Vukile increases liquidity and highlights growth

Posted On Friday, 29 June 2012 16:52 Published by Commercial Property News
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Vukile is committed to remaining a diversified fund but with a special emphasis on the retail sector. 

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The fund will be exploring acquisitions of retail centres and joint venture development opportunities that would complement the company’s existing portfolio make-up; and corporate activity has also not been excluded

Property loan stock company Vukile, which increased its full year distribution to unit holders by 6.1% for the year ended 31 March 2012, says the time is ripe to grow its portfolio far more aggressively than has previously been the case.

In its integrated annual report, chairman Anton Botha notes that at the end of the year, Vukile’s portfolio consisted of 72 properties worth over R6.1 billion. Its market capitalisation had grown four-fold from the date of its listing eight years ago to over R5 billion at the end of the financial year and is now R6.7 billion.  “This has laid the foundation for our next growth phase, which is to be more acquisitive and proactive in nature, while not diluting our focus from growing distributions to our unit holders,” he says.

Botha says “we continue to believe in the strength and growth of retail in the emerging market – a view supported by the performance of our current retail assets – and will therefore primarily concentrate our expansion in this market segment.”  He says market conditions have also become ripe for a consolidation of the listed property sector. 

In the same report, chief executive Laurence Rapp says the company has not excluded corporate activity as a means to grow the portfolio.  “Given our increased scale and improved liquidity, we are well positioned to take advantage of any value-adding corporate transaction opportunity that may arise.

Rapp says that Vukile’s equity raise, carried out as part of the company’s R1.5 billion property acquisition from Sanlam, had resulted in Vukile welcoming many new unitholders. Additionally, Sanlam’s decreased stake in Vukile to less than 6%, through inter alia, the sale of 70.2 million linked units to the Public Investment Corporation, has increased the company’s free float weighting from 50% to 100%.  “We are now one of the most liquid stocks in the listed property sector,” says Rapp.

Looking ahead, Vukile expects trading conditions to continue to be difficult in the year ahead.  “Based on management’s experience over the past few months it appears that the sector may have bottomed out and while it is still too early to predict a recovery, it is encouraging to note that vacancy levels across the portfolio are beginning to improve.  The portfolio has performed well, despite these challenging conditions, and we are confident that we should again deliver reasonable growth in distributions in the coming year,” Botha says.

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