SA Corporate Real Estate Fund (SAC) and SA Retail Properties Ltd (SRI), which are set to merge into a 7 billion rand diversified fund, both outperformed the Investment Property Databank industry standard for 2006 with total returns for the year of 33.8% and 41.2% respectively.

Craig Ewin, head of listed real estate at Old Mutual Investment Group:

Property Investments, which manages both funds, said that these were pleasing results and entrenches both funds' excellent IPD performance track record.

SA Retail's return of 41.2% follows a 32.6% return in 2005, and SA Retail has beaten the IPD average every year since the fund was listed in 2001. SA Corporate returned an impressive 33.8% which follows last years 34.4%.

"SA Corporate showed a high income yield of 10.2%, 100 basis points above the IPD benchmark of 9.2% for South Africa," said Ewin.

"This high income yield, combined with the low vacancies in the portfolio, shows that the fundamentals are strong and position SA Corporate well for future growth," he said.

SA Corporate's acquisition of SA Retail is well on track and this will position SA Corporate as a R7 billion diversified fund.

Ewin said the combined portfolio would comprise 65% retail properties, 29% industrial and 6% offices. The overweight industrial position is seen as positive, says Ewin, with IPD results showing that the industrial sector again had top returns with 31.1%.

The IPD results showed a total return of 26.7% placing South Africa second in world performance, marginally behind Ireland's 27.2%.

Interestingly, SA has the highest income yield reported so far by IPD. The SA IPD includes 2,478 investments worth more than 111 billion rand.

"The view by property strategists that the industrial sector will again be the best performer in 2007 is also encouraging to SA Corporate. So too is their view that prospects for the property market remain strong, and while commercial property returns may be slower, long term fundamentals remain positive" says Ewin.

I-Net Bridge