Vukile seals Sanlam property deal

Johannesburg – Vukile Property Fund announced on Tuesday it has sealed a long-awaited deal to obtain nine properties from Sanlam Life Insurance.

According to a Stock Exchange News Service (Sens) announcement, Vukile acquired the properties for R527m.

The properties purchased include Kim Park in Kimberley and the Sanlam Centre in Pinetown. These will be added to Vukile's R4bn portfolio, which already includes Randburg Square (the former Sanlam Centre) in Johannesburg, and the Dobsonville Shopping Centre in Soweto.

Vukile, which owns a number of shopping centres that cater mainly for lower-income consumers, expects the yield for the year ending March 2011 to be 9.5%.

The group reported distribution growth of 10.2% on Monday for the year to end-March 2010. The distribution was enhanced by R10m which was meant to be paid out as distributions to Sanlam, but was held back until the next financial year.

"We'll pay out the distribution [to Sanlam] once we've had the chance to benefit from the new properties," said CEO Gerhard van Zyl.

Asked whether Vukile will be making an offer for Sanlam's entire property portfolio, Van Zyl said such a move was still a long way off. "The market will only allow us to do so much in a given year,” he said.

The acquisition will be funded with R100m in cash, R200m debt and about R230m in vendor placement, in terms of which Vukile will place the consideration units on the vendor's behalf.