| Tue 27 Feb 2007, 12:30 | | VKE - Vukile Property Fund Limited - CEO Newslette |
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VKE - Vukile Property Fund Limited - CEO Newsletter
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
Share code: VKE & ISIN: ZAE000056370
("Vukile")
27 February 2007
Dear Vukile stakeholder
Strong performance delivered in 2006
It is extremely gratifying to note that Vukile has been one of the top
performers for the 2006 calendar year. According to the "Listed Property
Sector Monthly Overview" for January 2007, produced by Catalyst Fund
Managers, Vukile delivered a total return of 41.9% for the year,
comfortably better than the SA Listed Property Index`s total return of
28.4%. In fact, this performance ranked Vukile 8th out of 26 SA property
companies that have been listed for 12 months or more.
Even though it is unlikely that this excellent performance on the JSE for
2006 can be repeated in 2007, property fundamentals remain strong. There is
good demand for space across the board as is evidenced by declining
vacancies and increasing rentals. We are therefore looking forward to
another good year in 2007 and even beyond.
Robust portfolio performance
The Vukile portfolio reflects these positive trends. Our two major
expansion projects, the Dobsonville and Phoenix Plaza shopping centres,
were only completed in the last quarter of 2006 but huge demand has already
created waiting lists and prompted us to investigate the further expansion
of these centres. It`s worth bearing in mind that until recently only about
4 million of South Africa`s 45 million population were adequately served by
retail facilities, so clearly there`s still a lot of catching up to do. The
fact that Dobsonville is doing so well despite the development of a number
of competing complexes in the Soweto area underlines this trend. Against
this background, plans to further expand our Daveyton shopping centre have
reached an advanced stage, and the project will be put out to tender soon.
We are also looking at more developments in rural areas.
Meanwhile, our two previously underperforming properties, Randburg Square
and Bloemfontein Plaza, continue to show significant and sustained
improvement. The vacancy level at Randburg Square was reduced from 31% at
the beginning of 2006 to 12% by the end of the year. Over the same period,
the vacancy level at Bloemfontein Plaza improved from 11.5% to 5.3%. The
turnaround at both these centres is indicative of the extent to which
demand for well-priced office space is rising, but it is also attributable
to an effective marketing effort and the investment we made in upgrading
them (R6.5 million at Randburg and R5.6 million at Bloemfontein).
Major new deals
Since October 2006, Vukile has concluded new lease deals with a combined
contract value of some R240 million. The largest of these (with areas in
excess of 5 000m2) were at 227 Andries Street in Pretoria with the City of
Tshwane, the Midtown Building in Pretoria with the Public Works Department,
the Durban Embassy with Wesbank, and Randburg Square with Direct Channel
Marketing.
Specific issue for cash
As announced recently, Vukile has raised R200 million by way of a specific
issue of linked units for cash. The rationale for this capital-raising
exercise was to partly fund committed, portfolio-enhancing capital
expenditure of approximately R160 million and to strengthen our resources
for further acquisitions. An additional benefit of the exercise is that it
has enabled us to advance our strategic objective of broadening Vukile`s
unitholder base.
Full-year results on track to meet forecast
Vukile`s results for the financial year to March will be published on
Monday 28 May and as usual there will be a presentation to investors in
Johannesburg that day, followed by another in Cape Town the following
morning. If you would like to be included in the invitation list for either
of these presentations, please send your details to our investor relations
office at vukile@dpapr.com.
At this stage, we remain well on track to achieve our forecast, which was
that the distribution for the year was expected to reflect the buoyant
trading conditions as well as our strong portfolio performance, and should
show growth in excess of the rate of inflation.
Yours sincerely
Gerhard van Zyl
Chief Executive
Date: 27/02/2007 12:30:00 Produced by the JSE SENS Department.
