Archives for December 2019

Vukile grows dividends by 3.5%

Vukile Property Fund today reported 3.5% growth in dividends to 80.84 cents per share for its half-year to 30 September 2019 in line with its market guidance.

Vukile is a leading South African retail REIT with R35bn of property assets of which 48% are in Spain through its 82.5% held subsidiary Castellana Properties SOCIMI SA. Its unique investment proposition in the South African market is providing stable, predictable and growing Rand-denominated income streams for shareholders generated from property assets in one of Europe’s strongest economies.

Laurence Rapp, CEO of Vukile Property Fund, notes that the half-year results reflect an incredibly strong performance from its Spanish portfolio together with a continued solid showing from its South African shopping centres even in a stalled economy. Vukile’s half-year results extend its track record of unbroken growth in dividends for investors into its sixteenth year.

Rapp comments, “Vukile’s clear strategy, retail sector specialisation and strong operational emphasis is paying off, and the positive outcome can clearly be seen in this standout set of results”

The robustness of Vukile’s funding, financial, and business models was affirmed by GCR Ratings upgrading the national scale issuer ratings for Vukile to AA-(ZA) and A1+(ZA) for the long and short term respectively, with a stable outlook.

Vukile’s inbuilt diversification means its assets and future earnings are split almost equally between Southern Africa and Spain. With its employment growth and an A-grade credit rating with stable outlook, Spain is contra-cyclic to SA. This makes Vukile a solid Rand-hedge property company.

Now the eighth biggest REIT in Spain by market capitalisation and seventh largest retail landlord by gross lettable area, Castellana is well established as a substantial player in the Spanish market. Castellana increased its EPRA NAV by 3.1% and saw good deal flow and growth opportunities. Its proven business model continues to grow base rentals and scale up value in an environment that isn’t over-retailed.

Castellana is consolidating Spain’s fragmented retail property market. Its assets topped EUR1bn after the accretive acquisition of the 30,000sqm dominant, modern Puerta Europa shopping centre in Algeciras, Cadiz. It also invested EUR37m in El Corte Ingles big-box units and is redeveloping them. The 12-month project at Los Arcos, Bahía Sur and El Faro shopping centres is already over 80% pre-let and should be completed in September 2020. It will further add to the dominance and the value of the centres.

A strong operational performance in Spain reduced vacancies to 1.4%, with positive rental reversions up 6.7%, and 21% rental growth on new leases. Portfolio retail sales increased by 3.1%, double the 1.4% national benchmark. Similarly, shopper numbers grew 5.3%, well above the national index of -1.2%.

Vukile’s Southern African portfolio of shopping centres delivered another strong performance despite a distressed operating environment. “The defensive nature of our grocery-anchored shopping centres, which mostly sell everyday goods to everyday South Africans and have a mix of retailers that offer necessities and value-driven items, is serving us well,” confirms Rapp.

Operationally, Vukile’s tight focus and new internal structures helped to buck the trend and reduce vacancies to 2.8%, retain 82% of retail tenants and gain impressive like-for-like net property income growth of 6.1%. It’s internalised leasing team is building closer relationships with retailers and, actively engaging second-tier nationals, it introduced 92 new brands to the portfolio in six-months thereby enhancing the overall customer experience through expanded choice.

By providing profitable trading space for retailers, like-for-like trading densities increased 3.5% in the portfolio, well ahead of national averages, and with the Vukile team’s asset management interventions making a significant contribution, trading density growth improved by nearly 5%. It lowered its rent-to-sales ratio to 5.9%, which supports the ability to attract the best retail tenants for its shopping centres.

The net cost-to-property revenue ratio tightened to 16.9%. Vukile cares for its properties to ensure they are efficient, compliant and enjoyable for its customers and tenants. Sustainable energy and water management is a significant factor in this. Adding science to the building maintenance process, Vukile completed a comprehensive portfolio-wide building assessment to produce a five-year capital expenditure plan that will see it investing some R70m per annum in maintaining its SA assets.

Vukile’s R516m acquisition of Mdantsane Mall in the Eastern Cape, which transferred in November, extends its geographical footprint and its foothold in South Africa’s high-density township retail market with another dominant asset.

Vukile collaborates with retailers to provide exceptional experiences for the people who shop at its nodally dominant centres. Understanding customers is at the heart of this. Vukile has invested heavily in installing fibre at its centres and has various customer-centric pilot programmes in both South Africa and Spain, which enables it to understand customers better. “This insight helps us to manage our shopping centres better, which leads to better customer experiences, retailer trading and results for our shareholders,” notes Rapp.

With this in mind, a strategic priority for Vukile is investing in skills around customer-centricity. Developing these capabilities internally is a key success factor for its shopping centres going forward.

Transformation is at the forefront of Vukile’s business sustainability. In another real commitment to transforming the property sector, Vukile has partnered with AWCA Investment Holdings (AIH) to form a black-women-owned and -managed property asset management company, which will start by managing Mbako Property Fund. Mbako has acquired Vukile’s R700m remaining non-retail property assets as its initial portfolio.

Rapp concludes that Vukile will maintain its position as a high-quality low-risk retail REIT invested in defensive low- and mid-income retail centres in SA while capitalising on Castellana’s strong and growing market share in Spain. “Vukile is in a confident position as a well-diversified business with strong cash flows that offer predictability and ongoing growth for its shareholders.”

Vukile reaffirmed its guidance of between 3% and 5% dividend growth in FY20.

Growthpoint Investec African Properties on acquisition trail

Growthpoint Investec African Properties (GIAP), the pan-African real estate investment business managed by Growthpoint Investec African Property Management, has significantly advanced the execution of its strategy to aggregate a quality portfolio of prime income-producing commercial assets in select cities across Africa.

GIAP, initially established as a joint venture between Growthpoint Properties and Investec Asset Management, announced today that it has successfully concluded the acquisition of 100% of RMB Westport Real Estate Development Fund Limited (RMB Westport), the entity which houses the assets developed and owned by RMB Westport’s inaugural property development fund.

This transaction follows the recently announced GIAP acquisitions of Achimota Retail Centre in Ghana and Manda Hill Shopping Centre in Zambia, which were acquired in June and July respectively of this year. The acquisition of the RMB Westport portfolio of assets is a significant leap for the business and gives GIAP an asset base of approximately US$500 million and a presence across a number of Sub-Saharan African countries with the majority of exposure in key cities in Ghana, Nigeria and Zambia.

GIAP expects to announce progress regarding further acquisitions in due course.

In 2018, GIAP secured capital commitments of more than US$212 million from several large institutional and international investors. The acquisition of RMB Westport has resulted in GIAP’s initial commitments being fully invested, with the existing RMB Westport investors additionally having agreed to invest into GIAP as part of the transaction, further boosting the market capitalisation of the business.

Thomas Reilly, MD of Growthpoint Investec African Properties, says, “GIAP has successfully concluded the acquisition of RMB Westport, which marks a significant leap in GIAP’s evolution and undoubtedly positions it as one of the leading Sub-Saharan African firms in the industry. GIAP now owns 11 assets across four countries, with arguably some of the best performing landmark assets across both the retail and office sectors in the cities we are focussing on. These assets are predominantly well-matured and allows GIAP a significant amount of relevance in these markets, however they still have capacity to allow GIAP to enhance and extract growth from assets with a high degree of resilience to differing market cycles.”

Reilly adds, “We are excited to once again take advantage of a highly attractive entry-point in the cycle, adding quality yielding assets in select cities to our asset base at competitive prices, which we believe have the potential to offer strong growth prospects. The business continues to enjoy significant momentum, and we expect this to aid in the delivery of sustainable long-term investor returns.”

GIAP is expected to support the development of capital markets for real estate as an asset class across the countries in which it operates, thereby contributing to the wide-ranging developmental impact which the real estate sector can have in such markets.

Growthpoint completes the R320m Millroad Industrial Park

Growthpoint Properties will complete the final phase of its 40,000sqm Millroad Industrial Park in Cape Town this month.

Developed by Growthpoint in three phases, Millroad Industrial Park is a storage, warehousing and distribution park consisting of premium-grade warehousing with associated offices in the established industrial area of Bellville Industria

The first phase of Millroad Industrial Park is fully occupied by Laser Logistics leasing 5,000sqm with 1,000sqm expansion potential. The 22,000sqm second phase was completed at the end of 2018 and is significantly let.

“Now, the final phase of the project is well underway, adding 13,000sqm of quality sub-divisible space to the park, and will be completed in December 2019. Like previous phases, it combines warehousing with offices, however this phase is designed for smaller users and comprises four units with a minimum size of 2,700sqm,” says Errol Taylor, Head of Asset Management: Industrial at Growthpoint.

Each of the new units offers drive-through facilities and has a shared yard in the front and a dedicated yard at the back. They have clear internal stacking heights of eight metres to eaves and are sprinkler protected. In addition, the park is energy and water efficient, resulting in lower occupation costs. There is also plentiful power supply to the site.

Riaan Munnik, Growthpoint Properties Western Cape Regional Development Manager, says, “The final phase of Millroad Industrial Park is coming to market at the ideal time when industrial development in Cape Town has slowed and the letting of speculative development in the city has started to pick up.”

Millroad Industrial Park is ideally located opposite the well-known Sacks Circle near the R300 highway, with easy access to the N1, N2 and R300 highways and benefits from excellent highway visibility. It is also well positioned to benefit from the future extension of the M10 Robert Sobukwe Road, which has already improved its accessibility even further.

The industrial park is within walking distance from public transport, with the Sarepta passenger rail station being a mere 300 metres away. Ensuring the safety of the units, the park has full perimeter security fencing, onsite security management and 24/7 security guarding.

Taylor adds, “Millroad Industrial Park, with its premium-grade facilities, further strengthens the logistics and warehousing component of Growthpoint’s diverse industrial portfolio. It is a great asset and, because it is being delivered by Growthpoint’s own development team, we can be confident in its quality.”

Growthpoint creates space to thrive with innovative and sustainable property solutions. It is South Africa’s largest primary JSE-listed REIT with assets of nearly R126bn, including a 50% holding in Cape Town’s iconic V&A Waterfront. Growthpoint is invested in real estate and communities across three continents including Africa, Europe and Australia.

Emira completes The Bolton

The development of Emira Property Fund’s residential conversion, The Bolton, in Rosebank is complete after a two-year project, and its stylish apartments are already more than 95% let.

At the end of this two-year project, Emira is pleased with the results of its first foray into residential property. Ulana van Biljon, COO of Emira “The Bolton is certainly living up to our expectations for this landmark conversion. The letting, rental levels and overall management are doing well. By partnering on the project with leaders in the field, its ongoing success is ensured.”

The chic urban lifestyle offered by The Bolton is the result of Emira’s value-enhancing conversion of two Rosebank office property assets, which were consolidated into one and which Sasol occupied for many years. The JSE-listed REIT co-invests with respected hands-on specialists in their fields, and in the case of The Bolton residential conversion, Emira’s partner the Feenstra Group added its residential development and property management expertise to the project.

The conversion into residential apartments came with a unique set of challenges, especially as work had to be designed around the constraints of existing structures. The phased construction programme also called for flexibility to minimise any unnecessary disruption to tenants as they started moving in and until the dust settled.

The Bolton stands out from other residential accommodation in Rosebank, offering all the amenities – swimming pool, cinema, meeting rooms, free WiFi and more – but with smaller units that come at more palatable rentals for many.

“The Bolton has resonated well with its target market of young professionals, by actively marketing the apartments on digital and social media, it earned strong interest and demand. It has attracted residents mainly in their early 30s from a range of professions from advocates and accountants to medical and health professionals, bankers and business owners,” confirms van Biljon.

There are also a limited number of furnished, serviced units at The Bolton, specifically for corporate tenants in the area, which are proving popular.

Undoubtedly, The Bolton’s appeal also comes from its excellent proximity to a wide range of places of work and retail, commuter routes, the Rosebank Gautrain Station and amenities. Its on-site advantages are boosted by Rosebank being an attractive area to live in, with its vibrant shopping and socialising places.

“The Bolton is an ideal residential investment for Emira’s criteria, it has the right location, the right size and the right market, and is proving to be a good investment that enhances Emira’s residential property investments,” notes van Biljon.

Emira’s latest set of results pin its residential rental property holding at 5.7% of its total assets, including The Bolton and its 34.9% stake in JSE Alt-X listed Transcend Residential Property Fund.

Based on the success of The Bolton, van Biljon confirms that it will consider similar investment opportunities as it is part of a diversified property portfolio strategy. “We continually evaluate our office buildings for value-add opportunities, including alternative uses and conversions, and to the extent that they meet our criteria then we will pursue accordingly,” she says.

Emira is a medium-cap diversified JSE-listed SA REIT that is invested in a quality, balanced portfolio of office, retail, industrial and residential properties. At 30 June 2019, its directly held assets comprised 80 properties valued at

R10.9bn. It also invests indirectly in 22 lower LSM shopping centres valued at R1.15bn through its exposure to Enyuka Property Fund. It also has a 34.9% holding in JSE AltX-listed Transcend Residential Property Fund. Emira is internationally diversified through its investment in ASX-listed Growthpoint Properties Australia (GOZ) valued at R759.7m, and its equity investments in nine grocery-anchored open-air convenience shopping centres with a combined value of USD75.9m through its USA subsidiary.

Green game -changers win Greenovate Awards

University of Pretoria and North West University claim top honours at the Greenovate Awards.

University of Pretoria is the winner of the Greenovate Property Award 2019 and North West University the winner of the Greenovate Engineering Award 2019.

The prestigious Greenovate Awards acknowledge outstanding leadership in environmentally innovative thinking for the built environment at university level.

The Greenovate Awards is a joint venture initiative between South Africa’s forerunner in high-performance green buildings Growthpoint Properties and the Green Building Council South Africa (GBCSA). Launched in 2015, this student programme aims to educate and reward the young minds and future leaders of South Africa for innovation and green building in the built environment.

This year Growthpoint and GBCSA have been joined by sponsors RMS Remote Metering Services, Aurecon, WSP and Ellies to deliver an initiative that is so much more than a competition; it is changing our built environment

The programme has two streams: the Greenovate Property Awards – covering property studies, quantity surveying and construction management – offered for the fifth time in 2019, and the Greenovate Engineering Awards – covering electrical, computer and electronic, civil and mechanical engineering – now in its third year.

This year, 18 finalists were adjudicated from seven universities around South Africa. The wide-ranging and visionary submissions varied from sustainable societies to greywater and energy storage solutions.

The winners were announced at a gala dinner in Sandton Central with keynote speaker Carla Sharpe, founding member of the SA Space Association and Women in Aerospace Africa, who is also responsible for business development at Africa’s largest science undertaking, the Square Kilometres Array (SKA).

Greenovate Property Awards 2019:

Winners: The University of Pretoria team of Henno de Villiers and Liné Grobler supervised by Danie Hoffman, with their submission titled “Pushing back Day Zero – water-saving strategies for all”. The team won R30,000 as well as the opportunity to present at GBCSA Conference 2020, local flights and accommodation included.Second place: Neslon Mandela Bay University’s Ashvin Managa with his submission titled “Implications of a natural ventilation retrofit of an office building”, supervised by Chris Allen. The student won R15,000 as well as GBCSA Convention 2020 tickets. Third place: The University of the Witwatersrand team of Ayanda Mhlanga, Binaica Dalpat and Mzuchumile Makalima, supervised by Rolien Labuschagne, with their submission titled “The use of succulent plants to reduce the fumes in building fires”. The team won R10,000 and GBCSA Convention 2020 tickets.

Greenovate Engineering Awards 2019:

Winners: North West University Lucas van Wyk, supervised Dr Henri Marais, with the submission titled “Grey-water management system”. The student won R30,000 and the opportunity to present at GBCSA Conference 2020, local flights and accommodation included.Second place: Stellenbosch University’s Stephan Olivier with the submission “Low Cost, alternative energy storage for grid-tied solar PV systems”, and with Chris Jurgens supervising. The student won R15,000 as well as GBCSA Convention 2020 tickets. Third place: University of Cape Town’s Tariromunashe Mufunde, supervised by Dyllon Randall, with the submission “CO2 Sequestration from commercial buildings using algae”. The student won R10,000 and GBCSA Convention 2020 tickets.

WSP Buildability Award:

In addition, for the first time, this year WSP sponsored a laptop with accessories to the value of R20,000 for the submission with the best buildability. This special prize was won by Lucas van Wyk.

Werner van Antwerpen of Growthpoint Properties, who was a judge for the competition this year and has been involved in Greenovate since its inception, says: “We are proud to recognise student green building projects with a passion to create better, more sustainable, cities, towns and neighbourhoods. It is exciting that interest and participation in the Greenovate Awards continue to grow in its fifth year, expanding awareness and creating more solutions for global climate change.”

Grahame Cruickshanks, Managing Executive; Market Engagement, GBCSA, says, “The awards facilitate students’ exposure to green building and sustainability at the start of their careers, catalysing them to enter the market as advocates for green building with a passion to create and enable sustainable approaches in their professions. We are pleased to note the high standard of submissions and grateful for the opportunity to meaningfully introduce the future leaders of South Africa’s built environment sector to green building approaches.”

The benefits of encouraging and enabling green building innovation in South Africa and globally are tangible, meaningful and much-needed. This is why Growthpoint and GBCSA have set their sights on continuing to grow the competition and programme in future, to include more universities and a broader knowledge base of innovative solutions.

GREENOVATE 2019 MENTORS AND JUDGES

The Greenovate Awards provides university students with the opportunity to access the very best minds in environmental sustainability in the property and engineering sectors in South Africa. An unprecedented line-up of experts and thought leaders in their fields volunteer their time, experience and mentorship to encourage and guide South Africa’s next generation of leaders who will take the green building movement forward, innovate and inspire.

Greenovate Property Awards

Judging panel:

  • Hlompho Vivian, Key Accounts Manager, GBCSA
  • Marloes Reinink, Partner, Solid Green Consulting
  • Martin Smith, Technical Director – Buildings, Aurecon
  • Nkuli Bogopa, CEO, Broll Property Group
  • Adrie Fourie, Senior Environmental Sustainability Designer, Aurecon

Mentors:

  • Grahame Cruickshanks, Managing Executive; Market Engagement,
  • GBCSA Louwna Joubert, Environmental Sustainability Designer,Aurecon
  • Jarrod Lewin, Account Director, Broll Properties
  • Sally Misplon, Founder, Misplon Green Building
  • Consulting Pales Sibeko, Co-founder, Good Work Soc
  • Greenovate Engineering Awards

Judging panel:

  • Mauritz Kruger, Architect – Principal Specialist, Royal Haskoning
  • DHV Jenni Lombard, Technical Director, GBCSA
  • Werner van Antwerpen, Corporate Finance, Growthpoint Properties
  • Mike Aldous, Associate – Green Building & Sustainability Services, Mott MacDonald
  • Yogesh Gooljar, Building Performance Engineer, PJ Carew
  • Consulting Alison Groves, Regional Director, WSP

Mentors:

  • Nardo Snyman, National Sustainability Manager,
  • Excellerate Dash Coville, Sustainable Building Consultant, Solid Green
  • Hlologelo Manthose, Sustainability Consultant, WSP
  • Vere Shaba, Founder, Shaba Green Building Design and Engineering
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