Vukile Property Fund is set for a strong start to its 2024 year due to active portfolio management and defensive nature of its South African assets, CEO Lawrence Rapp said yesterday in a pre-close statement for the six months to September 30.
The group holds some R37 billion of property assets, with 42% consisting of urban, commuter, township and rural malls across South Africa and 58% held in Spain through the Madrid-listed subsidiary Castellana Properties Socimi.
Rapp said yesterday that the South African portfolio continued to deliver “excellent results”, with footfalls up 7% year-on-year (yoy) and sales up 3.6% yoy.
Trading density growth of 3.5% yoy was reported in all main segments, led by township (5.3%) and urban (4.8%) shopping centres.
Vacancies were steady at 2% with strong demand for space across all segments. The collection rate was 100%.
“The defensive nature of our South African portfolio and its nodal dominance is a buffer against the increasingly more difficult macro environment with higher interest rates affecting consumers,” said Rapp.
The Castellana portfolio continued to lead in the Spanish market in operating performance metrics with asset management interventions delivering good returns, he said.
Footfall grew 7.4% yoy and sales were up 9.7% yoy.
The Castellana portfolio had the highest occupancy (98.8%) and collection rates (98.7%) in its market, he said. Average rental growth was 9.31%.
“Trade in Spain remains positive and consumer confidence is buoyant for now. However, there is still potential for higher interest rates to influence consumer sentiment. The impact of higher finance costs has already been factored into our forecasts,” said Rapp.
A successful bonds issuance in August that attracted “significant investor demand and priced below guidance.”
Group loan to value (LTV) was anticipated to be 44%. Liquidity was strong with R2.7bn of cash and undrawn committed facilities. All debt expiries for the 2024 financial year had been repaid, refinanced or renegotiated.
A board refresh process was under way with the appointment of two independent non-executive directors - Jon Zehner, Vice Chairman of LaSalle Investment Management, one of the world’s leading real estate investment managers, and James Formby, former CEO of Rand Merchant Bank (RMB).
“They will add significant international and capital markets experience to the board as Vukile seeks to further strengthen the board with the right balance and skills for the longer term,” said Rapp.
He said Vukile continued to seek new opportunities at very attractive yields in Europe in disciplined deals that made both financial and strategic sense. However, there were no transactions currently on the table.
He confirmed the group’s guidance for the 2024 financial year, which included growth in funds from operations per share of 3% to 5%, and growth in dividend per share of 7% to 9% or to between 120 cents per share to 123 cents per share.
“We are pleased to confirm our guidance based on our actual performance to date, with all operating metrics showing trends of sustained growth,” said Rapp.
BUSINESS REPORT