SA Corporate December 2012 Year end Results Presentation

February 2013

Agenda

• Highlights Rory Mackey

• Financial Performance Antoinette Basson

• Portfolio Review Rory Mackey

• Strategic Objectives Rory Mackey

• Prospects Rory Mackey

• Acknowledgments Rory Mackey

• Questions Team

2

HIGHLIGHTSRORY MACKEY

High Level Review

• Distribution themes

• Full year distribution growth of 4.6%

• 2nd Half distribution growth of 3.5%

• Standing portfolio net property income growth of 6.4%

• Industrial sector characterised by low vacancies, strong retentions and healthy reversions

• Retail sector characterised by decline in vacancies as a percentage of rental income,

improved retentions and positive reversions despite tough trading conditions

• Investment strategy

• Disposal of 18 properties for R769m for 2012

• Disposal of Investment in Oryx for R175.2m

• Capital structure

• Repurchased 42.9m units at a weighted average price of 332cpu

• Weighted average cost of debt reduced by 2.8% (2.3% with fixes)

• Swaps renegotiated at significantly better rates

4

FINANCIAL PERFORMANCEANTOINETTE BASSON

Distribution History

6

17.00

14.50 14.45 14.24 14.3515.1715.o0 15.25

13.2414.18 14.48

14.98

32.00

29.75

27.6928.42 28.83

30.15

0

5

10

15

20

25

30

35

2007 2008 2009 2010 2011 2012

Interim Final Total

*

* Interim 2007 distribution includes SA Retail once off contribution of 2.40c

Distribution growth

7

-14.7%

-0.3%

-1.5%

0.8%

5.7%

1.7%

-13.2%

7.1%

2.1%

3.5%

-7.0% -6.9%

2.6%

1.4%

4.6%

-20%

-15%

-10%

-5%

0%

5%

10%

2008 2009 2010 2011 2012

Interim Final Total

*

*

Large negative growth in 2008 due to Interim 2007 distribution including SA Retail once off contribution of 2.40c. Growth excluding once off contribution is:- Interim 2008: -0.7%- Total 2008: 0.5%

*

Distribution at a glance

Dec 2012Rm

Dec 2011Rm

%Variance

Net property income 777.07 774.97 0.3

Investment income (Oryx) 1.40 16.97 (91.7)

Net finance costs (108.65) (140.56) (22.7)

Fund Expenses (48.78) (51.08) (4.5)

Taxation 0.70 (0.09) 851.6

VAT provision (5.93) - 100.0

Lapsed distribution 0.79 - 100.0

Distributable earnings 616.61 600.20 2.7

Distribution per linked unit 30.15 28.83 4.6

First six months 15.17 14.35 5.7

Second six months 14.98 14.48 3.5

8

Distribution contributors and detractors

9

28.83

0.92

0.78

-0.90

-0.74

1.45 0.06

-0.29

0.04 30.15

27

28

29

30

31

Distribution

31 Dec 2011

Increase in

Property

Income

Increase in

property

expenditure

recoveries

Increase in

Property

Expenses

Decrease in

Investment

Income

(Oryx)

Decrease in

Net Interest

Paid

Decrease in

Fund

Expenses

VAT

distribution

provision

Lapsed

distribution

from Unit

Buy-back

Distribution

31 Dec 2012

Group Financial Position

Rmillion

10

8,3

70

40

3 12

4 50

6

1,8

36

44

1

8,0

24

52

8

12

74

2

1,3

32

1,0

06

7,9

67

18

3 23

57

1

76

8

1,0

03

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Investment

Properties

For sale Other Non-current

assets

Current Assets Non-current

liabilities

Current Liabilities

December 2010

December 2011

December 2012

Disposal Proceeds

Rm

Disposal Proceeds at 31 December 2011 98

Net Disposal Proceeds for 2012 929

Units Bought Back in 2012 (142)

Loan repayments (427)

Capex (162)

Disposal Proceeds at 31 December 2012 297

11

Group debt structure – at year end

Maturity and interest rate profile of interest-bearing debt at 31 December 2012 (WAR –6.94% vs 9.71%)

12

Interest Rate:

July 2016 7.34%

April 2015 7.58%

August 2013 6.79%

August 2013 6.79%

December 2013 6.80%

September 2014 6.80%

(Rm)

400.0

220.0

270.0

30.0

200.0

21.0

0 100 200 300 400 500

Variable rate debt Fixed rate debt

Group debt structure – post year end

Maturity and interest rate profile of interest-bearing debt at 2 January 2013 (WAR -7.44% vs 9.71%)

13

Interest Rate:

July 2016 7.34%

April 2015 8.23%

August 2013 7.44%

August 2013 7.44%

December 2013 6.80%

September 2014 7.40%

(Rm)

400.0

220.0

270.0

30.0

200.0

21.0

0 100 200 300 400 500

Variable rate debt Fixed rate debt

Group net cash flow

14

373,651

775,875

(587,273)

929,242

(612,544)

(161,875) (59,230)

(141,910) (108,655)

407,281

(800,000)

(600,000)

(400,000)

(200,000)

-

200,000

400,000

600,000

800,000

1,000,000

Ba

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Ca

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s

Bo

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Pro

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ds o

n sa

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f asse

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Distrib

utio

n

Imp

rov

em

en

ts to p

rop

ertie

s an

d fixe

d

asse

ts

Se

ttlem

en

t of in

tere

st rate

swa

p

Un

it Bu

y-b

ack

Ne

t fina

nce

costs

Ba

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1 D

ece

mb

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01

2

R '000

Net Asset Value

15

335

-2

2

37

-30

342

300

325

350

375

Opening NAV 1

January 2012

Buy Back of units Amortisation of

debt restructure

Net Profit for the

year

Distribution Closing NAV 31

December 2012

SA Corporate Historic Yield

16

Dividend Yield relative to Property Index

17

Trading Volumes and liquidity

18

-

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

290

300

310

320

330

340

350

360

370

380

390

Volume Traded Closing Price ( c )

SAC: closing price v monthly volume traded

VolumePrice (c)

Value traded as % of market capital

Market Capitalisation (R’m)

HYP

CPL

GRT

FPT

ACP

EMI

RDF

SYC

VKE

SAC

0%

10%

20%

30%

40%

50%

60%

-10,000 - 10,000 20,000 30,000 40,000 50,000

Unit Repurchases

19

• Motivation

• Prevailing discount of SAC not reflective of remedial

steps taking

• Sales proceeds available for re-investment

• Acquisition price expectations elevated

• Deposit rates low – high opportunity cost of holding cash

• Contributes to optimising capital structure

• Low risk enhancement to unit holder returns

• Buying own portfolio considered preferred Acquisition

• Execution

• Total to not exceed 5%

• Indicative increased growth in consensus distribution

is 1.1% and 0.8% in 2013 and 2014 respectively

• Dec to Feb- weighted average purchase 375.59cpu vs

VWAP 370.97cp

PeriodUnits (mn)

Av cpu

R’m

Mar – Apr 2102 31.0 323.08 100.0

Dec -2012 11.9 356.24 42.5

Jan – Feb 2013 58.9 378.61 223.0

Total 101.8 358.63 365.5

PORTFOLIO REVIEWRORY MACKEY

Overview – Sectoral Analysis

139 Properties

Total GLA 1 187 211

Total Portfolio R8.1bn

Average discount rate

14.8%

Capitalisation rate

9.3%

21

Retail 35%

(Dec-11: 42%)

Industrial 59%

(Dec-11: 52%)

Commercial6%

(Dec-11: 6%)

by GLA

Retail 47%

(Dec-11: 52%

Industrial 44%

(Dec-11: 40%)

Commercial9%

(Dec-11: 8%)

by Market Value

8,034

4,831

9,441

6,426

9,250

5,202

9,103

6,865

-

5,000

10,000

Retail Industrial Commercial Average

Market Value (R/m²)

December 2011 December 2012

Overview – Geographical Analysis

22

Gauteng52%

(Dec-11:48%)

KwaZulu-Natal39%

(Dec-11: 39%)

Western Cape7%

(Dec-11: 8%)

Other2%

(Dec-11: 5%)

by GLA

Gauteng47%

(Dec-11: 46%)

KwaZulu-Natal44%

(Dec-11: 40%)

Western Cape7%

(Dec-11: 9%)

Other2%

(Dec-11: 5%)

by Market Value

10 largest properties

Sector Area m² Value (Rm) % of total

Musgrave Centre Retail 39,305 651.3 8.0%

East Rand Galleria Retail 50,516 461.1 5.7%

Pine Crest Centre Retail 40,208 *287.6 3.5%

57 Sarel Baard Crescent - Centurion Industrial 34,460 279.3 3.4%

Umlazi Mega City Retail 35,328 *262.0 3.2%

Beryl Street - Jet Park Industrial 27,680 256.7 3.1%

112 Yaldwyn Road - Jet Park Industrial 30,299 253.2 3.1%

Springfield Value Centre Retail 20,260 252.8 3.1%

Bluff Shopping Centre Retail 21,264 241.0 3.0%

37 Yalwyn Road - Jet Park Industrial 39,738 202.7 2.5%

Total 339,058 3,147.7 38.6%

* Represents ownership % of valuation

23

Disposals

Property SectorGLA(m²)

Exit Yield%

Sales price (R000)

Status Transferred

94 Intersite – Waltons Industrial 1,845 8.1 7,500 Jan-12

6 Lanner Road Industrial 4,364 7 22,500 Jan-12

Dube Village Mall Retail 7,292 9 25,000 Jun-12

Nzhelele Shopping Centre Retail 5,539 7.6 30,575 Jun-12

Hubyeni Shopping Centre Retail 12,866 10 80,793 Jun-12

The Village Centre – Richdens Retail 10,165 9.6 79,632 May-12

Renbro Centre Retail 11,000 8.3 107,000 Jun-12

Van Riebeeckshof Shopping Centre Retail 5,036 9.8 38,000 Jun-12

Highland Mews Shopping Centre Retail 17,032 10 130,000 Jun-12

Ermelo Game Centre Retail 5,757 9.2 26,000 Jun-12

10 Top Road * Industrial 2,270 7.2 5,300 Sep-12

24-28 Commercial Road * Retail 2,336 1.6 3,700 Oct-12

Tokai Junction Retail 7,613 9.4 84,900 Dec-12

212 Church St Retail 1,963 10.3 30,000 Dec-12

Mkuze Corner Retail 3,388 13.4 15,000 Dec-12

Ominplace Office 2,714 9 20,000 Dec-12

St Georges Square Retail 11,618 9.6 44,000 Dec-12

210 Church St Retail 1,897 9.7 19,556 Dec-12

Clubview Corner Retail 5,830 9.3 27,000 Jan-13

425 West Street Retail 9,559 10.1 54,500 Jan-13

130,083 850,956

Investment in Oryx Properties Limited 10.2 175,200 Jan-12

Total 1,026,156

24

* Estimated as vacant

Properties held for sale

Property SectorGLA(m²)

Exit Yield %

Sales price (R000)

Expected date of transfer

The Ridge Retail 4,770 8 30,000 Feb-13

106 Johan Avenue Sandton Office 2,270 *N/A 35,000 Feb-13

Total 7,040 65,000

* Building is fully vacant.

25

Lease renewals - % Rental Reversions

26

2.5%

5.0%

2.0%

3.6%

0%

1%

2%

3%

4%

5%

6%

Retail Industrial Commercial Total

12 months to Dec 2012

Contracted rental escalation profile

27

7.9%8.2% 8.2% 8.1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Retail Industrial Commercial Total

Group lease expiry

28

% GLA Cumulative

Vacancy Monthly 2013 2014 2015 2016 2017+

%GLA 6% 9% 18% 14% 18% 8% 26%

Cumulative 6% 15% 34% 48% 66% 74% 100%

6%

9%

18%

14%

18%

8%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

5%

10%

15%

20%

25%

30%

Largest expiries for the next 6 months

Property TenantGLA(m²)

update

37 Yaldwyn Rd, Jet Park RTT Logistics 30,197 new lease with tenant for 20000m²

Cnr Bridge & Molecule Rd, Bellville DPI Plastics 8,558 Lease extended for 2 years

83 Heidelberg Ave, City Deep SAMSAC Africa (Pty) Ltd 7,898 Lease extended for 3 years

Pine Crest Centre, Pinetown Pick n Pay Supermarket 5,508 Expected to renew

1/5 Stockville Rd, Pinetown Ellerine Furnishers 5,135vacating premises - lease with new tenant for 5 years

264 Aberdare Dr, Phoenix JDG Trading 3,648 in negotiation

Suffert Street, Pinetown Home Concept Furniture Logistics 3,624 in negotiation

33/37 Aloefield Cr, Durban Laser Facilities 3,624 new lease with tenant

199 North Ridge Road, Durban Transnet Limited 2,901 new lease with tenant

Stondell Investments, Wynberg (JHB) Esor-Franki Africa 2,551 in negotiation

73,644

The following tenants, with an area > 2 000m², will expire in the next 6 months:

29

Vacancy profile - % of gross rental

30

11.2%

2.2%

12.6%

8.0%

6.6%

1.5%

9.2%

5.0%

5.8%

1.5%

14.1%

4.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Retail Industrial Commercial Total

December 2010 December 2011 December 2012

Vacancy profile - % of GLA

31

10.4%

2.9%

19.5%

7.3%

9.7%

1.4%

13.6%

5.6%

10.6%

1.3%

19.2%

5.9%

0%

5%

10%

15%

20%

25%

Retail Industrial Commercial Total

December 2010 December 2011 December 2012

Ratio of gross recurring cost to property revenue

32

32.2%33.2%

35.0%36.2%

15.4%14.3% 15.0% 14.8%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Dec 2009 Dec 2010 Dec 2011 Dec 2012

Property expenses Property expenses excluding municipal expenses

Recurring expense categories

33

Advertising 2%

Bad debts 1%

Cleaning & Security 10%

Municipal Expenses 53%

Insurance 2%

Legal Expenses 1%

Letting Expenses 4%

Maintenance 8%

Sundry Expenses 2%

Property management fee

7%

Accounting and secretarial

fee 1%

Audit fees 1%

Administrative

expenses 1% Service Fees 7%

Distributable taxation 0%

Property Arrears and Provisions

TENANT DEBTORS AND PROVISIONS Dec-12 Dec-11

Total Trade Receivables

Trade receivable before bad debt impairment (Incl. VAT) 47,415 68,210

Provision for bad debts (27,229) (41,655)

Trade Receivable after bad debt impairment

(excluding debtors with credit balances) 20,186 26,555

Provision for bad debt

Opening balance 41,655 44,800

Amounts written off during the year (20,324) (26,741)

Additional provision recognised 5,899 23,596

Closing balance 27,229 41,655

Provision VAT inclusive 31,041 47,487

Ratios

Provision as a % of total trade receivable 57.4% 61.1%

Provision as a percentage of rental income 2.4% 3.5%

Trade receivables as a percentage of rental income 3.9% 5.7%

34

Redevelopments

Name of Property Sector Expected Capex Yield

Musgrave Retail R140.5m 7.4

Middelburg Pick 'n Pay Retail R5.3m 12.5

Cnr Rudo Nel & Tudor Str, Jet Park Industrial R29.5m 12.5

Hayfields Mall Retail R21.8m 10.3

Whirlprops P (Pty) Ltd Industrial R19m 9.3

8 Paul Smit Street, Anderbolt Industrial R16.4m 10.0

35

STRATEGIC OBJECTIVESRORY MACKEY

Strategic ObjectivesFour pillars: delivery of sustainable distribution growth

Property Management Strategy

• Acquisitions of quality

properties

• Divestments not compatible in

the long-term accompanied

with acquisitions

• Sector best property

management services

• RFP issued shortly

• Robust SLA

• “Stretch” KPI’s

• Appropriate Gearing

• Well priced debt –

• Managed Interest rate policy

• Complex regulatory

environment

• Structure formulated

• Net income growth

• Reduced vacancies, arrears

• Cost efficiencies

• Broker channel initiatives

• Enhanced tenant relationships

• Turnaround competence

• Acquisition capability from low

gearing

• Geographic spread not

dictated by PM

• Capitalising on our strengths

• Redevelopments

• Developer partnerships

• Debt Capital Market

• Share repurchase programme

• Well structured hedging

• Announcement

• Exclusivity

Investment Strategy

Optimal Capital Structure

Property Management Strategy

Alignment of investor and management

interests

37

PROSPECTSRORY MACKEY

Prospects

• Business conditions remain tight

• Quality acquisitions scarce and expensive

• No further dilution through sales

• Improved distribution growth expected

39

ACKNOWLEDGEMENTS

QUESTIONS

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. As prescribed by the Act, the Fund is required to have an external management company which is SA Corporate Real Estate Fund Managers Ltd. The Management Company has outsourced all the day to day operational management to Old Mutual Property (Pty) Ltd and all staff required to management the Fund is employed by the asset and property manager, Old Mutual Property (Pty) Ltd.

Old Mutual Property (Pty) Ltd, is a licensed financial services provider, FSP 817, approved by the Registrar of Financial Services Providers (www.fsb.co.za) to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of 2002. Old Mutual Property (Pty) Ltd is a wholly owned subsidiary of Old Mutual Investment Group South Africa Holdings (Pty) Limited.

Although every effort has been made to ensure the accuracy of the information contained herein, SA Corporate and Old Mutual Property (Pty) Ltd, will not accept any responsibility for any errors or omissions.