Vunani sees acquisition opportunities returning
Acquisition opportunities are returning to the listed property sector‚ as the expectations of sellers are being revised following the sector’s price rerating in May and June‚ Vunani Property Investment Fund CEO Rob Kane says.
Acquisition opportunities are returning to the listed property sector‚ as the expectations of sellers are being revised following the sector’s price rerating in May and June‚ Vunani Property Investment Fund CEO Rob Kane says.
Vunani‚ which recently reported strong distribution growth of 19.7% for the year ended June‚ reported its “very modest” acquisition activity as its one disappointment of the financial year.
But Kane said on Monday that the fund had been unable “to see value” in the market‚ given inflated property prices. He said some funds had been buying properties at yields “at sub-8% for‚ in some cases‚ not particularly attractive assets”.
“We have a perception of value and we are unwilling to pay more than that‚” Kane said.
He said it was likely still to take a few months for prices to be reasonable‚ but the price correction of May and June “brings a bit of sanity to the market”.
Much of the sector was likely to continue turning down deals that they had been targeting‚ and “sellers are going to have to adjust their expectations”‚ Kane said.
Vunani was seeing more opportunities returning to the market.
The fund was “very pleased” with the results of its rights offer‚ which closed last week and where it raised R455m. About 3.6% of the rights units were allotted to the underwriter‚ Handful of Keys‚ with the remainder being subscribed to by unitholders.
“If you consider where the market has been for the past three months‚ I think we have done really well to get the 96.4% away‚ with the 3.6% being the underwrite.
“Our target was to raise the full R455m and that’s what we did‚ so we couldn’t be happier‚” Kane said.
Vunani was also looking at tapping into the debt capital markets‚ most likely in the second half of the 2014 financial year.
Kane said the fund expected to accelerate its acquisition activity in the new financial year‚ albeit in a controlled manner.
In the year ended June‚ Vunani grew its distributions per linked unit by 19.7% to 77.25c. Vunani management expects distribution growth in this financial year of between 8.7% and 11.3%‚ with distributions between 84c and 86c per linked unit.
