Vukile delivers the goods for its investors

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Vukile Property Fund CEO, Laurence Rapp said the results reflect a strong year for the company where it delivered on its forecasts and achieved robust operational performance across all key metrics. Vukile Property Fund CEO, Laurence Rapp said the results reflect a strong year for the company where it delivered on its forecasts and achieved robust operational performance across all key metrics.

Delivering on its promise to investors, Vukile Property Fund, the 13.6 billion rand JSE-listed property group, on Tuesday declared 8.1% growth in income payouts for the year ending March 2015.

The company reported a 14.1% rise in headline earnings per share (HEPS) to 186.81c, while net asset value (NAV) per share grew by 14.6% to R17.16.

During the year Vukile raised its gross property revenue by 13.6% and grew its distributable income by 11.6%.

Vukile declared a final distribution of 77.68c per share, bringing the total distribution for the year to 136.77c up 8.1% from the year-earlier period.

The financial results were slightly ahead of the initial market guidance of between 7% and 8%.

Vukile Property Fund CEO, Laurence Rapp comments: “We’re pleased to report this strong set of results notwithstanding our very conservative hedging stance that supports the long-term nature of our investment philosophy.”

Portfolio

With its 33.9% holding in Fairvest, the group property portfolio at March 31 2015 which is internally managed, consisted of 93 properties with a total market value of R13.6 billion, with an average value of R143m per property. Retail centres now comprise about 64% of its portfolio.

Total portfolio vacancies fell to 4.6% during the year from 6.5% a year ago.

The company is expecting its property portfolio to grow from R13.6 billion to R14.7 billion, as it looks to bed down a R1 billion acquisition pipeline, awaiting transfer at year end. These include Nonesi Mall in Queenstown in the Eastern Cape, Moruleng Mall in North West Province, Batho Plaza in Soshanguve in Gauteng, a portfolio of distribution warehouses in Silverton in Gauteng and a further 40% interest in Maake Plaza in Limpopo.

It also finalised its acquisition of Synergy Income Fund during the year. It now owns 65% of the entire Synergy issued capital and owns its management company too.

While Synergy’s performance disappointed this year, Rapp confirms this was in line with Vukile’s expectations and is mostly because of the once-off costs Synergy incurred in defending the Vukile take-over transaction as well as the impact of Ellerines store closures following this retailer’s demise.

Mr Rapp plans to turn Synergy, which owns an R2.4bn portfolio of mostly smaller and mid-sized malls, into a high-growth vehicle. "We think we can add value through dealmaking and corporate activity."

Upgrades and Redevelopments

Vukile is investing R406 million on certain of its property assets, including ongoing projects at East Rand Mall in Boksburg, which it co-owns with Redefine Properties, Meadowdale Mall in Germiston, The Workshop in Durban, Sanlynn Office Park and Suncardia both in Pretoria, and extending De Tyger Office Park in Parow to develop premises for The Cure Day Clinic.

Rapp notes: “While we are circumspect about the economy, we are also actively seeking new opportunities for strategic growth. Besides our core portfolio, we also plan to develop an incubator portfolio by actively seeking opportunities in other asset classes and geographies to grow Vukile even further.”

Rapp announced on Tuesday that Vukile will convert the Randburg Square Office Tower into 180 Residential apartment units.

The R80 million-worth development is set to begin in September and will form part of Vukile’s recently refurbished Randburg Square Mall, north of Johannesburg.

Prospects

Looking ahead, Vukile said it expected tough trading conditions to continue into the year ahead as the economy was unable to generate any meaningful growth.

“We know the markets are tough and the electricity crisis is dampening business and impacting our tenants, but we are confident that we will deliver growth in distributions of between 7% and 8% per share for  investors in the coming financial year.” said Mr Rapp.

The heavily oversubscribed capital raising, which netted R1.1bn earlier last month, had significantly strengthened the fund’s balance sheet.


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