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Vukile, which owns a number of shopping centres that cater mainly for lower-income consumers, said it's too early to talk about a downward trend in vacancy rates as the economy shows signs of recovery from the recession.
The group reported a vacancy rate of 4.1%, significantly lower than the previous six months’ 4.5%. Distributions increased by an impressive 10.2%, compared to the sector's average growth of 8%.
"These are very good results," said Avior Research's Naeem Tilly. According to Tilly, the results are impressive despite a once-off R10m benefit that went to shareholders instead of Sanlam Properties. "That this would happen was known and included in [analysts'] calculations," he said.
A number of analysts at the Sandton presentation agreed with Tilly. Analysts polled by I-Net Bridge estimated growth of about 8%.
However, CEO Gerhard van Zyl said the pressure will remain on vacancies. "We believe there will be more bad news before good news – it won't all of a sudden be easy to do business again," he said.
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"We're jittery about vacancies – I won't be surprised if we see an uptick in next two to three months. The growth in distributions will certainly be lower, not higher, going forward," said Van Zyl.
Vukile's R4bn property portfolio includes Randburg Square (the former Sanlam Centre) in Johannesburg, Pinecrest Shopping Centre in Pinetown, Dobsonville Shopping Centre in Soweto and Hillfox in Roodepoort.
The group reported solid increases in rental escalation, despite few expiring rentals. "It is possible to increase renewals substantially even in tough markets," said Van Zyl.
Vukile leases 9% of its portfolio to government and renewals on these short-term leases account for a 24% increase in its commercial rentals.
"We would choose not to have government as tenants; they don't pay their rent," said Van Zyl.
The group is in the process of acquiring properties from Sanlam Properties' portfolio and said it will pay out Sanlam's distribution in the next financial year, when it has had a chance to benefit and receive income from the properties concerned.
- Fin24.com
