Investment firm Vunani Property Investment Fund (VPIF) would, in the coming 12 months, aggressively pursue further acquisitions and raise additional capital, CEO Rob Cane told Engineering News Online on Monday.

“We will start raising capital of between R400-million and R600-million over the next couple of months and would like to bed that down by June 30,” he said, adding that negotiations in this regard were advanced.

“During the course of the year, we would like to grow our assets by R1-billion, dependent on us signing quality assets. We are confident that we will,” Cane added.

Announcing its financial results for the six months ended December 31, 2012, VPIF reported a 6.6% increase in the value of its portfolio, which comprised 28 buildings, to R1.5-billion.

During the six months, the fund acquired an office property in Salt River, Cape Town, for R20-million and a business centre in Sandton for R64.58-million.

VPIF said it was able to maintain a high rating in all key performance indicators for the six months, despite market conditions being the toughest in the fund’s seven-year history.

Distributions increased by 24.4% to 38c per linked unit, revenue grew by 53.7% to R106.9-million, net property income rose by 74.6% to R75-million and the value of the fund’s portfolio increased by 6.6% to R1.5-billion during the reporting period.

Linked unit prices increased 16.4% to 960c, while tangible net asset value improved from 809.67c to 811.92c per linked unit and the company registered compound growth of 21% during the six months.

The fund also managed to maintain a vacancy rate of 5.8%, compared with the industry average of 10.7%.

It further succeeded in decreasing its total arrears to R3.7-million, down from R5.6-million at June 30, 2012, which it attributed to tight management of receivables.

VPIF indicated that it remained capitalised to take advantage of yield-enhancing acquisitions, having a loan-to-value ratio of 35% at the end of December, compared with 31.4% at the end of June 2012. The fund had an average cost of debt of 8.7%, with 67% of the outstanding debt hedged through the use of interest rate swaps.

Standard Bank had indicated that it would extend VPIF’s R532.33-million loan facility for a further five years upon expiry of the current facility on May 31.

VPIF further informed that it would make a debenture interest payment of 38c per linked unit for the six months ended December 31, on March 25.

PROSPECTS

Cane indicated that the fund’s good performance was anticipated to continue into the second half of the year, “We have looked at our portfolio and we see very little risk going forward in terms of being able to protect our distribution.”

The fund noted that it would continue to extract value from its chosen market of A+, A and some B grade offices, while avoiding trophy assets until such time as such investments are value enhancing.

Cane said VPIF was currently undertaking five refurbishment projects to enhance its earnings and that this formed a cornerstone of the fund’s management philosophy.

The global and domestic markets were anticipated to remain uncertain and largely stagnant. Such instability made capital preservation and low-risk distributions attractive to investors. VPIF was well placed to fulfil this objective and had a solid platform from which to offer above-market growth and earnings, it stated.

Cane said the fund would depend on its market experience and tight management to weather ongoing challenges in the local property market. “We have been going for seven years, five of those have been in a tough trading environment, and so we understand that market. This is reflected in our tenant retention, which is 95%.”

“We are about 10% under-rented and we do not see the tough market affecting us,” he noted, adding that the fund also anticipated further growth in distribution in the next six months.

Meanwhile, VPIF’s property at 14 Loop street, Cape Town received the 2012 Energy Efficiency Forum Award for commercial buildings and Cane said the fund would be looking at improving energy efficiency at its entire portfolio in the year ahead.