The group is a long-term investor in retail-focused property portfolios with strong contractual cash flows managed for income growth, sustainability and capital appreciation.


The group’s total assets amounted to R35.1 billion at 31 March 2019. The group’s direct property investments were valued at R30.5 billion at 31 March 2019 (March 2018: R19.2 billion), and are located in South Africa, Namibia and Spain. The Spanish properties were valued at R14.9 billion (€916 million) at year-end (March 2018: R4.5 billion (€308 million)).

Additionally, Vukile held the following listed investments at year-end:

  • A 34.9% shareholding in an associate, Atlantic Leaf Properties Limited (Atlantic Leaf) with a carrying value of R1.3 billion (March 2018: R1.2 billion). The net asset value of Atlantic Leaf at February 2019 amounted to £195 million (February 2018: £204.2 million);
  • A 26.9% shareholding in Fairvest Property Holdings Limited (Fairvest) valued at R568 million (March 2018: R595 million); and
  • A 25.3% shareholding in Gemgrow Properties Limited (Gemgrow) valued at R729 million (March 2018: R790 million).

Ongoing improvements in financial and operating metrics

The group is focused on generating dividends that are growing, sustainable, and predictable over the long term. Key decisions and strategies are aligned to this long-term approach and the group will avoid transactions which do not complement the longer-term strategies of the group.

It is pleasing to report that the dividend for the six months ended 31 March 2019 increased by 7.5% to 103.37872 cents per share. Dividends for the full year rose by 7.5% to 181.48123 cents per share, in line with guidance.

The group’s net profit available for distribution was R1.7 billion for the year ended 31 March 2019, representing an increase of 30% (March 2018: R1.3 billion).

The proposed total dividend for the year comprises:

    Rm %
per share
First 701.5 41.5 78.10251  
Second(1) 988.5 58.5 103.37872  
Total 1 690.0 100.0 181.48123  
(1) Based on shares in issue at 29 May 2019.
Key financial measures March

Dividend per share (cents) 181.48   168.82 7.5   
Earnings (Rm) 1 709   2 402 (28.9)  
Net asset value per share (cents) 2 026   2 010 0.8   
Loan to value ratio net of cash (%)(1) 37.2   28.2    
Gearing ratio (%)(2) 37.0   29.6    
(1) Based on directors’ valuations of the group’s portfolio and the market value of equity investments at 31 March 2019 less cash (excluding cash held on deposit from tenants).
(2) The gearing ratio is calculated by dividing total interest-bearing borrowings by total assets.

Share price and liquidity

Vukile’s share price decreased by 8.6%, from R21.88 per share at 31 March 2018 to R20.00 per share at year-end.

Vukile’s share price performed better than the SAPY index which declined by 12.2% over the same period.

Vukile’s market capitalisation at year-end amounted to R18.4 billion (March 2018: R17.2 billion).

During the 12 months ended 31 March 2019, 344 million Vukile shares were traded, which equates to approximately 28.7 million shares per month. The total value of shares traded during the year amounted to R7 billion or 38% of the company’s market capitalisation at 31 March 2019 (March 2018: 41%), demonstrating the liquidity of Vukile’s shares in the market.

Equity issuances

Equity issuance and dividend reinvestments for the year amounted to R2.6 billion:

  • Vukile issued 86 715 812 shares under an accelerated bookbuild on 26 July 2018 at R18.66 per share, including a specific issue to Encha Properties Equity Investments (Pty) Ltd (Encha) at R19.60 per share, raising R1.6 billion.
  • Shares issued under an election to reinvest cash dividends in return for shares were as follows:
    • 22 June 2018: 3 857 140 shares at R20.30 – R78 million; and
    • 24 December 2018: 4 480 038 shares at R19.40 – R87 million.
  • On 5 November 2018, Vukile issued 22 889 305 shares to settle the purchase price of R470.6 million for Kolenade Retail Park.
  • Vukile issued 18 253 483 shares under two further issuances in February and March 2019 at an average of R20.21 per share – raising R369 million.

Cash flow

The major items reflected in the composition of cash generated and utilised during the year under review are set out below:


Cash from operating activities 1 786   
Issue of shares 2 615   
Borrowings and advances 6 895   
Borrowings repaid (1 892)  
Acquisitions/improvements to investment properties : Local (988)  
                                                                                                : Spain (8 586)  
Dividends paid (1 518)  
Equity contribution from non-controlling shareholders 1 828   

Cash flow from operating activities more than covered the full dividend for the year.

Additional net debt raised of R5.6 billion, share issuances of R2.6 billion and external investors funding into Castellana of R1.8 billion were utilised to acquire investment properties of R10.1 billion, mainly in Spain.

Net asset value

The net asset value (NAV) of the group increased over the reporting period by 0.8% from 2 010 cents per share to 2 026 cents per share at 31 March 2019, as set out in the table below.


per share 
Opening NAV 1 April 2018  2 010    
Investment properties  1 340    
Investment properties held for sale  126    
Other non-current assets  17    
Current assets  18    
Current liabilities  (18)   
Non-current liabilities  (835)   
Non-controlling interest  (283)   
Adjusted for additional shares in issue  (349)   
Closing NAV 31 March 2019  2 026    

The NAV of 2 026 cents per share represents a slight premium to Vukile’s share price of 2 000 cents per share at 31 March 2019.

It should be noted that although the gross change in fair value of investments amounted to R804 million for the year ended 31 March 2019, this increase to NAV was offset by the following:

Unrealised fair value loss on listed property shares  (88)   
Unrealised foreign exchange loss on foreign loans  (66)   
Impairment of goodwill  (48)   
Fair value loss on net-settled derivatives  (208)   

The group’s NAV would increase to 2 070 cents per share if the impact of the temporary items above are excluded.

Extract from the calculation of distributable earnings for the year ended 31 March 2019

  2019   2018        
GROUP R000    R000    R000    R000  Variance 
Property revenue        2 186 904           1 561 798  40.0          
Property expenses (net of recoveries)       (312 603)          (252 723) (23.7)         
Net profit from property operations per segmental report excluding straight-line rental income accrual        1 874 301           1 309 075  43.2     (i)   
Investment and other income        344 815           323 255  9.5     (ii)   
Dividends received  126 390           137 889        (8.3)         
Interest and other income  218 425           185 366        17.8          
Share of income from associate (Atlantic Leaf)       53 585           95 485  (43.8)         
Corporate expenditure        (199 371)          (127 474) (56.4)    (iii)   
Finance costs        (509 749)          (367 808) (38.6)    (iv)   

Full details of distributable income are set out in the segmental report included in the separate consolidated annual financial statements for the year ended 31 March 2019.


Group net profit from property operations

Net group profit from property operations, excluding the straight-line income adjustment, increased by R565 million (43%) from R1.31 billion to R1.87 billion. The Castellana growth contributed R669 million (36%) towards the group’s net profit from property operations (March 2018: R174 million). The growth in net property revenue of the stable portfolio was 3.4%.

Group tenant arrears

Group tenant arrears (including tenant recharge accruals) amounted to R189 million at year-end (March 2018: R116 million) or 6.7% of gross rental income (March 2018: 5.8%). The increase of R73 million mainly arises due to the addition of Morzal debtors of R46 million being included for the first time. Castellana’s in-house leasing team collects at least 99% of monthly rentals invoiced.

The retail sector reported lower sales growth in general during the past financial period and the difficult trading environment has affected certain non-national tenants negatively. Our primary property managers, Excellerate Real Estate Services (Pty) Ltd trading as JHI and Broll Property Group (Pty) Ltd, report similar trends across the various portfolios they manage.

Impairment allowance – tenant receivables

The allowance for the impairment of tenant receivables decreased by R9.5 million from R43.7 million at 31 March 2018 to R34.2 million at 31 March 2019, under the new IFRS 9 requirements. The allowance is considered to be adequate. The impairment allowance represents 1.2% of gross property revenue (March 2018: 2.2%). In total, 26% of group tenant arrears have been accounted for as impaired. A summary of the movement in the impairment allowance of trade receivables is set out below:

Allowance for impairment of trade receivables:    
At 1 April 2018 43 709   
IFRS 9 adjustment (8 397)  
Reduction in the impairment allowance (1 098)  
At 31 March 2019 34 214   
Rental written off in the statement of profit or loss 14 868   

Group investment and other income

Investment and other income increased by R21.6 million to R345 million, made up as follows:

R000  Movement 
Dividends received 126 390   137 889 (11 499) (8.3)  
Interest and other income 55 351   91 490 (36 139) (39.5)  
Cross-currency interest rate swaps (CCIRS) 163 074   93 876 69 198  73.7   
  344 815   323 255 21 560  6.7   

Dividends received of R126.4 million during the year comprised:

Fairvest R54.5 million  
Gemgrow R71.9 million  
  R126.4 million  

Fairvest has performed well during the year, while Gemgrow’s results have been disappointing, resulting in a reduction in dividend income of R11.5 million year-on-year.

Higher net interest of R69 million on CCIRS was generated mainly due to €89 million new CCIRS concluded during the year. This higher income was offset by lower bank and money market interest earned compared to the prior year as surplus cash resources were extensively used to part fund new acquisitions in Spain.


Group corporate expenditure

Group corporate and administrative expenditure of R199.4 million is R71.9 million higher than the previous year’s expenditure (March 2018: R127.5 million).

South Africa:

  • Salary and related costs increased by R18 million comprising normal increases and the appointment of two new employees, including the appointment of an in-house leasing specialist.
  • New costs relating to the Vukile Academy of R5.5 million.


  • Salary costs increased to €2.7 million (approximating R43 million) at 31 March 2019 (March 2018: €0.5 million). The number of employees in the Castellana team increased to 24 employees compared to eight employees in the previous year. The Castellana team is now at scale and the business could absorb another three assets without having to increase the staff complement.

Corporate expenditure equates to 0.57% of total assets (March 2018: 0.55%).


Group finance costs

Group finance costs increased by R142 million, from R368 million to R510 million.

The primary reasons for this increase are set out below:

  • Interest was incurred on new R600 million debt drawn from local banks off Vukile’s balance sheet to part fund the acquisitions of Habaneras and the four shopping centres by Castellana from Unibail-Rodamco-Westfields.
  • Additional debt of €300 million was raised by Castellana to part fund the abovementioned acquisitions which incurred finance costs of R113 million. This new debt is compared to the €246 million debt in place in the prior year. This debt is non-recourse to Vukile, and secured against Spanish assets only.

The average cost of finance (including amortisation of capital raising fees) for the year equates to 4.53% (March 2018: 5.74%), with interest-bearing term debt being 96% hedged (March 2018: 100%).


Investments in associates at fair value

Fairvest – 26.9%

Fairvest continues to focus on the lower living standards measure (LSM) retail market, similar to Vukile’s strategy, but targeting smaller properties. Fairvest management has forecast a distribution growth of 8% to 10% for the period ending 30 June 2019.

Vukile owned 270.4 million shares in Fairvest at 31 March 2019 valued at R568 million. Dividends of R54.5 million (March 2018: R21.5 million) were received during the year ended 31 March 2019. Dividends calculated on a full 12-month period equates to a yield of 9.6% based on the value of Fairvest’s shares at year-end.

Gemgrow – 25.3%

Vukile owned 4.7 million Gemgrow “A” shares and 114.4 million Gemgrow “B” shares with a combined value of R729 million at year-end.

Gemgrow’s management has forecast a reduction in dividends for the “B” shares of 10% for the year ending 30 September 2019.

Dividends received in respect of the “A” and “B” shares held by Vukile for the year ended 31 March 2019 amounted to R71.9 million (March 2018: R92.6 million), a decrease of 6.5% from the prior year.

The management of Gemgrow and Arrowhead Properties Limited announced on 10 April 2019 that an agreement in principle had been reached for a reverse takeover of Gemgrow by Arrowhead, creating a company with a market capitalisation of R6.8 billion. This should result in a savings in corporate costs and provide for a Gemgrow “B” share which is expected to be significantly more liquid than at present.

Vukile does not consider this investment core to its strategy and will seek to dispose of this investment at an appropriate time and price, in order to reinvest the proceeds into investment opportunities in Spain or South Africa.


Investment in associate equity accounted

Atlantic Leaf – 34.9%

Atlantic Leaf’s assets (net of straight-line lease income adjustment) have increased to £372 million at 28 February 2019 (28 February 2018: £363 million) while total revenue increased by 11.5% to £26.9 million for its financial year ended 28 February 2019.

The company’s focus on the UK industrial and warehouse distribution centres, an attractive market segment, has provided growth in distributions of 2.2%, from 9.1 pence to 9.3 pence for the year ended 28 February 2019. Dividends of R115.4 million, including the positive impact of hedging these dividends, were earned during the year to 31 March 2019. Vukile’s share of equity-accounted profits from Atlantic Leaf for the year ended 31 March 2019 amounted to R53.6 million. Dividend income has generated an 8.3% yield in Pound Sterling for Vukile, based on the carrying value of the investment in Atlantic Leaf at year-end of R1.3 billion.

Atlantic Leaf’s management are forecasting a dividend of 10 pence per share for the year ending 28 February 2020, or a 7.5% growth in dividends. However, Atlantic Leaf’s after-tax earnings will be boosted due to corporate taxes no longer being payable following its conversion to a UK REIT. Any dividends it declares will be subject to a 20% withholding tax, with 5% being recoverable from the UK tax authorities in terms of the Double Tax agreement concluded between South Africa and the United Kingdom. In total, 72% of the £5.6 million dividends forecast to be received from Atlantic Leaf by Vukile for the year ending March 2020 are subject to forward exchange contracts, at an average exchange rate of R20.38.

While performing in line with expectations, Vukile is open to exploring an exit of its stake in Atlantic Leaf and to redeploy the proceeds in its core Spanish strategy.


Investment in subsidiary

Castellana – 72.2%

Despite Castellana’s significant growth in assets for the current year, Vukile’s shareholding in Castellana has decreased over the year from 98.7% to its current level of 72.2% as a result of introducing a strategic minority shareholder who part funded the equity required for the Unibail-Rodamco-Westfields transaction and now holds 18.2% of Castellana. Other minority shareholders hold 9.6%.

Details of the Spanish property portfolio, including details relating to acquisitions, valuations, value creation and investment strategy are set out in the portfolio review – Spain section in this report.

Key financial measures

  2019   2018    
Cash dividends net of withholding taxes ((2.0%) (March 2018: 2.66%))   €10.4 million Declared and paid in May 2018 for the year ended 31 December 2017  
  €7.5 million   Declared for the six months ended 30 September 2018 and paid in November 2018  
  €11.3 million   Declared and paid in May 2019 for the year ended 31 March 2019  
Investment properties €916 million   €308 million    
Interest-bearing debt €450 million   €146 million    
Loan to value ratio net of cash (%) 45.9   42.2  

It should be noted that under Spanish law, Castellana and its subsidiaries are required to utilise Spanish GAAP in the preparation of their individual annual financial statements and requires Castellana’s consolidated annual financial statements to be prepared under IFRS. The consolidated IFRS financial statements have been used in the preparation of Vukile’s consolidated annual financial statements.

Treasury management

Group borrowings

The group’s finance strategy is to optimise funding costs and minimise refinance risk.

Total debt as at 31 March 2019 amounted to R13.2 billion. A detailed breakdown is provided below:

Foreign Spanish funders (EUR) – four Spanish bank funders 7 322   Secured only against Castellana’s balance sheet with no recourse to Vukile  
Local funders (EUR) – four local bank funders 2 140   Partly secured against Vukile’s SA balance sheet  
Local funders (GBP) – one local bank funder 542  
Local funders (ZAR) – five local bank funders 1 219  
DMTN (ZAR) 2 007  
  13 230

* Excludes debt raising fees of R252 million.

Sources of funding

Vukile’s funding of R13.2 billion is well diversified across a number of funders, in line with its strategy of reducing refinancing risk.

per bank
and fixed    
Group debt and hedging exposure per bank in ZAR        
Aareal(3) 4 850 309     36.66 4 850 309      
DMTN term debt 2 007 000     15.17 —      
Absa 1 520 478     11.49 2 616 957      
Caixabank(3) 1 296 781     9.80 1 235 623      
Banco Santander(3) 991 522     7.49 954 827      
Investec 921 420     6.96 1 155 497      
Standard Bank 777 812     5.88 902 323      
RMB 581 735     4.40 40 646      
Banco Popular(3) 183 247     1.39 183 247      
Nedbank 100 000     0.76 280 000      
Grand total 13 230 304     100.00 12 219 429      
(1) Foreign currency denominated debt converted at EUR/ZAR spot rate of 16.2582 and GBP/ZAR spot rate of 18.8855 at 31 March 2019.
(2) Hedging exposure is represented by exposure per banking relationship.
(3) Group exposure includes Castellana Properties SOCIMI debt of €450.3 million (R7.32 billion equivalent), and swaps of €146.0 million (R2.37 billion equivalent).

Vukile group loan and swap expiry profile at 31 March 2019

The strategy of ensuring that no more than 25% of debt expires in any one year is being monitored.

Vukile group loan and hedging (swap and fixed term debt) expiry profile at 31 March 2019:

  2020 2021 2022 2023 2024 2025 2026 Total  
Loan expiry profile (Rm) 1 084 1 441 2 454 1 330 1 612 4 850 12 771  
Commercial paper and access facility expiry profile (Rm) 347 12 100 459  
Hedging (swap and fixed debt) profile (Rm)   518   842   2 013   2 145   6 676   25   –   12 219  

A summary of group debt ratios at 31 March 2019 is provided below:

South Africa
Total debt (excluding access facilities and commercial paper) 12 771 363 5 449 504 450 349  
Interest-bearing debt hedged (%) 95.68 91.67 98.66  
Debt maturity profile (years) 3.92 2.01 5.46  
Swaps – maturity profile (years) 3.55 2.66 4.16  
Interest cover ratio (times)(3) 6.05 7.94 4.07  
Directors’ valuation LTV ratio (excluding MTM of derivatives) net of cash(1) (%) 37.18 29.98 45.93  
Gearing ratio(2) (%) 37.00 30.13 45.63  
(1) Directors’ valuation LTV ratio is calculated as a ratio of interest-bearing debt divided by the sum of (i) the amount of the most recent directors’ valuation of all the properties in the Vukile group property portfolio, on a consolidated basis, and (ii) the market value of equity investments.
(2) Gearing is calculated as a ratio of total interest-bearing borrowings to total assets.
(3) Interest cover ratio is based on the operating profit excluding straight-line lease income plus dividends from equity-accounted investments and listed securities income (EBITDA) divided by the finance costs after deducting all finance income (net interest cost).

Undrawn available facilities at 31 March 2019

Undrawn available facilities amount to R1.4 billion.

Unencumbered assets at 31 March 2019

As at 31 March 2019, unencumbered assets amounted to R7.2 billion (R3.4 billion property assets and R3.8 billion listed shares) compared with unsecured debt of R1.3 billion. The total unsecured debt to unencumbered assets ratio at 31 March 2019 was 18.7% and total unsecured debt to unencumbered property assets ratio at 31 March 2019 was 39.9%.


Global Credit Rating Company (Pty) Ltd (GCR) affirmed a secured long-term credit rating of AA+(ZA), corporate long-term credit rating upgraded to A+(ZA) and corporate short-term rating of A1(ZA), with the outlook accorded as stable, in July 2018.

Group debt movement during the year ended 31 March 2019

During the 12-month period ended 31 March 2019 the total group debt increased by R6.2 billion.

Significant financing transactions are summarised below:

  • R456 million of bank debt was repaid.
  • R660 million unlisted and listed corporate bonds were repaid during the year.
  • R317 million commercial paper was repaid during the year.
  • R1.2 billion of new corporate bonds were issued.
  • Within Castellana, €42 million of fixed bank debt was entered for the Habaneras acquisition – this debt is nonrecourse to Vukile.
  • Proceeds of the Vukile equity bookbuild issuance of R1.6 billion were partially utilised together with R400 million of ZAR bank debt and €15 million of EUR bank to acquire shares in Morzal for the acquisition of four shopping centres in Spain.
  • Within Castellana €256 million of fixed bank debt was entered and restructured for the acquisition of four shopping centres – this debt is non-recourse to Vukile.
  • Vukile rebalanced/extended and entered new ZAR interest rate swaps totalling R1.9 billion and entered new EUR interest rate swaps totalling €15 million, at an estimated new annualised additional cost of R2.5 million (R0.8 million cost for FY19).

The group has complied with all the bank’s LTV covenants. The southern African group has also complied with the DMTN covenants.

Group foreign exchange currency hedges at 31 March 2019

Vukile has adopted a strategy of hedging its foreign dividend exposure at 75% over a three to five-year period in line with anticipated dates of dividend receipts.

EUR net income exposure – as at 31 March 2019

Dividend payment dates                         
Net EUR dividends forecast    6 616    7 881       8 549    8 439    7 551    9 416    9 721    11 270    11 533    
Existing CCIRS hedge interest costs(1)    (2 278)   (2 291)      (2 316)   (2 278)   (2 278)   (1 228)   (1 228)   –    –    
Existing forward exchange contract (FEC) hedges on dividends    (7 684)   (5 375)      (5 289)   (5 495)   (5 508)   (4 600)   (4 600)   (4 600)   (4 600)   
Average FEC EUR/ZAR rate  16.9725  17.7734     18.4981  18.5148  19.4321  20.6629  21.5255  22.4193  23.3412    
Unhedged dividend income  (1 068) 2 506     3 260  2 944  2 043  4 816  5 121  6 670  6 933    
FEC hedges/(net distribution                                  
+ CCIRS hedge) (%) 116.13  68.20     61.87  65.11  72.95  48.85  47.32  40.82  39.89    
Average hedge (%) 75                               
(1) Funded out of EUR dividends receivable from Castellana.

In total, 75% of net EUR dividends are hedged over the next 2.5 years (5 Castellana dividends).

GBP net income exposure – as at 31 March 2019

Dividend payment dates            
Net GBP dividends forecast (after interest cost) 2 546  2 282     2 282  2 338    
FEC hedges on dividends  (2 035) (1 996)    (2 045) (2 070)   
Average FEC GBP/ZAR rate  19.2135  19.9029     20.6072  21.3622    
Unhedged dividend income  511  286     237  268    
FEC hedges/net distribution (%) 80  87     90  89    
Average hedge (%) 86                

In total, 86% of net GBP dividends forecast are hedged over the next two years (four Atlantic Leaf dividends).

Group cost of finance at 31 March 2019

The make-up for the year ended 31 March 2019 of the historic weighted average interest cost of 4.53% comprises the following:

average cost
of finance
Debt as at
31 March
ZAR 9.21 3 226  
EUR 2.70 9 462  
GBP 3.45 542  
Weighted average 4.53 13 230  

SA REIT Association best practice recommendations

The SA REIT Association has published a draft second edition to its best practice recommendations (BPR) for financial reporting. In support of the sector’s transparency, Vukile is engaging SA REITs regarding the reporting measures that will most clearly, accurately and consistently represent the performance of REITs such as Vukile. The sector representative body has indicated that it expects to finalise the second edition before the end of 2019 and that it should be effective for financial year-ends starting from 1 January 2020. This will not impact Vukile’s reporting for FY20.


The southern African property portfolio at 31 March 2019 consisted of 60 properties with a total value of R15.5 billion (excluding the 20% non-controlling interest in Moruleng Mall) and gross lettable area (GLA) of 988 303m², with an average value of R258 million per property. The average value per property on the retail portfolio is R316 million.

The geographical distribution of the southern African portfolio is indicated in the table below. The portfolio is well represented in most of the South African provinces and Namibia. Some 76% of the gross income comes from Gauteng, KwaZulu-Natal, Western Cape and Limpopo.

Geographic portfolio Total
% of gross income    
Gauteng 38  
KwaZulu-Natal 22  
Western Cape 8  
Limpopo 8  
Namibia 7  
Free State 6  
North West 4  
Mpumalanga 4  
Eastern Cape 3  

Based on value, 92% of the southern African portfolio is in the retail sector, followed by 3% in the industrial, 3% in the office, 1% in the motor-related sector and 1% in the residential sector.

The tenant profile is listed in the table below:

Tenant profile Retail
% of GLA      
A – Large national and listed tenants and major franchises 74 69  
B – National and listed tenants, franchised and medium to large professional firms 9 8  
C – Other (1 193 tenants) 17 23  

Excluding 180 residential units

The retail portfolio’s exposure to national, listed and franchised tenants is 83% in total.

The portfolio has low tenant concentration risk with the top 10 tenants accounting for 41.1% of total rent and 47.3% of total GLA. Based on rent, the Pepkor group is the single largest tenant with 7.5% of total rent (8.1% of retail rent), with Pick n Pay the second largest at 5.8% of total rent (6.2% of retail rent).

The top 15 properties, all of which are retail assets, have 84.3% exposure to national, listed and franchised tenants and represent 58.8% of the southern African portfolio value and 46.5% of the southern African portfolio GLA.

Top 15 properties by value

Property Location Rentable
valuation at
31 March
of total
Boksburg East Rand Mall(1) Gauteng 34 126   1 433   9.2 42 002  
Pinetown Pine Crest KwaZulu-Natal 43 414   1 047   6.8 24 125  
Durban Phoenix Plaza KwaZulu-Natal 24 231   940   6.1 38 812  
Phuthaditjhaba Maluti Crescent Free State 35 335   667   4.3 18 887  
Gugulethu Square Western Cape 25 322   553   3.6 21 840  
Soweto Dobsonville Mall Gauteng 26 589   546   3.5 20 520  
Queenstown Nonesi Mall Eastern Cape 27 898   500   3.2 17 905  
Pretoria Kolonnade Retail Park Gauteng 39 450   497   3.2 12 598  
Germiston Meadowdale Mall(2) Gauteng 33 156   438   2.8 13 225  
Oshakati Shopping Centre Namibia 24 632   428   2.8 17 364  
Daveyton Shopping Centre Gauteng 17 774   421   2.7 23 685  
Thohoyandou Thavhani Mall(3) Limpopo 17 761   414   2.7 23 285  
Bloemfontein Plaza Free State 43 771   411   2.7 9 388  
Randburg Square Gauteng 40 767   409   2.6 10 025  
Moruleng Mall(4) North West 25 274   399   2.6 15 790  
Total top 15 properties   459 500   9 103   58.8 19 811  
% of total portfolio   46.5   58.8        
% of retail portfolio   53.4   64.0        
(1) 50% undivided share in this property.
(2) 67% undivided share in this property.
(3) 33% undivided share in this property.
(4) 80% share in Clidet No 1011 (Pty) Ltd.

Valuation of southern African portfolio

The accounting policies of the group require that the directors value the entire portfolio every six months at fair value. Using a DCF methodology approximately one-half of the portfolio is valued every six months, on a rotational basis, by registered independent third-party valuers. The directors have valued the southern African property portfolio at R15.5 billion(i) as at 31 March 2019. This is R1.0 billion or 7.0% higher than the valuation as at 31 March 2018. Pretoria Kolonnade Retail Park was acquired for R471 million and Hillcrest Richdens Shopping Centre was sold. The value of the stable portfolio increased by 3.3%. The calculated recurring forward yield for the portfolio is 8.4%.

During the year all southern African properties were valued by external valuers and the valuations by Quadrant Properties (Pty) Ltd and Knight Frank (Pty) Ltd are in line with the directors’ valuations.

(i) The southern African property portfolio value takes into account Moruleng Mall at 80%, whereas in the annual financial statements the group property value reflects 100% of Clidet No 1011 (Pty) Ltd, which owns Moruleng Mall.

Southern African property portfolio performance

We achieved like-for-like growth in net profit from our southern African operations of 3.4%. Income was under pressure at Sandton Sunninghill Sunhill Park due to increased vacancies, and at Rustenburg Edgars and Vereeniging Bedworth Centre due to restructuring of leases. Excluding the reduced rentals at these properties, property revenue escalated at 5.3% and net property income at 4.6%.

The above inflationary increase in net expenses is mainly contributed by the irregular municipal increases in rates/ taxes and utilities.

Financial performance for the stable portfolio (excluding acquisitions and sales)

  31 March 
  31 March 

Property revenue (Rm) 1 364. 9   1 308.3  4.3   
Net property expenses (Rm) (231.2)   (212.2) 9.0   
Net property income (Rm) 1 133.7    1 096.1  3.4   
Net cost to income ratio (%) 16.9    16.2     

New leases and renewals in excess of 218 000m² with a contract value of R1.8 billion were concluded during the year, with tenant retention at 81% (retail portfolio 87%).

Expiry profile

The lease expiry profile table reflects that 23%, based on rent, of the leases are due for renewal in the 2020 financial year. Approximately 42% of leases are due to expire in 2023 and beyond (up from 38% in 2022 and beyond in the prior year).

Lease expiry % of rent March
Rent 23 17 18 12 30  
Cumulative as at March 2019 23 40 58 70 100  
Cumulative as at March 2018 47 62 73 84 100  
Lease expiry % of GLA Vacant
GLA 3.9 20 14 16 11 35  
Cumulative as at March 2019 3.9 24 38 54 65 100  
Cumulative as at March 2018 4.2 46 59 68 83 100  


At 31 March 2019 the portfolio’s vacancy (measured as a percentage of gross rental) was 3.6% excluding development vacancy, compared to 3.7% at 31 March 2018. Retail vacancies decreased from 3.4% to 3.0% and industrial from 6.0% to 2.9%. The main reason for the increased office vacancies during 2019 was the high vacancy at Sunninghill Sunhill Park which is currently in the process of being sold.

Vacancies (% of gross rental) March
Retail 3.0   3.4  
Industrial 2.9   6.0  
Offices 19.6   10.3  
Motor related    
Total* 3.6   3.7  

Including development vacancy the 2019 vacant rent is 4.4%.

* Excluding 14 vacant residential units.

The vacancy per sector (measured as a percentage of gross lettable area) is indicated in the table below:

Vacancies (% of GLA) March
Retail 3.0   3.9  
Industrial 5.7   3.5  
Offices 21.0   13.5  
Motor related    
Total* 3.9   4.2  

Including development vacancy the 2019 vacant GLA is 4.2%.
* Excluding 14 vacant residential units.

GLA summary GLA m²  
Balance at 31 March 2018 937 463   
GLA adjustments 187   
Disposals (10 196)  
Acquisitions and extensions 60 849   
Balance at 31 March 2019 988 303   
Vacancy reconciliation Area m² %  
Balance at 31 March 2018  39 681  4.2    
Less: Properties sold since 31 March 2018  (864) 8.5    
Remaining portfolio balance at 31 March 2018  38 817  4.2    
Leases expired or terminated early  204 625       
Tenants vacated  38 197       
Renewal of expired leases  (137 991)      
Leases to be renewed  (26 872)      
Development vacancy  (2 840)      
New letting of vacant space  (75 091)      
Balance at 31 March 2019  38 845  3.9    

Base rentals (excluding recoveries)

The weighted average monthly base rental rates per sector, between 31 March 2018 and 31 March 2019, are set out in the table below:

Weighted average base rentals (R/m²) excluding recoveries March
Retail 134.78   130.44 3.3   
Industrial 57.83   54.42 6.3   
Offices 95.32   95.74 (0.4)  
Motor related 131.68   128.64 2.4   
Total * 127.54   122.77 3.9   

The average growth in the retail rental rate is influenced by the newly acquired Pretoria Kolonnade Retail Centre’s lower than average rate of R108/m². If this property is excluded, the average retail rental rate is R136.13/m² showing a year-on-year growth of 4.4%.
* Excluding residential units.

The average contractual rental escalation of 7.0% is slightly lower than the previous year at 7.2%. We achieved positive reversions of 4.0% on the total portfolio, with retail reversions at 4.5% and industrial at 5.5%. Reversions were concluded at lower rates in the office sector. New leases were concluded at 3.2% above budget in the retail sector. The ongoing pressure in the office and industrial sectors, to which we now have little exposure, dictated that new leases be concluded below budget rates. This resulted in the total portfolio’s new leases finalised at 1.4% above budget.

Expense categories and ratios

The top four expense categories contribute 82% of the total expenses. These are: government services (46%), rates and taxes (18%), cleaning and security (11%) and property management fees (7%).

The group continuously evaluates methods of containing costs in the portfolio.


Southern African property portfolio – developments, acquisitions and sales


Kolonnade Retail Park, Pretoria, Gauteng

We acquired the fully let 39 450m² retail park for R470.6 million on a yield neutral basis.

This is a strong centre with a good tenant mix. This single-level centre is anchored by a 12 261m² Pick n Pay Hyper, with more than 40 stores, a health and fitness component and home décor appeal. It has a Virgin Active Health Club with indoor swimming pool, Kauai-in-motion and Club V as well as a Sportsman’s Warehouse, Mr Price Sport, Puma, Tekkie Town and Chrome Supplements & Accessories. It also has a Continental Linen, Coricraft, Dial-a- Bed, Good Knight Bedding, MRP Home, Plus10 Discount Furnishers, Rochester, Sheet Street and UFO Furniture.

Vukile is very satisfied to have acquired Kolonnade Retail Park in a market where there are few sizeable, quality assets available on the market. It is located in an established retail node and is ideally matched to Vukile’s investment strategy.

Completed upgrade project

Maluti Crescent, Phuthaditjhaba, Free State

Maluti Crescent, formerly Setsing Crescent, underwent a major R392 million redevelopment with a projected yield of 8.09% on capital expenditure. The project added 13 797m² of GLA and transformed the former strip centre into a fully enclosed 35 335m² mall with three levels of parking. The first phase of the expanded Maluti Crescent Shopping Centre opened on 21 March 2019 to become the largest shopping centre in Phuthaditjhaba in the Free State. It includes new undercover parking as well as the first and only structured taxi facility of its kind in the area.

The major upgrade responds to shopper and retail demand. It builds on the centre’s excellent trading metrics and unlocks further income enhancement. Its development also achieved significant skills transfer through local employment.

Redevelopment projects in progress

Pine Crest Shopping Centre, KwaZulu-Natal

Pine Crest, the first and still the biggest shopping centre in the Pinetown CBD, is being extended and upgraded at a cost of R200 million with an expected yield of 7.4%. The project is due for completion by the end of July 2019. The new mall, with street access, is linked to the existing banking mall which leads to the second and third shopping levels by means of a new set of escalators. The new food court with direct access to the planned GoDurban bus terminus will cater to both shoppers and commuters. Tenants already trading in the new food court includes Spur, Nandos, KFC and Debonairs, all showing trade exceeding expectations.

The centre’s rebranding and relaunching has been conceptualised and planned by Totem, a specialist rebranding company based in Spain, but with international experience. It promises a brand new look and experience which will ensure that Pine Crest not only stay the most popular shopping centre in the area but also keeps on growing.

This capital investment keeps the centre relevant to its customer base, which has changed dramatically in recent years.

Current southern African portfolio projects

Our major development capital expenditure projects approved and incurred to 31 March 2019 are:

Approved Completion Approved
  Paid to
31 March
April 2019
to March
Phuthaditjhaba: Maluti Crescent 31 August 2019 391 650   304 594   87 056  
Pinetown: Pine Crest 31 July 2019 200 000   138 435   61 565  
Durban: Phoenix Plaza 31 May 2018 35 000   31 444   3 556  
Meadowdale Mall 29 August 2018 16 264   14 365   1 899  
Springs Mall (25%) 29 March 2019 8 560   8 102   458  
Hammarsdale Junction Extension 31 March 2019 4 500   3 227   1 273  
    655 974   500 167   155 807  

The projects will be financed out of the proceeds from property sales and existing bank facilities.

Southern African property sales

Vukile concluded property sales during the year of R138 million, which supported our strategy to focus on a low-risk, high-quality portfolio of retail properties.

Dates of sale  
Hillcrest Richdens Shopping Centre 138 000   9.8 % 29 March 2019  
  138 000   9.8 %    

* Based on year one net operating income forecast.


The Spanish property portfolio at 31 March 2019 consisted of 17 properties with a total value of €916.5 million and GLA of 317 106m², with an average value of €53.9 million per property.

The geographical distribution of the Spanish portfolio is indicated in the table below. Some 87% of the gross income comes from Andalucia, Extremadura, Castilla Leon and Com. Valenciana.

Geographic portfolio

% of rental income Total
Andalucia 44  
Extremadura 22  
Castilla Leon 11  
Com. Valenciana 10  
Madrid 8  
Asturias 4  
Murcia 1  

Based on value, 97% of the Spanish portfolio is in the retail sector with 3% in the office sector.

The tenant profile is indicated in the table below:

Tenant profile Retail
% of GLA      
Large national and international tenants 94 89  
Local tenants (83 tenants) 6 11  

Large national and international tenants account for 89% of tenants by GLA, and 90% of tenants by rent.

The portfolio has low tenant concentration risk with the top 10 tenants accounting for 28.3% of total rent and 41.8% of total GLA. Based on rent, Media Markt is the single largest tenant, with 4.0% of total rent (5.3% of total GLA), with Zara the second largest at 4.0% of total rent (3.8% of total GLA).

List of properties

Property Location   Rentable
value at
31 March
of total
El Faro Extremadura   43 423   162.4   17.7 3 740  
Bahía Sur Andalucia   24 789   120.2   13.1 4 849  
Los Arcos Andalucia   17 906   118.2   12.9 6 601  
Granaita Retail Park Andalucia   54 367   113.7   12.4 2 091  
Vallsur Castilla Leon   35 211   92.8   10.1 2 636  
Habaneras Com. Valenciana   24 158   88.8   9.7 3 676  
Parque Oeste Madrid   13 604   51.6   5.6 3 793  
Parque Principado Asturias   16 246   34.6   3.8 2 130  
Marismas del Polvorín Andalucia   18 079   28.4   3.1 1 571  
Edificio Alcobendas Madrid   11 046   20.6   2.3 1 865  
La Heredad Extremadura   13 447   20.1   2.2 1 495  
La Serena Extremadura   12 405   16.1   1.8 1 298  
Pinatar Park Murcia   10 637   11.8   1.3 1 109  
Motril Retail Park Andalucia   5 559   8.9   1.0 1 601  
Mejostilla Extremadura   7 281   8.9   1.0 1 222  
Ciudad del Transporte Com. Valenciana   3 250   7.4   0.8 2 277  
Edificio Bollullos Andalucia   5 698   5.7   0.6 1 000  
El Faro Development Extremadura       3.3   0.4    
Los Arcos Development Andalucia       3.0   0.2    
Total     317 106   916.5   100.0 2 890  

Valuation of the Spanish portfolio

During the year all the properties were valued by external valuers, Colliers International.

Expiry profile

The expiry profile as a percentage of contractual rent is shown below:

The Spanish properties’ lease expiry profile reflects that 9%, based on rent, of the leases are due for renewal in the 2020 financial year. Approximately 47% of leases are due to expire in 2029 and beyond.

Lease expiry March
Lease expiry % of rent                        
Rent 9 5 4 7 7 6 3 4 8 4 43  
Cumulative as at March 2019 9 14 18 25 32 38 41 45 53 57 100  
Cumulative as at March 2018 2 3 4 4 5 5 5 7 15 15 100  


Break profile* March
Lease expiry % of rent                        
Rent 25 20 12 17 6 6 2 6 —  6  
Cumulative as at March 2019 25 45 57 74 80 86 88 88 94 94 100  
Cumulative as at March 2018 23 46 58 76 79 82 84 84 84 84 100  
* Break profile is the date upon which the tenant has an option to terminate the lease prior to the expiry date.

Vacancy profile

The vacancy per sector (measured as a percentage of GLA) is indicated in the table below:

Vacancies (% of GLA) March
Shopping centre 3.6      
Retail park 1.0   3.2  
Total 2.1   2.8  

The shopping centres were acquired during the year, and did not carry vacancies in 2018. The total retail vacancies are 2.3% at year-end.

GLA summary GLA m  
Balance at 31 March 2018 172 974   
GLA adjustments (1 355)  
Disposals —   
Acquisitions and extensions 145 487   
Balance at 31 March 2019 317 106   


Vacancy reconciliation Area m2   %  
Balance at 31 March 2018 4 924    2.8  
Vacancy on new acquisitions 5 279    3.6  
Vacancy let (3 407)      
Balance at 31 March 2019 6 796    2.1  

Base rentals (excluding recoveries)

The weighted average monthly base rental rates per sector, between 31 March 2018 and 31 March 2019, are set out in the table below:

Weighted average base rentals (€/m²) excluding recoveries March
Shopping centre 19.98      
Retail park 9.32 9.24   0.9  
Offices 9.32 9.05   3.0  
Total 14.14 9.22   53.4  

The average retail rental rate increased from €9.24/m² to €14.41/m² due to the acquisition of the five shopping centres during the year.

Spain property portfolio – developments, acquisitions and sales


In May 2018, Castellana acquired the Habaneras shopping centre for €83.8 million. The GLA of the centre is 24 158m², the average unexpired lease term is 6.1 years with an occupancy rate of 95.8%. The shopping centre has a 91.9% national tenant component.

Vukile announced on 31 July 2018 that its subsidiary, Morzal, had acquired four high-quality shopping centres in Spain at a cost of €480.6 million (including acquisition costs), at an attractive pre-gearing yield of 5.7%. The acquisition is in line with Vukile’s strategy of increasing its international exposure to developed Europe through Spain.

The five shopping centres referred to above have a WALE of 10 years. The total GLA of the shopping centres is 145 487m² and 96% of gross revenue is derived from leading Spanish national and international retail tenants including Media Markt, Decathlon, Carrefour, Inditex Group, Primark, AKI and Mercadona. The average monthly rental of €19.98 per m² across the centres is at the lower end of the market rental which is between €15 and €32 per m², which is well positioned for income growth.

  Province   GLA
per m2
price of the
property €m*
El Faro Extremadura   43 423   17.10 157.36  
Bahía Sur Andalucia   24 789   25.40 120.92  
Los Arcos Andalucia   17 906   32.76 110.70  
Vallsur Castilla Leon   35 211   14.58 91.61  
Habaneras Com. Valenciana   24 158   18.33 83.81  
Total     145 487   19.98 564.40  

* Including transaction costs.

Redevelopment projects completed

Granaita Retail Park

Kinepolis Retail Park, Kinepolis Leisure Centre and Alameda shopping centre were merged and rebranded as a single shopping node – Granaita Retail Park. Granaita, as the largest retail and leisure park in the Granada region, offers a wide range of leisure, fashion, food and beverage to the local community. Granaita has emerged as a unique and powerful brand among customers.

In March 2019, Castellana completed and launched the newly redeveloped Granaita Leisure Centre in Granada. The project achieved and surpassed the following objectives:

  • Interior was upgraded and natural light was increased.
  • Installation of a customised high-visibility children’s play area.
  • New outdoor terraces were opened up to take advantage of the favourable Spanish climate.
  • Improvement of green areas.
  • Improvement of tenant mix.

In its entirety, the project capital expenditure was c.€5.4 million. The project will add an additional c.€600 000 to the net property income portfolio on an annualised stabilised basis resulting in a yield on capex of 10.9%.

The major upgrade, merger and rebranding responds to shopper and retail demand. It builds on the centre’s excellent trading metrics and unlocks further income enhancement.

Prospects for Castellana

Castellana’s retail portfolio is well placed to deliver sustainable returns. Castellana’s strategy is to keep growing the portfolio through organic growth, value-added asset management and accretive acquisitions.

The Spanish retail real estate market is forecast to be less active this year as opportunistic investors have turned to other asset classes; as a result, many opportunities are coming to Castellana as the acquisitions pipeline shows. Our investment strategy will remain focused on enhancing and adding value to our portfolio of low-risk, dominant retail assets that produce predictable and sustainable income streams.

While capital values and yields are reaching cycle peak levels, we expect rentals to start growing at better rates as spending and confidence return to the Spanish population.

We believe the time is right for a different approach to soft services, repairs and maintenance in the Spanish shopping centre environment. We are seeking to develop innovative solutions that offer us better value in the year ahead.

We do believe that within the near future we will position Castellana at the top end of the market with our quality retail portfolio and its integrated opportunities for value enhancement.


The Vukile Academy is a skills development, mentorship and transformation platform which was launched in January 2019.

The Academy was initiated by Vukile to create a meaningful and impactful contribution towards reducing the skills gap in the property sector and to also create economic transformation.

The Academy is designed as a three-tiered programme which focuses on the following areas:

  • The Vukile Bursary Fund – The Vukile Bursary Fund is a tertiary education-targeted fund. On an annual basis 50 plus students are identified and awarded bursaries for studies in property/real estate-related fields. The students are in their third year or honours year level of studies. The Bursary Fund is in partnership with industry organisations or the tertiary institutions directly. We have partnered with SAPOA, WPN, SAIBPP as well as Wits, UP, UKZN and UJ. Vukile has invested in excess of R5 million in the past financial year on our bursary programme.
  • The Vukile Internship Programme – On an annual basis, Vukile undertakes a rigorous and transparent selection process to identify and offer 10 deserving candidates a position in the Vukile Internship Programme. The programme is designed as an integration platform into the Real professional world for 10 graduates from our Bursary Fund. The industry leading programme is designed with curriculum experts and professionals from the industry and tertiary institutions like GIBS and UP. It runs over 11 modules. A personal mastery programme forms a crucial element of the programme, for a holistic integration process. The essence of the internship programme is to impart the Vukile Brand DNA to our candidates. They are each offered a fixed-term employment contract for a period of one year.
  • The Entrepreneur Property Development Hub – An incubator programme which is designed to assist black professionals and entrepreneurs realise their dreams and vision of entering the property development market. The developments are small to medium sized and generally located in underserviced areas of South Africa. The entrepreneurs receive support and guidance from the Vukile Academy interns and the full Vukile Property Fund team. Three projects have been identified located in Daveyton, Phuthaditjhaba and Thokoza, these comprise two retail centres and one student accommodation development.

The Vukile Academy is our initiative to give back to our communities and South Africa as a whole. We endeavour to uplift the lives of our people and create a better environment for all.


In line with its focused strategy, Vukile has decided that for the short to medium term, its only international expansion will be focused on Spain.


The Vukile business remains in very good shape; operationally and strategically. Our clearly focused retail strategy in both South Africa and Spain is providing benefits in each of these markets as seen by the strong operational metrics. In addition, at group level, the macro-economic benefits of diversification for South African investors is evident. The business remains very well positioned for long-term sustainability.

In South Africa, while encouraged by the results of the recent elections, and remaining hopeful of much needed political and economic change being effected, we still anticipate the short to medium-term economic conditions to remain challenging overall. Against this backdrop, we believe that our assets are defensive and well positioned in their markets, and should continue to weather the storm in the year ahead. Vukile continues to look for accretive opportunities to invest in the South African market as evidenced by the Rebosis transaction currently under evaluation.

The Spanish economy is continuing to outperform the Eurozone, albeit at a slower pace. We are, however, very encouraged by the operational performance of the business; specifically, the value add being created by our asset management team. Castellana is well established in the market and continues to see very strong deal flow.

We are pleased with the progress we have made in reducing our LTV from 42% at the time of the acquisition of the four shopping centres from Unibail-Rodamco-Westfields, to the current level of 37%. The balance sheet remains strong with well diversified sources of funding. Vukile’s interest cover ratio is significantly above the covenant level at 6 times cover.

Assuming no material adverse change in trading conditions or large corporate failures, Vukile expects to deliver growth in dividends of between 3% to 5% in the year ahead. Forecast rental income is based on contracted escalations, market-related renewals and on the successful conclusion of certain transactions in progress currently. Vukile is currently in negotiations, some at advanced stages, to recycle certain non-core assets and redeploy the proceeds into core strategy business opportunities currently under evaluation. The forecast for the year will be impacted by the closing and the timing of the various transactions. The forecast does not take into account the Rebosis transaction. Once Vukile has greater clarity and certainty on the finalisation of these deals and resultant impact on the forecast for FY2020, Vukile will update the market via a SENS announcement in order to provide an updated guidance range for the year ahead.

This forecast has not been audited or reviewed by the group’s auditors.


Dividend declaration

In line with IAS 10 – Events after the Reporting Period, the declaration of the dividend occurred after the end of the reporting period, resulting in a non-adjusting event that is not recognised in the financial statements.

The board approved a final dividend on 27 May 2019 of 103.37872 cents per share for the six months ended 31 March 2019 amounting to R988.5 million.

Issue of shares

On 11 April 2019 the company issued 35 264 483 shares at R19.85 in terms of an accelerated bookbuild under the general authority to issue shares for cash.

Acquisition of shopping centres

South Africa

On 12 May 2019, Vukile announced the acquisition of three shopping centres known as Mdantsane City Shopping Centre, Bloed Street Mall and Sunnypark Shopping Centre from Rebosis Property Fund Limited (Rebosis).

The purchase consideration will be an amount determined by applying a yield of 9.00% to the forecast net property income (the forecast NOI) to be generated from the shopping centres for the 12-month period commencing 31 August 2019. The forecast NOI has been assumed to be R160 million which would translate into an aggregate purchase price of R1.78 billion. The deal remains subject to funding with Vukile prepared to take on no more than 25% of debt to fund the acquisition.

Vukile will acquire the shopping centres with effect from the transfer date, which is anticipated to be 31 August 2019. The purchase consideration will be settled in cash and will be discharged on the transfer date.

The acquisition is still subject to a number of outstanding conditions precedent, including inter alia the completion by Vukile of a comprehensive due diligence investigation in respect of the shopping centres, approval of the Competition Authority, the securing by Rebosis of any necessary shareholder approvals required for it to dispose of the shopping centres, the securing by Vukile of shareholder approval to undertake the vendor consideration placement and the successful conclusion of the vendor consideration placement in respect of at least 75% of the purchase price at a pricing and on terms acceptable to Vukile.

The acquisition is a non-adjusting event that is not recognised in the financial statements.


On 24 May 2019, Castellana Properties SOCIMI announced the purchase of two El Corte Ingles (ECI) units in Bahía Sur and Los Arcos for a total purchase consideration of €38.4 million (including estimated transaction costs), and asset management initiatives incorporating related capex upgrade projects in Bahía Sur, Los Arcos and El Faro for a total capex budget of €28.49 million.


Notice is hereby given of a gross dividend amounting to 103.37872 cents per share out of distributable income for the six-month period to 31 March 2019. Vukile will not be providing shareholders with the option to elect (in respect of all or part of their holding) a dividend reinvestment (DRIP) for this reporting period.

Tax implications

Vukile was granted REIT status by the JSE Limited with effect from 1 April 2013 in line with the REIT structure as provided for in the Income Tax Act, 58 of 1962, as amended (the Income Tax Act) and section 13 of the JSE Listings Requirements.

The REIT structure is a tax regime that allows a REIT to deduct qualifying dividends paid to investors, in determining its taxable income.

The cash dividend of 103.37872 cents per share meets the requirements of a “qualifying distribution” for the purposes of section 25BB of the Income Tax Act (a qualifying distribution) with the result that:

  • dividends received by South African resident Vukile shareholders must be included in the gross income of such shareholders (as a non-exempt dividend in terms of section 10(1)(k)(i)(aa) of the Income Tax Act), with the effect that the dividends are taxable as income in the hands of the Vukile shareholder. These dividends are, however, exempt from dividends withholding tax, provided that the South African resident shareholders provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the company, in respect of certificated shares:
    – a declaration that the distribution is exempt from dividends tax; and
    – a written undertaking to inform the CSDP, broker or the company, as the case may be, should the circumstances affecting the exemption change or the beneficial owner cease to be the beneficial owner;
    both in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned documents to be submitted prior to payment of the distribution, if such documents have not already been submitted.
  • dividends received by non-resident Vukile shareholders will not be taxable as income and instead will be treated as ordinary dividends but which are exempt in terms of the usual dividend exemptions per section 10(1)(k) of the Income Tax Act. It should be noted that dividends received by non-residents are subject to dividends withholding tax at a rate of 20% unless the rate is reduced in terms of any applicable agreement for the avoidance of double taxation (DTA) between South Africa and the country of residence of the shareholder. Assuming dividends withholding tax will be withheld at a rate of 20%, the net distribution amount due to non-resident shareholders is 82.70298 cents per share. A reduced dividend withholding rate in terms of the applicable DTA, may only be relied upon if the non-resident holder has provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated shares, or the Company, in respect of certificated shares:
    – a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
    – a written undertaking to inform their CSDP, broker or the company, as the case may be, should the circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial owner;
    both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident holders are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned documents to be submitted prior to payment of the distribution if such documents have not already been submitted, if applicable.

Shareholders are further advised that:

  • the issued capital of Vukile is 956 226 628 shares of one cent each at 29 May 2019, being the declaration date; and
  • Vukile’s tax reference number is 9331/617/14/3.

This cash dividend may have tax implications for resident as well as non-resident shareholders. Shareholders are therefore encouraged to consult their tax and/or professional advisers should they be in any doubt as to the appropriate action to take.

The salient dates relating to the cash dividend are as follows:

Salient dates and times 2019
Last day to trade cum dividend Tuesday, 18 June
Shares trade ex dividend Wednesday, 19 June
Record date Friday, 21 June
Payment date Monday, 24 June


  1. Shares may not be dematerialised or rematerialised between Wednesday, 19 June 2019 and Friday, 21 June 2019, both days inclusive.
  2. Payment of the distribution will be made to shareholders on Monday, 24 June 2019. In respect of dematerialised shareholders, the distribution will be transferred to CSDP/broker accounts on Monday, 24 June 2019. Certificated shareholders dividend payment will be paid to certificated shareholders bank accounts on or about Monday, 24 June 2019.


Two property stalwarts in Vukile’s team retire at the end of June 2019, our FD Mike Potts and MD of South Africa Ina Lopion. Mike will stay with the group as a non-executive director of Castellana and serve on its audit committee. Ina is intending to use her exceptional experience and talents to build a career as an executive coach and will continue her connection with Vukile by taking on a coaching role with some of our top senior talent as well as playing a mentorship role within the Vukile Academy. We would like to take the opportunity to thank Mike and Ina for their immeasurable contributions to Vukile’s success over an extended period of 15 years.

Vukile has appointed Laurence Cohen as its new CFO. Laurence, who is widely respected for his extensive experience in the listed property sector, joined the team on 1 March 2019 as CFO designate. He will succeed Mike and be appointed to the Vukile board of directors on 1 July 2019.

Itumeleng (Itu) Mothibeli, director of Asset Management will succeed Ina as MD of South Africa and will be appointed to the board on 1 July 2019. Itu has been with Vukile since 2012 and has developed into an exceptional talent whom we are confident will continue to grow the South African business into the future.

Both Mike and Ina have mentored our next generation of leaders, who are already up-to-speed with Vukile’s strategic imperatives and systems, and will advance Vukile seamlessly.


The summarised consolidated financial statements for the year ended 31 March 2019, and comparative information, have been prepared in accordance with, and containing the information required by, International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Announcements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements, IAS 34 and relevant sections of the South African Companies Act.

Except for the amendments adopted as set out below, all accounting policies applied by the group in the preparation of these summarised consolidated financial statements are consistent with those applied by the group in its consolidated financial statements as at and for the year ended 31 March 2018. The group has adopted the following amendments to standards which were effective for the first time for the financial period commencing 1 April 2018:

  • Amendments to IAS 40 – Investment Properties
  • IFRS 9 – Financial Instruments
  • IFRS 15 – Revenue from Contracts with Customers
  • Amendments to IFRS 2 – Share-based Payments
  • International Financial Reporting Interpretations Committee (IFRIC) 22 – Foreign Currency Transactions and Advance Considerations

Based on management’s assessment of these amendments, the only material impact identified on the financial statements relates to IFRS 9.

These statements, which comprise the statement of financial position at 31 March 2019, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the 12 months then ended, are extracted from audited information, but is itself not audited. The annual financial statements were audited by PricewaterhouseCoopers Inc., who expressed an unqualified opinion thereon. The auditor’s report does not necessarily cover all of the information included in this announcement. Shareholders are therefore advised that, in order to obtain a full understanding of the nature of the auditor’s work, they should obtain a copy of the audit report together with the accompanying financial information from the registered office of the company situated at 4th Floor, 104 Oxford Road, Houghton Estate.

The directors take full responsibility for the preparation of this report and that the financial information has been correctly extracted from the underlying financial statements.

This report was compiled under the supervision of Michael John Potts CA(SA), the financial director of the company.

The directors are not aware of any matters or circumstances arising subsequent to 31 March 2019 that require any additional disclosure or adjustment to the financial statements and which are not disclosed in this announcement.

On behalf of the board

N Payne
LG Rapp
Chief executive officer

Houghton Estate
29 May 2019

(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE share code: VKE
ISIN: ZAE000056370
Debt company code: VKEI
NSX share code: VKN
(granted REIT status with the JSE)
(Vukile or the group or the company)

JSE sponsor: Java Capital

NSX sponsor: IJG Group, Windhoek, Namibia

Executive directors: LG Rapp (chief executive), MJ Potts (financial director), HC Lopion (executive director: asset management), GS Moseneke

Non-executive directors: NG Payne (Chairman), PS Moyanga, SF Booysen, RD Mokate, H Ntene, HM Serebro, B Ngonyama

Registered office: 4th Floor, 104 Oxford Road, Houghton Estate, 2198

Company secretary: J Neethling

Transfer secretaries: Link Market Services South Africa (Pty) Ltd, Braamfontein, Johannesburg

Investor relations: Instinctif Partners, The Firs 302, 3rd Floor, Corner Craddock Avenue and Biermann Road, Rosebank, Johannesburg, South Africa, Tel: +27 11 447 3030

Media relations: Marketing Concepts, 10th Floor, Fredman Towers, 13 Fredman Drive, Sandton, Johannesburg, South Africa, Tel: +27 11 783 0700, Fax: +27 11 783 3702

for the year ended 31 March 2019 and change to the board of directors

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