August 23 2024 16:00
SOUTH AFRICA AND SPAIN
Vukile Property Fund, the JSE-listed real estate investment trust (Reit) which invests in retail centres has issued R796m of senior unsecured corporate bonds. These have three, five and six and a half year maturities. Strong demand from the market was seen as R2.7bn was ultimately issued, being more than 3.4 times oversubscribed. The three-year notes of R214m were placed at a margin of 119bps, at a level better than price guidance. The five-year notes of R462m were placed at a margin of 137bps and the six and a half -year notes of R120m were placed at a margin of 146bps, both priced at the lower end of price guidance.
The overall average weighted issue margin of 134 basis points is tighter than the DCM notes maturing in the 2025 financial year that the proceeds of the issuance will be used to repay. By deploying the proceeds to repay existing DCM maturities, Vukile’s loan-to-value ratio is unchanged while interest costs are lowered.
“We are pleased with the strong demand and favourable pricing received. The substantial support for the auction demonstrates the market’s confidence in Vukile’s customer-centric approach in driving value creation for stakeholders and our strong balance sheet,” said Laurence Rapp, CEO of Vukile.
FirstRand Bank Limited, acting through its Rand Merchant Bank division, was appointed as lead arranger.
“The keen investor interest, with over 19 institutions participating in the auction, demonstrates Vukile’s strong position as a meaningful and regular DCM issuer. Vukile’s positive financial results and a supportive market culminated in an excellent auction and issuance outcome,” said Farishta Mansingh of RMB.
Maurice Shapiro, group head of treasury of Vukile said the bonds’ competitive pricing showcased Vukile’s “exceptional credit quality, robust balance sheet, and well-defined business strategy”.
“We value the instrumental contribution of RMB as arranger and appreciate the ongoing support of our investors. Robust partnerships and proactive stakeholder engagement reflect our core values and further our success,” he said.
In July 2024, Global Credit Rating Company Limited (GCR) released a credit rating announcement in which it placed Vukile’s national scale long term issuer rating of AA(za) on positive outlook because of the focus on growing its diversified retail portfolio.
Vukile is a specialist retail Reit developed on the foundation of 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 centres of growth by creating value for all its stakeholders,” Rapp said.
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. Many of Vukile’s South African malls serve the working class. In Spain, the group is exposed to malls in cities and towns such as Granada, Alicante, Badajoz, Cadiz, Valladolid, Madrid and San Pedro del Pinatar
alistair@propertyflash.co.za
