Much ex­pected from strong growth in Spain

Financial Mail - Investors Monthly - - Analysis - Al­is­tair An­der­son

Vuk­ile is a di­ver­si­fied property busi­ness that has re­cently ex­panded abroad. The com­pany has a stake in At­lantic Leaf Prop­er­ties, which owns in­dus­trial as­sets in the UK and has re­cently bought as­sets in Spain.

Vuk­ile is ad­min­is­tered by Lau­rence Rapp, who has been at the helm since 2011, and his core man­age­ment team.

Rapp’s lat­est strate­gic push was to re-fo­cus Vuk­ile’s port­fo­lio so that it is com­posed pre­dom­i­nantly of re­tail prop­er­ties. Even though in­dus­trial as­sets have out­per­formed re­tail and of­fice prop­er­ties over the past 18 months, they re­main the most de­sired as­set class.

A num­ber of fund man­agers

be­lieve in the long-term story of Vuk­ile.

The idea is that it will take a cou­ple of years for the com­pany to build a pres­ence in Spain.

“I think Vuk­ile is one of the bet­ter in­vest­ments now, [of­fer­ing] a pre­dom­i­nately re­tail port­fo­lio at a de­cent yield. You must look [past] the un­cer­tainty of the next year or so for the com­pany,” says Evan Robins, listed property man­ager of Old Mutual In­vest­ment Group’s MacroSo­lu­tions bou­tique.

Vuk­ile an­nounced in May it had bought 86.89% of the shares of Castel­lana, an un­listed Span­ish real es­tate in­vest­ment trust, for R193m, be­com­ing an early mover into the coun­try. It is look­ing for more deals in Spain.

Growth in that coun­try’s GDP has ex­ceeded 3%/year over the past three years. Con­sump­tion was pent up for the past seven years and eco­nomic re­cov­ery is driven by an in­crease in dis­pos­able in­come.

Peter Clark, a port­fo­lio man­ager at In­vestec As­set Man­age­ment, says Vuk­ile has been ex­pand­ing care­fully into Spain.

“Buy­ing Spain is part two of Vuk­ile’s off­shore strat­egy; part one was the in­vest­ment in At­lantic Leaf. Real es­tate in­vest­ment in Spain has been gain­ing in pop­u­lar­ity with SA and other in­ter­na­tional play­ers. The mar­ket has showed sig­nif­i­cant re­cov­ery since the global fi­nan­cial cri­sis, and the sec­tor has now been re­vived.

“Spain as a whole has a lower sov­er­eign risk than other Euro­pean coun­tries that SA peers have ven­tured into.

“Over­all, Vuk­ile has im­ple­mented its strat­egy well, with an in­creased fo­cus on re­tail and bal­ance sheet ca­pac­ity, which helps with fur­ther ex­pan­sion plans,” he says.

Vuk­ile’s share price has risen close to 20% over the past year, out­per­form­ing the FTSE-JSE SA Listed Property in­dex (Sapy) as its high ex­po­sure to re­tail as­sets in un­der­served ar­eas raised its pro­file among in­vestors.

The Sapy has risen about 1.5% in the year to date and 2.29% on a price ba­sis since June 2016. So far this year, Vuk­ile’s share price has climbed about 6%.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.