Vukile, Emira trade at similar ratings

Posted On Friday, 12 November 2010 02:00 Published by eProp Commercial Property News
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Property loan stock company Vukile Property Fund and property unit trust Emira Property Fund have delivered fairly stable and consistent returns to their shareholders, but the two trade at similar ratings and at a discount to the market due to a perception that they have lower quality assets.


James TempletonVukile, with a market capitalisation of R5,2bn and Emira, with R7bn, were created out of life insurance companies Sanlam and Momentum, respectively.

Both have diversified property portfolios spread across the retail, office and industrial sectors, which offer investors a high forward yield and income growth.

Their weighting is different though, with Emira having more office exposure while Vukile is more overweight on retail.

Stanlib property franchise head Keillen Ndlovu says Emira and Vukile have relatively conservative management, "though I’m getting a sense that James Templeton, Emira CEO, wants more aggression through increasing the gearing level and having more freedom in terms of what he can invest in and how he can fund that".

Before joining Emira, Mr Templeton was a listed property analyst working for securities firm Barnard Jacobs Mellet. "It is evident when he does his results presentations. He knows the information that analysts want … he looks at things from an analyst perspective. His presentations make it easy for them to do their numbers," Mr Ndlovu says .

Vukile CEO Gerhard van Zyl prefers to "underpromise" and "overdeliver". "He is well known to say that he expects ‘reasonable growth’ in distributions. Reasonable is subjective, but at least no one can tie him to that!"

Mr Ndlovu says Emira has stable management whereas Vukile is in the hunt for a new CEO, which means management style is likely to change. Mr van Zyl is to leave Vukile for personal reasons by the end of March .

Mr Ndlovu says Vukile has the ability to grow assets "substantially" compared to Emira. "This is as a result of Sanlam looking to sell its physical properties and convert them to listed holdings . However, one cannot rule out Emira buying some of Momentum’s and Metropolitan’s assets if the merger goes ahead."

Emira has opted to invest offshore and has just increased its stake in Growthpoint Australia. Vukile is focused on local assets, but this also includes Namibia.

Meago property analyst Jay Padayatchi says Vukile has "significant" retail exposure to the peripheral former township- taxi market, with its largest retail offerings in Phoenix, Dobsonville and Randburg’s central business district.

"However, management have ably sweated this portfolio over the last few years and deservedly generated optimal returns," Mr Padayatchi says.

Through its historical link to Sanlam, Vukile has been able to secure both the internalisation of its management company and property management business as well as access to Sanlam’s property portfolio. This has ensured potential to grow.

Mr Padayatchi says Mr van Zyl, whose resignation earlier this year was a surpris e, will be sorely missed, having spent almost 15 years with Sanlam prior to Vukile’s listing in 2003.

"While he is very familiar with the Vukile portfolio, having been involved with many of its properties while they were still within the Sanlam stable, he has surrounded himself with a capable asset management team."

Emira, on the other hand, has extensive exposure to the office and smaller retail offerings in the sector, which has been among the hardest hit in recent times, and whose performance invariably becomes a function of economic growth.

With Vukile having more retail exposure and Emira more office properties, the latter’s vacancies are higher. However, higher vacancies present a good opportunity when the office market turns positive.

Emira’s portfolio is less concentrated than Vukile’s, its top 10 properties make up 28% of the total portfolio by value, whereas Vukile’s top 10 make up 40%.

Last modified on Monday, 21 April 2014 16:24

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