CAPE TOWN - Vukile Property Fund is taking steps to manage down its loan-to-value (LTV) and may even consider introducing a strategic shareholder at its Spain-based retail centre subsidiary Castellana.
This emerged from a roadshow held by Vukile executives yesterday ahead of a potential corporate bond issuance of up to R500 million in February.
The funds are planned to be used to reduce debt and would not impact LTV. In their presentation, Vukile directors said they hoped to reduce LTV to around 35percent over 6 to 12 months, from 40.8percent at the end of the six months to September 30, 2019.
The plan was that the sale of the Namibia assets, the sale of non-core office and industrial assets, the sale of non-core retail assets and the possible introduction of a strategic shareholder in Castellana might together reduce LTV to around 34.7percent.
Vukile holds around R35billion of assets, R1.3bn of which is in the UK, R17bn or properties in Spain and some R17bn of property investments in southern Africa, R16bn of which are directly held in 45 properties.
Vukile also holds a R552m investment in Fairvest Property Holdings, and a R515m investment in Arrowhead Properties. The group has a history of strong shareholder returns, with a compound annual growth rate of 19.4percent since listing, and 16 years of unbroken growth in distributions.
Directors said Castellana had a proven business model in terms of consolidation, growth in rentals and value added opportunities that was ready to be scaled up further. Spain’s retail and economic fundamentals remained positive. There were good organic opportunities aligned to the existing assets in Spain. Vacancies were low at the shopping centres in Spain, and fell to 1.4percent in the interim period from 2.1percent previously.
Vukile’s directly held local property portfolio, which includes East Rand Mall, Bloemfontein Place and Gugulethu Square, remained defensively positioned, with 92percent of the retail space exposed to lower income groups, while 80percent of the space was tenanted by national tenants.
Vukile’s share price closed 0.11percent higher at R17.73 on the JSE yesterday.