Vukile Property Fund will issue R1 billion of new ordinary shares, following a successful accelerated book build.
The property group said in a statement yesterday that the equity raised would boost Vukile’s financial agility to capitalise on a pipeline of growth opportunities, aligned with its well-established long-term strategy.
Vukile is a specialist retail real estate investment trust (REIT) developed on the foundation of a well-defined, specialised growth strategy, with a focus on owning dominant retail assets across South Africa and Spain.
In a Stock Exchange News Statement, it said yesterday morning that the launch of an equity raise related to approximately 5% of the company's current market capitalisation, through the issue of new ordinary shares.
The bookbuild shares were placed at a price of R14.60 per share, representing a 0.75% discount to the pre-launch Vukile share price as at market close on February 19.
The share price of Vukile yesterday closed 0.07% higher at R14.72 with a market cap of R15bn.
Vukile said its assets were valued at around R40bn, with 40% in South Africa and 60% in Spain. The Spanish assets are held in the 99.5% Vukile-owned Madrid-listed subsidiary, Castellana Properties Socimi.
“Both South African and Spanish portfolios continue to deliver excellent results and solid performance metrics with Vukile’s proactive asset management unlocking value from the well-crafted portfolio of properties, most of which are dominant in their respective catchment areas,” it said.
Earlier this month, Vukile announced that it would exceed the upper end of its guidance for 2024 of growth in funds from operations (FFO) per share of 4% to 6% as well as growth in dividend per share of 8% to 10% was met with enthusiasm by investors.
Vukile said it intended to deploy the proceeds of the equity raise into strategic investment opportunities.
Laurence Rapp, the CEO of Vukile Property Fund, said, “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 South Africa and Spain. Pricing remains fragmented in the current market environment, which rewards certainty and speed of execution. The capital raised will place Vukile in a financially agile position underpinned by a strong balance sheet and enhanced funding optionality.”
Vukile said it remained firmly focused on maintaining a conservative balance sheet as its foundation for efficient capital management.
“In the short term, the proceeds of the equity raise will be used to temporarily reduce borrowings in anticipation of the closing of potential acquisitions. The capital raise will also reduce Vukile’s loan-to-value ratio,” it added.
Piet Viljoen, a portfolio manager and executive director at Merchant West Investments, said on social media platform, X, (@pietviljoen), “Vukile was able to raise R1bn on no information to the market whatsoever. This raises the question - do institutions have blind faith in management? Or do they know something the rest of the market doesn't (which is quite normal, btw) given the poor (and declining) ROIC, and ...” .
BUSINESS REPORT