JSE-listed real estate investment trust (Reit) Vukile has announced a 7% increase on its dividend for the six months to September 30, which is now 67.65c a share.

This solid set of half-year results reflects the company’s strategic retail property focus, strong operational performance and conservative balance sheet, revealing a stable platform for accretive deals, including international expansion.

CEO Laurence Rapp noted on Thursday that the company’s progress during the period was underpinned by strong national tenant leases.

“Despite the continued challenges in the South African market and the volatile economic and political environment, Vukile is well positioned for stability and a solid performance, and is on track to deliver full-year results in line with our half-year performance.”

According to Rapp, now that the proposed Vukile, Synergy Income Fund and Arrowhead Properties deal has been approved by shareholders – awaiting approval from the competition authorities – Vukile is set to emerge as an entirely repositioned retail property investment, with around 90% of its local asset base comprising retail shopping centres.

The company also sold its sovereign portfolio during the period under review for R1.2-billion, with the funds being used to reduce Vukile’s debt, lowering its gearing ratio to 23.9%.

“Locally, everything is in place to achieve our objective of transforming Vukile into a retail fund, which is the preferred asset class with lowest risk through the cycle. With the advent of the ‘new’ Vukile, we now have a great platform for international expansion in line with our stated strategy,” said Rapp.

Vukile contained its local retail vacancies at 3.9% of gross lettable area, achieved positive rental reversion of 6.4%, and signed its new deals at 3.2% above budgeted levels.

In addition, the company continued to invest in existing and new retail assets such as its recent upgrade and expansion of East Rand Mall, in Boksburg, the Durban-based Workshop Shopping Centre and Dobsonville Mall, in Soweto. 

Vukile also invested in two new regional mall developments with leading retail developers Flanagan and Gerard during the period under review.  Springs Mall, in Ekurhuleni, is due to open in March 2017 while Thavhani Mall, in Thohoyandou, will open its doors in August 2017.

Meanwhile, the first half of the 2016/17 financial year saw Vukile launch its international investment strategy with its 26% stake in Atlantic Leaf Properties, which recently moved its listing to the main board of the JSE.

With this transaction, the company has secured a foothold in the UK from which it intends to grow.

Rapp noted that, having taken the initial foray into international markets with Atlantic Leaf, Vukile has gained a richer understanding of European markets.

He added that Atlantic Leaf provides the perfect launchpad to deepen the company’s international exposure, noting that the opportunities in the market are made even more attractive by the weakening of the British pound.

“Vukile is focused on achieving strategic long-term goals and will continue to build a superior low-risk portfolio with a high-quality earnings stream to generate sustainable long-term returns for our shareholders,” said Rapp.