Vukile Property Fund increased its interim cash dividend 6% to 55.2 cents per share for the six months to September 30, 2024.
The consumer-focused retail REIT with sector specialisation and international diversification in Spain and Portugal was said yesterday that it was on track to meet full-year guidance of growth in FFO (funds from operations) per share of 2% to 4%, with a trajectory towards the upper end of its 4% to 6% dividend per share growth target.
“Our strong first-half performance delivered outstanding operating results and solid trading metrics across our property portfolios, which means we are well set up for the next six months, and certainly for a number of years thereafter,” CEO Laurence Rapp said in a presentation at the release of the results yesterday.
Vukile’s R40.1 billion of property assets includes 33 urban, commuter, township, and rural malls in South Africa valued at R16bn. Through its 99.5%-held Spanish subsidiary Castellana Properties, it has 15 shopping centres in Spain, and three shopping centres were acquired in Portugal post the interim period.
The three centres in Portugal involved a high-quality, blue-chip-tenanted portfolio valued at €176.5m (R3.4bn). The Portuguese economy was growing well, there was a strong growing tourism sector, and the country’s shoppers preferred shopping centres, said Alfonso Brunet, CEO of Castellana Properties.
“Castellana’s on-the-ground expertise positions it to add substantial value to the Portuguese assets, while growing in this market, with liquidity in place and further transactions under consideration,” he said.
Some 59% of Vukile’s assets are in the Iberian Peninsula, and almost 48% of its property net operating income is earned in Euros.
In October, Vukile accepted an offer to sell its 28.8% stake in Spain-listed company Lar Espana for €200m, generating a capital profit of some €70m. The proceeds would be redeployed into assets in well-advanced transactions being evaluated.
Castellana also remained in talks to acquire the largest shopping centre in Spain’s Valencia province, Bonaire Shopping Centre, from Unibail-Rodamco-Westfield. The transaction’s closing had been extended due to the tragic floods in Spain.
In South Africa, the momentum of positive results generated by improved sentiment, less load shedding, rising consumer confidence, and falling interest rates was expected to persist into the second half and beyond, said Rapp.
Valued at R16bn, local properties reported like-for-like net operating income growth of 4.6% and a 3.7% increase in the value of its retail portfolio. Vacancies were low at 1.9%, supported by active letting, with 85% of leases signed at better or the same rental level and 93% tenant retention success.
The portfolio lowered its cost-to-income ratio to 15%, the lowest level in a decade. The solar PV rollout in South Africa drove margin and propelled the group towards carbon neutrality.
During the six months, four solar PV plants with 4.9MWp of capacity were added to its 28 plants of 21.6MWp. Six more were planned that would increase the alternative energy generation to 20% of the group’s local demand from 18%.
The redevelopment of the recently acquired Mall of Umthatha was on schedule, with substantial letting expected by the first quarter of 2025.
The development of Thavhani Retail Park in Thohoyandou, Limpopo, where Vukile acquired a 33% stake for R101m, was expected to be completed in October 2025. It is located adjacent to Vukile’s successful Thavhani Mall asset.
“We are actively exploring opportunities (in South Africa) and are in the early stages of evaluating several potential deals in the market,” said Rapp.
In Spain, Castellana’s had surpassed market benchmarks and peers with high footfall and sales. The Spanish portfolio remained fully let, with marginal vacancies of around 1% and 95% of space let to blue-chip international and national tenants.
BUSINESS REPORT