Vukile sees distribution growth and 'bulks up' asset base

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Laurence Rapp, CEO of Vukile Property Fund. The company declared its full year distribution growth by 5.4% to 131.59 cents per linked unit in the 2013 financial year, and had significantly "bulked up" its asset base by 26% to R7.7 billion. Laurence Rapp, CEO of Vukile Property Fund. The company declared its full year distribution growth by 5.4% to 131.59 cents per linked unit in the 2013 financial year, and had significantly "bulked up" its asset base by 26% to R7.7 billion.

Vukile Property Fund on Thursday reported that it had achieved its full year distribution growth by 5.4% to 131.59 cents per linked unit in the 2013 financial year, and had significantly "bulked up" its asset base by 26% to R7.7 billion.

In its annual report, published today, chairman Anton Botha said the company made great strides towards its strategic objectives of growing the size of the property fund, increasing its retail exposure and improving the overall quality of the portfolio. 

“In delivering on these objectives, Vukile posted some significant markers including the transfer of the R1.5 billion Sanlam portfolio acquisition; the finalisation of the acquisition of a 50% stake in the East Rand Mall, the transfer of which took place in April 2013; the agreement with Encha Properties to acquire four government-tenanted properties for R1.04 billion plus a put and call option over Encha’s Pretoria Momentum Building; and Vukile’s continued success in accessing both the equity and debt markets to fund its rapid expansion through a series of well over-subscribed issues,” Botha said.

Net profit available for distribution came to R556.4 million for the year ended 31 March 2013, an increase of 26.7% on 2012’s R439.1 million. 

“The growth in actual distribution includes non-recurring income of 11 cents per linked unit which arose from sales commission earned on the R1.5 billion portfolio bought from Sanlam in the period under review.  Excluding this impact, the core business delivered a very healthy growth of 8.1% on the previous year,” said chief executive Laurence Rapp in the same report.

Rapp said Vukile will in future declare any non-recurring income, such as the sales commission of around R64 million from East Rand Mall, as a special distribution distinct from its core or normalised distribution. 

“Since acquiring the asset management business from Sanlam in 2010, the stable earnings pattern has been impacted by the inclusion of unpredictable and lumpy sales commission whenever assets are sold from the Sanlam portfolio. This impacts the certainty with which the investor community can predict Vukile’s distribution but also tends to mask the true operating performance, as was the case last year,” he said.

Looking ahead, Botha said Vukile is gearing its human capital, structures and systems to the demands of a rapidly expanding portfolio but that it will remain committed to the preservation of the characteristic qualities that have defined Vukile since its listing. 

“Building on the solid foundation laid over the past years, I am confident that the company has the strategies, the resources and the management expertise to sustain this momentum in the year ahead and beyond.”

“The board is therefore of the opinion that Vukile should again be able to deliver sustainable growth in its distributions in the year ahead,” Botha said.

Vukile is the first property company in South Africa to convert to a REIT.

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Listed Property / REITs  |  Vukile Property Fund  |  Laurence Rapp  |  Anton Botha