February 29 2024
Guest piece for Vukile Property Fund
Vukile Property Fund (JSE: VKE) has issued R1.027bn of senior unsecured corporate bonds with three, five and – for the first time – seven year maturities in an oversubscribed issuance that extends Vukile’s debt maturity profile. Indicating significant market interest, the initial target issuance size was R750m.
Three-year notes of R530m were placed at a margin of 128bps, five-year notes of R402m were placed at a margin of 143bps, and Vukile’s inaugural longer tenure seven-year notes of R95m were placed at a margin of 155bps, all favourably priced towards the lower end of guidance.
The issuance has increased the share of Vukile debt issued in debt capital markets (DCM) to 17% of total group debt (previously only 12%), which further diversifies its debt towards debt investors and cements its strategy to be a meaningful and regular participant in these markets.
“In line with our goal, Vukile has successfully expanded its presence in the DCM. This move not only provides investors with a High Quality Liquid Assets (HQLA) issuance but also extends the maturity of Vukile’s debt with the addition of a new seven-year bond offering,” said Laurence Rapp, CEO of Vukile.
Absa Corporate and Investment Bank, a division of Absa Bank Limited, acted as sole lead arranger. “This successful auction further supports Vukile’s strategy to be a regular DCM issuer. By increasing the issuance size of the auction above R1 billion, Vukile was able to increase exposure to the market while serving investor demand,” said Marcus Veller of Absa.
The proceeds of the issuance will be used to repay existing bank debt, as such Vukile’s loan-to-value ratio is unchanged.
In July 2023, GCR Ratings affirmed Vukile’s national scale long-term issuer rating of AA(za) and its national scale short-term issuer rating at A1+(za), with a stable outlook.
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. Vukile adopts a proactive approach to asset management. It is focused on customer centricity as the driver of value creation and acts as a centre of growth by creating value for all its stakeholders.
Vukile’s assets are 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.
247@propertyflash.co.za
