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How Cape Town turnaround its CBD

And why Vunani Property finds value in Cape Town and Rustenburg.

JOHANNESBURG – The CEO of Vunani Property Investment Fund, Rob Kane, says a recent survey conducted by an independent agency has found that 83% of Capetonians are happy to be in the CBD at night. This also goes for businesses in the Western Cape city.

Kane attributes this to sustained efforts to fight crime by, among others, close circuit TV and bobbies on the beat.

Kane says: “We find value in Cape Town and Rustenburg which is bringing in yields of 12%. Rustenburg is growing at 7% a year.”

Rustenburg in the North West province has in the past six weeks or so been the focus of turbulent strikes by platinum miners resulting in the death of at least 45 people during clashes with police.

In releasing Vunani’s maiden results since listing on the JSE, Kane said the company’s 82% portfolio growth had brought the total book value to R1.4bn. Revenue also increased by 48% while operating profit increased from R14.96m to R25.50m.

Vunani’s total distribution since listing amounted to almost 61c per linked unit. Said Kane: “We are very pleased with the results. Despite a tough market we remained focused on our listing promise to grow the fund through refurbishments and yield-enhancing acquisitions.. We grew the portfolio by 82%, maintaining a very low 5.8% vacancy rate. Our expertise in building refurbishment saw an 89% tenant retention, which is very important in these difficult markets. I am confident that we will continue to deliver on our strong distribution growth going forward.”

He added: “The fund’s weighted average lease expiry is 4.71 years, with 80% of its portfolio leased to blue chip national tenants.”

Several refurbishment projects and extensions with a combined value of approximately R13m were completed during the year. These include the two phase extension of Motherwell Shopping Centre in Port Elizabeth on the back of long-term leases with SuperSpar, Tops, Pep and Build-It and also Rynlal Building in Pretoria East which has resulted in reduced vacancies and increased rentals.

Kane told Moneyweb Vunani had concluded two refurbishments: “For every rand we spent, we got R3.00 back. We have debt fixed for five years. Our lease expiry is at 4.7 years. So we have a stable income from our tenants for the next five years. Our average rent escalation has been at 8.2%,” Kane said.

He declined to elaborate on Vunani’s pipeline other than to say: “We are not going to grow at the expense of quality or yield.”

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