Vukile Property Fund says it is ‘comfortably on track’ to achieve at least its guidance for the financial year to March 2025 of growth in funds from operations (FFO) per share of 2% to 4% and distribution per share (DPS) of 4% to 6%.
“The period has been defined by exceptional operational performance from the Spanish portfolio, strong and further improving metrics from the South African portfolio, excellent capital market support with oversubscribed capital raises in both equity and debt markets, and securing our first investments in Portugal,” commented CEO of Vukile Property Fund, Laurence Rapp, during the REIT’s pre-close operational update for the first half of its 2025 financial year which ends on the 30th of September 2024,
Vukile’s South African portfolio delivered a strong performance and growth, with trade increasing, particularly in the township (+5.3%) and rural (+3.5%) segments. Trading density growth of 3.3% in its domestic portfolio exceeded the 2.4% recorded during FY2024. Fashion, particularly women’s wear and pharmacies, bottle stores, health and beauty, sports facilities, and gyms, all experienced noteworthy trading density growth which also climbed in the grocery category.
Like-for-like vacancies remain low – and stable – at 1.9% with the Mall of Mthatha, transferred into the REIT’s portfolio in April 2024 – undergoing a major, approximate R200 million upgrade which is due for completion in February 2025. The asset currently has a 13% vacancy factor, set to decrease materially in the short term. The acquisition of this asset increased Vukile’s total portfolio vacancy figure slightly from 1.9% to 2.6%.
“We are greatly encouraged by the economic, social and political green shoots and the heightened sense of positivity in South Africa,” said Rapp.
The Spanish portfolio’s shopper numbers increased by 3.7% during the first eight months of 2024 when compared to the numbers for January to August 2023. Similarly, sales were up 4.6%. The portfolio’s occupancies of 98.4% are better than the Spanish average for the sector of 94.7% with rental increased at levels of 31.45% on average, 42.43% on new leases, and 9.83% on renewals.
“This year’s projected Spanish GDP growth has been increased to 2.5%, following better-than-expected first-quarter data, demonstrating economic strength that specifically supports retail property performance,” Rapp pointed out.
The REIT expanded its Iberian Peninsula footprint by entering Portugal in a milestone transaction concluded at projected cash-on-cash yields of more than 10%, due to close in October 2024. Post this acquisition, around 64% of Vukile’s assets will be in the Iberian Peninsula and nearly 56% of its property net operating income will be in Euros.
“We are actively exploring growth opportunities in South Africa as well as in the Iberian Peninsula, with its strong consumer confidence and exceptional tourism growth,” concluded Rapp.
