Old Mututal Investment Group - Property Investment, South Africa

Old Mutual Investment Group Property Investments (OMIGPI) has a clear and focused vision. Our objectives are:

To become the leading Property Asset Management company in South Africa and beyond

• By delivering superior performance

• Through achieving top quartile investment returns over all time horizons

• To grow our AUM to R100bn by 2015

• To maximize our shareholder returns

To attract and retain talent

• Having the right people in the right place who are empowered to take ownership and accountability

• Being truly regarded as a great place to work

To ensure we have the correct capability set

• By satisfying our customers' needs better than our

  competitors through our diverse capability of listed

  company management and institutional property asset

  management

To deliver on our vision while remaining committed to our core values

• Respect

• Integrity

• Accountability

• Pushing Boundaries

To limit the impact our business makes on the environment.

To capitalize on the positive impact our business makes in transforming South Africa. 

We use a clear and long-proven strategy, underpinned by strict investment criteria, to maximise returns for our clients. One of the keys to our success is our ability to construct diverse portfolios across an exceptionally wide range of property investment solutions. We achieve superior returns by harnessing our extensive research capability; setting targets above accepted industry benchmarks and carefully timing our acquisitions and sales. We set long-term investment horizons while maintaining short-term flexibility. We source and develop a wide range of mixed use, retail, commercial and industrial sites and manage properties in line with international standards.

With assets under management valued at R30 billion, Old Mutual Investment Group Property Investments (OMIGPI) is the largest property company in Africa - offering a comprehensive range of property services including asset management, development and property management. Direct property investments have, at times been overlooked for their lack of liquidity and the large capital outlay required. To overcome these constraints, OMIGPI developed a range of specialist unitised direct property portfolios. Triangle Real Estate Core Fund is an unlisted real estate fund offering an investment in high quality, established South African real estate. Triangle Real Estate Development Funds are unlisted real estate funds comprising properties under construction. The investment objective is a return of CPIX + 7.5% over three years.

Triangle Real Estate India Fund is an unlisted fund that aims to fund the building of approximately 29 large supraregional malls in India over the next four years, holding these assets for another four years and then selling the properties. The investment objective is to generate a pre-tax internal rate of return (IRR) of in excess of 25%.

Triangle Core Fund

This actively managed portfolio of real estate assets is made up of Old Mutual’s flagship properties. The portfolio managers invest in blue chip properties with quality tenants who are likely to generate predictable and growing income streams. While the focus is primarily on direct property, up to 20% of assets may be invested in listed property and cash to facilitate liquidity.

This is a pooled, unlisted real estate investment purchased as a policy contract. The assets are registered in the name of Old Mutual Life Assurance Company SA and managed by Old Mutual Investment Group Property Investments.

Investment objectives

The fund aims to generate a return (gross of fees) that exceeds CPIX by at least 5.5% a year over rolling seven-year periods. In addition, it strives to achieve top quartile performance over each calendar year, relative to its peer group, as measured by the Investment Property Databank (IPD) Index for large funds.

Investment Philosophy

The properties held in the portfolio are quality real estate selectively acquired for their ability to generate a growing income stream as well as high, long-term capital appreciation. The portfolio is adjusted with due consideration being given to the economic environment and property life cycle.

Triangle Development Fund

The Triangle Development Fund is a lowyielding alpha-sensitive fund appropriate for pre-retirement investors - corporate, retail and offshore - seeking an investment that produces a high capital return, together with sustained long-term growth by investing in the buildings that match this requirement. The properties developed are sourced from the prestigious development property portfolio of Old Mutual Life Assurance Company SA (OMLACSA), including some of South Africa’s most innovative commercial office blocks. The Triangle Development Fund is a closed-end fund structured as a collection of unlisted real-estate investment trusts (REITs), the first time this structure has been used in the SA property investment market. Each development consists of an issuer and a trust, with the asset (property development) held in the name of individual trusts. The performance objective is to offer a form of short- to medium-term capital appreciation not previously available in the unlisted real estate investment market thus far.

The Fund is managed by Property Investments and aims to achieve:

• High capital returns (annual return target of CPIX + 7.5%)

• On exit, provide properties to the Core Fund that has reliable, predictable and stable income growth.

Triangle India

The Triangle Real Estate India Fund LLC offers investors exposure to the rapidly growing property sector in India, with a focus on organized retail shopping centre development in tier II and tier III cities in India. The aim is to deliver enhanced capital returns through strategic Joint Ventures in large property developments and active asset management.

Why India?

• Second largest population in the world (1.1 billion)

• 50% of the population is younger than 25 years old and 70% is younger than 40 years old

• Large and growing consumer market (300 million consumers)

• Robust GDP growth (8%) since 2003

• Fourth largest economy in the world (PPP terms)

• Stable inflation (5%)

• Stable but appreciating currency

Indian Real Estate Market Overview

The size of the Indian Real Estate Market is currently USD 16 billion and industry estimates indicate the sector will grow to USD 60 billion over the next five years. Demand for quality real estate is seeing unprecedented growth across all sectors, with property yields compressing and an influx of foreign entrants. Off-shore private equity is expected to invest in excess of USD 20 billion over the next four years into the Indian Real Estate market.

Why Triangle India?

• Highly experienced Global fund manager

• Experienced local asset manager with expertise in retail, parking and development

• Investment in partnership with local and global experts

• Only investing in locations where competition is likely to be constrained

• Dominant centres with proven catchment

• Retail-centric with adjoining mixed use opportunities, hospitality and offices

• Superb pipeline of deals.

Targeted Investments is an exciting new initiative. By definition and intent, Targeted Investments positions Old Mutual Investment Group Property Investments as a significant player in the compelling and necessary area of economic transformation in South Africa. The fund objective is solely to pursue real estate investments in areas previously marginalised in our recent history. This will be done in alignment with the stated principles of the Financial Services and Property Charters. The fund has hit the ground running, with the first project well underway in the form of the Thembokwezi Lifestyle Estate in Khayelitsha, Cape Town. The prospects for the fund are healthy, with a significant pipeline of investments currently under review - ranging in location from the Eastern Cape to the Limpopo province. This fund represents the latest initiative in the expanding role of Old Mutual as a significant contributor to the economic transformation of our nation.

The 2005 acquisition of the Marriott Property business by Old Mutual brought the management of listed property funds into the group. Craig Ewin, who headed up corporate property for Marriott, joined Old Mutual Investment Group Property Investments and is now head of Listed Real Estate Funds. The aim and intention of the listed real estate business unit is to produce consistent superior returns for our investors and to expand and grow the assets under management.

The boutique manages two listed property funds - SA Corporate Real Estate Fund, listed on the JSE, and Oryx Properties Limited, the only primary listed property fund in Namibia.

SA Corporate Real Estate Fund

SA Corporate Real Estate Fund is a Property Unit Trust listed on the JSE and is therefore available for anybody to invest in. It is the fourth largest fund listed in the JSE’s Real Estate sector ranked by market capitalisation. Head of Listed Funds, Craig Ewin, says this offers numerous benefits to investors who are interested in property, including investing in a large property portfolio with sectoral and geographic diversification. The portfolio comprises 59% retail, 33% industrial and 8% office assets, in the metropolitan areas of South Africa. In addition, SA Corporate has bought 25% of Oryx Properties Limited in Namibia. Other benefits flowing from the size and structure of the fund are liquidity - the average monthly trade over the last 12 months is close to R200m - and tradeability of the shares, meaning that investments into and out of the fund are relatively easy. All net rental income from the property portfolio is distributed to unit holders and retains its form of rental and interest.

For more information on SA Corporate Real Estate Fund, visit www.sacorp.co.za.

Oryx Properties Limited

Oryx Properties Limited is the only primary listed property fund in Namibia, and is the second largest primary listing on the Namibian Stock Exchange (NSX). Oryx owns a premier quality retail, industrial and office real estate portfolio in Namibia, with 99% of the portfolio being based in the capital of Windhoek. The portfolio was valued at N$742 million at the end of December 2007. Oryx’s flagship is the Maerua Mall complex, the only regional shopping centre in Namibia. Oryx has a well-tenanted portfolio, with over 88% of the floor space occupied by South African nationals or their franchisees. Oryx has a very low vacancy rate with less than 0,7% of lettable area vacant at the end of December 2007. Oryx offers the benefits to investors of being able to own a share of a sizeable and diverse property portfolio, and introduces the benefits of diversification into another Southern African country. Oryx distributes all of its net property income to investors in the form of debenture interest.

For more information on Oryx, visit www.oryx.com.na.

We have grown our assets under management from R7 billion to R25 billion in the last 3 years - an impressive achievement by any measure. Our prestigious property portfolio has attracted numerous awards, including the following:

• Mutual Heights, refurbishment category of annual SAPOA awards for development excellence.

• Cavendish Square, The Zone@Rosebank, Eastgate and Westgate. In Harare, ICSC design and merit awards in recent years.

• Gateway Theatre of Shopping, international design and development merit award from the International Council of Shopping

  Centres.

• Menlyn Park, premier award from SA Property Owners’ Association for development excellence.

Old Mutual Investment Group Property Investments is a platinum founder member of the Green Building Council of South Africa, which seeks to promote and encourage environmentally sustainable practices in the property industry. Green building principles create properties which are energy- and resource-efficient, as well as environmentally friendly. Such buildings typically consume less than half the energy of a conventional building. Dramatic reductions are also seen in water usage, CO2 emissions and waste disposal. Green buildings are characterised by superior ventilation and indoor air quality. The resulting improved occupant comfort and health makes these buildings highly attractive to tenants.

Brent Wiltshire, Business Development Executive, describes some of the measures employed by the company: “At some of our malls we’ve achieved a 60% recycling rate, as well as installing control operating systems for lights and air conditioning so they don’t have to be on all the time. Air conditioning takes up the most energy in any shopping mall. We even look at environmentally friendly paint when renovating our malls, and use indigenous plants where possible. The business case for green buildings has been confirmed by studies which indicate that the greener the building, the higher the nett present value.”