Property loan stock company Vukile (VKE) on Tuesday reported a 6.1% rise in total distribution in the year ended March 2012 to 124.81 cents per unit compared with the same period a year earlier.
Chief executive Laurence Rapp said the property portfolio performed well in a difficult trading environment in which the industry faced higher vacancies, escalating costs and an uncertain economic outlook.
“Within Vukile, vacancies were well contained at 6.8% as a percentage of gross rentals (2011: 5.9%), decreasing to 5.9% if development vacancies were excluded,” he said.
The development vacancies are mostly situated in Randburg Square, where a major refurbishment of the shopping centre is taking place.
New leases and renewals of 202,129m² with a contract value of R579.5 million were concluded during the year and 74% of leases that expired during the year were renewed or were in the process of being renewed (2011: 82%).
Looking ahead, Rapp expects trading conditions to continue to remain challenging in the year ahead.
“We expect our retail centres to continue to perform well. The portfolio has performed admirably, and we are seeing increased tenant demand across our portfolio. Additionally, given the increased disposable income and shifting spending patterns in the lower income segments of the market, we are exploring a number of new developments and acquisitions of properties catering to this target group in both rural and urban areas,” he said.
Rapp said he expected a modest uptick in the industrial sector.
“Based on our experience over the past few months, it appears that the office sector may have bottomed out and, while it is still too early to predict a recovery, it is encouraging to note vacancy levels across the portfolio are beginning to improve,” he said.
He said the recent Sanlam acquisition, which added some 25% to the size of the portfolio, was the initial step of the company’s new strategy to be more acquisitive and proactive, and would also provide it with further scope for growth.
Vukile is confident of again delivering reasonable growth in distributions in the next year. - I-Net Bridge