The Mosenekes seem to have settled inside the JSE listed vehicle, Vukile Property Fund, after making an interesting entry early this year.
This view is coming out of the Vukile Property Fund financial results for the six months ended September. The numbers which show a property portfolio of R9.6bn are the first set of numbers after the entry of the Mosenekes, including the high flying businessman Tiego Moseneke and his niece Sedise Moseneke, in Vukile Property Fund.
Using an entity called Encha Properties, a unit of an investment holding company, Encha Group, the Mosenekes have landed an unencumbered 5.6% stake in Vukile Property Fund. This is after their vehicle Encha Properties sold four government tenanted properties to Vukile and got in return the Vukile stake. The transaction concluded in March this year made for an interesting Black Economic Empowerment (BEE) deal.
In reporting its financial results for the year ended June, Vukile Property Fund characterised this transaction in life changing terms for its R9.6bn property portfolio.
“The portfolio has changed dramatically over the past year,” said the JSE listed group. Highlights in the past six months, said the group, include the completion of the R1.04 billion Encha transaction. It described this transaction as “one of the most significant empowerment deals in the listed property sector to date”.
With the transaction, came the insertion of Sedise Moseneke, a former dentist, as executive director of Vukile Property Fund. Sedise Moseneke, the son of deputy chief justice Dikgang Moseneke, rose to prominence when he was elected the youngest ever president of the South African Property Owners Association (SAPOA) in 2012. This is after Sedise Moseneke made his mark as the head of Encha Properties.
Encha Properties describes itself as a leading black managed and black owned property company which has been in operation since 1998. Before the Vukile transaction Encha was said to be running a portfolio valued at R2bn. That would mean Encha has injected half of its portfiolio into Vukile. Like other black operators Encha would have been well positioned to play in the public sector space. As such its entry into Vukile advances the ability of Vukile to play in the massive government tenanted building space. Other prominent empowered players on this space include JSE listed entities Sisa Ngebulana led Rebosis Property Fund and Sandile Nomvete led Delta Property Fund. Arrowhead Properties has just positioned itself for this market through another interesting BEE deal with Indite which led by Tshepo Matlala.
The Vukile/Encha arrangement is such that Encha earns a mandate from Vukile to manage the public sector focused portion of the fund. This is to allow for Encha’s BEE credential to kick in when pursuing government business. The effectiveness of this formula for BEE is debatable but that is a matter for another day.
The numbers released by Vukile yesterday show that Encha has achieved exposure onto a larger and more diversified portfolio. Vukile Property Fund CE Vukile CE Laurence Rapp says the portfolio is evolving. In addition to the Encha acquisition Vukile also re-launched its Randburg Square following an extensive three phase upgrade for R207 million. Vukile also acquired 50% of East Rand Mall for R1.1 billion and the Hammarsdale Junction for R194m.
The portfolio generated property revenue of R657.3m in the six months ended September. Rapp said significant progress has been made in developing a better quality and lower risk portfolio. “This can be seen by our strong retail (52%), sovereign tenant (10%) and hospitality (3%) assets now representing the lion’s share (65%) of the overall portfolio.”
Vukile’s net profit from property operations came in 17.6% higher at R406.9 million. The property portfolio registered like-for-like growth of 8.1%.
Vacancies, measured as a percentage of gross rentals, decreased to 6.7% from 7.1% in March 2013. Distribution to holders of the stock show 5% growth.