Strong first half for Vukile Property Fund

Increases dividend per share by 6%.

Retail-focused landlord Vukile Property Fund reported a strong first half on Tuesday for the six months ended 30 September 2024.

The group, which is invested in the South African, Spanish and Portuguese property markets, posted a 6% increase in Dividends Per Share (DPS) – one of the highest amongst SA’s top five biggest primary-listed real estate investment trusts (Reits) on the JSE.

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Read: None of Castellana’s properties ‘adversely affected’ by Spanish flash floods – Vukile

DPS is a key financial performance metric for SA Reits.

Vukile declared an interim dividend of 55.2 cents per share, up 6% on the prior period.

The group said in its Sen results filing that it had “a strong first half comprising outstanding operating results” which “positions us well for continued growth”.

“Over the past six months, Vukile continued to deliver strong operational results and solid trading metrics in South Africa and Spain. The business is well-positioned to execute on our growth strategy, both from an operational and financial perspective,” it added.

Vukile’s share price

“The global economic environment is starting to see green shoots and access to capital in recent months has allowed us to pursue further potential deals that are accretive and aligned to our strategic objectives,” noted Vukile.

“Post the reporting period, Castellana [its Spanish subsidiary] concluded its first acquisition in Portugal, acquiring three landmark shopping centres and significantly increasing the group’s exposure to the Iberian Peninsula,” it said

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“Supported by a strong balance sheet, we enter the second half of the financial year positive and optimistic about the group’s continued growth prospects,” it added.

Key financial, operating and corporate highlights:

South African portfolio –

• Like-for-like retail Net Operating Income (NOI) growth of 4.6%
• Annualised trading density growth of 4.2%
• Retail vacancies at 1.9%
• Cost-to-income ratio decreased to 15.1% – the lowest level in a decade
• Like-for-like retail portfolio value increased by 3.7%

Castellana portfolio –

• Normalised like-for-like NOI growth of 2.1%
• Portfolio occupancy of 98.6%
• Positive rental reversions of 45.5%
• ‘Lowest-in-the-market’ occupancy-cost ratio of 9.5%

Group balance sheet and financials for H1 2025 –

• Significant available cash balances of R5.1 billion and undrawn debt facilities of R1.3 billion
• Loan-to-value (LTV) ration reduced to 35.4%
• Interest cover ratio (ICR) increased to 2.5 times
• Circa R2 billion raised from new share issuances
• Hedge ratio increased to 91% and Castellana’s Aareal syndicated loan refinanced with a fixed-term interest rate
• Corporate long-term credit rating of AA(ZA) was reaffirmed by GCR, with the outlook being upgraded from stable to positive
• Sold remaining interest in Fairvest for circa R141 million
• Accepted offer to dispose of 28.8% interest in Lar Espana at EUR8.30 per share, for circa EUR200 million
• Acquired an 80% controlling interest in three shopping centres in Portugal, valued at circa EUR176.5 million
• Funds from operations (FFO) of 82.40 cents per share
• Interim dividend of 55.2 cents per share (R679 million in aggregate), up 6% on the prior period.

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