| Mon 25 May 2009, 12:16 | | VKE - Vukile Property Fund Limited - Vukile increases distribution growth |
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VKE
VKE
VKE - Vukile Property Fund Limited - Vukile increases distribution growth
despite deteriorating market conditions
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Reg no. 2002/027194/06)
ISIN: ZAE000056370
JSE code: VKE
NSX code: VKN
("Vukile" or "the company")
VUKILE INCREASES DISTRIBUTION GROWTH DESPITE DETERIORATING MARKET CONDITIONS
Johannesburg, 25 May 2009 - Property loan stock company Vukile today reported
a 9.5% increase to R289.9 million in net profit available for distribution for
the full year to 31 March and posted a 12.0% rise to 53.8 cents per linked unit
in the final distribution for the last six months, making the total for the year
97.90 cents per linked unit, an increase of 10.9%.
Chief executive Gerhard van Zyl attributed the sound results to a strong
performance by the company`s underlying properties; a firm control on costs with
the company`s cost to property revenue ratio improving to 32.3% from 34.1% the
previous year; and the containment of vacancy levels at 3.2% of gross rentals
(2008: 2.8%).
He noted that, despite the deterioration in trading conditions especially in the
latter part of the year, the company managed to contain the vacancy levels in
the portfolio at very low levels. "We can expect, however, that vacancy levels
will increase from the current levels and that bad debts and tenancy failures
are likely to increase in the year ahead. Further cuts in interest rates should
start to have a positive effect on the economy which in turn will help reduce
debt delinquency," he said.
During the year the company spent R92 million on expansions of existing
properties, revamps and tenant installations. New leases and renewals of 130
988mSquared with a contract value of R290 million were concluded during the
year. 80% of leases that expired during the year ended 31 March were renewed.
The directors valued the company`s property portfolio on 31 March 2009 at R4.53
billion which is R213 million or 4.9% higher than the valuation at the previous
year end.
Van Zyl said the discussions between Vukile and Sanlam Properties regarding the
proposed acquisition of the asset management business of the Vukile property
portfolio of Sanlam Properties by Vukile as a going concern were continuing and
that, in order to facilitate these discussions, the existing asset management
contract between them was extended by a maximum of six months to 30 September
2009. It was expected that these discussions would be finalised shortly. He
said that the purpose of the proposed acquisition was to internalise the
company`s asset management function in line with international best practice and
the expected requirements of the new REIT structure, which is widely expected to
be introduced in South Africa next year.
Looking ahead, van Zyl said that, despite a downward trend of the interest rate
cycle, he expected the trading conditions to remain tough in the year ahead.
"The property sector tends to lag the broad economic cycle by about 12 to 18
months, which means we can expect to see further increases in vacancies,
resistance to higher rentals and increased bad debts," he said. "However,
property fundamentals are still relatively sound with generally low vacancies,
little new stock entering the market and high building costs."
"Internally, the company will continue its rigorous pursuit of cost control,
tenant retention, credit control, and energy savings while, at the same time,
enhancing the desirability of its property portfolio through the renovation and
refurbishment of its existing buildings. Therefore, barring any further
deterioration in the market conditions, we expect to show reasonable growth in
distributions for the year ahead."
For further information contact Gerhard van Zyl, CEO Vukile Property Fund
Limited, on 011 288 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
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Date: 25/05/2009 12:16:01 Produced by the JSE SENS Department.
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