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Namibia: Consumer confidence in shopping malls boosts Vukile Property Fund
Namibia: Consumer confidence in shopping malls boosts Vukile Property Fund

Namibia: Consumer confidence in shopping malls boosts Vukile Property Fund

FMCG SUPPLIER NEWS - Jun 7th, 11:30

Consumer confidence boost Vukile

Windhoek - The value of Vukile Property Fund received a boost in the last financial year and the dual-listed South African property fund has just reported a 26.7 percent increase in profit or N$556.4 million available for distribution for the full year, as of March 31, 2013. 

The fund has announced a second-half distribution of 74.56 cents per linked unit, making the total for the year 131.6 cents per linked unit, an increase of 5.4 percent over the previous year. Vukile’s property portfolio, worth about N$7.7 billion, comprises of some retail shopping centres in Namibia, including the Katutura Checkers Centre, Ondangwa Shoprite Checkers, Oshakati Shopping Complex, the BPI House in Windhoek, and Oshikango Ellerines.

The Oshakati Shopping Centre, which is valued at more than N$223 million, is currently ranked among the group’s top-ten high valued properties. The Ondangwa Shoprite Centre is being extended at a cost of N$8.7 million, and the work is scheduled for completion in November this year. In fact, the company announced that 86 per cent of the gross income is derived from the retail shopping complexes in South Africa’s Gauteng, KwaZulu-Natal and Western Cape provinces, as well as in Namibia.

“The geographical and sectoral distribution of the group’s portfolio is indicated in the graphs below. The portfolio is well-represented in most of the South African provinces and Namibia,” the group’s chief executive Laurence Rapp said of the financial results for the period up to March 2013. Vukile is dual listed on both the NSE and the JSE.

Vukile has also announced that it has sold the shopping complex in Katima Mulilo, the Katima Mulilo Pep Stores, for N$18 million and would use the money to acquire “properties that conform to its investment requirement”. Vukile property values got a boost from the transfer of 20 properties, including the N$1.5 billion Sanlam portfolio acquisition and the transfer of the N$1.112 billion, 50 percent, stake in the East Rand Mall, in the current financial year.

The company says it expects the portfolio value to exceed the initial target level of N$10 billion once a number of property deals are finalised. These include the initial acquisition of four government-tenanted buildings from Encha Properties valued at N$1.04 billion, the development of the Hammarsdale Shopping Centre for a capital outlay of N$194 million, which will open in June 2013 and other deals still in the pipeline.

Vukile’s composition of the portfolio is now 59 percent retail, 30 percent offices and 11 percent industrial based on gross income. Rapp said Vukile’s portfolio had “performed admirably in a lacklustre operating environment”. Vacancies, measured as a percentage of gross lettable area, were well contained at 6.8 percent at year-end, compared to 7.6 percent in September 30, 2012. New leases and renewals of 277 911 square metres with a contract value of N$1.015 billion were concluded during the year, and 87 percent of leases to be renewed during the year were renewed or are in the process of being renewed.

This is up from 74 percent in the previous reporting period. Positive reversions were achieved across all sectors with an average escalation on expiry rentals of 8.2 percent. New leases signed came in 4 percent ahead of budget for the portfolio as a whole. Refurbishment and extension projects to the value of N$117 million were completed during the course of the year, while N$400 million worth of projects are still in progress.

“We do not expect a significant improvement in the operating environment in the year ahead, but we have been very happy with the performance of the underlying property portfolio. We expect our retail component to continue to do well, but the office sector to remain tough. We have a good-deal pipeline and the introduction of new yield enhancing properties will positively impact the portfolio, and will be earnings enhancing,” said Rapp.

Rapp said following the decision to distinguish between non-recurring income, which is to be declared as a special distribution, and the company’s normalised earnings, he expects Vukile to deliver a growth in its normalised distribution of between 4 and 6 percent for the 2014 year off a base of 120.44 cent per share. That would increase to between 6 and 8 percent off a base of 131.59 cent per share for the year ending March 31, 2014 when taking into account the special distribution of approximately N$64 million, which arose from the sales commission earned through the East Rand Mall acquisition.


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