assumption• Consider the appropriateness and disclosure of related party transactions

Willow Way Shopping Centre, Pretoria, Gauteng

32


Fees Committees

Director 2008 2007 Board RA & CC BEE & Nomination & InvestmentR000 R000 transformation remuneration

Non-executive:B M Kodisang (Chairman) *# 133 137 Chair 5/6 Chair 2/2 2/2I N Mkhari 84 83 3/6I M Groves 116 115 6/6 Chair 3/3K J Forbes * 97 90 6/6 2/3E S Seedat 122 116 6/6 3/3 2/2M M Ngcobo 122 61 6/6 2/2 1/2 3/3L M Mojela 97 54 3/6 1/2W J Swain 125 70 4/6 3/3 Chair 2/2W C van der Vent * 84 47 4/6

Executive:C J Ewin *# 112 105 6/6 By 3/3 2/2 By 2/2 Chair 3/3

invite inviteR R Perkin *# 96 92 6/6 3/3A P W Sparks *# 96 54 6/6 3/3L C Tapping *# 96 87 6/6 By 3/3 2/2 By 3/3

Invite InviteAlternate directors:A Beattie *# 13 - 3 3/3N A Corbishley - - 2G P Dingaan - - 3P Zagaretos - - 4Total 1 393 1 111

* Fees accrue to the corporate entity where the director is employed# These directors are employed and paid by Old Mutual Property Investments

Notes:No directors recused themselves from a full meeting. Directors interests are recorded on a meeting by meeting basis and directorsrecuse themselves, where necessary, from “affected” decisions.

The Board or respective committee accepted a justified apology from directors that were unable to attend a meeting. In all caseswhere a director had an alternate their alternate was present in their absence.

Fees paid to the Board are based on the following structure which has been agreed by the Board on the recommendation of theNomination & Remuneration Committee and have been agreed to by the unitholders:-


Directors' fees and attendance at meetings (Board and committees):-

Committees

Board RA & CC BEE & Nomination & Investmenttransformation remuneration

2008Chairman 105 000 31 500 15 750 15 750 15 750Member 84 000 25 200 12 600 12 600 12 600

2007Chairman 100 000 30 000 15 000 15 000 15 000Member 80 000 24 000 12 000 12 000 12 000

A n n u a l R e p o r t 2 0 0 833


Executive remunerationExecutive directors are not paid by the Fund, they are remunerated by Old Mutual Property Investments out of the asset managementfee paid by the Manco. No costs of employment are borne by the Fund. The executives have standard contracts of employment withOld Mutual Property Investments.

ACCESS TO EXTERNAL ADVISORS

Members of the Board have access to the advice of the Company Secretary, and may in circumstances, where it is appropriate to doso, take independent professional advice at the Manco's expense.

COMPANY SECRETARIAT

All company secretarial functions are performed by Marriott Property Services (Pty) Limited (a wholly owned subsidiary of Old MutualProperty Investments). The Company Secretary advises the Board of their obligations and also ensures that all administrativerequirements relating to the Board and committees are met as well as providing guidance to the Board in terms of ethics and goodgovernance.

DEALING IN SECURITIES

A formal written communication policy document sets out the requirements for directors dealings in securities. A director may notdeal in any units in SA Corporate without first advising the Chairman (or one or more other appropriate directors designated for thispurpose) in advance and after receiving clearance. A director must prohibit his associates and investment managers from dealing inunits during a closed period (as defined by the JSE Listings Requirements). Directors annually accept that they have read and understoodthe contents of this policy.

Beryl Street, Jet Park, Gauteng

34


DEALING IN SECURITIES (continued)

Directors' and executives' interest in units as at 31 December 2008The directors' and executives' interests in units as at 31 December 2008 and 31 December 2007 are detailed in the following table.All dealings for the year ended 31 December 2008 were reported timeously on SENS via SA Corporate's Sponsors.

2008 2007

Director Beneficial Beneficial Direct Indirect Direct IndirectB M Kodisang - 891 601* - 272 297C J Ewin 310 000 500 931* 260 000 -R R Perkin 430 405 240 006* 350 405 -L C Tapping 140 605 173 946* 140 605 -A P W Sparks 425 405 272 545* 425 405 -M M Ngcobo - - - 14 728 864#L M Mojela - - - 8 837 318#G P Dingaan - - - 981 924#N A Corbishley - - - 9 819 242#W H Raffinetti 80 000 30 353 50 000 30 353(Investor Relations)P Nel (Company Secretary) 4 113 - 4 113 -Total 1 390 528 2 109 382 1 230 528 34 669 998

* These indirect beneficial holdings relate to the SA Corporate units held by the Old Mutual Medium Term Incentive Scheme Trust("the Scheme") of which these directors are beneficiaries. In terms of the Scheme, the directors will receive any income accruingto their indirect beneficial holding of these units with immediate effect but will only be entitled to take ownership of the units after three years, conditional upon them still being in the employ of Old Mutual Property Investments

# With the transfer of the ownership of the Wipken Trust, SA Corporate's former BBBEE partners, to the funders of the Wipken Trust, these directors are no longer the beneficiaries of these units

INTERNAL AUDIT

As part of the Old Mutual Group, the Manco is subject to Old Mutual's and Old Mutual Property Investment's internal audit reviewsand risk management processes.

COMMUNICATION WITH STAKEHOLDERS AND UNITHOLDERS

The Group is committed to effective communication with stakeholders and unitholders. To this end various policies governingcommunication with interested parties are in place, having regard to the dissemination of quality, complete, accurate and reliableinformation. In the interest of enhancing communication and maintaining relationships with unitholders the Manco continues to holda voluntary Annual General Meeting of the Fund. In addition to the Annual General Meeting, the Annual Report and interim resultsannouncements, management hold regular presentations for investors, analysts, the press and other stakeholders. Newsletterscontaining information on current events and market conditions are released on SENS and distributed to the e-mail database wheneverit is appropriate. The Fund's website is kept up to date and contains relevant and easily downloadable information for users. The Fundhas a dedicated investor relations manager who can be contacted on the following e-mail address:[email protected]

A n n u a l R e p o r t 2 0 0 835

Risk report

The identification, assessment and management of risk is a key responsibility of the Board. In this process directors need to find abalance between minimising risk to acceptable levels and the costs and practicalities involved in achieving this.

Accordingly, the Board has developed and maintains a thorough understanding of the various risks facing the Group and ensures thatappropriate internal controls are in place to create a strong control environment to address key risk areas. The Board also continuouslysatisfies itself of the adequacy, accuracy and effectiveness of information distribution and reporting in the area of management andcontrols.

SA Corporate views risk management as the systematic process of understanding, measuring, controlling and communicating theorganisation's risk exposure to achieve its objectives. The activities involved in risk management consist of planning, organising, co-ordinating and managing a business environment that minimises the adverse impact of risk on the fund's activities, earnings and cashflows.

SA Corporate is primarily exposed to strategic and business risk, financial risk, regulatory and compliance risk and human resourcesrisk.

Strategic and business riskThis is the risk of not achieving critical objectives such as meeting stakeholder expectations and the impact of the environment onSA Corporate. SA Corporate regards the major strategic and business risks as the following:

• Inappropriate and inaccurate investment decisionsThe Group undertakes regular strategic analysis and planning, maintains a thorough market knowledge and carefully monitorspast performance and results. It also ensures that it employs competent service providers to assist in the management of theFund and its assets and adheres to its approval framework which limits the delegation of responsibilities to acceptable levels.Post acquisition reviews are performed and reported to Board and the Investment Committee.

• Portfolio riskThe portfolio composition and tenancy risk is managed through regular strategic analysis and planning, continuously keepingup to date with market movements and preferences and analysis of the tenant mix to best suit the property. Portfolio risk is alsoreduced by maintaining a portfolio that is adequately diversified across different regions of the country, sectors of the economyand in terms of the number of, and maximum exposure to tenants. Please refer to the property portfolio section on pages 74 to87 for more detailed information.

The current property market has increased the vacancy and rental level risk, particularly in the smaller retail properties. Tomitigate this in the short term, management are increasing the focus on retail leasing, carefully monitoring rental levels in orderto minimise vacancies and supporting tenants through specific initiatives. The Group is also in the process of disposing of a numberof properties to improve the portfolio composition and decrease the number of properties in the portfolio, which will furthermitigate this risk in the future.

• Capital risk managementThe risk is that the Group will not have access to capital and debt to grow assets at the opportune time. To mitigate this riskthe Group has a business planning process that runs on an annual cycle with regular updates and projections. It is through thisprocess, which includes risk and sensitivity analyses of forecasts and cash flows, that the Group's capital is managed.

The relative cost and availability of debt and equity funding are considered as a key part of all acquisition considerations. Thisrisk is closely linked to liquidity risk which is more fully dealt with later in this report.

The Fund's gearing capacity is limited to 30% of the total investment portfolio value. Recent approval by the Registrar of CollectiveInvestments provides for the gearing limit to be increased to 60%. To implement this change the Fund would need trustee andunitholder approval. The current gearing ratio is 17% with a target range of between 20% and 50%.

36

• Capital risk management (continued)In addition management ensures proper communication with investors and capital markets at all times. It also identifies andmaintains relationships with current and potential investors and funders and focuses on the timing and approach in capital raisingexercises to ensure that investors support the transaction.

Financial riskThis is the risk that changes in the financial environment will impact on the financial condition of the Group and comprises four maincategories:• Interest rate risk

The Group has a policy of limiting the negative impact of interest rate movements on cash flows and profits. It achieves thisthrough careful cash monitoring, maintaining an appropriate mix of fixed and floating rate funding and interest rate swaps whenappropriate in a changing funding environment. Any debt in excess of 5% of the property portfolio is fixed to reduce interestrate risk to acceptable levels. This excludes the funding of developments in progress.

The Group has no exposure to interest rate risk on debt as at the date of this report as all funding liabilities have been fixedcontractually. Readers are also referred to page 67 in the notes to the annual financial statements for further details.

Interest rate risk also impacts interest received on cash held by the Group. Debt facilities were drawn down during the currentyear in advance of requirements in order to secure funding in view of the liquidity risk. Cash on hand at the year end is fullycommitted. The proceeds from disposals will generate further cash and management is monitoring all available investment optionsfor these proceeds.

• Liquidity riskThe Group has the responsibility to ensure that funds are available to settle obligations when they become due and to do thisat a reasonable cost. This is accomplished through cash flow monitoring and regularly assessing working capital requirements.It also constantly reviews funding alternatives, gearing levels and funding costs and maintains relationships with existing andpotential funders.

SA Corporate has low gearing by industry standards. Its debt as a percentage of the total investment portfolio value was aconservative 17% at 31 December 2008. The Group has the intention to increase the gearing to at least 20% over the mediumterm. The Group has access to financing facilities, the total unused amount of which was R200 million at the balance sheet date.Please refer to page 60 in the notes to the annual financial statements for further details.

There are no liabilities maturing which would require refinancing in the short term, with the first maturities only in 2012.

800

700

600

500

400

300

200

100

0

Rm

Funding maturity profile

2009 2010 2011 2012 2013 2014 2015


Years

A n n u a l R e p o r t 2 0 0 837

The fund has also negotiated a R200 million overdraft facility post year end to give it greater flexibility.

• Market riskMarket risk is the impact of changes in the economic and business environment. This risk directly impacts the value of theportfolio and financial instruments and indirectly impacts the Fund by the impact on tenants and funders. Market risk needs tobe managed to limit the impact on asset values, financial assets and liabilities and funding arrangements. The impact on tenantsis managed as part of the credit risk management process while the impact on funders is managed as part of the liquidity andinterest rate risk management processes.

Properties are valued twice per annum by external valuers and directors approve these valuations. Investors and financiers arekept informed of these valuations and the reasons for changes in the valuations. Debt gearing levels are maintained below theregulated limit to provide flexibility.

• Credit riskCredit risk is managed to limit the financial loss as a result of the default of a counterparty. The group is primarily exposed tocredit risk with respect to trade debtors and cash resources.

A large and diverse tenant base is maintained with thresholds and geographic and sectoral spreads within ranges agreed as partof investment strategy. Tenant creditworthiness is thoroughly assessed before leases are signed and, where possible, exposureto tenants is limited to acceptable levels of default risk and recovery of receivables. This is achieved through assessing tenants'business plans, performing credit checks and calling for deposits and sureties where required. An analysis of the grading of tenantsis included in the Management Company's Review on page 16.

Arrears are managed on an ongoing basis with appropriate action taken. Tenants over 60 days are handed over to attorneys,where appropriate and where suitable, tenants are rehabilitated through the implementation of payment plans. In addition, atenant support programme is being introduced to assist smaller tenants survive tougher economic times. The tenant approvalprocess referred to earlier under the credit risk section above, is an important risk mitigator in terms of managing bad debts.

Please refer to note 26 on page 69 in the annual financial statements for further information.

Cash is invested with reputable institutions in terms of pre-determined exposure limits. Exposure limits are assessed bi-annuallyand reviewed by the Risk, Audit & Compliance Committee.

Regulatory and compliance riskThis is the risk that the entity does not comply with all legal requirements.

The risk is managed through standard systems, controls and procedures with clearly defined responsibilities, checklists that arecontinuously verified and the appointment of skilled and experienced managers and asset managers. Compliance is monitored bythe Risk, Audit & Compliance Committee. The Board and its subcommittees also complete an annual checklist to monitor compliancewith the relevant charter, scope and responsibilities.

Human resources riskThis is the risk that key staff are not recruited/retained or that they are unable to meet expectations. This is an indirect risk for SACorporate as the Fund employs no staff and has contracted out all operational responsibilities. The risk is managed by ensuring thatsalaries are market related and that service providers maintain an adequate group of skilled staff to fulfill their responsibilities.

Type Maturity date Step escalation Fixed expiry/ Quantum Current Rate % pa step date (Rm) (%)Fixed - straight 31/10/2015 n/a 13/09/2013 100 10,57Fixed - straight 31/12/2012 n/a 31/12/2012 500 10,82Fixed - stepped 18/09/2014 6 30/04/2013 300 10,57Fixed - stepped 18/09/2014 6 05/06/2013 400 10,98Fixed - stepped 13/08/2013 6 13/08/2013 270 10,88Total 1 570 10,81

Debt exposure

38

Corporate Responsibility and Sustainability Report

OVERVIEW

SA Corporate as a PUT, listed on the JSE, is limited by law to expenditure that is related to its investments and costs incurred as aconsequence of being listed. However, through its duly appointed manager, the Manco, it is able to align itself to the corporateresponsibility initiatives of Old Mutual Property Investments and the wider Old Mutual Group.

The Group in conjunction with Old Mutual Property Investments, views corporate responsibility as the pursuit of commercial successin ways that honour ethical values and respect people, communities and the natural environment.

There is a commitment to investing in socially responsible activities, employment equity and diversity, skills development and affirmativeprocurement, as well as sustainable social investment projects and the active involvement of employees in social and communityaffairs.

STAKEHOLDERS

Key stakeholders, and the management thereof are set out below.

TenantsA strategic business objective is ensuring that SA Corporate has excellent relationships with its tenants as a key stakeholder grouping.

The top tenants across industrial, commercial and retail disciplines are engaged at senior levels on a regular basis. This includes butis not limited to annual executive engagements, where they align growth strategies and business objectives and maximise all availableopportunities for both parties.

Investors and FundersThe Fund has a dedicated investor relations manager and investors also have easy direct access to executive directors. Managementmake regular presentations to investors and funders and newsletters containing information on current events and market conditionsare released on SENS and distributed electronically to the database whenever it is appropriate. The Fund's website is kept up to dateand contains relevant and easily downloadable information.

Bluff Shopping Centre, Bluff, KwaZulu Natal

A n n u a l R e p o r t 2 0 0 839

STAKEHOLDERS (continued)

Regulators and Industry bodiesSA Corporate operates in an environment that is highly regulated both by the JSE and the Financial Services Board. The Fund maintainshealthy relationships with its regulators, and has a longstanding reputation for upholding and promoting good corporate governanceand regulatory compliance. In addition, SA Corporate is a member of the Association of Property Unit Trusts.

EmployeesOld Mutual Property Investments employs all staff that are operationally responsible for the Fund and focuses on a strategic themeof “Right people, right place, right focus” by putting programmes in place that ensure the development of top management andleadership capability, cultivate a top performance and innovation culture, align incentives and ensure effective talent and retention.

SuppliersAs described previously, SA Corporate outsources its property and asset management to Old Mutual Property Investments, who areresponsible for the procurement of all major suppliers. Old Mutual Property Investments in conjunction with the Old Mutual Grouphas procurement policies in place that include, where practical, criteria addressing ethical, social and environmental impacts of thebusiness. Specific attention is paid to contracting with BBBEE partners.

EMPOWERMENT

The Board and management have long been committed to BBBEE with members of the Board sitting as representatives and foundermembers of the Property Sector Charter Council, which has been instrumental in developing and now aligning the PSC with the DTICodes of Good Practice.

SA Corporate's structure as a PUT makes it difficult for the Fund to obtain a DTI Code rating as its investment activities and spendare restricted by law, its shares are publicly traded on the JSE and it has no employees. Good progress has, however, been made inmeeting the requirements of the PSC and a rating will be sought after the PSC is gazetted as a Code.

Old Mutual is committed to broad-based empowerment and to being rated an “A” performer as measured by the Financial SectorCharter. Old Mutual Property Investments, the owner of the Fund's Manco, is itself rated as a level 4 contributor under the DTI Codesand has adopted programmes to improve this rating to a level 3 in its next assessment.

Acknowledging its responsibility, albeit with enforced legislative and regulatory limitations, the Fund has directly committed to thefollowing as part of its BBBEE programme:

OwnershipDuring 2007, a 11% equity stake in the Fund was purchased by the Wipken Trust, a partnership between Wiphold and KensaniProperties. Unfortunately, due to the Fund's lower unit price and a resultant breach of funding covenants, the ownership of the WipkenTrust transferred from the Fund's BBBEE parties to the funders of the Trust. Efforts to secure significant BBBEE ownership in the Fundare challenging under the current funding environment and legislation which prohibits the Fund from providing financial assistance.

Management controlThe Board composition as detailed on pages 20 to 24 reflects the diverse demographics of our country and is aligned with the DTICode requirements.

40

EMPOWERMENT (continued)

Socio economic developmentThe Fund is committed to investing in previously under-resourced areas and has made a number of investments in areas such asUmlazi, Elim, and Mikhado. These initiatives have been done in partnership with the Spar Group and investments totalling R118,9million were made in 2008 and R137,5 million in 2007. A further centre in Hammanskraal will be acquired on completion which isexpected in the early part of 2009.

Enterprise developmentWhen disposals of the Fund's assets are being contemplated every effort is made to identify and promote potential previouslydisadvantaged purchasers. The recent sale of a 25% undivided share of Umlazi Mega City to the communities of Umlazi and Lamontvilleis a good example of this commitment. This deal will be finalised during the 2009 financial year.

Other projectsStaff are encouraged to pursue involvement in socially responsible activities and as such have volunteered and been involved withthe following during the year:-

• Building of houses through the Habitat for Humanity project• Running of the internationally recognised Toastmasters Youth Leadership programme which teaches students communication,

listening, evaluation and general leadership skills at Mowat Park High School (in Durban)• Involvement in Women's Property Network which has launched a bursary scheme to educate young black women in property

related studies and is launching a mentorship programme to nurture new talent in the industry• Involvement in Vukukhanye, a registered non-profit organisation, focused on community upliftment projects working with

the community of Chesterville (Durban) and partnering with government to implement bursary schemes, school partnership programmes, HIV/AIDS programmes, a Forensic Pathology Services Unit and a Sport for All programme amongst other initiatives

• Involvement in TAFTA (The Association for the Aged, a registered non-profit organisation, dedicated to the alleviation of distressand the promotion of the welfare and happiness of aged persons, across all demographics, living in the Durban area)

Corporate Responsibility and Sustainability Report(continued)

SA Corporate team building houses in the Habitat for Humanity project

A n n u a l R e p o r t 2 0 0 841

ETHICAL

The Fund is committed to maintaining the highest standards of corporate governance and compliance in order to protect its clientsand stakeholders, foster good relationships with regulators, and enhance the reputation of the business.

It recognises its accountability to all its stakeholders under the legislative and regulatory requirements applicable to its business.

The Fund and Old Mutual Property Investments are committed to comply with both the spirit and the letter of applicable legislativeand regulatory requirements and to always act with due skill, care and diligence.

In order to promote a culture of internal compliance Old Mutual Property Investments have in place a series of internal compliancepolicies. In addition staff and clients have access to their Anonymous Reporting website.

ENVIRONMENTAL

Old Mutual Property Investments is a founder member of The Green Building Council of South Africa. The Council is leading thetransformation of the South African property industry to ensure that all buildings are designed, built and operated in an environmentallysustainable way that will allow South Africans to work and live in healthy, efficient and productive environments.

Linked to the Green Building initiative, Old Mutual Property Investments is also focussed on managing energy use, water consumptionand waste production.

Bluff Shopping Centre, Bluff, KwaZulu Natal

42

SA CORPORATE REAL ESTATE FUNDContents To The Annual Financial Statements

Page

Directors' responsibility 43

Report of the trustee 44

Declaration by secretary 44

Independent auditors' report 45

Balance sheets 46

Income statements 47

Statements of changes in unitholders' funds 48

Cash flow statements 49

Notes to the annual financial statements

1. General information 50

2. Adoption of new and revised international financial reporting standards 50

3. Comparative figures 50

4. Accounting policies 50

5. Critical accounting estimates and judgements 55

6. New accounting standards and IFRIC interpretations 56

7. Rent 56

8. Investment in fixed property companies 56

9. Investment property 57

10. Investment in associate 58

11. Goodwill 59

12. Properties classified as held for disposal 59

13. Unitholders' funds 59

14. Interest bearing borrowings 60

15. Interest rate swap derivative 61

16. Deferred taxation 61

17. Capitalisation of interest 61

18. Taxation 61

19. Net (loss)/profit per unit 62

20. Weighted (loss)/profit per unit 62

21. Headline earnings per unit 62

22. Weighted headline earnings per unit 62

23. Distribution per unit 63

24. Operating lease income 63

25. Segment results 64

26. Financial instruments and financial risk management 67

27. Related party transactions 72

28. Capital expenditure commitments 73

29. Subsequent events 73

A n n u a l R e p o r t 2 0 0 843

IM GrovesChairman – Risk, audit & compliance committee6 March 2009

The directors of SA Corporate Real Estate Fund Managers Limited are responsible for the preparation and integrity of the annualfinancial statements and the related information included in the annual report. In order for the Board to discharge its responsibilities,management has developed and continues to maintain a system of internal control. The Board has ultimate responsibility for thesystem of internal controls and reviews its operation, primarily through the risk, audit & compliance committee.

The internal controls include a risk-based system of internal accounting and administrative controls designed to provide reasonablebut not absolute assurance that the assets are safeguarded and that transactions are executed and recorded in accordance withgenerally accepted business practices and the Group's policies and procedures. These controls are implemented by trained, skilledpersonnel with appropriate segregation of duties, are monitored by management and the risk, audit & compliance committee andinclude a comprehensive budgeting and reporting system operating within an appropriate control framework.

The external auditors are responsible for reporting on the annual financial statements, and their unmodified opinion is included onpage 45. The annual financial statements are prepared in accordance with International Financial Reporting Standards and in themanner required by the Companies Act, No. 61 of 1973 and the Collective Investment Schemes Control Act, No. 45 of 2002, andincorporate disclosures in line with the accounting philosophy of the Group. They are based on appropriate accounting policiesconsistently applied, except where otherwise stated, and are supported by reasonable judgements and estimates.

The directors believe that the Fund will be a going concern in the year ahead. Accordingly, in preparing the annual financial statements,the going concern basis has been adopted.

The annual financial statements for the year ended 31 December 2008 as set out on pages 46 to 73 were approved by the board ofdirectors on 6 March 2009 and are signed on its behalf by:

BM KodisangChairman6 March 2009

Directors’ ResponsibilityFor And Approval Of The Annual Financial Statements

Umlazi Mega City, Umlazi, KwaZulu Natal

44

In terms of Section 70(1)(f) of the Collective Investment Schemes Control Act of 2002

To The Unitholders Of SA Corporate Real Estate Fund

During the year as set out above during which the Collective Investment Schemes Control Act of 2002 has been in effect the trusthas been administered in accordance with:

i) The limitation imposed on the investment and borrowing powers of the Manager by the Act, andii) The provisions of the Act and the deed.

Absa Bank LimitedTrusteeJohannesburg6 March 2009

Declaration By Secretary

Marriott Property Services (Pty) Limited, in its capacity as Company Secretary of SA Corporate Real Estate Fund Managers Limited,hereby certifies that the Company has lodged with the Registrar of Companies all such returns as are required of a public company,in terms of section 268G(d) of the Companies Act, No. 61 of 1973, as amended, and that all such returns are true, correct and upto date.

Marriott Property Services (Pty) Limited(A wholly owned subsidiary of Old Mutual Investment Group Property Investments (Pty) Limited)Company Secretary6 March 2009

Report Of The TrusteeFor the year ended 31 December 2008


A n n u a l R e p o r t 2 0 0 845

Independent Auditor’s ReportTo The Unitholders Of SA Corporate Real Estate Fund

Report on the Financial StatementsWe have audited the annual financial statements and Group annual financial statements of SA Corporate Real Estate Fund, whichcomprise the balance sheet and the consolidated balance sheet as at 31 December 2008, the income statement and the consolidatedincome statement, the statement of changes in unitholders' funds and the consolidated statement of changes in unitholders' fundsand the cash flow statement and the consolidated cash flow statement for the year then ended, a summary of significant accountingpolicies and other explanatory notes, as set out on pages 46 to 73.

Directors' Responsibility for the Financial StatementsThe directors of SA Corporate Real Estate Fund Managers Limited are responsible for the preparation and fair presentation of thesefinancial statements in accordance with International Financial Reporting Standards, and in the manner required by the CollectiveInvestment Schemes Control Act, No. 45 of 2002. This responsibility includes: designing, implementing and maintaining internal controlrelevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due tofraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.

Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by thedirectors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of SA Corporate Real Estate Fundand the Group as at 31 December 2008, and of their financial performance and their cash flows for the year then ended in accordancewith International Financial Reporting Standards and in the manner required by the Collective Investment Schemes Control Act, No.45 of 2002.

Deloitte & ToucheRegistered Auditors

Per GD Kruger CA(SA)Partner6 March 2009

2 Pencarrow CrescentLa Lucia Ridge Office EstateDurban

National Executive: GG Gelink - Chief Executive, AE Swiegers - Chief Operating Officer, GM Pinnock - Audit, DL Kennedy - Tax,L Geeringh - Consulting, L Bam - Corporate Finance, CR Beukman - Finance, TJ Brown - Clients & Markets,

NT Mtoba - Chairman of the BoardRegional Leader: GC Brazier

46

Balance Sheetsas at 31 December 2008

Group Fund

2008 2007 2008 2007

Note R000 R000 R000 R000

Assets

Non-current assets

Investment in fixed property companies 8 - - 3 672 067 4 763 223

Shares - - 943 422 2 124 134

Loans - - 2 728 645 2 639 089

Investment property 9 6 797 155 8 241 267 3 990 004 4 290 997

At valuation 6 932 003 8 401 198 4 075 200 4 372 784

Straight line rental adjustment (134 848) (159 931) (85 196) (81 787)

Property under development 38 570 50 067 38 570 -

Investment in associate 10 173 150 168 954 173 150 168 954

Goodwill 11 - 1 009 094 - -

Rental receivable straight line adjustment 112 123 121 853 68 752 66 960

7 120 998 9 591 235 7 942 543 9 290 134

Current assets 2 502 697 244 573 1 505 247 317 148

Properties classified as held for disposal 12 1 861 110 18 000 787 488 18 000

Trade receivables 26 34 217 45 506 11 985 22 023

Other receivables and accrued interest 141 665 78 109 86 224 57 233

Intercompany receivables - - 178 733 169 354

Rent receivable - straight line rental adjustment 22 726 38 078 16 444 14 827

Cash resources and short term investments 442 979 64 880 424 373 35 711

Total assets 9 623 695 9 835 808 9 447 790 9 607 282

Unitholders' funds and liabilities

Unitholders' funds 13 7 260 893 8 433 253 7 262 248 8 437 100

Non-current liabilities

Interest bearing borrowings 1 571 283 667 960 1 571 283 667 702

At nominal value 14 1 570 000 667 960 1 570 000 667 702

Effective interest rate adjustment 1 283 - 1 283 -

Interest rate swap derivative 15 93 652 - 93 652 -

Deferred taxation 16 238 201 314 545 - -

1 903 136 982 505 1 664 935 667 702

Current liabilities 459 666 420 050 520 607 502 480

Trade and other payables 123 026 90 945 195 093 32 582

Intercompany payables - - - 155 722

Capital gains taxation and secondary taxation on companies 14 529 15 033 3 403 104

Unclaimed distributions 1 179 767 1 179 767

Distributions payable 320 932 313 305 320 932 313 305

Total unitholders' funds and liabilities 9 623 695 9 835 808 9 447 790 9 607 282

A n n u a l R e p o r t 2 0 0 847

Income Statementsfor the year ended 31 December 2008

Group Fund

2008 2007 2008 2007

Note R000 R000 R000 R000

Revenue 4.12 1 024 261 738 485 521 546 404 661

Income 4.12Rent 7 798 164 579 946 424 289 321 262Straight line rental adjustment 5 519 22 300 17 992 23 525Recovery of property expenses 220 578 136 239 79 265 59 874Income from associate company 16 707 6 310 16 707 6 310 Interest income 12 511 6 310 12 511 6 310 Share of post-acquisition reserves 4 196 - 4 196 -Interest 39 821 12 725 32 541 9 249Dividends from fixed property companies - - 378 215 228 894 Revenue - - 357 511 228 894 Capital - - 20 704 -

1 080 789 757 520 949 009 649 114

Expenses (445 503) (307 448) (280 546) (197 817)Accounting and secretarial fees (9 227) (7 934) (9 227) (7 098)Audit fees (1 116) (1 109) (1 116) (1 061)Administrative fees (4 675) (2 958) (4 547) (2 918)Interest paid (115 206) (77 620) (112 993) (68 821)Effective interest rate adjustment (1 283) - (1 283) -Property administration fees (33 859) (21 360) (14 641) (11 161)Property expenses (250 639) (169 588) (107 243) (79 879)Service fees (29 498) (26 879) (29 496) (26 879)

Deferred tax on straight line rental adjustment (668) (17 006) - -

Headline earnings 634 618 433 066 668 463 451 297Capital profit/(loss) on disposal of investment properties/investments 3 589 (5 388) 2 034 (1 296)Revaluation of investment properties/investments (229 401) 721 624 (186 666) 642 312 Investment properties (223 882) 743 924 53 566 524 190 Investments - - (222 240) 141 647 Straight line rental adjustment (5 519) (22 300) (17 992) (23 525)Goodwill/investment impairment (1 009 094) - (1 009 094) -Taxation 18 77 517 (60 659) - -

Net (loss)/profit attributable to unitholders (522 771) 1 088 643 (525 263) 1 092 313

Units Units Units Units

Units in issue (000) 2 104 469 2 089 336 2 104 469 2 089 336Weighted units in issue (000) 2 108 051 1 457 525 2 108 051 1 457 525

Cents Cents

Distribution per unit 23 29,75 32,00Net (loss)/profit per unit 19 (24,84) 52,10 Weighed net (loss)/profit per unit 20 (24,80) 74,69 Headline earnings per unit 21 30,16 20,73 Weighted headline earnings per unit 22 30,10 29,71

48

Statements Of Changes In Unitholders’ Fundsfor the year ended 31 December 2008

Group Fund

2008 2007 2008 2007

R000 R000 R000 R000

Unitholders' funds at beginning of year 8 433 253 2 375 610 8 437 100 2 375 821

Capital movements (1 172 360) 6 057 643 (1 174 852) 6 061 279

Revaluation of investment properties/investments (229 401) 721 624 (186 666) 642 312

Goodwill/investment impairment (1 009 094) - (1 009 094) -

Capital profit/(loss) on disposal of investment properties/investments 3 589 (5 388) 2 034 (1 296)

Capital dividends - - 20 704 -

Taxation on property revaluation, disposals and dividends 77 517 (60 659) - -

Straight line rental adjustment net of taxation 4 851 5 294 17 992 23 525

Share of associate company’s post-acquisition reserves 4 196 - 4 196 -

Effective interest rate adjustment (1 283) - (1 283) -

Transfers (to)/from revenue below (1 149 625) 660 871 (1 152 117) 664 541

Revaluation of interest rate swap derivative (93 652) - (93 652) -

21 590 385 units issued at prices ranging between 409,26 cpu and

414,06 cpu

(2007: 1 364 151 734 units issued at prices ranging between

304,50 cpu and 427,80 cpu) 85 444 5 593 725 85 444 5 593 725

Unit issue costs (63) (5 347) (63) (5 381)

6 457 279 units bought back at prices ranging between 195,37 cpu

and 240,94 cpu (14 246) - (14 246) -

Unit buy back costs (56) - (56) -

Transfer to revenue of pre-acquisition distribution received - (124 476) - (124 476)

Transfer to revenue of distribution prepaid received in advance (162) (67 130) (162) (67 130)

Revenue movements - - - -

Net (loss)/profit for the year (522 771) 1 088 643 (525 263) 1 092 313

Transfers from/(to) capital above 1 149 625 (660 871) 1 152 117 (664 541)

Pre-acquisition dividend received - 124 476 - 124 476

Transfer to revenue of distribution prepaid received in advance 162 67 130 162 67 130

Available for distribution 627 016 619 378 627 016 619 378

Distributions attributable to unitholders (627 016) (619 378) (627 016) (619 378)

Unitholders’ funds at end of year 7 260 893 8 433 253 7 262 248 8 437 100

A n n u a l R e p o r t 2 0 0 849

Cash Flow Statementsfor the year ended 31 December 2008

Group Fund

2008 2007 2008 2007

R000 R000 R000 R000 Cash flows from operating activitiesNet (loss)/profit for the year (522 771) 1 088 643 (525 263) 1 092 313Adjustments for:Interest received (39 821) (12 725) (32 541) (9 249)Income received from associate company (16 707) (6 310) (16 707) (6 310) Interest income (12 511) (6 310) (12 511) (6 310) Share of post-acquisition reserves (4 196) - (4 196) -Interest paid 115 206 77 620 112 993 68 821Effective interest rate adjustment 1 283 - 1 283 -STC and CGT charge (504) 15 251 - -Revaluation of investment properties/investments(excluding straight line adjustment) 223 882 (743 924) 168 674 (665 837)Deferred taxation on revaluations (76 344) 62 414 - -Goodwill/investment impairment 1 009 094 - 1 009 094 -Capital (profit)/loss on disposal of investmentproperties/investments (3 589) 5 388 (2 034) 1 296Operating profit before working capital changes 689 729 486 357 715 499 481 034

Working capital changes (19 777) (17 154) (21 132) (40 112)Increase in receivables (52 268) (79 966) (28 332) (175 754)Increase in payables 32 491 62 812 7 200 135 642

Cash generated from operations 669 952 469 203 694 367 440 922

Interest received 39 821 12 725 32 541 9 249Income from associate company 16 707 6 310 16 707 6 310Interest paid (115 206) (77 620) (112 993) (68 821)Taxation (paid)/received 1 (285) 3 299 40Distributions paid (619 389) (393 069) (619 389) (393 069)Net cash flows from operating activities (8 114) 17 264 14 532 (5 369)

Net cash flows from investing activities (501 687) (2 173 642) (514 028) (2 177 151)Investment properties/investments (561 555) (2 544 738) (573 396) (2 274 101) Total expenditure on investment properties/investments (646 774) (5 949 249) (658 615) (5 678 612) Less: Funded by unit issue to vendors 85 219 3 404 511 85 219 3 404 511Proceeds on disposal of investment properties/investments 59 868 371 096 59 368 96 950

(509 801) (2 156 378) (499 496) (2 182 520)

Net cash flows from financing activities 887 900 2 199 162 888 158 2 198 870Issue of new units 162 2 183 867 162 2 183 833 Total new units issued 85 381 5 588 378 85 381 5 588 344 Less: issued to vendors to fund acquisitions (85 219) (3 404 511) (85 219) (3 404 511)Buy-back of units (14 302) - (14 302) -Increase in interest bearing borrowings 902 040 15 295 902 298 15 037

Net increase in cash 378 099 42 784 388 662 16 350Cash resources at beginning of year 64 880 22 096 35 711 19 361Cash resources and short term investments at end of year 442 979 64 880 424 373 35 711

50

Statutory Information And

Notes To The Annual Financial Statementsfor the year ended 31 December 2008

1. GENERAL INFORMATION

SA Corporate Real Estate Fund (“the Fund”) is a collective investment scheme in property established in terms of the CollectiveInvestment Schemes Control Act, No. 45 of 2002. The Fund is listed on the JSE Limited. The Fund is managed by SA CorporateReal Estate Fund Managers Limited, a company approved by the Registrar of Collective Investment Schemes to manage theFund.

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

In the current year the Group has adopted all of the new and revised Standards and Interpretations issued by the InternationalAccounting Standards Board (“the IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”) of theIASB that are relevant to its operations and effective for accounting periods beginning on or before 1 January 2008. The adoptionof these standards and interpretations has not resulted in any adjustment to the amounts reported previously in the AnnualFinancial Statements for the year ended 31 December 2007.

3. COMPARATIVE FIGURES

During the current financial year, the following changes were made to disclosures:• bad debts, previously set off against rental income, are now included as part of property expenses;• dividends receivable , previously disclosed separately on the balance sheet, have now been included as part of intercompany

receivables.

4. ACCOUNTING POLICIES

The Annual Financial Statements have been prepared in accordance with International Financial Reporting Standards. Theaccounting policies used in the preparation of the financial statements are consistent with those applied in the prior year.The financial statements have been prepared on the going concern and historical cost bases, except where otherwise stated.

The principal accounting policies are set out below:

4.1 BASIS OF CONSOLIDATIONThe Group Annual Financial Statements incorporate the results and financial position of the Fund and all its subsidiaries. Theresults of subsidiaries are included from the effective dates of gaining control and up to the effective dates of relinquishingcontrol. All inter-entity transactions and balances between group entities are eliminated except for capitalised interest referredto in note 4.6, which forms part of the income earned by and distributed in full by the Fund.

The accounting policies of the subsidiaries are consistent with those of the Fund.

4.2 BUSINESS COMBINATIONSThe purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisitionis measured as the aggregate of the fair value of the underlying assets acquired, equity instruments issued and liabilities incurredor assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilitiesand contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.The excess of the cost of the acquisition over the fair value of the Group's share of the identifiable net assets acquired is recordedas goodwill. Goodwill is not amortised and is tested for impairment on an annual basis.

If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recogniseddirectly in the income statement. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposalof a subsidiary, attributable goodwill is included in the determination of the profit or loss on disposal.

4.3 INVESTMENT IN SUBSIDIARIESInvestments in subsidiary companies, including fixed property companies, are revalued to fair value at each reporting date.Surpluses or deficits on revaluation or disposal are reflected in the income statement and transferred to capital in the statementof changes in unitholders' funds.

A n n u a l R e p o r t 2 0 0 851

4.4 INVESTMENT PROPERTIESInvestment properties are properties held to earn rentals and appreciate in capital value. Investment properties are initiallyrecognised at cost, including transaction costs on acquisition, and are stated at their fair value at each reporting date. Thesefair values of property exclude accrued operating lease income. Gains or losses arising from changes in the fair values arereflected in the income statement in the year in which they arise and are transferred to capital in the statement of changes inunitholders' funds. Land and buildings are not depreciated.

Properties purchased by the Group and settled by the issuing of units are recorded at the fair value of the properties acquired,unless that fair value cannot be reliably measured, in which case they are measured at the fair value of the units granted interms of IFRS 2: Share Based Payments. This excludes purchases of properties which are regarded as business combinationsas described in note 4.2.

New buildings that are acquired and developed for future use as investment property are carried at cost. Existing investmentproperty that is redeveloped for continued future use as investment property is carried at fair value.

Properties held under long term operating leases are classified and accounted for as investment properties. These properties areidentified in the property portfolio on pages 74 to 87 of this report.

4.5 INVESTMENT IN ASSOCIATESAssociates are those companies, which are not subsidiaries or joint ventures, over which the Group exercises significant influence.Results of associates are accounted for in the Group using the equity method of accounting except when the investment isclassified as held for sale, in which case it is accounted for under IFRS 5: Non-Current Assets Held for Sale and DiscontinuedOperations. Any losses of associates are brought to account until the investment in and loans to such associates are writtendown to a nominal amount. Thereafter losses are accounted for only insofar as the Group is committed to providing financialsupport to such associates. The carrying value of investments in associates represents the cost of each investment includingunimpaired goodwill, the share of post acquisition retained earnings and losses and the movements in reserves. Equity accountedincome represents the Group's proportionate share of the associate's post-acquisition accumulated profit after accounting fordistributions declared by the associates. Any significant movements between the year end of associates and the Group areaccounted for. Where a Group entity transacts with an associate of the Group, profits and losses are eliminated to the extentof the Group's interest in the associate.

In the Fund the investment in the associate is held at cost in accordance with IAS 27.

4.6 BORROWING COSTSWhere a fixed property company undertakes a major development or refurbishment of its property, interest is capitalised tothe cost of the property concerned during the construction period and is treated as income in the Fund. Where a property, ownedby the Fund, undertakes a major development or refurbishment interest is capitalised to the extent that it is directly incurredin the course of development.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

4.7 ASSETS HELD FOR SALEProperties which have been earmarked for sale and have met the recognition criteria in terms of IFRS 5 are classified as currentassets held for sale and are measured at their fair value.

4.8 TAXATIONThe Fund is treated as a trust for income taxation purposes and no liability for taxation arises on its profits to the extent thatit is distributed by the Fund. The Fund's capital profit is exempt from capital gains taxation.

The fixed property companies are subject to taxation. For these companies the income tax expense comprises the sum of currenttaxation payable, secondary taxation on companies and deferred taxation. Taxable profit differs from accounting profit as itexcludes income or expenses that are taxable or deductible in other years and it excludes items never deductible or taxable.

52


Notes To The Annual Financial Statements (continued)

for the year ended 31 December 2008

4.8 TAXATION (continued)Deferred taxation is provided for using the balance sheet liability method based on temporary differences. Temporary differencesare differences between the carrying amounts of assets and liabilities for financial reporting purposes and their taxation bases.Deferred taxation is charged to the income statement except to the extent that it relates to a transaction that is recogniseddirectly in equity, or a business combination that is an acquisition. A deferred taxation asset is recognised to the extent that itis probable that future taxable profits will be available against which the associated unused tax losses and deductible temporarydifferences can be utilised. Deferred taxation assets are reduced to the extent that it is no longer probable that the related taxbenefit will be realised.

Deferred taxation assets and liabilities are not recognised if the temporary differences arise from goodwill, or from the initialrecognition (other than business combinations) of other assets and liabilities in a transaction which affects neither the taxableprofit nor the accounting profit.

Deferred taxation is raised in the fixed property companies at the current tax rate on all temporary differences, including thosearising from the revaluation of the building portion of properties, other than those held for sale. Deferred taxation is raised inthe fixed property companies at the capital gains tax rate on the revaluation of the land portion of properties or on the entirerevaluation when a property is earmarked for future sale.

4.9 IMPAIRMENT (EXCLUDING GOODWILL)The carrying amount of the Group's assets is reviewed at each balance sheet date to determine whether there is any indicationof impairment. An impairment loss is recognised in profit or loss whenever the carrying amount of an asset exceeds its recoverableamount, which is the higher of an asset's net selling price and value in use. Whenever an impairment loss is subsequentlyreversed, the carrying amount of the asset is increased to the extent that the increased carrying amount does not exceed theoriginal carrying amount. A reversal of impairment loss is recognised immediately in profit or loss.

4.10 FINANCIAL INSTRUMENTSA financial asset or financial liability is recognised for as long as the Group is party to the contractual provisions of the instrument.

4.10.1 Non-derivative financial instrumentsNon-derivative financial instruments recognised on the balance sheet include cash and cash equivalents, trade and otherreceivables, straight line rental adjustment, investments, unitholders' funds, interest bearing borrowings and trade payables.

a. Financial assets

i. Initial recognitionFinancial assets are initially measured at fair value plus, for instruments not at fair value through profit and loss, anydirectly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measuredas described below.

Financial assets are classified into the following specified categories: 'at fair value through profit or loss', 'held tomaturity' investments, 'available for sale' and 'loans and receivables'. The classification depends on the nature andpurpose of the financial assets and is determined at the time of initial recognition.

ii. Financial assets at fair value through profit or lossA financial asset is classified as at fair value through profit or loss if it is held for trading or is designated as such uponinitial recognition.

A financial asset is classified as held for trading if:• it has been acquired principally for the purpose of selling in the near future; or• it is a part of an identified portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or• it is a derivative that is not designated and effective as a hedging instrument.

A n n u a l R e p o r t 2 0 0 853

4.10 FINANCIAL INSTRUMENTS (continued)A financial asset other than a financial asset held for trading may be designated as at fair value through profit or lossupon initial recognition if:• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at fair value through profit or loss.

Investments in fixed property companies and in the associate company have been designated as at fair value throughprofit or loss.

Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognised inprofit or loss.

iii. Held-to-maturity investmentsBills of exchange and debentures with fixed or determinable payments and fixed maturity dates that the Group has thepositive intent and ability to hold to maturity are classified as held-to-maturity investments.

Held-to-maturity investments are recorded at amortised cost using the effective interest method less any impairmentlosses.

iv. Available for sale financial assetsThe Group does not currently have any available for sale financial assets. Gains and losses arising from changes in fairvalue of available for sale financial assets, other than impairment losses, are recognised directly in equity. Where theinvestment is disposed of, the cumulative gain or loss previously recognised in equity is transferred to profit or loss.

v. Loans and receivablesTrade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in anactive market are classified as loans and receivables. Loans and receivables are measured at amortised cost using theeffective interest method, less any impairment.

vi. Derecognition of financial assetsThe Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; orit transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. Ifthe Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to controlthe transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts itmay have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset,the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceedsreceived.

b. Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

i. Financial liabilities at fair value through profit or lossFinancial liabilities are classified as at fair value through profit or loss where the financial liability is either held for tradingor it is designated as at fair value through profit or loss.

54




4.10 FINANCIAL INSTRUMENTS (continued)ii. Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interestexpense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interestexpense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cashpayments through the expected life of the financial liability, or, where appropriate, a shorter period.

iii. Derecognition of financial liabilitiesThe Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled orthey expire.

4.10.2 Derivative financial instrumentsThe Group uses derivative financial instruments to hedge its exposure to interest rate risk exposures.

Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly inequity to the extent that the hedge is effective. The ineffective portion of any gain or loss is recognised immediately in theincome statement.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised thenhedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains thereuntil the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity istransferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in equity istransferred to profit or loss in the same period that the hedged items affects profit or loss.

The fair value of the interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swapat the balance sheet date, taking into account current interest rates and the current credit worthiness of the swap counterparties.

4.11 PROVISIONSProvisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which itis probable that an outflow of economic benefits will occur, and where a reliable estimate can be made on the settlement amountof the obligation.

4.12 REVENUE RECOGNITIONRevenue comprises gross rental income, including all recoveries from tenants. Variable operating cost recoveries are recognisedon the accrual basis. Rental income and fixed operating costs recoveries are recognised on the straight line basis in accordancewith IAS 17: Leases.

Interest income is recognised at the effective rates of interest on a time related basis.

Dividends are recognised when the right to receive them is established.

4.13 LEASESInvestment properties leased out under operating leases are reflected as investment properties on the balance sheet. Wherethere are fixed increments in rental, the income is recognised on a straight line basis in terms of IAS 17: Leases.

4.14 DEFERRED EXPENSESDeferred expenses comprise tenant installation costs and letting commissions which are amortised on a straight line basis overthe lease period to which they relate. These are currently included in accounts receivable due to the immaterial size thereof.

A n n u a l R e p o r t 2 0 0 855

4.15 DISTRIBUTIONSIn terms of the Collective Investment Schemes Act, No. 45 of 2002 the Fund is obliged to distribute to its unitholders all netrevenue profit earned and received.

4.16 SEGMENT REPORTINGOn a primary basis the Group operates in the following segments:• Retail• Industrial• Offices & other

On a secondary basis the Group reports on geographic locations as follows:• Gauteng• KwaZulu Natal• Western Cape• Other

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience as adjusted for current marketconditions and other factors.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,seldom equal the related actual results. The estimates or assumptions that have a significant risk of causing a material adjustmentto the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Estimate of the fair value of investment propertiesThe best evidence of fair value is current prices in an active market for similar leases and other contracts. In the absence of such information, the Group determines the amount within a range of reasonable fair value estimates. In making its judgement the Group considers information from a variety of sources including:

1. Current prices in an active market for properties of different nature, condition or location (or subject to different lease or other contracts), adjusted to reflect those differences;

2. Recent prices of similar properties in less active markets, with adjustments to reflect any changes in economic conditions since the date of the transactions that occurred at those prices; and

3. Discounted cash flow projections based on reliable estimates of future cash flows, derived from the termsof any existing leases and other contracts and (where possible) from external evidence such as currentmarket rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

Principal assumptions of management's estimation of fair valueIf information on current or recent prices is not available, the fair values of investment properties are determined usingdiscounted cash flow valuation techniques. The Group used assumptions that are mainly based on market conditionsexisting at each balance sheet date.

The principal assumptions underlying management's estimation of fair value are those related to:The receipt of contracted rentals, expected future market rentals, maintenance requirements and appropriate discountand capitalisation rates. These valuations are regularly compared to actual market yield data, actual transactions by the Group and those reported by the market.

The expected future market rentals are determined with reference to current market rentals for similar properties in the same location and condition.

56




5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

(b) Deferred taxationDeferred taxation is provided on the revaluation of properties owned by fixed property companies at the current incometax rate on the building portion of the property and at the capital gains tax rate on the land portion of property or where a property has been ear-marked for future sale.

The split between the land and building values was determined by independent valuers. (2007: Municipal values wereused to determine the split between the land and building values. Based on the portfolio on average 75% of the revaluation related to the buildings and 25% to the land.)

(c) Goodwill impairment assessmentGoodwill is tested for impairment on an annual basis, by comparing the carrying value of the underlying investment to a valuation of the underlying investment. The valuation is based on the underlying investment one year forward forecast income capitalised at the SA Corporate historic yield adjusted for growth at the time of doing the assessment(2007: J253 adjusted for growth).

6. NEW ACCOUNTING STANDARDS AND IFRIC INTERPRETATIONS

Certain new additional accounting standards and IFRIC interpretations have been published that are applicable for futureaccounting periods. These new standards and interpretations have not been early adopted by the Group. The directors do notexpect that the adoption of the standards and interpretations will have a material impact on future financial statements. Thestandards and interpretations in issue, but not yet effective, that are relevant to the Group are:IFRS 2 (Revised 2008): Share based payments (effective 1 January 2009)IFRS 3 (Revised 2008): Business combinations (effective 1 July 2009)IFRS 8: Operating Segments (effective 1 January 2009)IAS 1: Presentation of financial statements (effective 1 January 2009)IAS 23: Borrowing costs (effective 1 January 2009)IAS 28: Investments in Associates (effective 1 July 2009)IAS 39: Financial Instruments (effective 1 July 2009)

7. RENT

Included in rent is turnover rentals of:Group Fund

2008 2007 2008 2007R000 R000 R000 R000

13 234 14 529 1 885 3 077

8. INVESTMENT IN FIXED PROPERTY COMPANIES

The Fund has pledged and ceded the shares and loan accounts of certain of its subsidiary companies, to secure loan facilitiesof R770 million by Old Mutual Specialised Finance (Pty) Limited (2007: R750 million by Nedbank Limited and R1bn by Old MutualSpecialised Finance (Pty) Limited). At 31 December 2008 the balance owing to Old Mutual Specialised Finance (Pty) Limitedwas R770 million (2007: R500 million to Old Mutual Specialised Finance (Pty) Limited and R100 million to Nedbank Limited).Refer to note 14 for details of borrowings.

The Fund's claims against Madison Park Properties 24 (Pty) Limited and JRAD Investments (Pty) Limited have been subordinatedin favour of outside creditors.

The fund acquired 100% of the issued share capital of SA Retail Properties Limited, a property owning company during 2007.The effective date of the acquisition was 19 April 2007.

A n n u a l R e p o r t 2 0 0 857

8. INVESTMENT IN FIXED PROPERTY COMPANIES (continued)Group Fund

2008 2007 2008 2007R000 R000 R000 R000

Cost of acquisition: Settled by issue of 795,8 million SA Corporate units on a ratio of 3,05 units for every SA Retail share - - - 3 404 512

Settled by cash - - - 398 Transaction costs - - - 26 594

- - - 3 431 504Net assets acquired: Investment property - 3 594 780 - - Other assets - 104 955 - - Property acquisition obligation - (840 805) - - Other liabilities - (436 520) - - Goodwill - 1 009 094 - -

- 3 431 504 - -9. INVESTMENT PROPERTY

Carrying value at beginning of year 8 241 267 2 959 851 4 290 997 2 601 982 at valuation 8 401 198 3 026 564 4 372 784 2 660 244 straight line rental adjustment (159 931) (66 713) (81 787) (58 262)Transferred from property under development and classifiedas held for disposal 68 067 76 410 18 000 -Acquisitions and improvements including straight linerental adjustment on acquisitions 643 904 4 927 933 513 776 1 304 596Disposals (57 604) (376 484) (56 868) (98 246)Fair value adjustment (229 401) 721 624 35 574 500 665 at valuation (223 882) 743 924 53 566 524 190 straight line rental adjustment (5 519) (22 300) (17 992) (23 525)

Transfer to property under development (38 570) (50 067) (38 570) -Transfer to properties classified as held for disposal (1 830 508) (18 000) (772 905) (18 000) at valuation (1 861 110) (18 000) (787 488) (18 000) straight line rental adjustment 30 602 - 14 583 -

Carrying value at end of year 6 797 155 8 241 267 3 990 004 4 290 997 at valuation 6 932 003 8 401 198 4 075 200 4 372 784 straight line rental adjustment (134 848) (159 931) (85 196) (81 787)

The fair value of the entire portfolio of investment properties was determined by independent registered valuers, CBRE, based on thediscounted cash flow method and approved on 19 February 2009 by the directors.

The independent valuers applied current market related assumptions to the risks in rental streams of properties. Discount rates in therespective sectors ranged as follows:

2008 2007 Terminal Terminal

Discount capitalisation Discount capitalisationrates (%) rates (%) rates (%) rates (%)

Retail 14,0 - 16,5 9,5 - 12,0 13,0 - 15,0 8,25 - 11,5Industrial 14,5 - 17,0 9,75 - 17,42 14,5 - 17,3 8,75 - 11,5Offices & other 14,25 - 16,75 9,75 - 12,25 13,5 - 17,5 9,25 - 11,5

58




10. INVESTMENT IN ASSOCIATE

Oryx Properties Limited (“Oryx”) is a property loan stock company incorporated in Namibia and listed on the Namibian Stock Exchange.The carrying value of the Group's 25,47% interest in Oryx comprises:

Group Fund2008 2007 2008 2007R000 R000 R000 R000

Listed units (at cost) (14 019 055 units) 168 954 168 954 168 954 168 954Cumulative share of post-acquisition reserves 4 196 - 4 196 -Carrying value 173 150 168 954 173 150 168 954Market value 176 360 170 332 176 360 170 332

Oryx has a 30 June year end.

Financial information of associate at 31 December 2008:N$000* N$000* N$000* N$000*

Investment properties At valuation 750 789 737 933 750 789 737 933 Straight line basis adjustment (26 125) (23 873) (26 125) (23 873)

Other non-current assets 25 917 27 763 25 917 27 763Non-current assets held for sale 1 335 27 535 1 335 27 535Other current assets 19 250 2 760 19 250 2 760Total assets 771 166 772 118 771 166 772 118Debentures and debenture premium 299 635 302 412 299 635 302 412Deferred taxation 78 370 78 912 78 370 78 912Non-current liabilities 140 000 153 275 140 000 153 275Current liabilities 30 596 27 561 30 596 27 561Net asset value 222 565 209 958 222 565 209 958

Results for the six months to 31 December 2008:

Rental revenue before straight line rental adjustment 43 554 41 420 43 554 41 420Profit before finance costs 65 715 69 684 65 715 69 684Finance costs 7 331 8 059 7 331 8 059Debenture interest 25 457 23 806 25 457 23 806Profit before taxation 32 927 37 819 32 927 37 819Taxation 8 407 9 430 8 407 9 430Net profit for the year 24 520 28 389 24 520 28 389Group's share of reserves 56 547 53 476 56 547 53 476Group's share of profit after tax 6 245 2 672 6 245 2 672

Income received from associate:Debenture interest 12 511 6 310 12 511 6 310Share of retained income 4 196 - 4 196 -

16 707 6 310 16 707 6 310* N$1 = R1

9. INVESTMENT PROPERTY (continued)

Property descriptions are detailed on pages 74 to 87 of this report.

Certain properties are subject to mortgage bonds in favour of Absa Bank Limited, Old Mutual Specialised Finance (Pty) Limited and

A n n u a l R e p o r t 2 0 0 859

Group Fund2008 2007 2008 2007R000 R000 R000 R000

11. GOODWILL

At cost 1 009 094 1 009 094 - -Accumulated impairment losses (1 009 094) - - -Carrying value - 1 009 094 - -

The acquisition of SA Retail resulted in the recognition of goodwill.Goodwill is carried at cost less accumulated impairment losses. Thecarrying value of goodwill was assessed for impairment at31 December 2008, by comparing the carrying value of the investmentin SA Retail to a valuation based on SA Retail's one year forecast incomecapitalised at the SA Corporate historical yield adjusted for growth(2007: J253 adjusted for growth).

12. PROPERTIES CLASSIFIED AS HELD FOR DISPOSAL

The Group has embarked on a disposal strategy to improve the qualityof the portfolio and earnings. As part of this strategy, the smallerproperties within the portfolio will be realised with the objective ofmaintaining a portfolio of not more than 150 properties in order toimprove management focus. Another objective is to reduce theweighting to smaller retail centres and a number of these propertiestogether with other non-core assets have been identified for sale.Properties identified for disposal are detailed on pages 74 to 87 of thisreport.

Several sale agreements have already been concluded, some ofwhich are now unconditional with others pending the fulfilmentof suspensive conditions.

The assets and liabilities held for sale are as follows:

Assets:Investment Property at valuation 1 861 110 18 000 787 488 18 000 straight line rental adjustment (30 602) (162) (14 583) (162)Straight line rental adjustment Non-current asset 27 192 94 12 988 94 Current asset 3 410 68 1 595 68

1 861 110 18 000 787 488 18 000

Liabilities linked to the disposal of these assets is limited todeferred tax of R33 166 000, which has not been separatelydisclosed (2007: R nil).

13. UNITHOLDERS' FUNDS

2 104 468 612 (2007: 2 089 335 506) units 7 260 893 8 433 253 7 262 248 8 437 100

The statement of changes in unitholders' funds (set out on page 48) reflects a detailed analysis of movements in unitholders' funds.

60




Group Fund2008 2007 2008 2007R000 R000 R000 R000

14. INTEREST BEARING BORROWINGS

Absa Bank Limited 700 000 67 702 700 000 67 702Loan bearing interest at prime less 2,6% per annum. This loan issecured by first mortgage bond over a portion of the propertyportfolio as indicated on pages 74 to 87 and in note 9. This loan isrepayable on 18/09/2014. Interest rate swaps have been enteredinto in respect of the full loan (2007: Nil) as detailed in note 15.

Old Mutual Specialised Finance (Pty) Limited 770 000 500 000 770 000 500 000Loan bearing interest at 10,82% per annum NACQ. This loan isrepayable on 31/12/2012. 500 000 500 000 500 000 500 000

Loan bearing interest at 10,49% until 12/08/08 with thefollowing rates applying thereafter: 13/08/2008 to 12/08/2009- 10,88%, 13/08/2009 to 12/08/2010 - 11,54%, 13/08/2010 to14/08/2011 - 12,23%, 15/08/2011 to 12/08/2012 - 12,96%,13/08/2012 to 13/08/2013 - 13,74%. This loan is repayableon 13/08/2013. 270 000 - 270 000 -

These loans are secured by first mortgage bonds over a portion ofthe property portfolio, as indicated on pages 74 to 87 and in note 9,as well as the cession of shares and loan accounts of certain of theFund's property companies as indicated in note 8.

Nedbank Limited 100 000 100 258 100 000 100 000 Loan bearing interest at 10,57% per annum until 13/09/13and prime less 2,3% per annum thereafter. 100 000 100 000 100 000 100 000

This loan is secured by a pledge of shares and loan accounts ofcertain of the Fund's property companies as indicated in note 8.This loan is secured by first mortgage bond over a portion of theproperty portfolio as indicated on pages 74 to 87 and in note 9.This loan is repayable on or before 31/10/2015.

Loan bearing interest at a floating rate of prime less 2,3% perannum. - 258 - -

1 570 000 667 960 1 570 000 667 702

The fair value of interest bearing borrowings as at 31 December2008 amounts to R1 383 492 777.

Debt funding capacityLoan and guarantee facilities 1 570 000 2 840 339 1 570 000 2 487 839Overdraft facility 200 000 - 200 000 -Total facilities in place 1 770 000 2 840 339 1 770 000 2 487 839Difference between facility and debt funding capacity 931 450 (300 000) 853 943 258 363Total debt funding capacity 2 701 450 2 540 339 2 623 943 2 746 202Less: facility utilised (debt and guarantees issued) (1 570 000) (705 799) (1 570 000) (705 541)Debt funding capacity available at end of year 1 131 450 1 834 540 1 053 943 2 040 661Adjusted for future capital commitments and proceeds on disposal (135 752) (714 365) (107 547) (714 365)Capital commitments (251 752) (732 365) (129 547) (732 365)Expected proceeds on disposal 116 000 18 000 22 000 18 000

Anticipated available debt capacity 995 698 1 120 175 946 396 1 326 296

A n n u a l R e p o r t 2 0 0 861

15. INTEREST RATE SWAP DERIVATIVE

The interest rate swap derivatives have been designated as hedging instruments under a cash flow hedge accounting model.

Interest rate swap agreements have been concluded to convert floating rates to fixed rates on a step basis. The swap agreements in place relate to the Absa Bank Limited debt with a nominal value of R700m and 100% of these swaps have been designated as hedginginstruments.

The following table indicates the periods in which the cash flows are expected to occur and impact profit or loss:

Group Fund2008 2007 2008 2007R000 R000 R000 R000

Carrying amount of liability 93 652 - 93 652 -

Expected cashflows 764 - 764 -Less than one year 8 405 - 8 405 -One to five years (7 641) - (7 641) -More than five years - - - -

16. DEFERRED TAXATION

Balance at beginning of year 314 545 24 484 - -Acquired with acquisition of subsidiary company - 227 647 - -Charged to the income statement through the taxation line (77 012) 45 408 - -Charged to the income statement separately 668 17 006 - - 238 201 314 545 - -

17. CAPITALISATION OF INTEREST

Interest capitalised during development phases 17 293 16 384 11 957 97

Interest was capitalised at rates ranging from 11,7% to 12,9%(2007: 10,2% to 12,2%).

18. TAXATION

Secondary tax on companies 1 138 - - -Current capital gains taxation (1 643) 15 251 - -Deferred tax (77 012) 45 408 - - on property revaluations (65 486) 62 414 - - effect of change in tax rate (10 858) - - - on straight line rental adjustment valuation (668) (17 006) - -

(77 517) 60 659 - -

Deferred taxation is provided on the revaluation of properties owned by fixed property companies at the following rates:• The capital gains tax rate is used to compute deferred tax where the property has been earmarked for future sale and on the land portion of the revaluation.• The current income tax rate is used on the portion of the revaluation relating to the buildings.• The split between the land and building values was determined by the independent valuers. (2007: Municipal values were used to determine the split between the land and building values. Based on the portfolio on average 75% of the revaluation related to the buildings and 25% to the land.)

62




19. NET (LOSS)/PROFIT PER UNIT

The calculation of net (loss)/profit per unit is based on a net loss of R522 771 000 (2007: Net profit of R1 088 643 000) for the Group and 2 104 468 612 (2007: 2 089 335 506) units in issue during the year.

20. WEIGHTED NET (LOSS)/PROFIT PER UNIT

The calculation of weighted net (loss)/profit per unit is based on a loss of R522 771 000 (2007: Net profit of R1 088 643 000) for the Group and 2 108 051 064 (2007: 1 457 525 377) weighted units in issue during the year.

21. HEADLINE EARNINGS PER UNIT

The calculation of headline earnings per unit is based on headline earnings of R634 618 000 (2007: R433 066 000) for the Group and2 104 468 612 (2007: 2 089 335 506) units in issue during the year.

Reconciliation of earnings, headline earnings and distribution attributable to unitholders:

Group Group2008 2008 2007 2007R000 CPU* R000 CPU*

Net (loss)/profit for the year (522 771) (24,84) 1 088 643 52,10Adjustments for:Capital (profit)/loss on disposal of investment properties (3 589) 5 388 Revaluation of investment properties 229 401 (721 624)Taxation thereon (77 517) 60 659 Goodwill impairment 1 009 094 - Headline earnings 634 618 30,16 433 066 20,73

Straight line rental adjustment (5 519) (22 300)Taxation thereon 668 17 006 Share of associate company's after tax profit (4 196) - Effective interest rate adjustment 1 283 -Pre-acquisition distribution received - 124 476 Distribution prepaid received in advance 162 67 130 Distributable income attributable to unitholders 627 016 29,75 619 378 32,00

* Cents per unit

22. WEIGHTED HEADLINE EARNINGS PER UNIT

The calculation of the weighted headline earnings per unit is based on a headline earnings of R634 618 000 (2007: R433 066 000)for the Group and 2 108 051 064 (2007: 1 457 525 377) units.

Springfield Value Centre, Durban, KwaZulu Natal

A n n u a l R e p o r t 2 0 0 863

Group Fund2008 2007 2008 2007R000 R000 R000 R000

23. DISTRIBUTION PER UNIT

Available for distribution 627 016 619 378 627 016 619 378

cents cents cents cents

Cents per unit 29,75 32,00 29,75 32,00

No.25 declared 23 August 2007, paid 25 September 2007 17,00 17,00 Interim 14,60 14,60 Interim SA Retail once off contribution 2,40 2,40 No.26 declared 22 February 2008, paid 25 March 2008 15,00 15,00No.27 declared 22 August 2008, paid 29 September 2008 14,50 14,50 No.28 declared 23 February 2009, to be paid 30 March 2009 15,25 15,25

Distributions declared (cents per unit) 29,75 32,00 29,75 32,00

R000 R000 R000 R00024. OPERATING LEASE INCOME

The minimum future lease payments receivable undernon-cancellable operating leases are as follows:

Not later than one year 819 301 699 516 448 069 392 247Before straight line rental adjustment 793 165 695 196 430 030 376 152Straight line rental adjustment 26 136 4 320 18 039 16 095

Later than one year and not later than five years 1 718 222 1 556 716 941 849 934 227Before straight line rental adjustment 1 683 701 1 661 091 909 417 984 878Straight line rental adjustment 34 521 (104 375) 32 432 (50 651)

Later than five years 628 557 549 477 250 757 224 462Before straight line rental adjustment 523 763 609 353 201 449 271 693Straight line rental adjustment 104 794 (59 876) 49 308 (47 231)

3 166 080 2 805 709 1 640 675 1 550 936

6/8 Mahogany Ridge, Mahogany Ridge, KwaZulu Natal

64




25. SEGMENT RESULTS 2008

Offices & Business segment Retail Industrial other Corporate Group

R000 R000 R000 R000 R000Income statement

Rent (excluding straight line rental adjustment) 462 723 258 158 77 283 - 798 164Net property expenses (36 417) (17 449) (10 054) - (63 920) Property expenses (207 570) (57 152) (19 776) - (284 498) Recovery of property expenses 171 153 39 703 9 722 - 220 578

Net property income 426 306 240 709 67 229 - 734 244Income received from associate company - - - 16 707 16 707Interest received - - - 39 821 39 821Interest paid - - - (115 206) (115 206)Effective interest rate adjustment - - - (1 283) (1 283)Fund expenses - - - (44 516) (44 516)Deferred taxation on straight line rental adjustment (1 015) 369 (22) - (668)Goodwill impairment - - - (1 009 094) (1 009 094)Capital profit/(loss) on disposal of investmentproperties 2 070 1 525 (6) - 3 589Revaluation of investment properties (270 994) 56 901 (9 789) - (223 882)Taxation 62 171 15 511 (165) - 77 517Net (loss)/profit attributable to unitholders 218 538 315 015 57 247 (1 113 571) (522 771)

Balance sheet

Properties 4 854 825 3 003 018 838 992 - 8 696 835 At valuation 3 632 100 2 704 302 595 601 - 6 932 003 Classified as held for disposal 1 288 364 353 818 2 189 928 - 1 861 110 Under development - - 38 570 - 38 570 Straight line rental adjustment (65 639) (55 102) (14 107) - (134 848)

Other current and non-current assets (3 504 812) (1 369 518) (650 374) 6 451 564 926 860 Excluding rental straight line adjustment (3 570 451) (1 424 620) (664 481) 6 451 564 792 012 Rental straight line adjustment 65 639 55 102 14 107 - 134 848

Total assets 1 350 013 1 633 500 188 618 6 451 564 9 623 695

Interest bearing borrowings - - - 1 571 283 1 571 283Other current and non-current liabilities 50 377 18 676 6 846 141 958 217 857Taxation and deferred taxation 226 767 22 448 217 3 298 252 730Distribution payable - - - 320 932 320 932Total liabilities 277 144 41 124 7 063 2 037 471 2 362 802

A n n u a l R e p o r t 2 0 0 865

25. SEGMENT RESULTS 2008 (continued)

Geographical segment KwaZulu Western Gauteng Natal Cape Other Corporate Total

R000 R000 R000 R000 R000 R000Income Statement

Rent (excluding straight line rentaladjustment) 307 055 374 494 72 613 44 002 - 798 164Net property expenses (1 444) (50 571) (8 755) (3 150) - (63 920) Property expenses (101 165) (145 104) (21 252) (16 977) - (284 498) Recovery of property expenses 99 721 94 533 12 497 13 827 - 220 578

Net property income 305 611 323 923 63 858 40 852 - 734 244

Balance Sheet

Properties 3 612 303 3 799 832 758 200 526 500 - 8 696 835 At valuation 3 123 903 2 945 800 684 000 178 300 - 6 932 003 Classified as held for disposal 537 680 916 951 91 979 314 500 - 1 861 110 Under development - - - 38 570 - 38 570 Straight line rental adjustment (49 280) (62 919) (17 779) (4 870) - (134 848)Other current and non-currentassets (2 507 851) (1 968 622) (633 153) (415 078) 6 451 564 926 860 Excluding rental straight line adjustment (2 557 131) (2 031 541) (650 932) (419 948) 6 451 564 792 012 Rental straight line adjustment 49 280 62 919 17 779 4 870 - 134 848

Total assets 1 104 452 1 831 210 125 047 111 422 6 451 564 9 623 695

SEGMENT RESULTS 2007


R000 R000 R000 R000 R000Income statement

Rent (excluding straight line adjustment) 324 158 207 877 47 911 - 579 946Net property expenses (24 851) (3 893) (3 665) - (32 409) Property expenses (124 261) (34 406) (9 981) - (168 648) Recovery of property expenses 99 410 30 513 6 316 - 136 239

Net property income 299 307 203 984 44 246 - 547 537Interest received - - - 19 035 19 035Interest paid - - - (77 620) (77 620)Fund expenses - - - (38 880) (38 880)Deferred taxation on straight line rental adjustment (16 808) (213) 15 - (17 006)Capital loss on disposal of investment properties (3 815) (334) (1 239) - (5 388)Revaluation of investment properties net oftaxation 251 140 319 338 90 487 - 660 965Net profit attributable to unitholders 529 824 522 775 133 509 (97 465) 1 088 643

66




25. SEGMENT RESULTS 2007 (continued)


R000 R000 R000 R000 R000Balance sheet

Properties 4 828 644 2 859 930 620 760 - 8 309 334 As per valuation/cost 4 923 318 2 914 985 630 962 - 8 469 265 Straight line rental adjustment (94 674) (55 055) (10 202) - (159 931)

Other current and non current-assets 275 478 115 690 23 007 1 112 299 1 526 474 Excluding rental straight line adjustment 180 804 60 635 12 805 1 112 299 1 366 543 Rental straight line adjustment 94 674 55 055 10 202 - 159 931

Totals assets 5 104 122 2 975 620 643 767 1 112 299 9 835 808

Interest bearing borrowings - - - 667 960 667 960Trade and other payables 42 253 12 611 3 814 33 034 91 712Taxation and deferred taxation 287 953 41 320 304 1 329 578Distribution payable - - - 313 305 313 305Total liabilities 330 206 53 931 4 118 1 014 300 1 402 555

Geographical segment KwaZulu Western Gauteng Natal Cape Other Corporate Total

R000 R000 R000 R000 R000 R000

Income Statement

Rent (excluding straight line rentaladjustment) 237 400 265 425 68 036 9 085 - 579 946Net property expenses 15 991 6 791 4 454 5 173 - 32 409 Property expenses (66 927) (73 465) (19 991) (8 265) - (168 648) Recovery of property expenses 50 936 66 674 15 537 3 092 - 136 239

Net property income 221 409 258 634 63 582 3 912 - 547 537

Balance Sheet

Properties 3 633 265 3 593 120 866 499 216 450 - 8 309 334 As per valuation/cost 3 691 189 3 675 862 881 514 220 700 - 8 469 265 Straight line rental adjustment (57 924) (82 742) (15 015) (4 250) - (159 931)Other current and non-currentassets 161 868 195 977 47 097 9 233 1 112 299 1 526 474 Excluding rental straight line adjustment 103 944 113 235 32 082 4 983 1 112 299 1 366 543 Rental straight line adjustment 57 924 82 742 15 015 4 250 - 159 931

Total assets 3 795 133 3 789 097 913 596 225 683 1 112 299 9 835 808

A n n u a l R e p o r t 2 0 0 867

26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Group is exposed to strategic and business risk, financial risk, regulatory and compliance risk and human resources risk which aremore fully described in the risk report on pages 35 to 37.

This note deals with certain financial analyses relating to the financial risks.

Capital risk managementCapital is actively managed to ensure that the Group is properly capitalised and funded at all times, having regard to its regulatoryneeds, prudent management and the needs of its stakeholders.

The Group has a business planning process that runs on an annual cycle with regular updates to projections. It is through this process,which includes risk and sensitivity analyses of forecasts, that the Group's capital is managed. Specifically, the Group has adopted thefollowing capital management policies:• Maintenance, as a minimum, of capital sufficient to meet the statutory requirements and such additional capital as management believes is necessary.• Maintenance of an appropriate level of liquidity at all times. The Group further ensures that it can meet its expected capital and financing needs at all times, having regard to the business plans, forecasts and any strategic initiatives.

The Group has both qualitative and quantitative risk management procedures to monitor the key risks and sensitivities of the business.This is achieved through scenario analyses and risk assessments. From an understanding of the principal risks, appropriate risk limitsand controls are defined.

Gearing ratioThe Group's investment committee reviews the capital structure on a quarterly basis. As part of this review, the committee considersthe cost of capital and the risks associated with each class of capital. The Group's borrowing capacity is limited to 30% of the totalinvestment portfolio value in terms of the Trust Deed and 60% in terms of the Collective Investment Schemes Control Act, No. 45 of2002. The Group's current borrowings amount to 17% of its total investment portfolio. The Group has a target debt to total investmentportfolio ratio of 20%.

The debt to total investment portfolio ratio at the year end was as follows:Group Fund

2008 2007 2008 2007 R000 R000 R000 R000

Debt (before effective interest rate adjustment) 1 570 000 667 960 1 570 000 667 702Total investment portfolio* 9 004 833 8 638 219 8 746 475 9 154 007Gearing ratio 17% 8% 18% 7%

*Total investment portfolio includes investment property (at valuation), property under development, properties classified as held for disposal, investment in fixed property companies and investment in associate.

Financial risk management objectivesIn the normal course of operations, the Group is exposed to interest rate risk, credit risk and liquidity risk. In order to manage theserisks, the Group may enter into transactions which make use of derivatives. The Group does not speculate in or engage in the tradingof derivative instruments.

Interest rate risk managementInterest rate movements impact on the net cost of the Group's short term cash investments and interest bearing borrowings. The riskis managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, monitoring cash flows andinvesting surplus cash at negotiated rates. The Group enters into interest rate swap contracts, from time to time, for the purposes ofcash flow hedging.

It is the Group's policy that all debt above 5% of the property portfolio value be fixed to reduce the interest rate risk to acceptable levels.This excludes the funding of developments in progress that will be ring-fenced in order to comply with the accounting requirements forcapitalising interest.

68




26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)

For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at balance sheet date was outstandingfor the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personneland represents management's assessment of the reasonable possible change in interest rates.

The Group has no sensitivity to interest rates on debt as all debt is either fixed or covered by interest rate swaps. (2007: A 50 basispoint change, on the assumption that the year end debt was in place for the entire year, would decrease the Group's net profit for theyear by R340 000 and decrease the Fund's net profit for the year by R339 000).

The Group's sensitivity to a 50 basis point interest rate change on cash balances, would increase the Group's net profit for the year byR2 215 000 (2007:R324 000) and the Fund's net profit by R2 122 000 (2007: R179 000), if the closing cash balance was in place forthe entire year.

Credit risk managementCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Themaximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. The maximumexposure to credit risk at the end of the year was:

Group Fund2008 2007 2008 2007R000 R000 R000 R000

Fair value through profit or loss 173 150 168 954 3 845 217 4 932 177Loans and receivables (including cash and cash equivalents) 753 710 348 426 786 511 366 108

926 860 517 380 4 631 728 5 298 285

Credit risk with regard to trade and other receivables, and the straight line rental adjustment is limited due to the large and diversetenant base, spread across diverse industries and geographical areas.

Credit risk attached to the Group's cash resources is minimised by its cash resources being placed with several financial institutions ofhigh credit standing, in terms of pre-determined exposure limits. Exposure limits are assessed bi-annually and reviewed by the risk,audit & compliance committee.

The Group does not have any significant credit risk exposure to any single tenant counterparty. The top 20 tenants by rentable areaare set out on page 17 of this report.

34/37 Yaldwyn Road, Jet Park, Gauteng

A n n u a l R e p o r t 2 0 0 869


The following table represents relevant information on trade and other receivables at the balance sheet date:

Group Fund2008 2007 2008 2007R000 R000 R000 R000

Trade receivables 50 316 53 075 17 854 23 433Past due but not impaired 34 217 45 506 11 985 22 023Impaired 16 099 7 569 5 869 1 410Provision for doubtful debts (16 099) (7 569) (5 869) (1 410)Trade receivables net of provision for doubtful debts 34 217 45 506 11 985 22 023Other receivables and accrued interest 141 665 78 109 86 224 57 233Total trade and other receivables 175 882 123 615 98 209 79 256

Ageing of trade receivables past due but not impaired 34 217 45 506 11 985 22 023< 30 days 8 099 22 370 2 287 13 72730 days 1 412 7 960 885 3 50760+ days 24 706 15 176 8 813 4 789

Ageing of impaired trade receivables 16 099 7 569 5 869 1 410< 30 days 143 3 721 15 87830 days 115 1 324 64 22560+ days 15 841 2 524 5 790 307

Provision for doubtful debtsThe movement in the provision for doubtful debts during the yearwas as follows:Balance at the beginning of the year 7 569 2 258 1 410 1 608Amounts written off during the year (1 299) (4 415) (122) -Additional provisions recognised 13 802 8 535 5 251 737Prior provisions reversed (3 973) (5 421) (670) (935)SA Retail take on balance - 6 612 - -

16 099 7 569 5 869 1 410

The carrying amount of financial assets recorded in the financialstatements, which is net of impairment losses, represents the Group'smaximum exposure to credit risk without taking into account the valueof any collateral obtained.

The calculation of the provision for doubtful debts as a percentage ofarrear rentals is shown in the table below. The provision is carriedexclusive of VAT whilst the arrear rentals include VAT. This has beentaken into account in the calculation below.

Provision excluding VAT 16 099 7 569 5 869 1 410VAT thereon 2 254 1 060 822 197Provision including VAT 18 353 8 629 6 691 1 607

Arrear rentals 50 316 53 075 17 854 23 433

Provision as a % of arrear rentals 36% 16% 37% 7%

Management and the Board do not consider there to be any material credit risk exposure, which is not adequately provided for.

70





Liquidity risk managementGroup Fund

2008 2007 2008 2007R000 R000 R000 R000

Less than three months Trade and other payables 123 026 90 945 195 092 188 304 Distributions payable 320 932 313 305 320 932 313 305

Between three months and one year Capital gains tax and secondary tax on companies 14 529 15 033 3 403 104

Between one and five years Unclaimed distributions 1 179 767 1 179 767 Interest bearing borrowings 770 000 500 000 770 000 500 000

After five years Interest bearing borrowings 800 000 167 960 800 000 167 702

2 029 666 1 088 010 2 090 606 1 170 182

The Group has access to financing facilities, the total unused amount of which is R200 million (2007: R2,135bn) at the balance sheetdate. The Group expects to meet its other obligations from operating cashflows and refinancing long term debt.

Musgrave Centre, Durban, KwaZulu Natal

A n n u a l R e p o r t 2 0 0 871


Categories of financial instruments

Group Fund2008 2007 2008 2007R000 R000 R000 R000

Non-derivative financial instruments:

Financial assets 926 860 517 380 4 631 728 5 298 285

Designated as at fair value through profit or loss 173 150 168 954 3 845 217 4 932 177 Investment in fixed property companies - - 3 672 067 4 763 223 Investment in associate 173 150 168 954 173 150 168 954

Loans and receivables (including cash and cash equivalents) 753 710 348 426 786 511 366 108 Rental receivable straight line adjustment 112 123 121 853 68 752 66 960 Trade receivables 34 217 45 506 11 985 22 023 Other receivables and accrued interest 141 665 78 109 86 224 57 233 Intercompany receivables - - 178 733 169 354 Straight line rental adjustment 22 726 38 078 16 444 14 827 Cash resources 442 979 64 880 424 373 35 711

Financial liabilities 2 016 420 1 072 977 2 088 486 1 170 078

Amortised cost 2 016 420 1 072 977 2 088 486 1 170 078 Interest bearing borrowings 1 571 283 667 960 1 571 283 667 702 Trade and other payables 123 026 90 945 195 092 32 582 Intercompany payables - - - 155 722 Unclaimed distributions 1 179 767 1 179 767 Distributions payable 320 932 313 305 320 932 313 305

Derivative financial instruments:

Derivative instruments in designated hedge accountingrelationships 93 652 - 93 652 -

Philani Valley Shopping Centre, Umlazi, KwaZulu Natal

72




27. RELATED PARTY TRANSACTIONS

2008 2007R000 R000

PARTY CONCERNED TRANSACTION TYPE

Amounts paid

SA Corporate Real Estate Fund Managers Limited Service fee, including aportion of value addedtaxation 27 153 26 879

Old Mutual Investment Group Property Investments Property administration fees 33 859 21 360(Pty) Limited, including its wholly owned subsidiary Accounting and secretarial fees, includingMarriott Property Services (Pty) Limited a portion of value added taxation 9 227 7 934

Letting commissions 3 906 5 521Disposal commissions,acquisition and development fees 20 179 16 500

Old Mutual Specialised Finance (Pty) Limited Facilitation fee 1 560 750Guarantee fee 157 850Interest paid on loans 47 958 -

Nedbank Limited Interest paid on loans 9 528 70 343

Sponsor fees 123 48Transactional fee - 4 012

Marriott Insurance Consultants, a division of the Old MutualInvestment Group Property Investments (Pty) Limited Property insurance - 4 377

Absa Bank Limited Trustee fees 447 451


Fair value of financial instrumentsThe fair value of financial assets and financial liabilities are determined as follows:• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is

determined with reference to quoted market prices;• the fair value of other financial assets and liabilities (excluding derivative instruments) is determined in accordance with generally

accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealerquotes for similar instruments;

• the fair value of derivative instruments is calculated using quoted prices. Where such prices are not available, use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments for non-optional derivatives and option pricing models for optional derivatives; and

• Interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yieldcurves derived from quoted interest rates.

A n n u a l R e p o r t 2 0 0 873

27. RELATED PARTY TRANSACTIONS (continued)

2008 2007R000 R000

PARTY CONCERNED TRANSACTION TYPE

Amounts credited to the income statement

Nedbank Limited Rental income 8 156 9 017

Old Mutual (South Africa) Limited Group Rental income 1 929 3 206

Oryx Properties Limited Distribution 12 511 6 310

Amounts owing to related parties

SA Corporate Real Estate Fund Managers Limited Service fee, including a portionof value added taxation 2 345 3 118

Nedbank Limited Long term borrowings 100 000 100 258Net interest payable 463 550

Old Mutual Investment Group Property Property administrationInvestments (Pty) Limited fees - 1 105

Letting commissions 2 946 4 484Building staff costs 1 782 3 370

Old Mutual Specialised Finance (Pty) Limited Long term borrowings 770 000 500 000Facilitation fee accrual - 750Net interest payable 17 641 -

Absa Bank Limited Trustee fees 41 -

Transactions between the Fund and its subsidiaries, which are related parties of the Fund, have been eliminated on consolidation andare not disclosed in this note. Details of transactions between the Group and other related parties are disclosed above.

28. CAPITAL EXPENDITURE COMMITMENTSGroup Fund

2008 2007 2008 2007R000 R000 R000 R000

Total capital commitments 251 752 732 365 129 547 732 365

These commitments will be funded by available cash and debt.

29. SUBSEQUENT EVENTS

Certain property transactions have been contracted for since 31 December 2008 and are detailed on page 14.

74

Property PortfolioAnd Investment In Fixed Property Companies

Atterbury Décor (¢)

Cambridge Crossing

Clubview Corner (^)

Coachman’s Crossing

Comaro Crossing

Cullinan Jewell Shopping Centre ($) (^)

East Rand Galleria (¢)

Forest Road Design & Décor Centre ($) (§)

Fountains Centre - Fountainbleau ($) (^)

Kempton Shoprite Checkers ($) (^)

Midway Mews (¢)

Montana Crossing (§)

Northpark Mall (^)

The Boulevard - Melville (#) (^)

The Ridge ($)

Town Square Shopping Centre (g )

Willow Way Shopping Centre (^)

Cnr Atterbury road & Niewoudt Street,

Pretoria

Cnr Witkoppen & Stone Haven Streets,

Paulshof, Sandton

527 Harvard Avenue, Pretoria

Cnr Peters Place & Karen Street, Sandton

Cnr Oak Street & Boundary Road,

Oakdene, Gauteng

Cnr Main Road & Oak Avenue, Cullinan

Cnr Northrand & Rietfontein

Roads Jansenpark, Boksburg

Pineslopes, Fourways

Cnr Republic and Rabie Streets, Randburg

Cnr Langenhoven & Central Streets,

Kempton Park

Cnr Harry Galaun & 7th Street, Halfway

House, Gauteng

571 Dirk Avenue, Pretoria, Gauteng

526 Rachel De Beer Street, Pretoria North,

Gauteng

Cnr Main & Ayr Main Roads, Melville

Cnr Mozart & Paul Kruger Streets,

Wilgeheuwel

Hendrik Potgieter Drive, Constantia Kloof,

Westrand

Cnr Lynwood Rd & Powere Ave, Lynwood,

Pretoria

Pretoria

Sandton

Pretoria

Sandton

Oakdene

Cullinan

Boksburg

Fourways

Randburg

Kempton Park

Halfway House

Pretoria

Pretoria North

Mellville

Wilgeheuvel

Westrand

Pretoria

14 784

12 478

18 420

15 860

24 067

10 753

98 202

21 933

7 138

49 124

28 198

69 733

20 415

9 907

15 838

25 027

26 482

5 828

3 650

5 830

6 370

16 873

6 076

52 873

10 997

2 353

17 807

8 235

22 575

30 785

5 506

4 770

5 485

8 139

79

119

49

71

78

50

58

65

49

16

67

58

45

62

90

119

71

5 498

5 217

3 421

5 452

15 824

3 675

37 007

8 592

1 384

3 501

6 621

15 631

16 636

4 117

5 124

7 842

6 932

67 300

56 000

32 500

63 900

175 500

38 000

453 000

101 000

14 100

30 000

69 400

209 100

141 500

39 800

44 300

81 000

80 100

Retail - Gauteng

Property company/name Property address Location Site area (m2) Lettablearea (m2)

Weightedaverage

rental per m2

(*)

Total rental (*) R000

ValueR000

Retail - KwaZulu Natal

210 Church Street - Pietermaritzburg ($) (^)

212 Church Street - Pietermaritzburg ($) (^)

24/28 Commercial Road - Amanzimtoti ($) (^)

343/345 West Street - Durban ($) (^)

425 West Street - Durban ($) (§)

Bluff Shopping Centre (§)

Cnr Eagle Ave & Falcon St - Mkuze ($) (^)

Davenport Square Shopping Centre (§) (^)

Dube Village Mall (^)

Hayfields Mall (§) (^)

Knowles Centre (£)

Montclair Mall (£) (^)

Musgrave Centre (£) (¢)

Philani Valley Shopping Centre

Pine Crest Shopping Centre (@)

Pine Walk Centre

Quarry Centre (^)

Queensburgh Shopping Centre (^)

210 Church Street, Pietermaritzburg

212 Church Street, Pietermaritzburg

24/28 Commercial Road, Amanzimtoti

343/345 West Street, Durban

425 West Street , Durban

Tara Road, Bluff, Durban

Cnr Eagle Ave & Falcon St, Mkuze

Bulwer Road, Glenwood, Durban

Main Road 93, Inanda, Durban

Blackburrow Road, Hayfields,

Pietermaritzburg

22 Chancery Lane, Pinetown

169 Wood Road, Montclair, Durban

115 Musgrave Road, Musgrave, Durban

179 Echwebweni Avenue, Umlazi

Kings Road, Pinetown

Kings Road, Pinetown, KZN

57 Hilton Avenue, Hilton

Cnr of Ridley Park and Main Road,

Queensburgh, Durban

Pietermaritzburg

Pietermaritzburg

Amanzimtoti

Durban

Durban

Bluff

Mkuze

Glenwood

Inanda

Pietermaritzburg

Pinetown

Montclair

Durban

Umlazi

Pinetown

Pinetown

Hilton

Queensburgh

840

735

1 395

628

3 511

48 637

6 917

18 544

14 357

34 683

37 114

23 315

25 892

47 768

51 175

13 889

41 727

35 770

1 897

1 963

2 335

1 100

9 559

21 012

3 388

9 344

7 346

12 306

9 623

11 898

39 886

12 940

40 498

8 562

7 926

8 136

81

98

39

144

49

72

40

88

66

85

55

58

124

56

98

63

48

81

1 835

2 299

1 105

1 900

5 582

18 066

1 611

9 867

5 815

12 568

6 399

8 233

59 425

3 643

47 536

6 480

4 525

7 949

21 100

24 700

7 900

21 900

65 000

181 000

13 900

108 000

44 700

129 000

54 000

81 000

645 000

83 000

213 000

65 000

42 300

87 388

A n n u a l R e p o r t 2 0 0 875

Fruit & Veg City, Sterlings, Easylife Kitchens & Others

Woolworths, O'Hagans & Others

Spar, Kia Motors, Kaap Krimp & Others

Pick 'n Pay, Woolworths & Others

Pick 'n Pay, Hi-Fi Corporation, Fruit & Veg City & Others

Premier Hotel, Cullinan Spar & Others

Pick 'n Pay, Dion, Joshua Doore & Others

Tiffendels, Carrims, Java Plantation & Others

Spar, Steers & Others

Shoprite Checkers, Engen Petrolium & Others

Pick 'n Pay, Body Quest & Others

Timber City, Tile Africa, Pick 'n Pay, Hi-Fi Corporation &

Others

Edgars, Jet, World Dynamic Bodys, FNB & Others

Spar, Steers & Others

The Spar & Others

Woolworths, News Café & Others

Spar, Dunlop, Bathroom Bizarre & Others

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail / Offices

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail / Offices

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Various

Various

Various

Various

Various

Various

Various

Various

Gross

Various

Various

Various

Various

Various

Various

Various

Various

100

01/05/07

01/05/07

01/05/07

01/05/07

01/05/07

30/04/07

01/05/07

08/02/07

31/07/98

01/05/07

01/05/07

13/08/07

24/05/07

24/04/06

22/06/07

01/05/07

01/05/07

(2 704)

22 396

(2 345)

21 296

(11 543)

-

140 930

-

-

7 782

(6 897)

(228)

(57 742)

-

-

22 701

11 357

69 702

23

34 609

25

187 759

-

31 494

-

-

149

77 387

205 805

2 664

39 885

-

300

205

66 998

22 419

32 264

21 321

176 216

-

172 424

-

-

7 931

70 490

205 577

(55 078)

39 885

-

23 001

11 562

1%

1%

0%

1%

2%

0%

5%

1%

0%

0%

1%

2%

2%

0%

1%

1%

1%

Major tenant/s Usage Type oflease

Number ofsharesissued

Date ofacquisition

Investment insharesR000

Investment inloansR000

Total

R000

Grading

Mr Price Group Ltd - Mr Price Weekend Material

Truworths Limited

The Hub

Discom

The Hub & Milady's

Shoprite Checkers, Woolworths, Edgars & Others

Spar, Fairdeal Furniture & Others

Shoprite Checkers, Milady's, C N A & Others

Shoprite Checkers, OK Furniture & Others

Pick 'n Pay, Nedbank & Others

Spar, Peoples Pharmacy, Nedbank & Others

Pick & Pay, Clicks, Ackermans, Mr Price, Bears & Others

Ster Kinekor, Mr Price, Stuttafords, Woolworths, Pick 'n

Pay & Others

Spar, Build IT, OK Furniture & Others

Pick 'n Pay , Games Stores, Woolworths & Others

Spar, furniture City, Geen & Richards & Others

Spar, Picasso, Clicks & Others

Pick 'n Pay, Russels, ABSA Bank & Others

Retail

Retail

Stand Alone Retail

Stand Alone Retail

Stand Alone Retail

Retail Centre

Retail Centre

Retail / Offices

Retail Centre

Retail Centre

Retail / Offices

Retail / Offices

Retail / Offices

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Triple Net

Triple Net

Net

Triple Net

Triple Net

Various

Various

Various

Various

Various

Various

Various

Various

Various

Various

Various

Various

Various

100

06/11/07

06/11/07

31/07/98

06/11/07

31/07/98

01/05/07

01/10/07

01/05/07

01/05/07

01/05/07

20/12/02

20/12/02

15/09/04

12/06/07

01/05/07

01/05/07

01/05/07

01/05/07

-

-

-

-

-

33 314

-

(5 858)

727

61 041

13 672

21 773

92 276

-

75 219

1 347

11 946

49 200

-

-

-

-

-

3 550

-

112 784

192

937

15

285

3 337

83 500

7 757

5 527

7 827

3 307

-

-

-

-

-

36 864

-

106 926

919

61 978

13 687

22 058

95 613

83 500

82 976

6 874

19 773

52 507

0%

0%

0%

0%

1%

2%

0%

1%

1%

1%

1%

1%

7%

1%

2%

1%

0%

1%

% ofFund

B

B

C

B

B

B

B

B

B

C

B

A

B

C

B

A

B

B

B

C

C

B

A

C

B

C

B

B

B

A

B

A

B

B

B

76

Property PortfolioAnd Investment In Fixed Property Companies (continued)

Springfield Value Centre (§)

The Colonial Development ($) (^)

The Village Centre ($) (§)

Umlazi Mega City (#) (§)

Electron Road, Durban

The Colony, 50 Old Main Road

The Village Centre, Hillcrest, KZN

Umlazi Mega City, Umlazi, Durban

Springfield

Hillcrest

Hillcrest

Umlazi

52 020

12 770

26 324

163 300

20 275

4 200

10 203

35 320

67

30

69

61

16 205

1 494

8 429

25 846

204 000

24 400

94 000

237 000

Retail - KwaZulu Natal (continued)

54 Main Road - Fish Hoek ($) (^)

Checkers Somerset West

Paradys Park (^)

St Georges Square (¢)

Stellenbosch Square - Stellenbosch ($) (§)

Tokai Junction (£) (§)

Van Riebeeckshof Centre

Retail - Western Cape

54 Main Road, Fish Hoek

Cnr Main & Gordon Roads ,Somerset

West

Cnr Paradys Street & Frans Conradie

Drive, Brackenfell

Cnr of Knysna Road & Third Street,

George

Stellenbosch Square, Stellenbosch

236 Main Road, Tokai

Cnr of Van Riebeeckshof, Koelenhof &

Delaire Roads, Belville, Western Cape

Fish Hoek

Somerset West

Brackenfell

George

Stellenbosch

Tokai

Bellville

4 490

13 961

18 840

25 696

34 753

25 101

15 998

3 617

6 253

8 031

11 268

10 450

7 613

5 067

43

63

40

60

69

72

71

1 851

4 761

3 895

8 058

8 710

6 576

4 293

21 576

39 500

31 000

74 400

73 600

69 000

35 800

Retail - Other

84 - 88 Oxford St - East London ($) (^)

Ermelo Game Centre ($) (^)

Highland Mews (£) (^)

Hubyeni Shopping Centre ($)

Middelburg Pick ’n Pay

Nzhelele Valley Shopping Centre

Rhodesdene Centre (^)

84, 88 Oxford St, East London

Cnr de Emigratie Rd & Voortrekker Ave,

Ermelo

Cnr Watermeyer St & Hans Strydom Drive,

Witbank

Elim, Limpopo

Cnr Church & Joubert Streets, Middelburg

R523

Cnr Caters Road and Selous Avenue,

Kimberley

East London

Ermelo

Witbank

Limpopo

Middelburg

Dzanani

Kimberley

3 070

19 144

35 267

28 017

9 918

10 926

8 584

8 406

5 735

17 165

12 846

7 698

5 540

2 982

36

52

66

52

48

36

66

3 650

3 558

13 652

8 086

4 435

2 423

2 362

33 400

34 400

165 300

94 200

41 800

42 300

20 400

Industrial - Gauteng

10 Top Road - Anderbolt ($) (^)

106/109 Bain Street - Boksburg ($)

11 Enterprise Close - Linbro Park ($)

11 Wankel Street - Jet Park ($)

111 Mimets Road - Denver ($) (§)

120 Loper Avenue - Aeroport ($)

137 Kuschke Street - Meadowdale ($)

141 Hertz Close - Meadowdale ($)

144 Kuschke Street - Meadowdale ($) (^)

145 Kuschke Street - Meadowdale ($) (^)

148 Fleming Street - Meadowdale ($) (^)


15 Patrick Road - Jet Park ($) (^)

15 Tedstone Road - Wadeville ($) (^)

10 Top Road, Anderbolt

106/109 Bain Street, Boksburg

11 Enterprise Close, Linbro Park

11 Wankel Street, Jet Park

111 Mimets Road, Denver

120 Loper Avenue, Aeroport

137 Kuschke Street, Meadowdale

141 Hertz Close, Meadowdale



148 Fleming Street, Meadowdale


15 Patrick Road, Jet Park

15 Tedstone Road, Wadeville

Anderbolt

Boksburg

Linbro Business Park

Jet Park

Denver

Aeroport Industrial Estate

Meadowdale

Meadowdale

Meadowdale

Meadowdale

Meadowdale

Meadowdale

Jet Park

Wadeville

6 030

18 882

4 414

16 905

33 881

10 111

2 820

6 694

2 536

2 262

2 652

3 382

8 140

24 529

2 270

15 209

1 913

6 724

18 051

3 575

1 541

3 616

1 488

1 518

1 417

2 090

2 275

9 486

24

8

66

28

27

34

58

30

31

33

35

19

28

12

643

1 401

1 523

2 253

5 933

1 458

1 066

1 304

558

607

600

477

763

1 377

6 900

21 200

15 600

24 100

67 600

17 800

7 900

17 500

7 000

6 600

6 200

8 600

9 200

21 780


Weightedaverage

rental per m2

(*)


ValueR000

A n n u a l R e p o r t 2 0 0 877

Hi-Fi Corporation, Sportsmans Warehouse & Others

Fruit & Veg City, Clicks & Others

Spar, Truworths, Ackermans, Mr Price & Others

Woolworths, Spar, Cashbuild, Caltex & Others

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Various

Gross

Gross

Various 100

01/05/07

31/07/98

31/07/98

11/01/05

94 296

-

-

44 391

1 528

-

-

87 683

95 824

-

-

132 074

2%

0%

1%

3%

Shoprite Checkers

Shoprite Checkers & Others

The Zone Fittness Club, Kwikspar & Others

Shoprite Checkers, Ster Kinekor, Standard Bank & Others

Pick 'n Pay, Woolworths & Others

Pick 'n Pay, Toys R Us, David Bloomberg Pharmacy &

Others

The Spar, Cattle Baron, Durabell Pharmacy & Others

Wholesale

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Triple Net

Various

Various

Various

Various

Various

Various

03/12/07

01/05/07

01/05/07

18/06/07

26/06/03

20/12/02

01/05/07

-

16 799

1 509

(16 294)

-

3 002

(7 892)

-

443

777

94 267

-

37

45 534

-

17 242

2 286

77 973

-

3 039

37 642

0%

0%

0%

1%

1%

1%

0%

Woolworths, Van Huysteen & Coetzee Incorporated &

Others

Game, Maxi & Others

Woolworths, Foschini, Truworths, Clicks, Mr Price & Others

Spar, Edgars Limited, Barnetts & Others

Pick 'n Pay & Others

Spar, FNB, PEP

Pick 'n Pay & Others

Retail / Offices

Retail Centre

Retail Centre

Retail Centre

Retail Centre

Retail

Retail Centre

Various

Various

Various

Various

Various

Gross

Various

05/10/07

20/04/06

20/12/02

05/10/07

01/05/07

29/04/08

01/05/07

-

-

32 883

-

16 967

-

1 463

-

-

220

-

662

-

117

-

-

33 103

-

17 629

-

1 580

0%

0%

2%

1%

0%

0%

0%

Chemfit Industrial Holdings (Pty) Ltd

Busaf Gauteng (Pty) Ltd

Altech Data (Pty) Ltd

Kennametals SA (Pty) Ltd, AIMS & others

Auto Parts Distributors (Pty) Ltd

OCS a Division of UTI Logistics

Essilor South Africa (Pty) Ltd

Galactex Outdoor (Pty) Ltd

Karcher (Pty) Ltd

Pyramid PC Technic CC

Associated Independant Bakeries (Gauteng) (Pty) Ltd

Vacant

Hertz Car Rental

Stewarts & Lloyds

Offices & Warehousing

Offices, Workshops & Warehousing

Offices & Hi-Tech Workshops












Net

Triple Net

Triple Net

Gross

Triple Net

Triple Net

Triple Net

Net

Gross

Gross

Gross

n/a

Triple Net

Triple Net

31/07/98

05/10/07

16/04/03

31/07/98

29/12/05

21/02/96

20/06/01

20/06/01

20/06/01

20/06/01

20/06/01

20/06/01

05/10/07

05/10/07

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

0%

0%

0%

0%

1%

0%

0%

0%

0%

0%

0%

0%

0%

0%

A

B

B

A

B

B

C

B

A

B

B

C

B

C

B

B

B

B

C

B

A

B

B

A

B

B

B

C

B

B

B

C



Date ofacquisition



Total

R000

Grading% ofFund

78

Industrial - Gauteng (continued)


16/20 Quality Street - Isando ($) (^)

18 Covora Street - Jet Park ($)

2 Fobian Street - Boksburg ($) (§)

2 Webb Road - Jet Park ($) (^)

20 Commercial Street - Strydom Park ($) (^)

21 Pomona Road - Pomona ($) (§)

27 Jet Park Road - Jet Park ($) (§)

293 Hebbard Road ($)

3 Fabriek Street - Strydom Park ($) (^)

3 Remblok Street - Strydom Park ($) (^)


32 / 34 Yaldwyn Road - Jet Park ($)

33 Ontdekkers Road - Roodepoort ($)


37 Yaldwyn Road - Jet Park ($) (§)

40 Electron Avenue - Isando ($)

5 Yaldwyn Road - Jet Park ($) (§)

57 Sarel Baard Crescent - Centurion ($) (§)

7 Belgrade Avenue - Aeroport ($) (^)

73 Cavaleros Drive - Germiston ($)

8 Director Drive - Aeroport ($)

83 Heidelburg Ave - City Deep ($) (§)

85 Newton Street - Meadowdale ($)

88 Loper Avenue - Aeroport ($) (§)

90 Electron Avenue - Isando ($) (¢)

96 - 15th Road - Randjespark - Midrand ($)

(¥)

Beryl Street - Jet Park ($) (§)

Cnr Bismuth & Graniet Streets - Jet Park ($) (^)

Cnr Fleming St & Koornhof Rd - Meadowdale

($)

Cnr Koornhof Rd & Essex Street - Meadowdale

($) (§)

Cnr Paul Smit & Title Road - Anderbolt ($)

Cnr Rudo Nel & Tudor Streets - Jet Park ($)

Cnr Staal & Stephenson Road - Pretoria ($)

Stondell Investments (Pty) Ltd (^)


16 Quality Street, Isando

18 Covora Street, Jet Park

2 Fobian Street, Boksburg

2 Webb Road, Jet Park

20 Commercial Street, Strydompark

21 Pomona Road, Pomona

27 Jet Park Road, Jet Park

293 Hebbard Road, Robertville, Gauteng

3 Fabriek Street, Strydom Park

3 Remblok Street, Strydom Park


34 Yaldwyn Road, Jet Park

33 Ontdekkers Road, Roodepoort



40 Electron Avenue, Isando


57 Sarel Baard Crescent, Centurion

7 Belgrade Avenue - Aeroport

73 Cavaleros Drive, Germiston

8 Director Drive, Aeroport

Production Park, 83 Heidelburg Ave, City

Deep

85 Newton Street, Meadowdale

88 Loper Avenue, Aeroport

90 Electron Avenue, Isando

96, 15th Road, Randjespark, Midrand

Beryl Street, Jet Park

Cnr Bismuth & Graniet Streets, Jet Park

Cnr Fleming St & Koornhof Rd,

Meadowdale

Cnr Koornhof Rd & Essex Street,

Meadowdale

Cnr Paul Smit & Title Road, Anderbolt

Cnr Rudo Nel & Tudor Streets, Jet Park

Cnr Staal & Stephenson Road, Pretoria

684 Pretoria Main Road, Wynberg

Meadowdale

Isando

Jet Park

Boksburg

Jet Park

Strydom Park

Pomona

Jet Park

Robertville

Strydom Park

Strydom Park

Jet Park

Jet Park

Roodepoort

Jet Park

Jet Park

Isando

Jet Park

Centurion


Germiston


City Deep

Meadowdale


Isando

Midrand

Jet Park

Jet Park

Meadowdale

Meadowdale

Anderbolt

Jet Park

Pretoria

Wynberg

3 180

12 293

10 498

12 047

6 009

12 000

20 229

55 256

11 783

6 992

3 084

7 391

7 758

14 805

16 800

59 759

28 959

41 194

80 999

3 525

14 218

6 948

19 175

5 600

10 953

13 078

44 682

130

418

4 005

5 471

20 929

40 778

35 281

43 957

7 435

1 835

2 550

4 638

5 258

1 859

6 588

4 585

14 211

7 762

4 261

1 787

3 952

4 000

6 386

5 090

39 738

13 171

17 552

34 460

1 535

8 408

3 900

7 898

2 947

7 711

5 303

10 443

12 509

1 800

3 060

9 783

18 197

10 786

28 538

2 551

34

25

25

29

32

18

34

24

25

23

43

18

28

50

27

28

32

23

31

36

19

30

46

31

31

32

56

49

31

31

23

10

30

15

21

746

779

1 404

1 818

722

1 416

1 881

4 147

2 301

1 191

922

877

1 356

3 851

1 671

13 450

5 005

4 938

12 858

671

1 923

1 395

4 383

1 093

2 890

2 026

7 015

7 333

669

1 155

2 706

2 219

3 911

4 999

649

8 300

9 100

19 800

21 200

6 300

19 500

20 000

41 600

24 100

11 900

7 600

18 300

15 100

49 200

20 000

198 300

55 600

61 900

166 000

7 100

30 900

17 600

50 400

13 100

33 000

22 100

90 200

195 402

6 600

13 700

40 600

28 900

46 800

64 800

6 300



Weightedaverage

rental per m2

(*)


ValueR000

A n n u a l R e p o r t 2 0 0 879


Offices






Offices & Workshops



Offices & Workshops


Warehousing

Offices & Showrooms













Offices & Training Centre

Offices, Warehousing & Workshop

Offices & Workshops


Office & Warehousing

Offices, Factory & Storage


Office, Factory & Warehousing

Offices & Warehousing 2 Ord

9 800 "A"

20/06/01

05/10/07

31/07/98

31/10/97

31/07/98

14/12/05

05/12/02

25/04/97

11/04/07

31/07/98

31/07/98

31/07/98

31/07/98

07/12/07

31/07/98

17/09/03

20/06/01

19/08/05

31/03/03

31/07/98

31/07/98

31/07/98

20/12/07

20/06/01

21/10/03

22/10/96

27/11/07

27/09/95

31/07/98

20/06/01

16/08/05

08/10/07

05/10/07

31/08/06

31/07/98

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

4 472

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1 489

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5 961

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

1%

0%

2%

1%

1%

2%

0%

0%

0%

1%

0%

0%

0%

1%

2%

0%

0%

0%

0%

1%

1%

0%

B

C

B

A

B

B

A

B

B

C

C

B

B

B

B

A

B

B

A

A

B

A

B

B

A

A

A

A

B

B

B

B

A

B

B

Stonehouse Graphics (Pty) Ltd

Barloworld Robor (Pty) Ltd

Sandvik Mining & Construction (Pty) Ltd & Others

P G Bison Ltd

Continental China (Pty) Ltd

Shoprite Checkers

Kuehne & Nagel (Pty) Ltd

Babcock Africa Services (Pty) Ltd, Bustruck Marketing

Services & The Pumphouse CC

Freightmax (Pty) Ltd

Kool Aluminium (Pty) Ltd

Formula Panelbeaters C.C.

Lectrolite (A Division of Imperial Group (Pty) Ltd)

Kwezi V3 Engineers (Pty) Ltd & Others

Laser Facilities (Pty) Ltd, Continental Printing Inks, PPS

(Pty) Ltd

Hansen Transmissions (A Division of Invensys SA (PLD))

Supply Chain Services

Schenker SA (Pty) Ltd, Prompt Pac & Others

Pickpack Grindrod (Pty) Ltd

Fuel Logistics Group & Pharmaceutical Healthcare

Steiner Hygiene (Pty) Ltd

Hyundai Automotive SA (Pty) Ltd

Berco Express (Pty) Ltd

MSA

RAM Transport (S A) (Pty) Ltd

Sapphire Logistics (Pty) Ltd & Iliad Africa Trading

(Pty) Ltd

Premier Freight (Pty) Ltd

Robert Bosch (Pty) Ltd & Business Connection (Pty) Ltd

Bell Equipment Company SA (Pty) Ltd

K & M Signs (Pty) Ltd

Daikin Industries Ltd & Africa Homerite

Chemical Services Ltd

Global Roofing Solutions (Pty) Ltd

Supply Chain Services

Nampak Tissue (Pty) Ltd & Biddulphs Removals &

Storage SA

Frankipile Africa (Pty) Ltd

Gross

Triple Net

Gross

Triple Net

Gross

Triple Net

Triple Net

Triple Net

Triple Net

Triple Net

Gross

Triple Net

Gross

Triple Net

Triple Net

Triple Net

Gross

Gross &

Triple Net

Gross &

Triple Net

Triple Net

Gross

Gross

Triple Net

Gross

Gross/Net

Triple Net

Net

Triple Net

Gross

Gross

Net

Triple Net

Triple Net

Net

Gross



Date ofacquisition



Total

R000

Grading% ofFund

80

Industrial - KwaZulu Natal

1 Baltex Road - Isipingo ($)

1 Circuit Road - Westmead ($) (^)

1 Irvine Bell Drive - Empangeni ($)

1/5 Stockville Road - Westmead ($)

11 Coconut Grove - Shakashead ($) (^)

11 Columbine Place - Red Hill ($)

121 Intersite Ave - Durban ($) (#)

121 Malacca Road - Red Hill ($)

14/24 Mahoganyfield Way - Springfield Park ($)

145/149 Crompton Street - Pinetown ($) (^)

147/149 Old Main Road - Pinetown ($)

153 Old Main Road - Pinetown ($)

155/157 Old Main Road - Pinetown ($)

17 Young Road - Pinetown ($)

2 Beechfield Crescent - Springfield Park - Durban

($)

20 Kyalami Road - Pinetown ($)

24 Westmead Road - Westmead ($)

264 Aberdare Drive - Phoenix ($)

28 Goodwood Road - Mahogany Ridge ($)

2A - B & C Kuba Ave - Riverhorse Valley ($)

30 / 34 Hillclimb Road - Mahogany Ridge ($)

33 / 37 Aloefield Crescent - Springfield Park ($)

33 Surprise Road - Pinetown ($)

35 Circuit Road - Westmead ($)

5 Westgate Place - Westmead ($)

6 Cedarfield Close - Springfield Park ($)

6 Lanner Road - New Germany ($)

6/8 Mahogany Road - Mahogany Ridge ($)

89 Flanders Drive - Mount Edgecombe ($)

9 Henwood Road - Pinetown ($) (^)

9 Twilight Road - Umhlanga ($)

9/15 Lanner Road - New Germany ($)

94 Intersite Avenue - Durban ($) (#) (^)

Blue Heron Investments (Pty) Ltd (#) (^)

Cnr Eagle Ave & Iris Road - Mkuze ($) (^)

Cnr Gillitts & Young Roads - Pinetown ($)

Dune Lark Investments (Pty) Ltd (#) (^)

Erf 84/85/86 Shakas Head (Pty) Ltd

Forktailed Drongo Investments (Pty) Ltd (^)

Grey Heron Investments (Pty) Ltd (#) (^)

1 Baltex Road, Isipingo

1 Circuit Road, Westmead

1 Irvine Bell Drive, Empangeni

1/5 Stockville Road, Westmead

11 Coconut Grove, Shakashead

11 Columbine Place, Red Hill

121 Intersite Ave, Durban

121 Malacca Road, Red Hill

14/24 Mahoganyfield Way, Springfield Park

145/149 Crompton Street, Pinetown

147/149 Old Main Road, Pinetown

153 Old Main Road, Pinetown

155/157 Old Main Road, Pinetown

17 Young Road, Pinetown

2 Beechfield Crescent, Springfield Park,

Durban

20 Kyalami Road, Pinetown

24 Westmead Road, Westmead

264 Aberdare Drive, Phoenix

28 Goodwood Road, Mahogany Ridge

2A, B & C Kuba Ave, Riverhorse Valley

30/34 Hillclimb Road, Mahogany Ridge

33/37 Aloefield Crescent, Springfield Park

33 Surprise Road, Pinetown

35 Circuit Road, Westmead

5 Westgate Place, Westmead

6 Cedarfield Close, Springfield Park

6 Lanner Road, New Germany

6/8 Mahogany Road, Mahogany Ridge

89 Flanders Drive, Mount Edgecombe

9 Henwood Road, Pinetown

9 Twilight Road, Umhlanga

9/15 Lanner Road, New Germany

94 Intersite Avenue, Durban

Cnr Shadwell & Jenkyn Roads, Maydon

Wharf, Durban

Cnr Eagle Ave & Iris Road, Mkuze

Cnr Gillitts & Young Roads, Pinetown

34 Shadwell Road, Maydon Wharf, Durban

15 Coconut Grove, Shakashead, KZN

5 Quality Street, Mobeni

137 Johnston Road, Maydon Wharf, Durban

Isipingo

Westmead

Empangeni

Westmead

Shakashead

Red Hill

Durban

Red Hill

Springfield Park

Pinetown

Pinetown

Pinetown

Pinetown

Pinetown

Durban

Pinetown

Westmead

Phoenix

Mahogany Ridge

Riverhorse Valley

Mahogany Ridge

Springfield Park

Pinetown

Westmead

Westmead

Springfield Park

New Germany

Mahogany Ridge

Mount Edgecombe

Pinetown

Umhlanga

New Germany

Durban

Maydon Wharf

Mkuze

Pinetown

Maydon Wharf

Shakashead

Mobeni

Maydon Wharf

53 080

5 478

12 788

20 033

1 254

21 172

7 579

7 565

7 263

10 298

12 950

9 044

14 576

8 942

4 636

6 614

9 952

10 000

21 409

9 979

15 966

6 804

15 894

7 024

27 828

17 137

13 420

15 173

10 479

3 228

2 106

8 260

2 945

15 703

3 873

12 354

16 779

24 537

4 366

7 894

9 964

2 911

2 736

8 078

453

9 947

2 734

3 526

4 986

1 898

6 186

3 394

5 858

3 970

3 815

3 052

3 542

3 648

7 848

4 817

10 181

5 672

5 931

3 918

4 504

10 105

4 364

7 245

8 473

2 204

823

6 960

1 845

14 587

3 025

4 616

13 091

10 705

2 814

7 394

65

32

35

25

39

24

57

34

29

48

45

54

26

24

30

32

26

24

34

48

19

34

24

23

60

30

26

42

28

25

96

30

38

26

28

30

23

17

25

26

7 725

1 122

1 146

2 419

211

2 915

1 879

1 455

1 717

1 085

3 336

2 192

1 852

1 164

1 392

1 173

1 105

1 059

3 244

2 788

2 351

2 294

1 688

1 098

3 240

3 657

1 382

3 678

2 831

657

953

2 536

848

4 556

998

1 682

3 565

2 142

841

2 309

84 400

8 300

12 200

29 000

1 850

39 300

20 600

12 200

18 600

8 300

35 800

19 600

21 500

10 600

17 000

10 600

11 800

10 200

34 600

34 100

29 200

19 000

17 700

8 000

31 600

40 900

16 200

38 100

26 900

6 000

11 000

20 000

8 800

41 500

10 200

16 800

28 984

23 300

3 450

20 300



Weightedaverage

rental per m2

(*)


ValueR000

A n n u a l R e p o r t 2 0 0 881

Offices & Hi-Tech Workshops

Mini Factories

Offices & Workshops


Offices & Workshops





Offices, Showroom & Workshops

Offices, Showroom & Workshop

Showrooms & Wholesale Retail

Offices, Showroom & Workshops

Offices, Warehousing & Storage





Offices, Warehousing & Workshops



Offices, Warehousing & Workshops

Offices & Factory

Warehousing

Offices, Warehousing & Transport Yard

Offices, Factory & Storage

Offices & Factory

Offices & Factory

Showroom, Workshops & Offices

Offices, Warehousing & Factory

Mini Unit

Mini Factories & Offices

Warehousing



Offices, Warehousing & Storage


Offices, Warehousing & Factory



Triple Net

Gross

Triple Net

Gross

Triple Net

Net

Gross

Triple Net

Gross

Gross

Triple Net

Gross

Triple Net

Gross

Gross

Gross

Gross

Gross

Triple Net

Gross &

Net

Net

Gross

Gross

Gross

Triple Net

Triple Net

Triple Net

Triple Net

Gross

Gross

Triple Net

Gross

Triple Net

Triple Net

Triple Net

Gross

Triple Net

Triple Net

Gross

Triple Net

1

1

100

1

1

06/11/07

31/07/98

28/11/97

13/12/95

08/12/97

31/07/98

06/11/07

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

06/11/07

27/09/95

31/07/98

27/09/95

31/07/98

01/10/07

28/07/03

31/07/98

20/03/02

31/07/98

31/07/98

27/09/95

31/07/98

16/04/02

28/06/99

31/07/98

01/10/07

27/09/95

06/11/07

31/07/98

01/10/07

31/07/98

31/07/98

10/06/99

31/07/98

31/07/98

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

30 858

-

-

19 955

8 112

2 320

13 719

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

8 542

-

-

6 686

13 372

1 044

4 264

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

39 400

-

-

26 641

21 484

3 364

17 983

B

C

B

A

B

B

B

B

B

C

A

A

A

B

A

B

B

B

A

A

B

B

B

B

B

A

B

A

B

C

B

B

B

B

C

B

B

B

C

B

1%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

0%

Chep South Africa (Pty) Ltd & Air Liquide (Pty) Ltd

Hudaco Trading Ltd, Brockett Engineering & others

Bell Equipment Company (SA) (Pty) Ltd

Relyant Trading (Pty) Ltd & X Press Net (Pty) Ltd

Bell Equipment Company (SA) (Pty) Ltd

Division of RTT Consumer (Pty) Ltd

Burchmores

Direkshinz (Pty) Ltd

Strategic Logistical Alliance (Pty) Ltd

Turners Fleet Maintenance (Pty) Ltd & Unitrans Freight

(Pty) Ltd

NMI Durban South Motors (Pty) Ltd

Servistar (Pty) Ltd & Hyundai Automotive South Africa

(Pty) Ltd

Whirlprops 14 (Pty) Ltd

BSN Medical (Pty) Ltd

AGI Aluminium (Pty) Ltd

Fixtrade (Pty) Ltd

Avery Dennison (Pty) Ltd

J D G Trading (Pty) Ltd

Famous Brands & Stamford Tyres

NRG Gestetner SA (Pty) Ltd, Uvex Safety SA (Pty) Ltd

& Others

Amalgamated Appliances (Pty) Ltd

Massstores (Pty) Ltd

Unitrans Motors (Pty) Ltd

Spunlok Bonded Textiles CC & The Wooden Lamp (Pty)

Ltd

Crossroads Distribution (Pty) Ltd & BRG5 Industrial

Services (Pty) Ltd

Universal Web (Pty) Ltd

Pailpac (Pty) Ltd

Astraflex (Pty) Ltd

Kempster Sedgwick (Pty) Ltd, Engen Petroleum Ltd &

Others

Woodstock Boards Durban (Pty) Ltd

Tiger Wheel & Tyre

Sicpa (SA) (Pty) Ltd, Supaswift Express (Pty) Ltd &

others

Waltons Stationery Company (Pty) Ltd

Grindrod Terminals Maydon Wharf, a division of Grindrod

(South Africa) (Pty) Ltd

Final Call Investments

Supergroup Corporate Services (Pty) Ltd



Olam South Africa (Pty) Ltd

Daveglen 229 Investments (Pty) Ltd





Date ofacquisition



Total

R000

Grading% ofFund

82

Industrial - KwaZulu Natal (continued)

Main Street - Gingindlovu ($) (^)

Rock Kestrel Investments (Pty) Ltd (#) (^)

Suffert Street - Pinetown ($)

Whirlprops 25 M (Pty) Ltd (#)

Whirlprops 25 P (Pty) Ltd (#) (§)

Widah Bird Investments (Pty) Ltd (^)

Wood Ibis Investments (Pty) Ltd (#) (^)

Main Street, Gingindlovu

Shadwell Road, Maydon Wharf, Durban

Suffert Street, Pinetown

1 Royal Palm Avenue, Umgeni, Durban

59 Intersite Avenue, Umgeni, Durban

1 Quality Street, Mobeni, Durban

Methven Road, Maydon Wharf, Durban

Gingindlovu

Maydon Wharf

Pinetown

Umgeni Business Park

Umgeni Business Park

Mobeni

Maydon Wharf

9 238

14 408

33 653

5 628

21 753

5 170

19 150

2 992

398

13 943

2 489

13 322

1 778

18 060

24

300

29

60

31

11

22

863

1 433

4 822

1 805

4 882

244

4 858

9 000

11 800

38 200

12 500

56 600

1 450

37 300

Industrial - Western Cape

1 Marconi Street - Montague Gardens ($)

10 Industrial Avenue - Kraaifontein - Paarl ($)

16 Nourse Avenue - Epping - Cape Town ($) (^)

5 Bofors Circle - Cape Town ($)

9 Milner Road - Paarden Eiland (Tableview

Industrial Park) ($)

Cnr Bridge Street and Molecule Road - Belville

($)

Cnr Giel Basson Drive & Nathan Mallach Road -

Goodwood ($)

Cnr Isotope & Bridge Streets - Belville ($)

Tygerberg Business Park ($) (§)

1 Marconi Street, Montague Gardens

10 Industrial Avenue, Kraaifontein, Paarl

16 Nourse Avenue, Epping, Cape Town

5 Bofors Circle, Cape Town

9 Milner Road, Paarden Eiland

Cnr Bridge Street and Molecule Road,

Belville

Cnr Giel Basson Drive & Nathan Mallach

Road, Goodwood

Cnr Isotope & Bridge Streets, Belville

Trans Karoo Street, Parow Industria

Montague Gardens

Paarl

Cape Town

Cape Town

Paarden Eiland

Belville

Goodwood

Belville

Parow Industria

12 141

24 875

8 107

16 743

31 244

29 083

10 430

10 756

49 030

3 970

3 259

3 104

5 870

15 990

8 558

5 902

4 573

17 408

38

67

19

31

8

22

67

26

41

1 827

2 636

690

2 159

1 616

2 225

4 727

1 440

8 581

21 900

29 300

7 603

20 600

74 000

28 100

52 900

15 300

103 800

Offices - Gauteng

106 Johan Avenue - Sandton ($) (¢)

13 Wellington Road ($)

21 Fricker Road - Illovo ($) (§)

252 Montrose Ave - Northriding ($)

36 Wierda Road West - Sandton ($)

Cnr Handel & Crownwood Roads - Ormonde

($) (§)

Cnr Old Pretoria & Alexandra Roads - Midrand

($)

Garsfontein/Lebombo Road ($)

Summer Cottage (^)

106 Johan Avenue, Sandton

13 Wellington Road, Parktown

21 Fricker Road, Illovo

252 Montrose Ave, Northriding

36 Wierda Road West, Sandton

Cnr Handel & Crownwood Roads, Ormonde

Cnr Old Pretoria & Alexandra Roads,

Midrand

Cnr Garsfontein & Lebombo Roads,

Pretoria

Cnr Roos & Fourways Boulevard, Fourways,

Gauteng

Wierda Valley

Johannesburg

Sandton

Northriding

Wierda Valley

Ormonde

Midrand

Pretoria

Fourways

3 965

4 020

3 718

12 237

6 575

36 073

5 857

3 966

4 017

2 270

3 300

2 746

2 419

2 977

6 131

2 828

3 340

1 487

51

70

104

81

91

56

121

77

70

1 400

2 779

3 440

2 345

3 244

4 091

4 106

3 086

1 245

28 200

30 100

37 300

27 300

28 800

38 800

46 900

35 700

12 700

Offices - KwaZulu Natal

1 Holwood Park ($)

10 Yarborough Road - Pietermaritzburg ($)

12 Sookhai Place - Derby Downs Office Park -

Westville ($)

131 Jan Hofmeyer Road - Westville ($)

17 Timber Lane - Pietermaritzburg ($) (^)

191 Chapel Street - Pietermarizburg ($) (^)

1 Holwood Park, La Lucia Ridge Office

Estate

10 Yarborough Road, Pietermaritzburg

12 Sookhai Place, Derby Downs Office

Park, Westville

131 Jan Hofmeyer Road, Westville

17 Timber Lane, Pietermaritzburg

191 Chapel Street, Pietermarizburg

Umhlanga Ridge

Pietermaritzburg

Westville

Westville

Pietermaritzburg

Pietermaritzburg

16 736

38 712

5 806

2 661

587

3 178

7 674

3 400

2 719

2 160

2 035

3 234

106

80

103

85

47

50

9 728

3 274

3 348

2 204

1 152

1 947

109 000

38 200

33 000

21 000

12 700

19 700



Weightedaverage

rental per m2

(*)


ValueR000

A n n u a l R e p o r t 2 0 0 883


Offices & Container Yard

Industrial Complex

Showroom & Workshops

Offices & Factory



Triple Net

Triple Net

Gross

Gross

Triple Net

Gross

Triple Net

1

100

1

1

01/10/07

31/07/98

31/07/98

20/03/02

28/06/02

31/07/98

31/07/98

-

8 954

-

3 714

29 309

771

28 716

-

1 796

-

7 450

19 327

854

5 296

-

10 750

-

11 164

48 636

1 625

34 012

C

B

B

B

A

C

B

0%

0%

0%

0%

1%

0%

0%

Final Call Investments

Grindrod Terminals Maydon Wharf, a division of

Grindrod (South Africa) (Pty) Ltd

Brits Automotive Systems (Pty) Ltd, Brits Textiles,

Sanware & Plumbing & Others

Hyundai Automotive SA (Pty) Ltd

Universal Print Group (Pty) Ltd

Dubyla Properties CC

Grindrod Terminals Maydon Wharf, a division of

Grindrod (South Africa) (Pty) Ltd

Penny Pinchers Holdings Ltd

Chep S A (Pty) Ltd

International Tube & Technology

Metro Cash & Carry

Vacant - being redeveloped

Dpi Plastics (Pty) Ltd

Reeds Delta

Sandown Motor Holdings (Pty) Ltd

Fuel Group

Warehousing



Wholesale

Warehousing

Offices, Factory & Warehousing

Motor Showroom


Warehousing

Triple Net

Triple Net

Gross

Triple Net

n/a

Net

Gross

Triple Net

Triple Net

31/07/98

06/11/07

06/11/07

05/10/07

31/07/98

31/07/98

06/12/02

30/10/02

04/04/06

-

-

-

-

-

-

-

-

-

0%

0%

0%

0%

1%

0%

1%

0%

1%

Nedbank Ltd

BDO Spencer Steward

Turner & Townsend, McCreedy Friedlander & Others

Lundbeck SA (Pty) Ltd

Mvelapanda Management Services (Pty) Ltd, The South

Africa Property Owners Association & Others

AC Nielsen Marketing and Media (Pty) Ltd

Absa Bank Limited

Kwezi V3 Engineers (Pty) Ltd

Innovation Group (Pty) Ltd & Others

Offices

Offices

Offices

Offices

Offices

Offices

Offices

Offices

Offices

Gross

Net

Various

Triple Net

Gross

Gross

Triple Net

Gross

Gross

31/07/98

25/02/08

03/10/05

28/11/07

31/07/98

31/07/98

19/09/06

07/07/06

01/05/07

-

-

-

-

-

-

-

-

1 282

-

-

-

-

-

-

-

-

37

-

-

-

-

-

-

-

-

1 319

0%

0%

0%

0%

0%

0%

1%

0%

0%

A

B

B

B

A

B

B

B

A

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

A

B

A

B

A

B

B

B

B

Offices


Offices

Offices

Offices

Offices

Gross

Triple Net

Gross

Gross

Gross

Gross

14/05/08

06/11/07

12/12/06

31/07/98

06/11/07

01/10/07

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1%

0%

0%

0%

0%

0%

Investec Bank & Unilever

Department of Public Works

Bytes Corporate Services (Pty) Ltd

Chep South Africa (Pty) Ltd

Natal Joint Municipal Pension Fund & Others

The Kwa Zulu Natal Department of Health

A

C

A

B

C

C



Date ofacquisition



Total

R000

Grading% ofFund

84

In the process of being wound-up

1271 South Coast Road

Bat Hawk (Pty) Ltd

Breightmet Properties (Pty) Ltd

Button Quail Investments (Pty) Ltd

Centaprops 6 (Pty) Ltd & Propforum 7 (Pty) Ltd

Glossy Ibis Investments (Pty) Ltd

LMD Investments (Pty) Ltd

Loerie Properties (Pty) Ltd

Longclaw Investments (Pty) Ltd

Natal Nightjar Investments (Pty) Ltd

Petrel Properties (Pty) Ltd A

Petrel Properties (Pty) Ltd B

Rhea Properties (Pty) Ltd

Stand 1096 Morningside (Pty) Ltd

Stand 624 Alrode (Pty) Ltd

Stand 705 Denver (Pty) Ltd

Stoneham (Pty) Ltd

Thatcherprops (Pty) Ltd

Whimbrel Investments (Pty) Ltd

Offices and Other - Western Cape

22 Voortrekker Street - Vredenberg ($) (^)

31 Allen Drive - Belville ($)

Omniplace

22 Voortrekker Street, Vredenberg

31 Allen Drive, Belville

Bella Rosa Street, Belville, Western Cape

Vredenberg

Belville

Belville

9 507

2 969

2 444

3 067

3 255

2 714

86

75

66

3 152

2 939

2 145

31 800

25 000

20 800

SA Retail Portfolio

Offices and Other - Other

110 Zastron Road - Bloemfontein ($) (^)

28 Durham Road - Mthatha ($) (^)

34 Mangold Street - Port Elizabeth ($) (^)

40 Grey Street - Bloemfontein ($) (^)

Unipark Offices ($)

110 Zastron Road, Bloemfontein

28 Durham Road, Mthatha

34 Mangold Street, Port Elizabeth

40 Grey Street, Bloemfontein

Noble Street

Bloemfontein

Mthatha

Port Elizabeth

Bloemfontein

Bloemfontein

1 985

4 342

1 606

1 147

7 808

1 977

4 197

967

645

-

34

82

74

38

-

803

4 109

856

296

-

8 600

43 400

6 600

2 400

38 570

Offices - KwaZulu Natal (continued)

199 North Ridge Road - Durban ($)

24 Chancery Lane - Pinetown ($) (^)

3 Inanda Road - Hillcrest ($) (^)

3 The Terrace - Westway ($)

4 School Road - Pinetown ($) (^)

48 Kings Road - Pinetown ($) (^)

Cnr Chancery Lane & Crompton St - Pinetown

($) (^)

Portion 4 of Erf 12445 Durban (Pty) Ltd

Portion 5 of Erf 12445 Durban (Pty) Ltd

199 North Ridge Road, Durban

24 Chancery Lane, Pinetown

3 Inanda Road, Hillcrest

3 The Terrace, Westway

4 School Road, Pinetown

48 Kings Road, Pinetown

Cnr Chancery Lane & Crompton St,

Pinetown

Portion 4 of Erf 12445 Durban

Portion 5 of Erf 12445 Durban

Morningside

Pinetown

Hillcrest

Westville

Pinetown

Pinetown

Pinetown

Durban

Durban

3 765

8 430

4 146

3 017

6 941

3 237

4 358

2 140

1 528

4 648

3 497

1 674

2 235

7 176

2 029

-

-

-

85

49

74

100

44

33

-

-

-

4 741

2 043

1 485

2 691

3 832

799

-

-

-

41 300

25 863

14 650

24 300

28 100

8 300

4 117

5 800

4 100



Weightedaverage

rental per m2

(*)


ValueR000

A n n u a l R e p o r t 2 0 0 885

100

6

114

1

200

1

100

1

10

1

1

1

200

100

100

4 000

278

1

21/10/99

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

31/07/98

100

6

114

1

200

1

100

1

10

1

1

1

200

100

100

4 000

278

1

(100)

(6)

(114)

(1)

(200)

(1)

(100)

(1)

(10)

(1)

(1)

(1)

(200)

(100)

(100)

(4 000)

(278)

(1)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

West Coast Private Hospital

Kwezi V3 Engineers (Pty) Ltd & Others

Pragma Trust, Eskom & AIM Academy of Cosmetology

CC

Hospital

Offices

Offices

Triple Net

Gross

Various

20/11/07

07/07/06

01/05/07

-

-

(2 854)

B

B

B

-

-

24 190

-

-

21 335

0%

0%

0%

The Office of the Auditor General

St Mary's Hospital

Dowmont Snacks (Pty) Ltd

Simlab (Pty) Ltd

Vacant Land to be developed for cellular company

Offices

Hospital

Offices

Offices

Offices

Gross

Triple Net

Gross

Gross

n/a

243 387 609

07/07/06

07/11/07

07/07/06

07/07/06

04/02/08

-

-

-

-

-

104 173

B

C

B

B

A

-

-

-

-

-

1 518 165

-

-

-

-

-

1 622 338

0%

0%

0%

0%

0%

100%

R R R

Offices

Offices

Offices

Offices

Offices

Offices

Vacant

Zoned Offices

Zoned Offices

Gross

Gross

Gross

Gross

Gross

Gross

n/a

n/a

n/a

100

100

31/07/98

06/11/07

21/12/05

07/07/06

31/07/98

31/07/98

06/11/07

27/07/99

27/07/99

-

-

-

-

-

-

-

1 818

1 314

-

-

-

-

-

-

-

3 427

2 418

-

-

-

-

-

-

-

5 245

3 732

0%

0%

0%

0%

0%

0%

0%

0%

0%

McCarthy Retail Ltd, Bosch Management Services (Pty)

Ltd & Jack Rabbits

The Spar Group Limited

The Standard Bank of South Africa Ltd, & Others

Kwezi V3 Engineers, BP South Africa & Turner & Townsend

NOSA, Sanlam, African Engineering International (Pty)

Ltd & Others

Blue Light Monitoring and Armed Response

Vacant Land

Vacant Land

Vacant Land

A

B

B

A

C

C

C

A

A



Date ofacquisition



Total

R000

Grading% ofFund

86

Disposal of Properties

2 Nereide Street - Paarden Eiland ($)

238 Church Street - Pietermartizburg ($)

Cnr Anvil & Industry Roads ($)

Total

2 Nereide Street, Paarden Eiland

238 Church Street, Pitermaritzburg

Cnr Anvil & Industry Roads, Isando

1 423 002

Disclosed in the balance sheet at as:

Investment property - at valuation

Properties classified as developments

Properties classified as held for disposal

6 932 003

38 570

1 861 110

(#) indicates leasehold properties with leases expiring between 2025 and 2054

(*) Before straight line rental adjustment

(@) Indicates a 50% share in property

($) Indicates properties owned directly by the fund

(£) Indicates a 50% share owned directly by the fund

(¢) Indicates properties bonded with Absa

(§) Indicates properties bonded with Omsfin

(¥) Indicates properties bonded with Nedbank

(^) Properties classified as held for disposal

8 831 683

Umlazi Mega City, Umlazi, KwaZulu Natal199 North Ridge Road, Durban



Weightedaverage

rental per m2

(*)


ValueR000

A n n u a l R e p o r t 2 0 0 887

Investment in associate (*) 173 150

Investment in property (*) 4 901 258

Fund net current liabilities (*) 180 709

Fund non-current liabilties (*) (1 664 935)

Fund total capital employed (*) 7 262 249

31/07/98

01/10/07

31/07/98

943 422 2 728 645 3 672 067

-

-

-

57 Sarel Baard Crescent, Centurion, Gauteng



Date ofacquisition



Total

R000

Grading% ofFund

Cnr Giel Basson Drive, Goodwood, Western Cape

88

SA CORPORATE REAL ESTATE FUND MANAGERS LIMITEDContents To The Annual Financial Statements

Page

Directors' responsibility 89

Declaration by secretary 89

Independent Auditor's report 90

Directors' report 91

Balance sheet 93

Income statement 94

Statement of changes in equity 95

Cash flow statement 95

Notes to the annual financial statements

1. General information 96

2. Adoption of new and revised international financial reporting standards 96

3. Accounting policies 96

4. Critical accounting estimates and judgements 98

5. New accounting statements and interpretations thereof 98

6. Investment in property fund units 98

7. Cash and cash equivalents 98

8. Share capital 98

9. Share premium 99

10. Non-distributable reserve 99

11. Deferred taxation liability 99

12. Income from property fund units 99

13. Taxation 99

14. Cash generated by operating activities 100

15. Dividends paid to shareholders 100

16. Taxation paid 100

17. Capital resources 100

18. Financial instruments and financial risk management 100

19. Related party transactions 102

A n n u a l R e p o r t 2 0 0 889

IM GrovesChairman – Risk, audit & compliance committee19 February 2009

The Company's directors are responsible for monitoring the preparation and fair presentation of the annual financial statements andrelated information included in this annual report.

In order for the Board to discharge its responsibilities, management has developed and continues to maintain a system of internalcontrol. The Board has ultimate responsibility for the system of internal control and reviews its operation, primarily through the risk,audit & compliance committee.

The annual financial statements are prepared in accordance with statements of International Financial Reporting Standards andincorporate disclosure in line with the accounting and corporate governance philosophy of the Company. They are based on appropriateaccounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The Board has satisfied itself that the Company has adequate resources to continue in operation for the foreseeable future and hasno reason to believe the business will not be a going concern in the year ahead.

The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the applicablefinancial reporting framework.

The annual financial statements for the year ended 31 December 2008 as set out on pages 91 to 102 were approved by the Boardof Directors on 19 February 2009 and are signed on its behalf by:

BM KodisangChairman19 February 2009

SA Corporate Real Estate Fund Managers Limited: Annual Financial Statements

Directors’ ResponsibilityFor And Approval Of The Annual Financial Statements

Declaration By Secretary

The secretary certifies that the Company has lodged with the Registrar of Companies all such returns as are required of a publiccompany, in terms of section 268G(d) of the Companies Act, No. 61 of 1973, as amended, and that all such returns are true, correctand up to date.

Marriott Property Services (Pty) Limited(A wholly owned subsidiary of Old Mutual Investment Group Property Investments (Pty) Limited)Company Secretary19 February 2009

90


Independent Auditor’s ReportTo The Members Of SA Corporate Real Estate Fund Managers Limited

Report on the Financial StatementsWe have audited the annual financial statements of SA Corporate Real Estate Fund Managers Limited which comprise the directors'report, the balance sheet as at 31 December 2008, the income statement, the statement of changes in equity and cash flow statementfor the year then ended, a summary of significant accounting policies and other explanatory notes, as set out on pages 91 to 102.

Directors' Responsibility for the Financial StatementsThe company's directors are responsible for the preparation and fair presentation of these financial statements in accordance withInternational Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibilityincludes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accountingpolicies; and making accounting estimates that are reasonable in the circumstances.

Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of thefinancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevantto the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An auditalso includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bythe directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the company as at 31 December2008, and the financial performance and its cash flows for the year then ended in accordance with International Financial ReportingStandards, and in the manner required by the Companies Act of South Africa.

Deloitte & ToucheRegistered Auditors

Per G Kruger CA(SA)Partner19 February 2009

2 Pencarrow CrescentLa Lucia Ridge Office EstateDurban

National Executive: GG Gelink - Chief Executive, AE Swiegers - Chief Operating Officer, GM Pinnock - Audit, DL Kennedy - Tax,L Geeringh - Consulting, L Bam - Corporate Finance, CR Beukman - Finance, TJ Brown - Clients & Markets,NT Mtoba - Chairman of the Board

Regional Leader: GC Brazier

A n n u a l R e p o r t 2 0 0 891

Nature of businessThe business of the company continues to be the management of property unit trust schemes in accordance with the CollectiveInvestment Schemes Act, No. 45 of 2002.

Issued share capitalThere were no changes to the authorised and issued share capital during the financial year under review. The authorised and issuedshare capital is:

2008 2007

R R

100 000 Ordinary shares of R2 each 200 000 200 000

1 800 000 “A” Ordinary shares of 1 cent each 18 000 18 000

218 000 218 000

Financial reviewThe annual financial statements fully reveal the results of the company's operations for the year under review.

InvestmentsThe company's beneficial ownership of units in the SA Corporate Real Estate Fund is 1 202 615 units (2007: 1 202 615 units).

DividendsThe following dividends have been declared:

2008 2007R R

Dividend No. 43 (No 42) - declared475,66 (2007: 305,70) cents per ordinary share 475 663 305 703237,83 (2007: 152,85) cents per “A” ordinary share 4 280 966 2 751 330

4 756 629 3 057 033


Directors’ Report31 December 2008

DirectorateThere were no changes in directors during the year under review and the directors are:

DirectorCJ EwinKJ ForbesIM GrovesBM KodisangI MkhariLM MojelaMM NgcoboRR PerkinES SeedatAPW SparksWJ SwainLC TappingWC van der Vent

Alternate directorA BeattieN CorbishleyGP DingaanP Zagaretos

92


The table below sets out the directors' fees for the year:31 December 2008 31 December 2007

R000 R000Non-executiveA Beattie *# 13 -KJ Forbes * 97 90IM Groves 116 115BM Kodisang *# 133 137I Mkhari 84 83LM Mojela 97 54MM Ngcobo 122 61ES Seedat 122 116WJ Swain 125 70WC van der Vent * 84 47MI Wyndham - 31CS Young*# - 39

ExecutiveCJ Ewin *# 112 105RR Perkin *# 96 92APW Sparks *# 96 54LC Tapping *# 96 87

1 393 1 181

* Fees accrue to the corporate entity where the director is employed# These directors are employed and paid by Old Mutual Property Investments

Post balance sheet events and going concernThe directors are not aware of any material post balance sheet events and are of the opinion that the company has adequateresources to continue in operation for the foreseeable future. The financial statements have accordingly been prepared on a goingconcern basis.

Company secretaryThe secretary of the company is Marriott Property Services (Pty) Limited whose business address is:

Marriott at KingsmeadKingsmead Office ParkDurban4001

and whose postal address is:

P O Box 207Durban4000

The above address is also the business address and registered office of the company.


Directors’ Report (continued)

31 December 2008

A n n u a l R e p o r t 2 0 0 893


Balance Sheetas at 31 December 2008

2008 2007Note R000 R000

ASSETS

Non-current assetsInvestment in property fund units 6 3 127 4 810

Current assets 7 425 6 774Trade receivables 4 647 3 185Cash and cash equivalents 7 2 778 3 589

TOTAL ASSETS 10 552 11 584

EQUITY AND LIABILITIES

Capital and reserves 2 985 4 419Share capital 8 218 218Share premium 9 1 782 1 782Non-distributable reserve 10 977 2 411Distributable reserve 8 8

Non-current liabilitiesDeferred taxation liability 11 153 411

Current liabilities 7 414 6 754Trade payables 2 122 3 318Current tax liabilities 535 379Shareholders' for dividend 4 757 3 057

TOTAL EQUITY AND LIABILITIES 10 552 11 584

83 Heidelburg Ave, City Deep, Gauteng

94

2008 2007Note R000 R000

Revenue 3.6 29 706 27 159

Income 29 706 27 159

Property fund units 12 29 438 26 865Interest received 268 294

Expenses 22 536 22 356

Administration expenses 1 512 1 256Asset management fees 19 631 19 886Audit fees - current year - 33

- Current year 43 33- Prior year overprovision (43) -Directors' fees 1 393 1 181

Profit before taxation and revaluation of investments 7 170 4 803

(Deficit)/surplus on revaluation of investment (1 683) 721

Profit before taxation 5 487 5 524

Taxation 13 2 164 1 850

Profit for the year attributable to shareholders 3 323 3 674


Income Statementfor the year ended 31 December 2008

106 Johan Ave, Sandton, Gauteng East Rand Galleria, Boksurg, Gauteng

A n n u a l R e p o r t 2 0 0 895

Non-Share Share distributable Distributablecapital premium reserve reserve TotalR000 R000 R000 R000 R000

Balance at 31 December 2006 218 1 782 1 794 8 3 802

Profit for the year attributable to shareholders - - - 3 674 3 674Transfer to non-distributable reserve - - 617 (617) -Dividends declared - - - (3 057) (3 057)

Balance at 31 December 2007 218 1 782 2 411 8 4 419

Profit for the year attributable to shareholders - - - 3 323 3 323Transfer from non-distributable reserve - - (1 434) 1 434 -Dividends declared - - - (4 757) (4 757)

Balance at 31 December 2008 218 1 782 977 8 2 985


Statement Of Changes In Equityfor the year ended 31 December 2008

2008 2007Note R000 R000

Operating activitiesCash generated by operating activities 14 3 889 3 405Interest received 268 294Distributions received 355 349Dividends paid to shareholders 15 (3 057) (1 571)Taxation paid 16 (2 266) (2 766)

Net cash flow from operating activities (811) (289)

Cash and cash equivalents at beginning of year 3 589 3 878

Cash and cash equivalents at end of year 7 2 778 3 589


Cash Flow Statementfor the year ended 31 December 2008

96

1. GENERAL INFORMATION

SA Corporate Real Estate Fund Managers Limited is a public company incorporated in South Africa. The address of its registeredoffice and principal place of business, together with its principal activities, are disclosed and described in the Directors' Report.

2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Company has adopted all of the new and revised Standards and Interpretations issued by the International AccountingStandards Board (“the IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”) of the IASB thatare relevant to its operations and effective for accounting periods beginning on or before 1 January 2008.

3. ACCOUNTING POLICIES

The financial statements provide information about the financial position, results of operations and changes in financial positionof the Company. They have been prepared in accordance with International Financial Reporting Standards. The accountingpolicies applied have been consistently applied to all years presented. The Company's functional and presentation currency isSouth African Rands.

The principal accounting policies are set out below:

3.1 INVESTMENTSThe Company's investments are initially recognised at cost and are stated at fair value at each reporting date. Gains or lossesarising from changes in the fair value or disposal are reflected in the income statement in the year in which they arise. Gainsnet of taxes are transferred to a non-distributable reserve in the statement of changes in equity. Losses net of taxes aretransferred to a non-distributable reserve to the extent that the decrease does not exceed the amount held in the non-distributablereserve.

3.2 TAXATIONIncome tax charge for the year comprises current and deferred tax, and secondary tax on companies. Income tax is recognisedin the income statement except to the extent that it relates to items recognised directly in equity. Current tax is the expectedtax payable on the taxable income for the year and any adjustment to tax payable in respect of previous years. Deferred taxationis provided for using the balance sheet liability method, based on temporary differences. Temporary differences are differencesbetween the carrying amounts of assets and liabilities for financial reporting purposes and their tax base. The amount of deferredtaxation provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities.Deferred taxation is charged to the income statement except to the extent that it relates to a transaction that is recogniseddirectly in equity. The effect on deferred taxation of any changes in tax rates is recognised in the income statement, except tothe extent that it relates to items previously charged or credited directly to equity. Deferred tax liability is not recognised ontemporary differences that arise from the initial recognition of goodwill, initial recognition of an asset or liability in a transactionthat is not a business combination which, at the time of transaction, affects neither the accounting nor taxable profit or loss;and temporary differences associated with investments in subsidiaries, associates and joint ventures where the timing of thereversal of the temporary differences can be controlled by the Company and it is probable that the temporary differences willnot reverse in the foreseeable future. A deferred tax asset is recognised to the extent that it is probable that future taxableincome will be available, against which the unutilised tax losses and deductible temporary differences can be used. Deferredtax assets are reduced to the extent that it is no longer probable that the related tax benefits will be realised. Additional incometaxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividendis recognised.


Notes To The Annual Financial Statementsfor the year ended 31 December 2008

A n n u a l R e p o r t 2 0 0 897

3. ACCOUNTING POLICIES (continued)

3.3 IMPAIRMENTThe Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or group offinancial assets, excluding financial assets at fair value through profit or loss, is impaired. An impairment loss is recognised inprofit or loss whenever the carrying amount of an asset exceeds its recoverable amount, which is the higher of an asset's netselling price and value in use. Whenever an impairment loss is subsequently reversed (except for goodwill), the carrying amountof the asset is increased to the extent that the increased carrying amount does not exceed the original carrying amount. Areversal of impairment loss is recognised immediately in profit or loss.

3.4 FINANCIAL INSTRUMENTSFinancial instruments are recognised when the company becomes a party to the contractual provisions of the particular instrument.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand and deposits held on call with banks.

Trade and other receivablesTrade and other receivables originated by the Company are held at amortised cost, using the effective interest rate method,after deducting accumulated impairment losses. Receivables with no fixed maturity are held at cost.

InvestmentsInvestments are initially recognised at cost, including directly attributable transaction costs. Subsequent to initial recognitionthese instruments are measured as follows:Held-to-maturity investments are held at amortised cost using the effective interest rate method after deducting accumulatedimpairment losses.At fair value through profit or loss and available for sale investments are held at fair value. Gains or losses are recognised innet profit for the year.

Financial liabilities and equityFinancial liabilities and equity instruments issued by the Company are classified according to the substance of the contractualarrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is anycontract that evidences a residual interest in the assets of the Company after deducting all its liabilities. The accounting policiesadopted for specific financial liabilities and equity instruments are set out below:

Equity instrumentsEquity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

Trade payablesTrade payables are carried at the fair value of the consideration to be paid in the future for goods and services that have beenreceived or supplied and invoiced or formally agreed with the supplier.

3.5 PROVISIONSProvisions are recognised when the Company has a present legal or constructive obligation as a result of past events for whichit is probable that an outflow of economic benefits will occur and where a reliable estimate can be made of the settlementamount of the obligation.

3.6 REVENUE RECOGNITIONRevenue comprises service fees, income from investments and interest income and is recognised when the right to receive payment is established.

98

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect theapplication of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differfrom these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised inthe year in which the estimate is revised and in any future years affected. There are no estimates or assumptions that have asignificant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

5. NEW ACCOUNTING STATEMENTS AND INTERPRETATIONS THEREOF

No standards, amendments to standards, or interpretations effective for the first time in the current accounting year are relevantto the Company.

The following standards, amendments to standards and interpretations, effective in future accounting periods, which are relevantto the Company, have not been early adopted in these financial statements:IAS 1 Presentation of financial statements (Amendments) (effective 1 January 2009)IAS 23 Borrowing costs (Amendments) (effective 1 January 2009)IAS 27 Consolidated and separate financial statements (Amendments) (effective 1 January 2009)IFRS 3 Business combinations (Amendments) (effective 1 July 2009)IFRS 8 Operating segments (effective 1 January 2009)IFRIC 15 Agreements for construction of Real Estate (1 January 2009)

2008 2007R000 R000

6. INVESTMENT IN PROPERTY FUND UNITS

SA Corporate Real Estate Fund

1 202 615 units in SA Corporate Real Estate Fund at carryingvalue at beginning of year 4 810 4 089(Deficit)/surplus on revaluation of units (1 683) 721

Market value at end of year 3 127 4 810

7. CASH AND CASH EQUIVALENTS

Cash on call 2 762 3 548Current accounts 16 41

2 778 3 589

8. SHARE CAPITAL

Authorised and issued

100 000 Ordinary shares of R2 each 200 2001 800 000 “A” Ordinary shares of 1 cent each 18 18

218 218




A n n u a l R e p o r t 2 0 0 899

2008 2007R000 R000

9. SHARE PREMIUM

Arising on the issue of 1 800 000 “A” Ordinary shares 1 782 1 782

10. NON-DISTRIBUTABLE RESERVES

Balance at beginning of the year 2 411 1 794Revaluation of investments net of deferred capital gains taxation (1 434) 617

Balance at end of the year 977 2 411

Comprising:Capital profit arising on the sale of Marriott Property Equity Unit Trust units 34 34Surplus arising on the revaluation of investments net of deferred capital gains taxation 943 2 377

977 2 411

11. DEFERRED TAXATION LIABILITY

Balance at beginning of the year 411 323Effect of rate change (14) -Charge for the year (244) 88

Balance at end of the year 153 411

Temporary differences comprise of:Prepayments - 8Deferred taxation on revaluation of investments 153 403

153 411

12. INCOME FROM PROPERTY FUND UNITS

Income from SA Corporate Real Estate Fund:Service fee 29 083 26 516Distributions received 355 349

29 438 26 865

13. TAXATION

South African normal taxation- Taxation on income - Current 2 023 1 380 - Deferred (258) 88- Taxation on dividends - Secondary taxation on companies 399 382

2 164 1 850

100

13. TAXATION (continued)2008 2007

% %Reconciliation of effective tax rate:Statutory rate 28,0 29,0Secondary taxation on companies 7,3 6,9Capital gains taxation 4,3 (1,9)Prior year adjustments (0,3) (0,7)Non-deductible expenses 0,1 0,2

Effective rate 39,4 33,5

14. CASH GENERATED BY OPERATING ACTIVITIES 2008 2007R000 R000

Cash receipts from service fees 27 621 24 492 Service fees 29 083 26 516 Increase in accounts receivable (1 462) (2 024)

Cash paid to suppliers (23 732) (21 087) Expenses (22 536) (22 356) (Decrease)/increase in accounts payable (1 196) 1 269

Cash generated from operations 3 889 3 405

15. DIVIDENDS PAID TO SHAREHOLDERS

Balance at beginning of the year (3 057) (1 571)Charged to the statement of changes in equity (4 757) (3 057)Balance at end of the year 4 757 3 057

(3 057) (1 571)

16. TAXATION PAID

Balance at beginning of the year (379) (1 383)Charged to the income statement (2 422) (1 762)Balance at end of the year 535 379

(2 266) (2 766)

17. CAPITAL RESOURCES

The management company's capital resources employed orimmediately available for employment for the purpose of theCollective Investment Scheme at the year end amounted to 2 985 4 419

18. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

The Company's financial instruments consist primarily of cash deposits with banks, investments, trade and other receivablesand payables. All these financial instruments are carried at cost or amortised cost with the exception of the Company's investmentwhich is carried at fair value.

In the normal course of its operations, the Company is inter alia exposed to credit, interest rate, liquidity and price risk. In orderto manage these risks, the Company may enter into transactions which make use of derivatives. The Company does not speculatein or engage in the trading of derivative instruments.




A n n u a l R e p o r t 2 0 0 8101

18. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)2008 2007

Credit risk R000 R000Credit risk is the risk that an asset, in the form of a monetary claim against acounterparty, may not result in a cash receipt (or equivalent) in accordance withthe terms of a contract. The credit risk attached to the Company's cash depositsis minimised by its cash deposits only being placed with reputable financial institutions.Credit risk with respect to trade and receivables is limited in view of all fee incomebeing received from a JSE listed Collective Investment Scheme in Property whichis restricted to a maximum debt level of 30% of the asset value and the fact thatthe Company is responsible for the management of this entity.

All trade receivables are current and unsecured. No impairment is considerednecessary and no amounts have been provided for or written off (2007: nil).

Trade and other receivables 4 647 3 185Cash and cash equivalents 2 778 3 589

7 425 6 774

Interest rate riskInterest rate risk is the risk that fluctuating interest rates will unfavourably affectthe Company's earnings and the value of its assets, liabilities and equity. Theexposure to interest rate risk is limited to cash resources and is managed throughmonitoring cash flows and investing surplus cash at negotiated rates which enablesthe Company to maximise returns while minimising risks.

Cash and cash equivalents 2 778 3 589

Due to the relatively low cash and cash equivalents balances, a change in theinterest rates would not have a significant impact on the operating results of theCompany.

Liquidity riskLiquidity risk is the risk that cash may not be available to pay obligations when dueat a reasonable cost. The Company proactively manages its liquidity risk by regularlyassessing cash requirements and monitoring cash flows, whilst ensuring surpluscash is invested in a manner to achieve maximum returns. The Company alsocomplies with the capital adequacy requirements of the Collective InvestmentSchemes Control Act and reports to the Financial Services Board monthly in thisregard.

Less than three months:Trade and other payables 2 122 3 318Shareholders for dividend 4 757 3 057

6 879 6 375

Between three months and one year:Current tax liabilities 535 379

102

18. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued)2008 2007R000 R000

Price riskPrice risk arises from the risk of an adverse effect on the carrying value of theCompany's investment resulting from fluctuations in the quoted price of the equity.The Company only has an investment in the Collective Investment Scheme managedby it.

Investment in property fund units 3 127 4 810

A 10% movement in the value of the quoted price of the units would result in aR312 700 (2007: R481 000) change to the surplus on revaluation of investmentsand investment value.

19. RELATED PARTY TRANSACTIONS

Related party transactions are concluded on an arm's length basis in the normalcourse of business. Details of material transactions with those related parties thattook place during the year under review are summarised below:

Party concerned Transaction type

SA Corporate Real Estate Fund Service fee 29 083 26 516Distributions received 355 349

Old Mutual Investment GroupProperty Investments (Pty) Ltd Asset management fee (19 631) (19 886)

Various Directors fees 1 393 1 181

Shareholders Dividend (4 757) (3 057)

Balances at year end

Nature Disclosed as

Service fee receivable Trade receivables 2 334 3 082

Asset management fee payable Trade payables (1 750) (2 312)

Directors’ fees payable Trade payables - (906)

Dividend payable Shareholders for dividend (4 757) (3 057)

Asset management fee Trade receivables 2 181 -

Expense reimbursements (Old MutualProperty Investments) Trade payables (254) -




A n n u a l R e p o r t 2 0 0 8103

Terms and Definitions

BBBEEBroad based black economic empowerment (BEE - black economic empowerment)

Buffcol portfolioA portfolio of 37 mainly industrial properties acquired by the Fund in 2007 at a value of R965 million, with the last property transferringto the Fund in early 2008.

Building gradingProperties are graded A, B or C based on a weighting of the following criteria:

• Strength of tenant• Location: short and long term• Size desirability• Design flexibility• Quality of improvements• Quality of finishes• Anticipated maintenance costs

The items are rated 1 - poor, 2 - bad, 3 - average, 4 - good or 5 - excellent (maintenance is scaled in reverse)

Capital returnMovement in the unit price expressed as a percentage of the opening unit price.

CBRECB Richard Ellis

Closed periodA closed period is defined in the JSE Listings Requirements as:

• the date from the financial year end up to the date of the earliest publication of the preliminary report, abridged report or provisional report;

• the date from the expiration of the first six month period of a financial year up to the date of publication of the interim results;

• the date from the expiration of the second six month period of the financial year up to the date of publication of the secondinterim results, in cases where the financial period covers more than 12 months;

• in the case of reporting on a quarterly basis, the date from the end of the quarter up to the date of the publication of the quarterly results; and

• any period when an issuer, or any listed major subsidiary thereof, or any of their listed securities are trading under a cautionary announcement.

Current historic yieldThe distributions for the previous 12 months divided by the current unit price.

(Discount)/premium to net tangible asset valueThe difference between the price at which the units are trading and the net tangible asset value, divided by the net tangible assetvalue. A discount implies that the units are trading at a price below the asset value and a premium that they are trading above theasset value.

Distributable earningsNet income that arises from the core business of the PUT i.e. net rental income after Fund expenses but excluding all items of a capitalnature. See page 10 for a breakdown of distributable earnings.

Distribution100% of the distributable earnings of the Group are required to be distributed to unitholders. The Fund does not pay any taxationand unitholders receive pre-tax rentals, interest and dividends on a conduit principle. Distributions are paid six monthly in March andSeptember for the periods ending 31 December and 30 June respectively.

104

Distribution paid in advance/distribution contributionWhen units are issued part way through a distribution period, those units are entitled to the full distribution on payment date. In ordernot to dilute existing unitholders distributions, new units issued during a period are therefore required to contribute a pro-rata amounttowards the upcoming distribution, which they effectively receive back on payment of the distribution.

DTI BEE CodesDepartment of Trade and Industry Black Economic Empowerment codes.

Exit yieldIncome for the following 12 months divided by the sale price, expressed as a percentage.

Historic yieldThe distributions for the previous 12 months divided by the closing unit price expressed as a percentage.

IFRSInternational Financial Reporting Standards.

Income (dividend/distribution) yieldDistributions for the previous 12 months divided by the opening unit price for the year, expressed as a percentage.

Initial (forward) yieldExpected income for the following 12 months divided by a current value/price, expressed as a percentage.

Interest coverInterest cover is calculated as the number of times that distribuable earnings before interest paid and distribution contributions coversinterest paid.

Net tangible asset valueThe asset value of the Fund (usually expressed in cents per unit) reduced by goodwill and increased by the differential betweendeferred taxation provided on building revaluations at 28% and the capital gains tax rate of 14%, which is the rate that would bepayable on disposal of the property.

Pre-acquisition distributionDistribution received from SA Retail Properties Limited which related to the period prior to SA Corporate's acquisition of the companyi.e. for the period from 1 October 2006 to 17 April 2007.

Property portfolioProperties identified in the property portfolio on pages 74 to 87. The properties are either owned directly by the Fund or are held in100% owned subsidiaries of the Fund. The property portfolio comprises:

Group2008 2007 R000 R000

Investment property at valuation 6 932 003 8 401 198 Property under development 38 570 50 067 Properties classified as held for disposal 1 861 110 18 000

8 831 683 8 469 265

Property Sector Charter (PSC)A transformation charter, published in the government gazette in October 2007, issued under Section 12 of the Broad-Based BlackEconomic Empowerment Act, No. 53 of 2003. The PSC is in the process of being migrated to a Code of Good Practice under Section9 of the Broad-Based Black Economic Empowerment Act, No. 53 of 2003.

PUTProperty Unit Trust.

Terms And Definitions (continued)

A n n u a l R e p o r t 2 0 0 8105

Old Mutual Property InvestmentsOld Mutual Investment Group Property Investments (Pty) Limited.

REITSReal Estate Investment Trusts.

SA GAAPSouth African Generally Accepted Accounting Practice.

Sharemax portfolioA portfolio of nine neighbourhood and community shopping centres and one office block with a value of R1 026 million purchased bySA Retail Properties Limited in 2007 and therefore acquired by the Fund as part of the acquisition of SA Retail.

Standing portfolioProperties in the portfolio that have been held for the full current year and the comparable 12 months in the prior year. Acquisitions,developments and disposals in either the current or prior year are excluded from the standing portfolio.

Stepped debtThe fixed rate in the debt starts at a low rate and then escalates at a fixed percentage each year. The details are set out onpage 37.

Straight line adjustmentAn accounting adjustment required to smooth escalated rental income and interest expense on stepped rate debt over the period ofthe lease / debt. For example if a lease has 8% escalations for 5 years, the full rental receivable is added together, including allescalations, and is divided by the five years. Distributable earnings are calculated by excluding the straight line adjustment (effectivelydistributable earnings are calculated using the cash flows from rentals as opposed to a smoothed rental).

Tenant gradingAs per section 13.18 of the JSE Listing Requirements:A= Local, provincial and national government, parastatals, listed tenants and national retailersB= Professional firms and other medium sized companiesC= Other

Tenant retention (renewal) rate %The retention rate is calculated as the square metres renewed expressed as a percentage of the total square metres expired duringthe same period.

Total investment portfolioThe property portfolio and investment in associate (Oryx).

Total returnsTotal returns are calculated as the income yield plus the capital return, assuming that the distributions are re-invested into units.

UnitsDue to the structure of the Fund as a Property Unit Trust, shares are referred as units and shareholders as unitholders. Units aretraded on the JSE in exactly the same way as shares in listed companies are.

Vacancy factor (as percentage of lettable space)Unoccupied space (excluding unoccupied space in development buildings) in square metres divided by total lettable space.

Vacancy factor (as percentage of total income)Lost rental from unoccupied space (excluding unoccupied space in development buildings) divided by total rentals.

106

DISTRIBUTION DECLARATION

Unitholders’ Diary

DISTRIBUTION PLAN DATESfor the financial year ending 31 December 2009

1st half to 30-Jun-2009 24-Aug-09 17-Sep-09 18-Sep-09 25-Sep-09 28-Sep-092nd half to 31-Dec-2009 01-Mar-10 18-Mar-10 19-Mar-10 26-Mar-10 29-Mar-10

Income distributionperiod

Distributionannouncement

Last date totrade cum-distribution

Units will tradeex-distribution

Record dateto participate

in thedistribution

Payment ofdistribution

UNIT PRICE AND TRADEABILITY

The movement in the unit price and the monthly trades in SA Corporate for the year are set out in the table below. During the year27% of the units with a value of R1,6bn traded.

Share code SAC

ISIN ZAE000083614

Distribution number 28

Distribution per unit 15,25 cents

Declaration date Friday, 20 February 2009

Last date to trade cum-distribution Friday, 20 March 2009

Units commence trading ex-distribution Monday, 23 March 2009

Record date to participate in distribution Friday, 27 March 2009

Distribution payment date Monday, 30 March 2009

Unit certificates may not be dematerialised of re-materialised between Monday, 23 March and Friday, 27 March 2009, both days inclusive.

300 000

250 000

200 000

150 000

100 000

50 000

-

R000400

350

300

250

200

150

100

50

-

cpu

01/08 02/08 03/08 04/08 05/08 06/08 07/08 08/08 09/08 10/08 11/08 12/08

SAC value traded SAC Close

2%

2%

2%1%

2%2%

1%

4%

2%

3%

2%

3%

Source: INET

A n n u a l R e p o r t 2 0 0 8107

UNITHOLDER PROFILE

The major unitholders are set out in the table below:

No. ofBeneficial unitholders holding 5% or more Units %

Public Investment Corporation 659 634 462 31,34Old Mutual Group 324 596 707 15,42The Wipken Trust* 196 384 846 9,33

1 180 616 015 56,10

* The Wipken Trust is owned 50% by the Absa Group and 50% by the Old Mutual Group.

SA Corporate SA Corporate Value tradedMonth high low Ruling* No. traded Rm

Jan - 08 405 305 339 35 980 851 128Feb - 08 385 330 350 46 057 807 166Mar - 08 350 275 305 26 711 024 83Apr - 08 328 285 285 33 946 659 104May - 08 300 270 280 30 325 627 86Jun - 08 280 235 247 41 071 858 105Jul - 08 300 230 289 47 742 819 127Aug - 08 305 250 265 83 780 650 241Sep - 08 280 225 235 38 069 364 101Oct - 08 259 194 225 74 651 027 166Nov - 08 245 215 245 44 337 188 102Dec - 08 278 235 260 59 271 217 150

561 946 091 1 559* Month end close price

The yield of the sector, as measured by the South African Listed Property Index (J253) is compared to the yield of SA Corporate below:

UNIT PRICE AND TRADEABILITY (continued)

Div

iden

d Yi

eld

%

15,5

13,5

11,5

9,5

7,5

5,5

Listed Property Index (J253) SAC without earnings enhancement

12/07 01/08 02/08 03/08 04/08 05/08 06/08 07/08 08/08 09/08 10/08 11/08 12/08 01/09

Source: INET

SA Corporate is currently trading at a significant discount to the sector as measured by the South African Listed Property Index.The differential has been caused by a number of factors including low distribution growth, the dissolution of the BEE shareholdingand the Fund’s exposure to smaller retail centres considered more vulnerable in difficult economic times.

108

Analysis of unitholders by size of holding is contained in the table below:

No. of No. ofUnitholders’ classification Unitholders % Units %

1 - 1 000 units 1 082 16,05 390 725 0,021 001 - 10 000 units 2 106 31,25 11 523 483 0,5510 001 - 100 000 units 2 857 42,39 100 672 048 4,78100 001 - 1 000 000 units 545 8,09 165 760 453 7,881 000 001 units and over 150 2,22 1 826 121 903 86,77

6 740 100,00 2 104 468 612 100,00

Analysis of unitholders by classification is contained in the table below:

No. of No. ofUnitholders’ profile Unitholders % Units %

Assurance & insurance companies 42 0,62 267 880 800 12,73Close corporations 63 0,94 4 559 702 0,22Custodians 28 0,42 34 535 756 1,64Foundations & charitable funds 139 2,06 27 615 004 1,31Insurance company 12 0,18 3 368 838 0,16Investment partnerships 40 0,59 61 713 023 2,93Medical aid funds 18 0,27 6 003 872 0,29Multi-managed funds 18 0,27 59 535 778 2,83Organs of state 2 0,03 659 634 462 31,34Pension & provident funds 112 1,66 85 008 619 4,04Private companies 124 1,84 78 841 249 3,75Public companies 9 0,13 17 414 631 0,83Retail unitholders 4 832 71,69 110 140 878 5,23Scrip lending 11 0,16 18 505 763 0,88Share schemes 10 0,15 2 351 164 0,11Stockbrokers 3 0,04 1 429 695 0,07Trusts 1 159 17,20 102 966 996 4,89Unclaimed scrip 3 0,04 57 408 0,00Unit trusts 115 1,71 562 904 974 26,75

6 740 100,00 2 104 468 612 100,00

Unitholders’ Diary (continued)

Analysis of unitholders between public and non-public holders is contained in the table below:

No. of % of issuedPublic/non-public unitholders Units Unit Capital

Non-public unitholders 1 017 900 990 48,36Holders holding more than 10% (excluding directors' holdings) 1 014 243 411 48,19Directors 3 385 444 0,16 direct beneficial 1 306 415 0,06 indirect beneficial 2 079 029 0,10Share schemes and trusts (excluding directors' holdings) 272 135 0,01Public unitholders 1 086 567 622 51,64

2 104 468 612 100,00

UNITHOLDER PROFILE (continued)

A n n u a l R e p o r t 2 0 0 8109

SA Corporate Real Estate Fund (“SA Corporate” or “the Fund”)(Incorporated in the Republic of South Africa)Share Code: SAC ISIN Code: ZAE000083614A Collective Investment Scheme in Property registered in terms of the Collective Investment Schemes Control Act, No. 45 of 2002and managed by SA Corporate Real Estate Fund Managers Limited(Registration number 1994/009895/06)

PLEASE TAKE NOTICE that the 9th Annual General Meeting of SA Corporate will be held in The Conference Room, Marriott at Kingsmead,Kingsmead Office Park, Durban at 10h00 on Thursday, 23 April 2009.

AGENDA

1. Notice convening the Meeting

2. Apologies

3. Confirmation of the minutes of the 8th Annual General Meeting held on 24 April 2008

4. Report of the Chairman of SA Corporate Real Estate Fund Managers Limited (“SA Corporate Fund Managers”), incorporating the activities of SA Corporate

5. Ordinary Resolution Number 1

To receive the Annual Financial Statements for the year ended 31 December 2008 including the Chairman's report, the ManagementCompany's report and the report of the Auditors thereon.

6. Ordinary Resolution Number 2

To re-elect and confirm the appointment of directors in accordance with the provisions of the Articles of Association of SA Corporate Fund Managers, as nominated by unitholders of SA Corporate. The voting to be conducted by way of specific individualresolutions.

The directors that were nominated by unitholders and appointed at the last Annual General Meeting were Mr WJ Swain and MrWC van der Vent. Messrs Swain and van der Vent being eligible, have indicated that they are available for re-election. Any newappointment is subject to approval by the Registrar of Collective Investment Schemes.

7. Special Resolution Number 1

“Resolved that, as a general approval contemplated in sections 85(2) and 85(3) of the Companies Act 61 of 1973, as amended(“the Act”), the acquisition of units issued by the Fund and/or its subsidiaries upon such terms and conditions and in such amounts as the directors may from time to time decide, but subject to the provisions of section 85 to section 89 of the Act andthe JSE Limited (“JSE”) Listings Requirements, namely that:

(a) the repurchase of securities will be effected through the order book operated by the JSE trading system and done withoutany prior understanding or arrangement between the Fund and the counterparty;

(b) authorisation thereto being given by the Fund's Trust Deed;

(c) approval by unitholders in terms of a special resolution of the Fund, which shall be valid only until the Fund's next AnnualGeneral Meeting or for 15 months from the date of the special resolution, whichever period is shorter;

Notice Of Annual General Meeting

110

(d) in determining the price at which the Fund's units are acquired by the Fund in terms of this general authority the maximumpremium at which such units may be acquired shall be 10% of the weighted average of the market price at which suchunits are traded on the JSE, as determined over the five trading days immediately preceding the date of the repurchaseof such units by the Fund;

(e) in any one financial year the general authority to repurchase will be limited to a maximum of 20% of the Fund's issuedshare capital of that class at the time authority is granted in that financial year;

(f) the Fund after such repurchases still complies with paragraphs 3.37 to 3.41 of the JSE Listings Requirements concerningunitholder spread requirements;

(g) the Fund makes an announcement in terms of paragraph 11.27 of the JSE Listings Requirements as soon as the Fund and/or its subsidiaries has acquired, on a cumulative basis, more than 3% of the number of units in issue at the date of the general meeting at which this special resolution is approved, and for each 3% in aggregate of the initial number acquired thereafter;

(h) the Fund only appoints one agent to effect any repurchase(s) on its behalf;

(i) repurchases may not be made during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements,meaning a closed period or any period when there exists any matter, which constitutes unpublished price sensitive information in relation to the issuer's securities (whether or not a director has knowledge of such matter), unless the Fund has a repurchase programme in place where the dates and quantities of securities to be traded during the relevantperiod are fixed (not subject to any variation) and full details of the programme have been disclosed in an announcementreleased on SENS prior to the commencement of the prohibited period;

(j) the Fund will be in a position to repay its debts in the ordinary course of business for a period of twelve months from the Fund first acquiring securities under this general approval and subject to (n) below;

(k) the assets of the Fund, being fairly valued in accordance with International Financial Reporting Standards, will be in excess of the liabilities of the Fund for a period of twelve months from the Fund first acquiring securities under this general approval and subject to (n) below;

(l) the capital and reserves of the Fund and the Group will be adequate for a period of twelve months from the Fund first acquiring securities under this general approval and subject to (n) below;

(m) the working capital of the Fund and the Group will be adequate for ordinary business purposes for a period of twelve months from the Fund first acquiring securities under this general approval and subject to (n) below; and

(n) upon entering the market to proceed with the repurchase, the Fund's Sponsor, Nedbank Capital, will have discharged its duties as set out in Schedule 25 of the JSE Listings Requirement.

The JSE Listings Requirements require the following additional disclosure for purposes of this general authority, some of whichis disclosed in the annual report of which this notice forms part as set out below:

- Directors and management - pages 20 - 24- Major unitholders of the Fund - page 107- Directors' interests in securities - page 34; and- Unitholders' Funds - pages 48 and 59.

Notice Of Annual General Meeting (continued)

A n n u a l R e p o r t 2 0 0 8111

Material changeThere have been no material changes in the affairs or financial position of the Fund and its subsidiaries since the dateof signature of the audit report and the date of this notice.

Directors' responsibility statementThe directors, whose names are given on pages 21 to 24 of the annual report, collectively and individually accept fullresponsibility for the accuracy of the information pertaining to Special Resolution Number 1 and certify that to the bestof their knowledge and belief there are no facts that have been omitted which would make any statement false ormisleading, and that all reasonable enquiries to ascertain such facts have been made and that this resolution containsall such information.

Litigation statementIn terms of section 11.26 of the JSE Listings Requirements, the directors, whose names are given on pages 21 to 24 ofthe annual report of which this notice forms part, are not aware of any legal or arbitration proceedings, includingproceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous12 months, a material effect on the Fund's financial position.

Reason for and effect of the Special Resolution Number 1The reason and effect for the Special Resolution Number 1 is to authorise the Fund and/or its subsidiaries by way of ageneral authority to acquire its own issued units on such terms, conditions and such amounts determined from time totime by the directors, subject to the limitations set out above.

8. To transact any other business which may be transacted at an Annual General Meeting

9. General

SA CORPORATE REAL ESTATE FUND MANAGERS LIMITED,MARRIOTT PROPERTY SERVICES (PTY) LIMITED, a subsidiary ofOLD MUTUAL INVESTMENT GROUP PROPERTY INVESTMENTS (PTY) LIMITED(COMPANY SECRETARY)

6 March 2009

Pinecrest Shopping Centre, Pinetown, KwaZulu Natal

112

SA Corporate Real Estate Fund(“SA Corporate” or “the Fund”)(Share Code: SAC ISIN Code: ZAE000083614)

1. An SA Corporate unitholder (certificated or own name dematerialised unitholder) entitled to attend and vote at the Annual General Meeting is entitled to appoint one or more proxies to attend, speak and vote, and on a poll, in his/her stead. Such proxyneed not be a member of the Fund. For the convenience of registered certificated SA Corporate unitholders or SA Corporate unitholders who have dematerialised their SA Corporate units with own-name registration, a form of proxy is attached hereto.Duly completed forms of proxy must be lodged at the registered office of the Fund or at the transfer secretaries at the addressesbelow by no later than 10h00 on Tuesday, 21 April 2009.

SA Corporate unitholders who have dematerialised their SA Corporate units and have not selected own-name registration mustadvise their Central Securities Depository Participant (CSDP) or broker of their voting instructions should they be unable to attendthe Annual General Meeting but wish to be represented thereat. Dematerialised SA Corporate unitholders without own-nameregistration should contact their CSDP or broker with regard to the cut-off time for their voting instructions. If, however, suchmembers wish to attend the General Meeting in person, then they will need to request their CSDP or broker to provide themwith the necessary authority in terms of the custody agreement entered into between the dematerialised unitholder and theirCSDP or broker.

2. Should you wish to nominate a director, a Director's Nomination Form, to be completed by the nominator and person(s) nominatedas director, can be collected from Ms W Raffinetti at the registered office of SA Corporate.

3. The Director's Nomination form together with their Curriculum Vitae is to be lodged at the registered office of SA Corporate byno later than 10h00 on 16 April 2009.

REGISTERED OFFICEMarriott at KingsmeadKingsmead Office ParkDURBAN, 4001

Postal: PO Box 207DURBAN4000

Tel. +27 31 366 1201Fax. +27 31 366 1364

TRANSFER SECRETARIESComputershare Investor Services 2004 (Pty) LimitedGround Floor, 70 Marshall StreetJOHANNESBURG, 2001

Postal: PO Box 61051MARSHALLTOWN2107

Tel. +27 11 370 5000Fax. +27 11 688 5218

Notes To Notice Of Annual General Meeting

A n n u a l R e p o r t 2 0 0 8113

SA Corporate Real Estate Fund (“SA Corporate” or “the Fund”)(Incorporated in the Republic of South Africa)Share Code: SAC ISIN Code: ZAE000083614A Collective Investment Scheme in Propertyregistered in terms of the Collective Investment Schemes Control Act, No. 45 of 2002 and managed bySA Corporate Real Estate Fund Managers Limited(Registration number 1994/009895/06)

This form of proxy is for the use by SA Corporate unitholders who hold certificated SA Corporate units (“certificated SACorporate unitholders”) or who are registered as own-name in dematerialised form, (“own-name dematerialised SACorporate unitholders”) only. SA Corporate unitholders who have dematerialised their SA Corporate units, other thanwith own-name registration, are requested to contact their CSDP for a full understanding of the action required by them.

For use by certificated SA Corporate unitholders and own-name dematerialised SA Corporate unitholders only at the Annual GeneralMeeting of the Fund to be held at The Conference Room, Marriott at Kingsmead, Kingsmead Office Park, Durban on Thursday, 23 April2009, commencing at 10h00, or at any adjournment thereof.

I/We (Name/s in block letters)

of (Address)

being the registered holder/s of units in SA Corporate

hereby appoint of

or failing him ofor failing him THE CHAIRMAN OF THE MEETING as my/our Proxy to attend, speak and vote for me/us and on my/our behalf at theAnnual General Meeting and at any adjournment thereof.

Unless otherwise instructed, my/our Proxy will vote or abstain as he/she thinks fit.

Proxy Form

FOR AGAINST ABSTAIN1. Ordinary Resolution Number 1

To receive the Annual Financial Statements for the year ended 31 December 2008

2. Ordinary Resolution Number 22.1 To re-elect Mr W J Swain

2.2 To re-elect Mr W C van der Vent

2.3 To elect any other director duly nominated

3. Special Resolution Number 1General authority to repurchase securities

Signed at on this day of 2009

Full Names(in block letters)

Signature(s)

Assisted by (Guardian) date 2009

114

SA Corporate Real Estate Fund (“SA Corporate” or “the Fund”)(Incorporated in the Republic of South Africa)Share Code: SAC ISIN Code: ZAE000083614A Collective Investment Scheme in Propertyregistered in terms of the Collective Investment Schemes Control Act, No. 45 of 2002 and managed bySA Corporate Real Estate Fund Managers Limited(Registration number 1994/009895/06)

A unitholder entitled to attend and vote is entitled to appoint a Proxy to attend, speak, vote, and on a poll, vote in his stead, andsuch Proxy need not be a unitholder of SA Corporate.

REGISTERED OFFICE DETAILSPostal: PO Box 207 Marriott at Kingsmead Tel. +27 31 366 1201

DURBAN Kingsmead Office Park Fax. +27 31 366 13644000 DURBAN

TRANSFER SECRETARIESPostal: PO Box 61051 Computershare Investor Services Tel. +27 11 370 5000

MARSHALLTOWN 2004 (Pty) Ltd Fax. +27 11 688 52182107 Ground Floor, 70 Marshall Street

JOHANNESBURG

Proxy Form (continued)

INSTRUCTIONS ON SIGNING AND LODGING THE PROXY FORM

1. This form of proxy must only be used by certificated SA Corporate unitholders or own name dematerialised SA Corporate unitholders.2. If unitholders have dematerialised their units with a CSDP or broker, other than own-name dematerialised unitholders, they must arrange with

the CSDP or broker concerned to provide them with the necessary authorisation to attend the Annual General Meeting and vote thereat or theunitholder concerned must instruct their CSDP or broker as to how they wish to vote in this regard. This must be done in terms of the agreemententered into between the unitholder and the CSDP or broker concerned.

3. An SA Corporate unitholder entitled to attend and vote may insert the name of a proxy or the names of two alternative proxies of the unitholder'schoice in the space provided, with or without deleting “the Chairman of the meeting”. A proxy need not be a unitholder of the Fund. The personwhose name stands first on the form of proxy and who is present at the meeting will be entitled to act as proxy to the exclusion of those whosenames follow.

4. An SA Corporate unitholder is entitled to one vote on a show of hands and on a poll the SA Corporate unitholder is entitled to one vote for each SA Corporate unit held. An SA Corporate unitholder's instructions to the proxy must be indicated by inserting the relevant number of votesexercisable by the SA Corporate unitholder in the appropriate box. Failure to comply with this will be deemed to authorise the proxy to vote orto abstain from voting at the meeting as he/she deems fit in respect of all the SA Corporate unitholders' votes.

5. A vote given in terms of an instrument of proxy shall be valid in relation to the meeting notwithstanding the death of the person granting it, or the revocation of the proxy, or the transfer of the SA Corporate units in respect of which the vote is given, unless an intimation in writing ofsuch death, revocation or transfer is received by the transfer secretaries, not less than 48 hours before the commencement of the meeting.

6. If an SA Corporate unitholder does not indicate on this form of proxy that his/her proxy is to vote in favour of or against any resolution or to abstain from voting, or gives contradictory instructions, or should any further resolution(s) or any amendment(s) which may properly be put before the meeting be proposed, the proxy shall be entitled to vote as he/she thinks fit.

7. The Chairman of the meeting may reject or accept any form of proxy which is completed and/or received, other than in compliance with thesenotes.

8. The completion and lodging of this form of proxy will not preclude the relevant SA Corporate unitholder from attending the meeting and speakingand voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such SA Corporate unitholder wish to do so, subjectto the conditions stated herein.

9. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the Fund or unless this requirement is waived by the Chairman of the meeting.

10. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documentsestablishing his/her capacity are produced or have been registered by the Fund.

11. Where there are joint holders of SA Corporate units:a. any one holder may sign this form of proxy;b. the vote(s) of the senior unitholder (for that purpose seniority will be determined by the order in which the names of SA Corporate unitholders appear in the Fund's register of SA Corporate unitholders) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint SA Corporate unitholder(s).

12. Forms of proxy should be lodged with or mailed to the Fund's registered office or the transfer secretaries to be received by no later than 10h00on Tuesday, 21 April 2009 (or 48 hours before any adjournment of the meeting which date, if necessary, will be notified in the press and on the Stock Exchange News Service).

13. Any alteration or correction made to this form of proxy, other than the deletion of alternatives, must be initialled by the signatory/ies.


115

Administration

COMPANY SECRETARY AND REGISTERED OFFICE

Marriott Property Services (Pty) LimitedMarriott at KingsmeadKingsmead Office ParkDURBAN, 4001PO Box 207DURBAN, 4000Tel. +27 31 366 1201Fax +27 31 366 1364

PROPERTY ASSET MANAGER, PROPERTY MANAGERAND CONSULTANT

Old Mutual Investment Group Property Investments (Pty) LimitedMarriott at KingsmeadKingsmead Office ParkDURBAN, 4001PO Box 207DURBAN, 4000

AUDITORS

Deloitte & Touche2 Pencarrow CrescentPencarrow ParkLa Lucia Ridge Office EstateLA LUCIA, 4051PO Box 243DURBAN, 4000

TRUSTEES

Absa Bank LimitedFlora Park Office1st Floor, Block ECorner of Ontdekkers and Conrad RoadsFLORIDA, 1709PO Box 1132JOHANNESBURG, 2000

TRANSFER SECRETARIES

Computershare Investor Services 2004 (Pty) LimitedGround Floor, 70 Marshall StreetJOHANNESBURG, 2001PO Box 61051MARSHALLTOWN, 2107Tel. +27 11 370 5000Fax. +27 11 688 5218

SPONSORS

Nedbank Capital, a division of Nedbank Limited3rd Floor, Corporate Place, Nedbank Sandton135 Rivonia RoadSANDOWN, 2196PO Box 1144JOHANNESBURG, 2000

BANKERS

First National Bank, a division of FirstRand Bank LimitedCorporate Account Services - Durban8 Rydall Vale Park, Douglas Saunders DriveLA LUCIA, 4051PO Box 4130The SquareUMHLANGA ROCKS, 4320

INVESTOR RELATIONS

Investor Relations ManagerTel. +27 31 366 1111Fax. +27 31 366 1364Email. [email protected]. www.sacorp.co.za

SA CORPO

RATE REAL ESTATE FUN

D Annual Report 2008

www.sacorp.co.zaTel: +27 31 366 1111Fax: +27 31 366 1364e-mail: [email protected]


199 North Ridge Road, Durban, KwaZulu NatalPinecrest Shopping Centre, Pinetown,KwaZulu Natal


sa corporate real estate fund annual report 2008 corp_ar_08.pdf · sa corporate real estate fund...

Documents