| Tue 17 Jul 2007, 12:00 | | VKE - Vukile Property Fund Limited - Vukile CEO Ne |
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VKE - Vukile Property Fund Limited - Vukile CEO Newsletter
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE Share code: VKE
NSX Share code: VKN
ISIN: ZAE000056370
("Vukile")
17 July 2007
Dear Vukile Stakeholder
The operating environment
Since the publication of our annual report almost a month ago, market
conditions in the property sector have remained buoyant. The eProp Commercial
Rental Barometer reflected a strong growth in gross rentals in the office and
industrial sectors as at July 2007.
Similarly, the FNB Commercial Property Finance (CPF) Commercial Property
Building Cost Index (an index reflecting the average building cost/m2, as
priced by building contractors when winning tenders) reflects a growth in
building costs of 16%, which implies a need for higher rentals to justify new
office and industrial developments.
In the retail sector, London-based Aberdeen Asset Management - which owns a
significant share in MassMart and Truworths - has a bullish view on South
African retailers, saying that the growing black middle class in South Africa,
coupled with an increase in demand for the formal retail market, has
positioned these companies for growth.
The latest interest rate hikes do not seem to have had a negative impact on
the listed property sector.
When all of the above is taken into account, we remain confident that we will
continue to see robust trading conditions and that rentals will continue to
rise in line with our expectations and budgets.
Expanding into Namibia
Earlier this month Vukile was dual-listed on the Namibian Stock Exchange (NSX)
and also acquired a Windhoek landmark - BPI House - for R113 million as part
of a strategy to expand our footprint in that country as well as to broaden
our shareholder base.
With our acquisition of MICC, we gained seven commercial properties with a
value of more than R250 million and a gross lettable area of some 50 000 m2 in
Namibia. Our decision to enlarge that presence was based on the buoyancy of
the Namibian economy and the healthy state of its commercial property market.
BPI House - an A grade office and retail complex in the heart of the Windhoek
CBD - increases the value of our Namibian portfolio to more than R360 million
and adds almost 13 000 m2 to our total gross lettable area there.
The NSX listing also presents us with an ideal opportunity to bring new
investors into the company, as Namibian asset managers are required to invest
at least 35% of their funds in instruments categorised as "local assets."
Moratiwa Crossing development on track
Back in South Africa, development of the new Moratiwa Crossing shopping centre
being built in the Jane Furse district of Limpopo is progressing well and the
centre should open for business towards the end of October this year as
scheduled.
Vukile will, on completion, own an 86.5% stake worth R61.6 million in the
centre. The centre, which will have a gross lettable area of 11 280 m2, will
serve a rural community of some 185 000 people who currently have to do most
of their shopping at Groblersdal, 40 km away.
Moratiwa Crossing is conveniently located at the junction of three main
arterials, close to a number of villages. The new Hlogotlou agricultural
development, backed by ABSA, is just to the south of the junction and it is
also in the vicinity of Roossenekal, where a number of new platinum mines as
well as the De Hoop dam are to be built.
The centre is already fully let with SPAR and Jetmart as anchor tenants. Some
85% of the total area has been let to national tenants. We expect it to
produce a net initial yield of 9.5% in the first year.
Allandale expansion also on schedule
The R21 million extension of our mini-factory and warehousing complex at
Allandale in Gauteng is also on track and should be completed by the end of
November this year. The extension comprises 17 units and will add 5 650 m2 to
the complex`s existing 15 600 m2 area. Demand for space at the complex is
very good and is driven by its location just off the N1 freeway between
Johannesburg and Pretoria and we are confident that we will let the new space
as soon as it is completed.
Annual report
Our annual report for the year to March 2007 was published at the end of June.
If you did not get a hard copy you can see an electronic version on our
website www.vukileprops.co.za. Our interim results for the six months to
September will, as usual, be published in the latter half of November.
Yours sincerely
Gerhard van Zyl
Chief executive
Sponsor: Bridge Capital Advisors (Pty) Limited
Namibian Sponsor: IJG Securities (Pty) Limited
For further information call Gerhard van Zyl, CEO Vukile Property Fund Limited
on +27 11 288 1002
Issued by du Plessis Associates on behalf of Vukile Property Fund Limited.
dPA contact Helen McKane Tel : +27 11 728 4701, Fax: +27 11 728 2547, Mobile:
082 330 2034 or e-mail: vukile@dpapr.com
www.vukileprops.co.za
Date: 17/07/2007 12:00:01 Produced by the JSE SENS Department.
