Much expected from strong growth in Spain

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%.