Vukile Property Fund has raised R1bn to fortify its balance sheet for potential acquisitions in SA and Spain, where it has earmarked further opportunities for growth.
The money was raised via an accelerated bookbuild — a share sale held over a short period of time — which was oversubscribed.
The bookbuild shares were issued at R14.60 each, representing a 0.75% discount to the pre-launch share price on Monday and a 4.85% discount to the 10-day volume-weighted average price.
Vukile said the equity raise would allow it to reduce its net debt and give it financial flexibility to pursue potential deals. Its loan-to-value ratio, which measures the company’s debt relative to its assets, stood at 42% in September.
Anything above 40% is considered by fund managers to be the limit at which financial stress is felt on a balance sheet.
At 3.20pm its shares were up 0.6% to R14.60, giving Vukile a market cap of R15.3bn.
“As part of Vukile’s ongoing growth strategy, we have identified and are evaluating an attractive pipeline of financially accretive, strategically aligned direct property acquisition opportunities in both SA and Spain,” CEO Laurence Rapp said in a statement on Tuesday.
“Pricing remains fragmented in the current market environment, which rewards certainty and speed of execution.”
Vukile owns a portfolio of shopping malls predominantly in townships and rural areas in the home market while the Spanish assets are held in the Madrid-listed subsidiary Castellana, in which Vukile has a 99.5% interest.
Some of its shopping centres include East Rand Mall and Daveyton Mall in Gauteng, Hammarsdale Junction, Phoenix Plaza, KwaMashu Shopping Centre and Pine Crest in KwaZulu-Natal.
About 60% of the total asset base, valued at R40bn, is euro denominated, with the SA portfolio making up the balance.
The commercial property market is still in the recovery phase following the crippling Covid pandemic, as well as a high interest rate environment and load-shedding.
However, retail portfolios located in townships and rural areas proved resilient during the height of the pandemic relative to large malls in metropolitan areas.
Listed property as an asset class has lost its shine in recent years, as reflected by the significant drop in the share values of those listed on the JSE. They have, however, bounced off their Covid lows.
While the retail segment of the market has rebounded, the office market remains in the doldrums, a situation aggravated by the hybrid work model, which has resulted in the space used by companies for offices.
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