‘Talk of a retail property apocalypse is misplaced’

ALL TALK IN the market of a retail property apocalypse, which had been made worse by the Covid-19 pandemic, was misplaced, Vukile Property Fund chief executive Laurence Rapp said yesterday.

Speaking at a presentation, Rapp said “it is just not true” and the rate of recovery in the group’s shopping centres in South Africa and in Spain, where the group holds 52 percent of its assets, had been strong as economies began reopening through the Covid19 lockdowns.

In South Africa, footfall in the group’s mainly rural and regional shopping centres was already 70 percent of pre-Covid-19 levels, and in Spain the percentage was already at 65 percent.

In addition, management reports showed that shoppers were much more focused in their shopping currently, and were spending more at the group’s malls in South Africa than last year.

Rapp said it was appropriate to say that the rate of change in the shopping centre environment has sped up.

He said the Covid-19 crisis had shown that there had been an unhealthy level of “short termism” in the sector and people had stopped investing in Real Estate Investment Trusts on the basis of the quality of the underlying “bricks and mortar” asset investments.

“It is very clear that the retail landscape will change and while we will experience a rise in online shopping, quality retail centres will continue to have a critical role in any economy as part of an evolution to a world of omni-channel retailing,” he said.

Vukile’s profit for distribution increased by 3.32 percent to 187.25 cents per share for the year, from 181.48c the previous year. The share price was up 9.58 percent to R7.89 on the JSE around midday yesterday, before closing at R7.69.

In South Africa, the portfolio remained defensively positioned in the middle to lower disposable income markets, with a strong township and rural bias, which was trading better than big urban centres.

Looking to the first half of 2021, Vukile did not anticipate paying an interim dividend. No earning guidance was provided for the full year and a variable dividend payout ratio was being adopted, instead of paying out 100 percent of distributable earnings, in order to preserve cash.