Vukile eyes low-income sector to grow further
PROPERTY loan stock company Vukile Property Fund, which has grown its asset base by 25% to R6,1bn for the year ended March, is exploring several new developments and acquisitions of properties catering to both rural and urban areas.
CEO Laurence Rapp said yesterday the JSE-listed company had a strong pipeline of acquisitions in townships and rural nodes as there was strength in those markets. “We want to increase our exposure in this market and there are a number of deals we are evaluating.”
He said increased disposable income and shifting spending patterns in the lower-income segments of the market had led the company to consider new developments and acquisitions of properties catering to this target group.
The recent Sanlam property portfolio acquisition, which added about 25% to the size of Vukile’s portfolio, was the initial step in the company’s new strategy to be more acquisitive and proactive, and would provide it with further scope for growth, Mr Rapp said.
Last month Vukile acquired 20 properties worth R1,5bn from Sanlam Life Insurance.
Vukile posted a 6,1% increase in distributions to 124,81c per unit for the year ended March.
Mr Rapp said the property portfolio had performed well in a difficult trading environment, in which the industry faced higher vacancies, escalating costs and an uncertain economic outlook.
Vacancies rose to 6,8% from 5,9%. However, if vacancies related to redevelopments were excluded, the ratio remained unchanged.
The development vacancies are mostly situated in the Randburg Square shopping centre, where a major refurbishment is under way.
New leases and renewals of 202 129m² of property space with a contract value of R579,5m were concluded during the year.
The company said 74% of leases that expired during the year were renewed or were being renewed.
Vukile wants to sell office properties valued at R282m in the central business districts of Johannesburg and Pretoria.
“We are selling some lower B and C-grade offices as we improve the quality of the portfolio by buying Bplus grade offices,” Mr Rapp said.
Vukile still had a strong appetite for acquisitions of shopping centres, especially in townships and rural areas, “where we see growth”.
Maurice Shapiro, fund manager at Alternative Real Estate, said yesterday: “Management has embarked on strategic initiatives which help secure the company’s good property fundamentals.
“We are particularly impressed with their use of technology to implement a broker website which improves their communication about vacancies and leasing opportunities.”
Entering joint ventures with developers and targeting middleincome shopping centres gave confidence “that management will deliver their target of top quartile earnings growth in the sector”, he said.