By Lehlohonolo Lehana.
The consumer-focused retail real estate investment trust (Reit) Vukile Property Fund announced it had outperformed the upper end of its full-year market guidance, delivering a 10.5% increase in dividends per share (DPS) to 124.2c for the year to March 31and 6.7% growth in its funds from operations (FFO) to 154.2c a share.
Coming off the back of an “exceptionally strong year”, Vukile, in a media release, confirmed that it was on track to deliver further growth for shareholders for the year to end on March 31, 2025, with expected FFO per share growth of between 2% and 4% and DPS growth of between 4% and 6%.
Vukile’s portfolio of retail property assets valued at R40.2-billion is strategically diversified across South Africa and Spain through its 99.5% held Madrid-listed subsidiary Castellana Properties Socimi.
A significant 61% of Vukile’s assets are in Spain, and 50% of its earnings are generated in euros.
Vukile said this forecast assumes aggregate growth in net operating income (NOI) across the direct property portfolios in South Africa and Spain of between 5% and 7%; a higher cost of funding from increases in base rates in South Africa and Spain and from the expiry of the €256-million fixed rate loan in Castellana, affecting the 2025 financial year numbers for a full year; a Lar España dividend accrual of 70c a share for the period from February 2024 to January 2025; and a rand/euro exchange rate of R20.05.
The company said this would equate to an FFO per share of between 157.3c and 160.4c and a full-year DPS of between 129.2c and 131.9c to be paid with an interim dividend and a final dividend.
“[I am] really… upbeat about the set of results that we are putting out,” expressed Vukile CEO Laurence Rapp during a results presentation on June 5. He pointed out that this year was Vukile’s twentieth anniversary since listing in 2004.
Primarily located in townships and rural areas, Vukile’s defensive domestic portfolio of high-quality shopping centres achieved like-for-like retail net operating income growth of 5.4%.
Retail property valuations increased by 5.8% on a like-for-like basis. The company said that demand for space in Vukile’s shopping centres remains “exceptionally strong,” adding that active leasing reduced already low retail portfolio vacancies to 1.9%.
The company also noted that rental growth continued its rebound with positive reversions of 2.9%, with 87% of leases signed producing stable or growing rentals. Tenant retention increased to 94% of gross lettable area.
The portfolio achieved trading density growth of 2.4%, led by township and rural shopping centres and those in the Gauteng, Western Cape and North West provinces.
“We continue driving our consumer focus model in the core portfolios in South Africa and Spain. You’ve seen the result that that’s delivered, we’ll hopefully continue delivering those results, and then we’re continually looking for new opportunities,” said Rapp.