Vukile raises over R340mil in rights offer

Property loan stock company Vukile Property Fund (VKE) said on Monday it managed to raise R342.8m following its rights offer of 20‚525‚000 new linked units‚ representing 4.99% of the total number of linked units in issue and would use the money to repay debt facilities and temporarily reduce gearing in the company.

The company said new linked units were placed with qualifying institutional investors at a price of R16.70 per linked unit.

The issue price represented a discount of 3% to Monday’s closing price and a discount of 4.6% to the 30 day volume weighted average price of Vukile linked units on Monday.

It said the repayment of debt was expected to be yield enhancing.

Vukile also plans to use the proceeds to partly pay for its planned acquisition of a 50% share in the East Rand Mall in Gauteng for R1.115bn‚ in line with its strategy of energetically growing its portfolio with a special emphasis on the retail sector.

The company has reached an agreement with Sanlam Life Insurance to acquire the 50% stake in the mall. The other half will be acquired by another JSE-listed property company‚ Redefine Properties. The East Rand Mall’s total value is R2.23bn.

Vukile has completed its due diligence and the acquisition was now subject to the negotiation of formal legal agreements and the receipt of approval from the Competition Commission.

In April Vukile acquired 20 properties worth R1.5bn from Sanlam Life Insurance.

The Sanlam property portfolio acquisition‚ which added about 25% to the size of Vukile’s portfolio‚ was the initial step in the company’s new strategy to be more acquisitive and proactive‚ and is expected to provide it with further scope for growth.

Vukile’s management has embarked on initiatives that would help secure good property fundamentals. The company is using technology to implement a broker website to improve communication about vacancies and leasing opportunities.

Vukile has grown its asset base to R6.1bn for the year ended March‚ and is exploring several new developments and acquisitions of properties catering to both rural and urban areas.

The company was entering joint ventures with developers and targeting middle- income shopping centres and management believed it would deliver its target of strong earnings growth.