Vukile delivers sound performance in an extremely difficult economy

Vukile Property Fund FD Mike Potts says he is extremely pleased with March 2019 results.

Vukile Property Fund released its results for the year ended 31 March 2019 on Wednesday, stating that the fund’s South African business delivered “sound performance in an extremely difficult economy”. 

It achieved positive retail rental reversions at 4.5 percent and reduced vacancies to 3 percent with 87 percent tenant retention. 

Commenting on the results, Vukile FD Mike Potts said: 

“I am extremely pleased with Vukile’s March 2019 results given the tough trading conditions prevailing in South Africa-the positive results are a testament to the successful implementation of Vukile’s long term strategy”

Vukile continued to grow its portfolio size and quality by buying Kolonnade Retail Park in Pretoria for R470.6 million and investing in core assets with upgrades, redevelopments and expansions. It's R392 million redevelopment of Mauti Crescent also opened on 21 March to become the dominant centre in Phuthaditjhaba. The launch of the Vukile Academy was also an exciting highlight this year. In addition, its R200 million major renovation of the Pine Crest in Pinetown opens in July. 

Vukile continued to benefit from a strong balance sheet and capital market support during the year. Exhibiting extremely healthy cash flows, its interest rate cover ratio (ICR) is six times, which is significantly ahead of covenant levels. Its loan-to-value ratio reduced to 37 percent with 96 percent of debt hedged, and its corporate long-term credit rating was upgraded to A+(za). Vukile also enjoyed strong support from the equity market, raising R2.6 billion during the year and a further R700 million after year-end, in oversubscribed book builds. Vukile raised R1.24 billion in corporate bonds.

Vukile had several transactions in progress at year-end, designed to recycle capital from its non-core assets into its SA and Spanish retail strategies, including selling its remaining non-retail assets in SA to a BEE group and disposing of its Namibian portfolio. After year-end, Vukile reached a still highly-conditional agreement to acquire three assets from Rebosis Property Fund. The assets are completely aligned with Vukile’s strategy of retail property investment in high-density markets

Reaching the end of a management era, Mike and Vukile’s SA MD Ina Lopion, both stalwarts of the property sector respected for their quiet professionalism and exceptional delivery, are retiring on 30 June 2019. 

The company’s successful succession planning has ensured its seamless transition to a new executive team from 1 July 2019, with Laurence Cohen as CFO and Itumeleng Mothibeli as MD of the South African business.

Read more: Laurence Cohen new Vukile Property Fund CFO