Vukile raises R250m via securitisation

Posted On Tuesday, 22 September 2009 02:00 Published by eProp Commercial Property News
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Vukile Property Fund has raised R250m through Vukile Investment Property Securitisation to reduce the cost of funding its commercial property investment.

Laurence RappProperty loan stock company Vukile Property Fund on Tuesday said it had raised R250 million through Vukile Investment Property Securitisation (VIPS), the commercial mortgage-backed securitisation programme established by the company to reduce the cost of funding its commercial property investment.

The company said the funds were raised through the placement of two tranches of notes in the South African debt capital markets to four investors in July and September this year.

The notes were rated "Aa2/AAA.za" by Moody's and were placed at a spread of Jibar (Johannesburg Interbank Agreed Rate) plus 200 bps for an all-in cost of funding, including the note margin, of 10.42%, it said.

The interest rate on this new debt has been fixed by way of an interest rate swap.

The notes have a tenor of 2.7 years and mature on May 7 2012.

This capital-raising represents the first "tap" by VIPS since its establishment in October 2005 and increases the total outstanding amount under the programme to R1.02 billion.

Chief executive Gerhard van Zyl said that due to the appreciation of property values within the company's portfolio and the escalation in rental income, no additional properties needed to be added to the portfolio to effect the transaction.

"We are particularly pleased with this result, which has allowed us to use VIPS and our existing property portfolio more effectively," he said.

Following the transaction, the company's loan to value and interest cover ratio remained well within the covenant levels of 65% and 1.55x respectively.

VIPS was the second commercial mortgage backed securitisation programme to be implemented in South Africa and was realised with the assistance of Absa.

These programmes have been used worldwide since the late nineties as an alternative to conventional bank loans and are a favoured instrument for reducing the cost of funding commercial property portfolios.

Mortgage-backed securitisation programmes currently constitute some 15% of European securitisation issuance and has been used to fund major projects such as London's Canary Wharf.

Vukile has a portfolio of 74 properties with a gross lettable area of 920 232m squared.

The portfolio has a gross asset value in excess of R4.53 billion.

At 11.05am, shares in Vukile were trading 15 cents, or 1.45% higher, at R10.50.

Last modified on Tuesday, 29 April 2014 11:38

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