Vukile plays it safe with final dividend

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Vukile plays it safe with final dividend

Published Date: 2020-07-01 | Source: Stephen Gunnion | Author: Stephen Gunnion

Vukile plays it safe with final dividend

The property fund says it will adopt a lower and more prudent payout ratio in the future as it focuses on its long-term sustainability.

Vukile Property Fund is being cautious and deferring its decision on a final dividend due to the material uncertainty in the market. However, the property fund says it has benefitted from its defensive positioning in the local and Spanish property sectors as consumers head back to the shops.

Just over half of Vukile's assets are in Spain through its 82.5% stake in Castellana Properties. In SA, 81% of its portfolio is in shopping centres positioned in townships, commuter belts, value centres and rural areas, which is says have outperformed their urban counterparts and are leading the country's retail recovery. By the end of last month, trading densities were ahead of May 2019. In Spain, Castellana reopened its shopping centres in the last week of May and the centres indicated trading at about 65% of their pre-Covid-19 footfalls. However, it said customer conversion rates and spend per head seemed to be increasing, pointing to a relatively lighter impact on sales.

For the year to end-March, Vukile said its portfolios performed well, achieving all key targets. SA reported like-for-like trading density growth of 3.4%, boosted to 5.1% with asset management interventions including the redevelopment of the Pine Crest mall in Pinetown and Maluti Crescent in Phuthaditjhaba. Retail vacancies remained low at 2.9% and it achieved 84% retail client retention for the year. In Spain, vacancies were contained at 1.8%, with a 10.8% growth in rentals on renewals and new lets and a 99% collection rate.

For the year, total revenue rose 21% to R3.4 billion and profit available for distribution increased by 6% to R1.79 billion. It recorded a loss per share of 10.81c, down from earnings of 199.05c, primarily due to a downward fair value adjustment to investment property and listed investments. It grew distributable earnings per share by 3.2% to 187.25c.

The fund said the Covid-19 lockdown had accelerated inevitable changes in the retail landscape and fast-tracked the rate of change in the physical shopping experience. It had increased its capacity to analyse customer behaviour and was working with its tenants to adapt to the changes. Despite a strong balance sheet, it said it would be adopting lower and more prudent dividend payout ratios in the future as it focused on its long-term sustainability.

Due to uncertainty in the market, Vukile said it was too early to provide dividend guidance for the current year or to commit to paying an interim dividend.

Its shares rose 6.8% to R7.69 yesterday.





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