Vukile looking at possible further Spanish expansion
The diversified real estate group grew its dividend 7.5% in the year to March, weathering a weak SA economy
Vukile Property Fund hopes to receive more than R2bn through the possible sale of its interests in UK and SA real estate funds over the next year, which it would use to expand further in Spain.
The group’s move into Spain has already paid off handsomely for investors.
Speaking at a media presentation following the release of results for the year to March, CEO Laurence Rapp said Vukile’s focus is on SA and Spain and, as such, the company will look to exit UK-based Atlantic Leaf Properties, in which it owns a R1.3bn stake, and to sell its R730m interest in SA diversified property group Gemgrow Properties.
Rapp said Vukile had cemented its position in Europe’s sixth largest economy in 2018 and the early part of 2019. This helped Vukile’s dividend per share to grow 7.5% in the year to March. Rapp said it was Vukile’s 15th year of uninterrupted dividend growth.
“I think this has been our toughest year domestically, so putting our dividend growth into this context is why I’d say the performance stands out for me,” Rapp said.
Vukile’s domestic portfolio achieved positive retail reversions at 4.5% and vacancies were reduced to 3% with 87% tenant retention.
Rapp said Vukile’s aggressive push into Spain meant the fund, which was now 49% invested abroad and 51% at home, could maintain this growth while some of its peers had cut their income payouts because of the worst local operating conditions in years.
Vukile owns 72.2% of Castellana Properties, a Spain-listed company that owns €916.5m worth of commercial property and is the ninth largest real estate investment trust in that country. The asset base tripled in value from €308m during the financial year, through the acquisition of five shopping centres.
In terms of Vukile’s balance sheet, 45% of its assets are in Spain.
“Our overseas investments are focused on Spain where we have developed a base from which we can achieve scale,” said Rapp.
Keillen Ndlovu, head of listed property at Stanlib, said Vukile has been reshaped under a strong management team. “Management has turned Vukile into a great and well-diversified business, which has now attracted lots of interest in the market.”