Our opinion on the current state of VUKILE(VKE)
Vukile (VKE) is a real estate investment trust (REIT) listed on the JSE and the Namibian Stock Exchange. The company owns properties directly, holds shares in other REITs, and has significant property investments in the UK and Spain. Its portfolio is geographically diversified, with 50% of its assets located in Southern Africa, primarily in retail properties, 46% in Spain, and 4% in the UK.
Vukile follows a strategy of reinvesting into its existing properties, and as part of this strategy, it has partnered with MTN to install fiber in 37 of its malls, with MTN investing R80 million. The company also holds notable investments in other REITs, including R595 million in Fairvest, R1.3 billion in Atlantic Leaf (34.9%, currently being sold), and R790 million in Gemgrow Properties, which it is also attempting to divest. The company is refocusing its portfolio on Southern Africa and Spain, selling off its UK assets and shareholdings in other REITs to streamline operations and strengthen its core assets.
In its results for the year to 31st March 2024, Vukile reported revenue growth of 11.8% and a 5.2% increase in its net asset value (NAV) to 2155 cents per share. The company’s loan-to-value (LTV) ratio stood at 40.7%, reflecting a well-managed balance sheet. Regarding its South African portfolio, Vukile highlighted: "Like-for-like retail NOI growth of +5.4% - Vacancies reduced to 1.9% - Rental reversions +2.9%, up from +2.3% - Like-for-like retail portfolio value increased by +5.8%."
In an update on trading for November and December 2024, the company reported a 6.1% increase in trading density compared to the prior year. Township shopping centers were the top-performing segment of the portfolio, achieving trading density growth of 9.6%.
Vukile’s shares are currently trading on a multiple of 12.47, which remains attractive and indicates that the share is undervalued. Over the past 15 years, despite various challenges, Vukile has proven to be a reliable long-term investment, with its share price steadily increasing.
Given the company’s strong performance, growing portfolio, and focused strategy on its core assets in Southern Africa and Spain, we consider Vukile to be one of the best REITs on the JSE. It continues to present a compelling opportunity for long-term investors, particularly at current levels, which still look cheap.
Vukile follows a strategy of reinvesting into its existing properties, and as part of this strategy, it has partnered with MTN to install fiber in 37 of its malls, with MTN investing R80 million. The company also holds notable investments in other REITs, including R595 million in Fairvest, R1.3 billion in Atlantic Leaf (34.9%, currently being sold), and R790 million in Gemgrow Properties, which it is also attempting to divest. The company is refocusing its portfolio on Southern Africa and Spain, selling off its UK assets and shareholdings in other REITs to streamline operations and strengthen its core assets.
In its results for the year to 31st March 2024, Vukile reported revenue growth of 11.8% and a 5.2% increase in its net asset value (NAV) to 2155 cents per share. The company’s loan-to-value (LTV) ratio stood at 40.7%, reflecting a well-managed balance sheet. Regarding its South African portfolio, Vukile highlighted: "Like-for-like retail NOI growth of +5.4% - Vacancies reduced to 1.9% - Rental reversions +2.9%, up from +2.3% - Like-for-like retail portfolio value increased by +5.8%."
In an update on trading for November and December 2024, the company reported a 6.1% increase in trading density compared to the prior year. Township shopping centers were the top-performing segment of the portfolio, achieving trading density growth of 9.6%.
Vukile’s shares are currently trading on a multiple of 12.47, which remains attractive and indicates that the share is undervalued. Over the past 15 years, despite various challenges, Vukile has proven to be a reliable long-term investment, with its share price steadily increasing.
Given the company’s strong performance, growing portfolio, and focused strategy on its core assets in Southern Africa and Spain, we consider Vukile to be one of the best REITs on the JSE. It continues to present a compelling opportunity for long-term investors, particularly at current levels, which still look cheap.
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