Vukile Property Fund: Defying Economic Odds with Strong Growth and Strategic Prowess in Global Real Estate Markets

  • Operational Resilience: Vukile Property Fund navigates economic challenges with a defensive portfolio, sustaining strong results in South Africa and Spain.
  • Financial Triumph: Impressive growth in FFO and dividends, guided by a resilient strategy, propels Vukile towards a positive fiscal outlook.
  • Strategic Success: Exceptional group results stem from robust operations, notably in South Africa and Spain, showcasing Vukile's resilience and foresight.
By Lethabo Ntsoane

In the face of a challenging macro-economic environment, Vukile Property Fund Limited has emerged as a resilient force, showcasing robust operational results and solid trading metrics in both its South African and Spanish portfolios over the past six months. The company’s strategic focus and a well-composed portfolio have been pivotal in navigating these challenging times, reflecting in impressive financial growth and an optimistic outlook for the future.

Operational Triumph in Testing Times

Vukile’s ability to sustain strong operational results, even amidst economic uncertainties, underscores the strength of its portfolio composition. Described as dominant and defensive, the company’s overall portfolio has proven to be a reliable anchor in the turbulent economic seas.

Portfolio Composition and Defensive Strategy

The defensive nature of the portfolio has played a crucial role in shielding Vukile from the economic headwinds. The company’s clear and focused strategy has positioned it as a dominant player, allowing it to weather the storm and emerge with commendable operational performance.

Financial Growth and Rand Hedge Advantage

The financial results for the past six months speak volumes about Vukile’s resilience. The Rand hedge nature of the company’s earnings has further contributed to its success, acting as a buffer against the volatility of currency markets.

Impressive Financial Growth

The financial performance metrics are indeed impressive, with Funds from Operations (FFO) and dividends per share witnessing substantial growth. In the interim period, FFO per share increased by 5.2%, while dividends per share saw an even more substantial growth of 10.0%.

Guidance for FY24: A Positive Outlook

Buoyed by its ongoing strong performance, Vukile has raised its guidance for the fiscal year ending March 31, 2024. The company now anticipates growth in FFO per share between 4% to 6%, a positive revision from the previous guidance of 3% to 5%. The growth in dividends per share is also revised upwards, now projected to be between 8% to 10%, compared to the earlier estimate of 7% to 9%.

The increased guidance signals confidence in the company’s ability to sustain and build upon its current success, with the full-year dividend per share expected to range between 121.4 and 123.6 cents, a notable increase from the previous fiscal year’s 112.4 cents.

Forecast Assumptions

However, it’s essential to note that these positive projections are based on certain assumptions. The forecast assumes no material adverse change in trading conditions, contractual escalations, market-related renewals, as well as stability in interest rates and exchange rates.

Corporate Information: Leadership and Governance

Vukile’s success is undoubtedly influenced by its leadership, and the company’s board boasts a team of experienced and independent directors. LG Rapp serves as the Chief Executive Officer, while NG Payne chairs the board.

Financial Strength and Governance

The company’s financial position is described as robust, not just operationally but also from a financial and strategic perspective. This strength is supported by a stable credit rating of AA(ZA) with a stable outlook, emphasizing the company’s financial resilience.

Dividend Announcement and Capital Structure

Vukile’s commitment to shareholder value is reflected in its dividend announcements. The interim dividend of 52.1 cents per share, totaling R540 million, represents a 10.0% increase from the prior period. This not only demonstrates the company’s financial health but also its commitment to delivering returns to investors.

A snapshot of Vukile’s financial performance for the interim period ending September 2023 is presented in the table below:

Financial Performance (Unaudited)30 September 202330 September 2022% Change
Gross Property Revenue (Rm)2,0171,76214.5%
Operating Profit before Finance Costs (Rm)1,2161,1139.3%
Profit for the Year Attributable to Owners (Rm)1,1741,06510.2%
Basic Earnings per Share (cents)113.43108.654.4%
Headline Earnings per Share (cents)83.0061.5734.8%
Net Asset Value (R per Share)21.1619.1010.8%
Direct Property Investments (Rm)36,02632,67710.2%
Indirect Property Holdings (Rm)2,6831,94837.7%
Gross Dividend (cents per Share)52.0742047.3212510.0%

A separate announcement regarding the dividend, including details on the taxation treatment, will be released on SENS.

Exceptional Group Results: A Deeper Dive

The exceptional group results are not just a product of financial growth but are derived from a combination of strong operational performance and a clear strategic focus.

South African Portfolio: A Pillar of Strength

Vukile’s South African portfolio continues to deliver robust operating results, with key performance indicators painting a positive picture:

  • Like-for-Like Annualized Retail NOI Growth: 5.1%
  • Vacancies Maintained: 2.0%
  • Rental Reversions: +2.4% (Up from -2.4%)
  • Annualized Trading Densities: Increased by 3.5%
  • Like-for-Like Retail Valuations: Increased by 3.9%

These metrics underscore the stability and growth potential of Vukile’s South African holdings.

Castellana Metrics: Benchmarking Success in Spain

In the Spanish market, Vukile’s Castellana metrics continue to set the benchmark:

  • Normalised NOI Growth: 13%
  • Negligible Vacancies: 1%
  • Positive Reversions: +8.3% (Including Indexation +11.6%)
  • International/National Tenants: 95% of Retail Space
  • Debt Maturities: None in Castellana until FY26

These robust metrics in the Spanish market not only contribute significantly to the overall group performance but also highlight the success of Vukile’s international ventures.

Balance Sheet Strength and Credit Metrics

Vukile’s balance sheet strength is a testament to its prudent financial management:

  • Interest Cover Ratio (ICR): 2.9 times
  • Loan-to-Value (LTV): 42.9%
  • Liquidity: R3.1 billion in cash and undrawn debt facilities

The reaffirmation of a corporate long-term credit rating of AA(ZA) with a stable outlook further attests to the company’s financial stability.


In conclusion, Vukile Property Fund Limited’s performance in the past six months reflects not just financial growth but a strategic resilience that positions the company for future success. The increased guidance for FY24, supported by strong operational performances and a sound financial structure, instills confidence in the company’s ability to thrive in a dynamic economic landscape. As the global economic position improves, Vukile stands as a promising player in the real estate sector, ready to capitalize on opportunities and deliver sustained value to its stakeholders.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: Twitter: @NtsoaneLethabo