Laurence Rapp
Laurence Rapp

Vukile raises dividends by 7.5% after year of sterling performance

By Edward West Time of article published May 30, 2019

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CAPE TOWN - Vukile Property Fund yesterday increased dividends by 7.5percent to 181.48cents a share for its year to end March.

Vukile’s results deliver on its market guidance and represent 15years of uninterrupted dividend growth for its investors. The dividend was fully covered by the cash flow from operations, its management said in a statement yesterday.

Net profit available for distribution was R1.7billion, representing an increase of 30percent over the year to March 2018.

The results reflected the benefits of Vukile’s growing international diversification and value-adding asset management in Spain. They were also underpinned by a solid operational performance from its southern African portfolio, a robust balance sheet and capital market support.

Chief executive Laurence Rapp said this had been Vukile’s strongest year yet. Vukile was now a high-quality retail Reit, with just under half of its R28.7bn direct property investments in Spain.

“Vukile really matured and came into its own this year. We have a clear vision, structure and strategy. The business is in excellent shape operationally and strategically, and well positioned for good, sustainable growth in both South Africa and Spain,” he said.

Vukile’s Spanish asset base grew strongly by tripling in value through the acquisition of five shopping centres. Vukile’s listed Spanish subsidiary, Castellana Properties Socimi, was the ninth biggest Reit in Spain by market capitalisation. “With 45percent of our assets in Spain, Vukile has added the advantages of macroeconomic diversification for investors.

Vukile offers rand-denominated exposure to high-quality properties and tenants in the fastest growing economy in western Europe,” he said.

Castellana delivered a strong operational performance and asset management interventions that were paying off. All nine of its original retail parks were now fully let and Castellana was achieving positive reversions on expiring and new rentals of nearly 11percent, with like-for-like rental growth of 3.5percent compared with a 1.2percent inflation rate in Spain.

“Our Spanish business has matured exceptionally quickly, given it is only two years old. It has a solid pipeline of deal-making and asset management opportunities,” Rapp said.

The South African business delivered sound performance in a difficult economy. Positive retail rental reversions at 4.5percent were achieved and vacancies reduced to 3percent, with 87percent tenant retention.

In SA, Vukile acquired Kolonnade Retail Park in Pretoria for R470.6million and invested in core assets with upgrades, redevelopments and expansions. The launch of the Vukile Academy was designed to make a difference to transformation, it kicked off with more than 50 bursaries to help young black university students and eight hands-on internships at Vukile.

Vukile enjoyed strong support from the equity market, raising R2.6bn during the year and a further R700m after year-end, in oversubscribed book builds. Vukile raised R1.24bn in corporate bonds.

“We are in negotiations on a number of transactions, and Vukile expects dividends to grow between 3 and 5percent in financial 2020, assuming no major shocks,” Rapp said.

Earlier this month, Vukile announced the acquisition of three shopping centres: Mdantsane City Shopping Centre, Bloed Street Mall and Sunnypark Shopping Centre from Rebosis Property Fund.

The acquisition, estimated to cost R1.78bn, remained subject to funding with Vukile prepared to take on no more than 25percent of debt to fund the acquisition.


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