Vukile Property Fund has reported a 6% increase in its interim cash dividend to 55.2 cents per share for the six months to 30 September 2024, positioning the retail REIT to meet its full-year guidance of growth in funds from operations (FFO) per share of 2% to 4% with a trajectory towards the upper end of its 4% to 6% distribution per share growth target.
Vukile’s SA portfolio, valued at R16 billion, delivered a strong performance with like-for-like operating income growth of 4.6% and a 3.7% increase in the value of its retail portfolio. Vacancies remain low at 1.9% with 85% of leases signed at better – or the same – rental level with a 93% tenant retention. The portfolio achieved trading density growth of 4.2% with a decreased cost-to-income ratio, down 15% – the lowest level in a decade.
The redevelopment of its recently acquired Mall of Umthatha is scheduled for completion and letting in Q1 2025 with an anticipated minimum 10% yield on the acquisition.
The reconfigured East Rand Mall in Boksburg is trading well following the introduction of Checkers FreshX as its first-ever grocery anchor.
The R141 million Bedworth Centre upgrade in Vanderbijlpark is progressing with both new anchor tenants, Boxer and Shoprite, opening in time for the 2024 festive season with the development of Thavhani Retail Park in Thohoyandou, Limpopo, where Vukile acquired a 33% stake for R101 million, on an 8.6% yield, has broken ground.
The REIT says it remains ‘keen’ to invest in SA and it is actively exploring opportunities with the evaluation of several potential deals in the market.
Vukile’s portfolio in Spain remains fully let with marginal vacancies of around 1% and 95% of space let to blue-chip international and national tenants. It achieved like-for-like rental growth of 2.1% and high positive rental reversions of 45.5% with the market’s lowest occupancy-cost ratio of 9.5%.
Post-period in October 2024, Vukile accepted the offer to sell its entire 28.8% stake in Lar Espana for €200 million, generating a capital profit of some €70 million and an IRR exceeding 30% in Euros. The proceeds will be redeployed into physical assets in well-advanced transactions being evaluated.
As disclosed, Castellana remains in exclusive discussions to acquire the largest shopping centre in Spain’s Valencia province, Bonaire Shopping Centre, from multinational retail REIT Unibail-Rodamco-Westfield, delayed due to tragic high floods in Spain pending a full damage assessment and remediation timeline.
Another key highlight executed post the reporting period was Castellana’s entry into Portugal which has expanded its Iberian investment footprint.
Vukile’s balance sheet remains strong with a reduced LTV of 35%, an increased ICR of 2.5 times, and R6.4 billion in liquidity including R5.1 billion of cash on hand and R1.3 billion undrawn facilities.
The REIT’s AA(za) corporate rating was reaffirmed by GCR with an upgraded positive outlook. Fitch also upgraded Castellana’s Long-term Issuer Rating of BBB- with a positive outlook.
Vukile raised approximately R2 billion during the period from new share issuances.
