Johannesburg - Listed property fund Vukile has abandoned its plans to invest into the residential sector in South Africa and will focus instead on expanding into international markets.
Laurence Rapp, the chief executive of Vukile, said yesterday that it would be looking to expand into developed markets internationally but not into eastern Europe.
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“We think there is more than enough exposure in the South African market to eastern Europe through MAS, Nepi, Rockcastle and Redefine and are not sure we are going to add to the local investor base by going to eastern Europe,” he said.
Rapp said the initial target was to have 25 percent of Vukile’s portfolio offshore within the next two years.
Firepower
He said the fund had “about R1.5 billion of current firepower” on the company’s balance sheet through cash resources and existing debt facilities to deploy internationally without having to go to the equity capital markets for more equity.
Vukile launched its international investment strategy with the acquisition of a 26 percent stake in JSE-listed Atlantic Leaf Properties, which secured it a foothold in the UK from which it could grow.
“Atlantic Leaf provides the perfect launch pad to deepen our international exposure while building our high-quality, low-risk portfolio,” Rapp said.
Rapp confirmed it was in discussions regarding a few potential transactions, but none of them was far enough advanced yet for the fund to make any announcement.
He said Vukile’s international expansion could involve other markets than Europe. “We think there are a lot of opportunities there with a lot of money chasing into it. But it is a more difficult market to structure into than Europe and more difficult to manage,” he said.
Rapp said that expansion into the US market was on the back burner.
He said the residential sector in South Africa was no longer a key priority because of the management time and effort it would require.
Vukile yesterday reported a 7 percent growth in dividends a share to 67.65c in the six months to September from 63.22c in the previous corresponding period.
Net profit available for distribution increased by 15 percent to R526m from R457m, while property revenue rose by 8.2 percent to R1.09bn from R1bn.
Vacancies were unchanged at 5 percent.
Shares in Vukile dropped 1.17 percent on the JSE yesterday to close at R17.71.
BUSINESS REPORT