Net property income for the period was at R366.4 million from R356.7 million reported last year.

The fund said the impact of the weakening economy was reflected in the interim results.

"Management has taken cognisance of this in the assessment of provisions," it said.

In October 2008, the fund announced its intention to dispose of certain properties with the objectives of reducing the number of properties within the portfolio and improving the overall quality of the fund's property portfolio and earnings. Progress in terms of the disposal strategy is being dealt with later in this results announcement.

The fund said its retail portfolio comprised 56% of the total portfolio value and 43% of the gross lettable area.

It is dominated by smaller retail centres which make up more than two-thirds of the retail portfolio by value.

The difficult economic environment has led to challenging retail conditions which have influenced the demand for space, causing a slower take up of vacancies and curtailing market rental growth. While the rental levels achieved on renewals were up by an average of 10% on closing rentals, vacancies have increased to 8% of the retail lettable space (2008: 6%).

Turnover rental for the year under review amounts to R2.1 million, 0.5% of total rental, down 13% on the previous year's R2.4 million and reflects the decline in consumer spending.

The industrial portfolio, which makes up 35% of total portfolio value and 51% of gross lettable area, comprises warehousing, workshops and distribution facilities.

This portfolio has performed well in a challenging industrial market and has continued to enjoy excellent occupancy levels throughout the period under review, however space that has become available is remaining unlet for longer periods of time, the Fund said.

It noted that the vacancy factor at the end of June has increased to 3% of the total lettable space (2008: 1%).

The increase in the vacancy factor is mainly due to the vacancy at the Paarden Eiland Development in Cape Town which was completed in December 2008, it said, noting however that the overall vacancy position remained positive and continued to reflect the quality of its industrial portfolio.

SA Corporate said the average rentals of leases renewed during the six-month period to June 30 2009 was 18% higher than the closing rentals.

The fund's office portfolio comprises 9% of the total property portfolio value and 6% of the gross lettable area, hence the impact of this sector on its overall performance was limited.The rentals in terms of leases renewed in this sector grew by an average of 6%.

However, the vacancy factor has increased to 11% of lettable office space (2008: 10%) and the majority of the increase in these vacancies is as a result of vacant offices which form part of retail centres.

Looking ahead, SA Corporate said necessary capital expenditure to maintain the condition and lettability of the properties would be income dilutive in the short term, but would significantly improve the quality and sustainability of future income growth.

The fund said asset disposals were expected to be greater than capital expenditure on retained assets and selective acquisitions, which together with the unit price trading at a significant discount to NAV, would see the fund continue to pursue unit buybacks and alternative debt structures.

The implementation of the Fund strategy in addition to an expected recovery in the economy and more effective leasing and debt collections was likely to bear fruit, the full impact of which was not expected to be felt in the current year.

"To maintain 2008 distributions in the current year will be a challenge," said SA Corporate.