Vukile Property Fund to grow residential portfolio

Posted On Friday, 27 November 2015 12:18 Published by
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Vukile will launch its residential property strategy before the end of March next year as it looks to add diversification to its predominantly retail-focused portfolio.

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Vukile Property Fund will launch its residential property strategy before the end of March next year as it looks to add diversification to its predominantly retail-focused portfolio.

Speaking at the release of results for the six months to September yesterday, CEO Laurence Rapp said residential property was in high demand and that Vukile was in discussions with a partner to either convert commercial properties to residential or develop new residential assets from scratch.

Many listed property funds are pushing money into residential property as it promises higher returns than that which is offered by some older office and retail assets.

Some high-profile examples include Indluplace Properties, which was listed this year after being unbundled from Arrowhead Properties’ residential portfolio, and SA Corporate Real Estate Fund and Redefine Properties, which both made residential acquisitions.

Mr Rapp said its first residential project was converting the Randburg Square Office Tower it owned into 180 residential apartment units.

Beyond this, Vukile had other residential plans that it was not yet ready to reveal.

“We have a memorandum of understanding in place with a partner in SA’s property industry and we are looking at creating a national relationship which will see us enter the residential arena. We are currently doing a due diligence.

“We will announce further details when it becomes appropriate to do so. My initial target is to have 10% of Vukile’s total portfolio being residential assets,” said Mr Rapp.

He was also looking to add more investments in developed markets to complement the group’s interest in Atlantic Leaf, a UK owner of industrial assets.

Vukile achieved 6.1% distribution growth from its core portfolio in the six month period to September.

Including new acquisitions made during the reporting period, Vukile achieved 7% total distribution growth, which was at the lower end of its 7%-8% guidance. However, this was partly because of incurring a provision expense for incorrect billing by the city council.

Stanlib’s head of listed property funds, Keillen Ndlovu, said: “Vukile’s results came in slightly below expectations. The distribution growth of 7% has been held back by the provision of an incorrect council billing.

“Management have been conservative by taking the knock now rather than maybe later. Despite this, Vukile delivered a good operational performance during the period.”

Maurice Shapiro, fund manager at Ma’alot Investments, said the results were “fair” and that “6.1% core portfolio distribution growth was admirable when larger funds were managing half that”.

source Business Day

Last modified on Friday, 27 November 2015 12:39

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