Vukile delivers 7.1% distribution growth | Fin24
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Vukile delivers 7.1% distribution growth

May 24 2017 19:16

Johannesburg - Vukile Property Fund on Wednesday reported 7.1% growth in dividends per share for the year to 31 March 2017, delivering on its market guidance and advancing its track record of unbroken growth in dividends since listing in 2004.

It said in a statement that the results reflect the continued good metrics in Vukile’s retail property portfolio, its sharp strategic delivery, strong balance sheet, deal-making dexterity and a solid platform for further international expansion.

Laurence Rapp, CEO of Vukile Property Fund, notes this has been a momentous year for Vukile, which has successfully repositioned itself as a defensive, conservatively geared and managed Retail REIT. In doing so, Vukile has made certain it is well positioned to navigate the fragile political and economic environment in South Africa.

Rapp said Vukile has successfully transformed into a high-quality, low-risk Retail REIT. It has also established a platform for more international investment.

"As we launch our next strategic phase with exciting new horizons, Vukile expects to deliver growth in dividends of between 7% and 8% in the coming year,” said Rapp.

Retail assets

To boost its retail assets, Vukile’s highlights during the year included completing its well-crafted acquisition of Synergy Income Fund’s R2.5bn portfolio of assets. Vukile acquired a 25% stake in the newly opened Springs Mall in Gauteng and the remaining 50% of Pine Crest in KwaZulu-Natal. It completed the major revamp and extension of East Rand Mall. It also sold its R1.2bn sovereign property portfolio.

“Retail property has proven the best and most defensive sector through the cycle in South Africa,” notes Rapp. “Taking advantage of this, we achieved a major milestone for Vukile by becoming a focussed Retail REIT with an excellent portfolio of retail assets distinguished by their strong trading metrics.”

Vukile has a R1.5bn war chest, creating a springboard for its increased international growth. It invested a further £10.7m in UK-focused Atlantic Leaf, growing its stake to 29.6%. It is also actively evaluating an opportunity in another developed European market.

“Our growing international investment strategy is focused on developed Europe and the UK. It responds to the difficult domestic property fundamentals and diversifies our risk away from local economic challenges. It also provides us with exposure to global tenant profiles. As an emerging market company, we believe that investing in developed markets has greater diversification benefits than investing in other emerging markets,” explains Rapp.

Vukile continued to invest in its existing retail assets during the year, protecting their market position and strengthening them for growth. Vukile completed upgrade, expansion and redevelopment projects of R440m in the year. It has a further R288m planned for the year ahead.

Conservatively funded, Vukile’s gearing ratio was 23% at year-end, with R1.5bn of available facilities and cash. Some 95% of its interest bearing debt is hedged with a 3.4-year maturity profile. Vukile has a long-term ‘A’ corporate rating with a positive outlook, and an ‘AA+’ secured rating.

“Vukile’s strategic achievements have broadened its horizons with exciting opportunities ahead. We will remain focused on achieving long-term strategic goals as a local Retail REIT with a portfolio of strong trading shopping centres, and increased international diversification, to generate sustainable long-term returns for our shareholders,” says Rapp.

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