Property market not that bad, says Vukile

Posted On Thursday, 03 July 2008 02:00 Published by eProp Commercial Property News
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Property loan stock company Vukile should be able to report reasonable growth in distributions in the twelve months to March next year because property fundamentals should remain fairly strong in spite of adverse market conditions.

Gerhard van ZylThis was according to chairman Anton Botha, who said in the group’s annual report tougher business conditions would have a negative effect on the demand for space, but would also limit the supply of space and should continue to put upward pressure on rentals.

CEO Gerhard van Zyl said although “things are not as good as they were, they’re certainly not as bad as some people make it out to be. We still have low vacancies across the board.”

Botha said Vukile had been cautious regarding investments and did not acquire properties with unacceptably low yields when the market was in upswing. Instead, emphasis was placed on growing its portfolio organically by expanding or upgrading existing properties.

“These prudent and timely measures have equipped the company well to cope during these trying times and the board is of the opinion Vukile should be able to deliver reasonable growth in distributions for the year to March 2009,” he said.

Vukile posted robust results for the year to March, increasing distributions by more than 15% on strong property performance and the contribution of properties acquired during the year, as well as expansions and upgrades. The company also experienced its lowest vacancy rate of 2,4% this year.

Vukile reduced its gearing ratio to 27,9% from 29,9% last year. It also had unutilised bank facilities of R400m, which Botha said put the company in a good position to take advantage of acquisition, redevelopment or expansion opportunities that met its risk reward criteria.

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