Vukile sells R700m worth of assets to Mbako
Vukile, which has R35bn worth of assets, is selling its non-retail properties to the black women-owned fund
Vukile Property Fund is selling all its non-retail assets to one of the country’s first black women-owned and managed real estate company, Mbako, as it opts to become a specialised company focusing on shopping centres.
Specialised property groups in SA have tended to outperform their diversified peers as management teams can give their full attention to running only one type of property and the attendant issues that come with that. SA- and Spain-focused Vukile has invested in shopping centres that serve middle to lower living standards measurement study (LSMs), which have been more defensive than larger, super-regional shopping centres — those bigger than 74,000m2 — in SA’s slow growth economy.
It has also invested in Spanish retail assets over the past 2.5 years through its stake in Castellana Properties, gaining exposure to Europe’s fifth biggest economy’s recovery from the 2008/2009 global recession.
Vukile’s CEO Laurence Rapp said the company will sell R700m worth of assets to Mbako Property Fund, thereby enhancing economic and gender transformation in SA’s commercial property sector.
The portfolio is the first investment for Mbako, an unlisted property fund led by AWCA Investment Holdings (AIH) as its founding shareholder, and will be managed by a new joint venture between AIH and Vukile.
Rapp said Mbako means “to build” and that it “embodies its co-founders’ vision of working together to build a sustainable SA property fund”.
“We are extremely proud of this innovative deal that not only realises Vukile’s strategic vision of a directly held portfolio made up exclusively of retail property in SA, but, more significantly, is positive for economic and gender transformation,” Rapp said.
“In Mbako’s hands, these assets are a platform for growth and wealth creation. There is no better partner to unlock this potential with than the respected executives and leaders of AIH.”
Vukile will dispose of the rental enterprises comprising the nine properties known as Centurion Samrand N1, Houghton 1 West Street, Kempton Park Spartan Warehouse, Midrand Allandale Industrial Park, Midrand Ulwazi Building, Pinetown Richmond Industrial Park, Pretoria Rosslyn Warehouse, Sandton Bryanston Ascot Offices, and Sandton Linbro 7 On Mastiff Business Park.
Evan Robins, a fund manager at Old Mutual Investment Group, said Vukile’s decision to specialise “makes strategic sense” as the company wouldn’t need to hire office or industrial asset managers but could focus its team on one asset type.
Sindi Mabaso-Koyana, executive chair of AIH, said the group is turning its attention to accelerating transformation in the property sector through Mbako.
Mbako might also list in the future. There were a number of black-owned and managed funds that pursued listings in 2018 and 2019, but they have been unable to get support as the listed property sector has struggled to reward its shareholders.
The FTSE/JSE SA Listed Property Index lost 25.26% including dividend growth in 2018 and has battled to recover in 2019, having achieved a total return of 4.4% year-to-date, while equities have returned 10.1%. Some SA landlords have struggled to sign new leases at higher rentals and have also battled with managing increasing vacancies as smaller mom-and-pop stores and other small businesses have closed.