Vukile to buy 50% share in East Rand Mall to grow retail portfolio

Posted On Tuesday, 06 November 2012 16:24 Published by Commercial Property News
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Property loan stock company Vukile Property Fund is planning to acquire a 50% share in the East Rand Mall in Gauteng for R1.115bn, in line with its strategy of aggressively growing its portfolio with a special emphasis on the retail sector.

Laurence RappCE Laurence Rapp said on Thursday a detailed terms announcement would be made once the formal agreement had been signed.

He said the company’s results for the six months ended September, due out on November 23, would contain the financial effects of the acquisition.

Vukile has reached an agreement with Sanlam Life Insurance to acquire the 50% stake in the East Rand Mall. The other half of the mall will be acquired by fellow JSE-listed property company Redefine Properties. The mall’s total value is R2.23bn.

Vukile said a due diligence had been completed and the acquisition was subject to the negotiation of formal legal agreements and the receipt of Competition Commission approval.

Vukile’s portfolio includes lesser-quality assets, such as Randburg Square, Roodepoort Hillfox Power Centre and Dobsonville Shopping Centre in Soweto.

But, the company has grown its asset base by 25% to R6.1bn for the year ended March, and it is exploring several new developments and property acquisitions catering to rural and urban areas.

Mr Rapp said the company had a strong pipeline of acquisitions in townships and rural nodes as there was strength in those markets.

"We want to increase our exposure in this market and there are a number of deals we are evaluating."

Vukile wants to benefit from the increased disposable income and shifting spending patterns in the lower-income segments of the market. For this reason, the company is considering new developments and property acquisitions that cater for this target group.

The Sanlam property portfolio acquisition earlier this year, which added about 25% to the size of Vukile’s portfolio, was the initial step in the company’s new strategy to be more acquisitive and proactive, and would provide it with further scope for growth.

In April, Vukile acquired 20 properties worth R1.5bn from Sanlam Life Insurance.

Source: BD

Last modified on Monday, 27 May 2013 12:51

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