Our opinion on the current state of VKE

Vukile (VKE) is a real estate investment trust (REIT) listed on the JSE and the Namibian Stock Exchange. The company holds various types of real estate assets, including direct property ownership, shares in other REITs, properties in the UK, and a growing portfolio of properties in Spain. Approximately 50% of its assets are located in Southern Africa, primarily in the retail sector, with 46% in Spain and 4% in the UK. Vukile follows a policy of reinvesting in its existing properties and has partnered with MTN, which invested R80 million to install fiber in 37 of its malls.

Vukile holds investments of R595 million in Fairvest, a R1.3 billion stake in Atlantic Leaf (representing 34.9%, which is in the process of being sold), and a R790 million investment in Gemgrow Properties, also under sale negotiations. The company is considered one of the top REITs on the JSE, with a history of steadily rising share prices over the past 15 years, despite occasional setbacks.

CEO Laurence Rapp has articulated a strategy of divesting from its holdings in other REITs and its UK assets to focus on portfolios in Southern Africa and Spain. In its financial results for the year ending March 31, 2023, Vukile reported a 3.1% increase in revenue and a 14.3% rise in net asset value (NAV) to 2048 cents per share. The company's loan-to-value (LTV) ratio stands at 42.6%, reflecting a conservative approach to leverage. Headline earnings increased marginally to 134.72 cents per share compared to 134.25 cents per share in the previous year.

Vukile estimated that its dividend for the six months ending September 30, 2023, would grow by between 7% and 9%, thanks to increased footfall and trading density. In a trading update for November and December 2023, the company reported a 2% rise in shopper footfall and a 2.6% increase in portfolio sales for the entire 2023 calendar year. Additionally, the portfolio's trading density surged by 4.3% during the combined November and December period compared to the same months in 2022, with the township portfolio witnessing a remarkable 9.7% increase.

Vukile's shares are trading at a multiple of 9.8, which is still considered attractive from an investment perspective. This company has demonstrated a strong track record as a good long-term investment option.