Vukile R233-million maiden profit

Posted On Tuesday, 14 June 2005 02:00 Published by eProp Commercial Property News
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The Vukile Property Fund lists on the JSE in June 2004. In its maiden annual results attributable profit to the end of March 2005 is R233-million, and the final distribution is 31.5 cents per linked unit. With Vukile chief executive Gerhard Van Zyl

Gerhard van ZylLINDSAY WILLIAMS: You say the highlight of the year was the acquisition of almost 75% of MICC’s linked units - can you describe the Vukile property portfolio before the MICC acquisition?

GERHARD VAN ZYL: Vukile on its own - on a geographical spread basis - about 60% of the portfolio is in Gauteng, around 23% in KwaZulu-Natal, 7% in the Western Cape and 6% in the Free State. After the MICC acquisition the Gauteng exposure dropped to 52%, the KwaZulu-Natal exposure is roughly the same, and the Western Cape is also the same. On a sectoral spread basis - prior to the acquisition - Vukile was 48% exposed to retail, 16% to industrial, and 36% to commercial. That changes to 56% retail, 31% commercial and 13% industrial.

LINDSAY WILLIAMS: So it was a deliberate decision by you to increase your exposure to the retail market?

GERHARD VAN ZYL: No, I don’t think I can say it was deliberate - it was a follow-on that we certainly appreciate. We did not acquire the MICC stake to increase our exposure to retail - but it was certainly a very strong attribute of the portfolio when we started looking at it.

LINDSAY WILLIAMS: You’ve got almost 75% of MICC - are you going to try and increase that in the weeks and months ahead?

GERHARD VAN ZYL: That is certainly the intention. We are in discussions already with the remainder of the unit holders. We would certainly like - as soon as we can - to finalise that and acquire all the units.

LINDSAY WILLIAMS: How much of the earnings of the year that you have just reported is attributable to the MICC units that you have acquired?

GERHARD VAN ZYL: We could only account for MICC for six months - and in fact due to accounting conventions we could only really account for it for three months, so about R18-million was attributable from MICC.

LINDSAY WILLIAMS: So the best is yet to come?

GERHARD VAN ZYL: Definitely.

LINDSAY WILLIAMS: You talk about upgrading and improving your existing properties - outside of the MICC properties that you’ve acquired - does that suggest that maybe you haven’t been getting the maximum out of those properties up until now?

GERHARD VAN ZYL: I don’t think one can say that. We’ve only been there a year obviously - previously the properties were owned by various vendors - but we certainly think that there are opportunities to add value, and extract value from the existing portfolio on both the Vukile as well as the MICC properties. Vukile has entered into a management agreement - in terms of which Vukile is responsible for the management of the MICC portfolio as well, so we certainly are investigating all the potential value-add opportunities within both portfolios, and we think we could add quite a bit of value there.

LINDSAY WILLIAMS: Does that suggest to the layman that the fact that you are going to look at your existing portfolio - upgrade it, improve it and try and improve yields from it - that there is a genuine lack of good value properties on the market?

GERHARD VAN ZYL: I think maybe not to say there is a lack of good properties - maybe just at acceptable prices. There are good properties on the market from time to time - but at prices we certainly consider to be expensive. For that reason we are not a big player in the direct investment market - at this point in time. Having said that, there are always opportunities - and we will look at them as they come along - but as a general statement we certainly think the market is expensive.

LINDSAY WILLIAMS: Expensive in terms of investment in the JSE listed property sector as well?

GERHARD VAN ZYL: That is the same.

LINDSAY WILLIAMS: So we’re getting to the point now where the market is almost full - from an investment point of view?

GERHARD VAN ZYL: That is our view. We think that there can’t be too much additional upside. I certainly don’t subscribe to the idea that there is bubble - but I certainly think that we are fully priced, and that we can expect to see a gradual movement from here on. Now that is in general - there are specifics that may be different.

LINDSAY WILLIAMS: One of those specifics being Vukile’s share price - more or less unchanged for most of the day - are you putting people off buying your share?

GERHARD VAN ZYL: No, I don’t think so. I think there is real value in Vukile - if you look at it on a relative basis compared to the rest of the sector. On a real basis I think there is quite a bit of upside still - because fundamentally there are a lot of good things still to come from Vukile.

Last modified on Wednesday, 07 May 2014 10:19

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