DURBAN - Vukile Property Fund, a special retail real estate investment trust (Reit), reported a 66.27 percent decline in earnings for the six months to end September, hurt by Covid-19 rent concessions granted to tenants both in Southern Africa and Spain.
Its headline earnings per share (Heps) declined to 27.99 cents a share, down from 82.99c compared to last year.
The group said the Covid-19 crisis had a negative impact on the global property market and on retail real estate companies in particular.
Vukile granted rental relief to tenants of R133 million in Southern Africa and €15m (R256.38m) to tenants in Spain during the period.
Chief executive Laurence Rapp said despite providing extensive tenant relief in South Africa and Spain, both Vukile’s domestic portfolio and Spanish portfolio delivered sustained operational performances in tough trading environments.
“We are comfortable with both portfolios’ trading metrics, which show solid asset performance locally and in Spain during the most extreme months of the coronavirus crisis in both countries. We are cautiously confident that we have navigated through the worst of the crisis. Should this be the case, Vukile’s portfolio and tenants have weathered the storm much better than expected, with a solid platform for recovery,” Rapp said.
The group said it benefits from macroeconomic diversification, with 54 percent of its defensive, cash-generative assets in Spain, held through its 82.5 percent subsidiary Castellana Properties SOCIMI SA, and 46 percent assets are in Southern Africa.
It said Castellana’s rental collection rate is at 90 percent, with footfalls in the Spanish portfolio showing a steady month-on-month increase. At the end of October footfalls recovered to 84 percent of October 2019 levels.
In Southern Africa, Vukile’s rental collection rate reached 95 percent and footfall in October returned to 86 percent compared to the prior year.
However, gross property revenue declined by 22.22 percent to R1.4 billion while operating profit before finance costs decreased by 45.49 percent to R731m.
The group did not declare an interim dividend in order to preserve cash for the uncertainty created by Covid-19.
Vukile’s direct property investments amounted to R35.1bn at the end of September, down from R35.7bn compared to last year.
Its total indirect property holdings, which consists of listed property investments, was reduced to R600m at the end of September compared to R2.1bn at the end of March, following the sale of its interest in Atlantic Leaf for R1.1bn.
The group said the proceeds from the sale of Atlantic Leaf in August helped to reduce debt by R1.5bn, and stated that it plans further debt reduction through disposing of previously identified non-core properties.
Its listed investments consist of investments in Fairvest Properties and Arrowhead Properties.
Looking ahead, the group said while the Spanish economy will be hard hit in 2020, current forecasts anticipate a strong rebound in 2021.
BUSINESS REPORT ONLINE