Vunani posts solid financial performance

By
Font size: Decrease font Enlarge font
Rob Kane: Vunani Property Investment Fund CEO Rob Kane: Vunani Property Investment Fund CEO

Vunani Property Investment Fund (VPIF) , the listed property investment fund with significant exposure to the commercial office market, reported on Monday a solid financial performance since listing on the JSE in August 2011, despite a difficult operating environment.

The company, meeting its distribution target of 8%, declared a maiden cash distribution of 27c a linked unit for the six months to December 2011, VPIF CEO Rob Kane told SA Commercial Prop News.

Yield-enhancing acquisitions and above-budget performance of the existing assets ensured a revenue increase of 24.5% from R56-million, in June 2011, to R70-million in December.

Kane pointed to the investment firm’s aggressive growth strategy, which resulted in a 37% growth in enterprise value since its August listing, as well as an acquisitive growth of 12%.

VPIF acquired the Xstrata building and Mabe Park, both in Rustenburg, as well as Lion Roars, in Port Elizabeth, and the Foretrust building, in Cape Town, while undertaking several refurbishment projects and extensions.

Refurbishments, with a combined value of R13-million, included the Motherwell Shopping Centre and Wale Street Chambers, in Cape Town, as well as the Rynlal building, in Pretoria.

VPIF’s portfolio was dominated by blue chip or government tenants, with longer-than-average lease contracts and a low 30-days-plus arrears book at R453 000, also adding to the group’s reported robust distribution and a consistent growth profile.

“The weighted average lease expiry for the portfolio is now 5.16 years and the vacancy at reporting date was 4.8%,” said Kane, adding that most of the large lease negotiations for 2012 were successfully concluded at budgeted rentals.

Since its inception in 2006, VPIF adopted a “lower rentals” strategy, increasing the price of rental only as vacancies and new developments commanded higher prices.

The strategy of introducing lower rentals also partly offset the impact of the depressed office rental sector on the company. The sector was also experiencing a shortage of office space owing to limited building activity since 2008.

However, Kane believed that the office sector was well poised for recovery within the next 12 to 18 months and would experience attractive rental growth when the current oversupply was absorbed.

In the short term, the firm would avoid premium AAA grade “trophy” buildings, and rather continue targeting well-located B+ and A grade office buildings with a stable tenant profile, which held solid opportunities for the company.

“We remain well positioned and capitalised to continue with our strategy of significantly growing the portfolio through yield-enhancing acquisitions,” Kane concluded.

 


NEWSLETTER — GET THE LATEST NEWS IN YOUR INBOX. SIGN UP RIGHT HERE.


Enter your e-mail address below using Lowercase.



Home in 1 | Leading Supplier to Events, Catering & Hospitality Industry