Vukile Property Fund, the consumer-focused retail real estate investment trust (REIT), said it outperformed its upper-end full-year market guidance, with a 10.5% increase in dividend per share (DPS) to 124.2cps for the year to 30 March 2024.
The group reported a 6.7% growth in its funds from operations (FFO) to 154.2cps.
The Reit confirmed it is on track to deliver further growth for shareholders for the year ending 31 March 2025, with expected FFO per share growth between 2% and 4% and DPS growth between 4% and 6%.
Vukile’s portfolio of retail property assets valued at R40.2 billion is strategically diversified across South Africa and Spain through its 99.5% held Madrid-listed subsidiary Castellana Properties Socimi.
A significant 61% of Vukile’s assets are in Spain, and 50% of its earnings are generated in Euros.
Primarily located in townships and rural areas, Vukile’s defensive domestic portfolio of high-quality shopping centres achieved like-for-like retail net operating income growth of 5.4%.
The Reit owns 41 malls in SA worth R14.6 billion, including the Boksburg East Rand Mall and Gugulethu Square.
Retail property valuations increased by 5.8% on a like-for-like basis over the reporting period.
The demand for space in Vukile’s shopping centres remains exceptionally strong. Active leasing reduced already low retail portfolio vacancies to a mere 1.9%.
Rental growth continued its rebound with positive reversions of 2.9%, with 87.0% of leases signed producing stable or growing rentals.
Tenant retention increased to 94% of gross lettable area. The portfolio achieved trading density growth of 2.4%, led by township and rural shopping centres and those in the Gauteng, Western Cape and North West provinces.
Vukile said it made significant strides in executing its environmental commitment through its solar power programme.
It began the financial year with an installed rooftop PV capacity of 14.9 MWp and expanded that capacity to 21.6 MWp, and a further 11MWp is under construction for completion in FY25.
Post year-end, Vukile exited its full stake in Fairvest, which has been an excellent investment for the company. It also successfully took transfer of a 50% share in Mall of Mthatha (formerly BT Ngebs City shopping centre), for R400 million, which Vukile will upgrade with its partners Flanagan & Gerard Property Group.
“Vukile is steadfast in its commitment to disciplined capital allocation. We’ll only pursue opportunities that offer clear strategic alignment and financial upside,” said Laurence Rapp, CEO of Vukile Property Fund.
It has explored various domestic opportunities; however, in most cases, the pricing doesn’t make economic sense. In Europe, Vukile said it is seeing attractively priced assets, signalling a unique window of opportunity to deploy capital into high-quality assets at attractive prices.
While withdrawing its non-binding indicative proposal to the Board of Capital & Regional, it is still actively pursuing various prospects, including entering discussions to acquire direct retail assets in Spain and in neighbouring Portugal.
Vukile secured R1.1 billion of funding through an innovative green loan and sustainability-linked loan post year-end. Its interest cover ratio is 2.3 times, and LTV reduced to 40.7%.
The group said it has a strong liquidity position with significant available cash balances of R2.4 billion and undrawn debt facilities of R2.9 billion.
“We’re seeing a significant increase in deal flow in the sector. However, the biggest challenge the industry — and Vukile — faces is accessing capital at a cost that makes deals accretive. With our strong liquidity position, we are well positioned to execute our growth strategy and remain a consumer-focused retail real estate business,” said Rapp.
Shares in the group are up some 21.50% over the past year.
Comments