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Johannesburg - Vukile Property Fund [JSE:VKE] has greatly enhanced the overall quality of its portfolio and is confident of meeting its distribution growth guidelines for 2014, chief executive Laurence Rapp said on Monday in a video interview with Fin24.
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Vukile on Monday reported a 5.0% increase in its normalised interim distribution for the six months ended September 30 2013.
Net profit available for the distribution increased by 28% to R343.8m.
Rapp said significant progress had been
made in the last six months in developing a better quality and lower risk
portfolio.
That includes: the completion of a R207m upgrade to Randburg Square; completion of the R1.04bn Encha transaction in which Vukile acquired four government-tenanted properties; the acquisition of 50% of East Rand Mall for R1.1bn; the acquisition of Hammarsdale Junction for R194m and; the sale of R287m worth of higher risk properties.
“... Which collectively have greatly enhanced the overall quality of the portfolio,” said Rapp. “This can be seen by our strong retail (52%), sovereign tenant (10%) and hospital (3%) assets now representing the lion's share (65%) of the overall portfolio.”
New leases and renewals with a contract value of R538.3m were concluded during the review period, 78% of leases to be renewed were renewed or are in the process of being renewed. Vacancies, measured as a percentage of gross rentals, decreased to 6.7% from 7.1% in March 2013.
In line with the company's new policy of declaring sales commission and other non-recurring income as a separate, special distribution, Vukile is paying a special distribution of 13.83c per unit representing the sales commission earned from Sanlam on the sale of East Rand Mall.
Looking ahead, Rapp says that while he did not expect to see a significant improvement in the macro operating environment, the portfolio was well positioned to produce better growth going forward. "Our retail assets continue to perform well and we have been encouraged by an increase in demand for industrial space. The office sector remains the most challenging though," he said.
"The business is in good shape and we are confident of meeting our distribution growth guidelines for 2014 of between 4% and 6% off a normalised base of 120.44c per linked unit and thereafter seeing a healthy increase in distribution growth for 2015.”
- Fin24
