Vukile Property Fund’s South African retail portfolio has continued its delivery of positive metrics, reporting like-for-like retail net operating income (NOI) growth of 5.4% for FY2024. Local vacancies reduced to 1.9% with positive rental reversions of 2.9% (FY2023: 2.3%) and a like-for-like retail portfolio value increase of 5.8%.
Tenant retention increased to 94% of gross lettable area (GLA), achieving trading density growth of 2.4%, led by township and rural shopping centres and those in Gauteng, the Western Cape, and North West.
Its Castellana portfolio in Spain recorded normalised NOI growth of 11%, negligible vacancies of 1.1% and positive rental reversions of 9.7%. 95% of Vukile’s Spanish retail space is let to national and international tenants.
“This year of outperformance is a testament to our clear strategic direction and unwavering focus on execution which positions us exceptionally well to capitalise on opportunities. This sterling set of results is underscored by Vukile’s astute asset selection, sustained strong operational results, and balance sheet strength supported by robust credit metrics and deep liquidity. Our South African portfolio is delivering positive numbers, and our Spanish assets are achieving market-leading performance. Vukile is a resoundingly strong, sustainable business,” comments CEO of Vukile Property Fund, Laurence Rapp.
Post year-end, Vukile exited its full stake in Fairvest Limited. It also 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 says it has explored various domestic opportunities however, in most cases, “the pricing doesn’t make economic sense.” In Europe, Vukile is seeing attractively priced assets, signaling a unique window of opportunity to deploy capital. While withdrawing its non-binding indicative proposal for Capital & Regional, the Group is still actively pursuing various prospects including entering discussion to acquire direct retail assets in Spain and Portugal.
Group property revenue increased by 11.8% to R4 million when compared to FY2023 (R3.594 million) with its operating profit before finance costs decreasing from R2.389 million in FY2023 to R2.328 million during the current reporting period.
The REIT reported total funds from operations (FFO) of 154.20 cents per share, up 6.7% on FY2023 with its net asset value (NAV) increasing by 5.2% to 21.55 cents (FY2023: 20.48 cents).
Its Board declared a final dividend of 72.10 cents per share with a total dividend for the year of 124.20 cents per share, up 10.5% on the prior year. The total dividend of R1.3 billion was fully covered by cash from operations of R2.2 billion.
During the reporting period, it raised R1.7 billion from new share issuances and secured a R1.1 billion green loan and sustainability linked funding post yearend.
The Group has available cash balances of R2.4 billion and undrawn of 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,” explains Rapp.
“June 2024 marks Vukile’s 20th anniversary since first listing on the JSE. Today, it is well established as a 100% focused retail REIT with strong operational metrics, clear strategic direction and significant geographic diversification off which to launch its next phase of growth. We have consistently and significantly outperformed the SAPY index, and, as we move forward, Vukile remains committed to our scalable consumer-led model that creates value for all our stakeholders.”
Vukile’s loan-to-value (LTV) ratio reduced to 40.70%.
