Vukile boosts transformation through new asset management JV with AIH and selling non-retail property assets to Mbako Property Fund
28 November 2019
Vukile Property Fund today announced that it is disposing of all its remaining non-retail property assets to Mbako Property Fund in a deal that achieves economic and gender transformation in the South African property sector.
Mbako is a new black-women-owned and -managed unlisted property fund led by AWCA Investment Holdings (AIH) as its founding shareholder, which will be managed by a new joint venture between AIH and Vukile. Mbako, meaning “to build”, embodies its co-founders’ vision of working together to build a sustainable South African property fund.
Laurence Rapp, CEO of Vukile, says, “We are extremely proud of this innovative deal that not only realises Vukile’s strategic vision of a directly held portfolio made up exclusively of retail property in South Africa but more significantly is positive for economic and gender transformation. In Mbako’s hands, these assets are a platform for growth and wealth creation. There is no better partner to unlock this potential with than the respected executives and leaders of AIH.”
Sindi Mabaso-Koyana, Executive Chairperson of AIH, says, “AIH is turning its attention to accelerating transformation in the property sector through Mbako Property Fund. We are thrilled to have a like-minded management company partner in Vukile and the financial backing of RMB.”
RMB financed Mbako’s R700 million initial property portfolio acquisition from Vukile. RMB’s Sashen Naidoo says, “In funding the Mbako transaction, RMB is furthering its commitment to economic transformation by facilitating the creation of a high-impact transformative investment vehicle. Mbako will benefit from the management of experienced professionals with impeccable credentials and a proven return on investment track record for investors.”
AIH was founded and funded in 2008 by black women Chartered Accountants. It has 54 shareholders as well as NPO African Women Charted Accountants (AWCA) as a 10% beneficiary. The 1,500-member strong AWCA is premised on the mutual support, personal and professional development of African Women CAs. AIH is an investment vehicle that creates wealth and gender transformation through investments in multiple sectors. It has made a total of 14 investments to date, with two exited so far at returns above 30%.
Vukile is a JSE-listed, high-quality, low-risk retail REIT with half of its c. R35bn property investments in South Africa and the other half focused in Spain through its subsidiary Castellana Properties Socimi SA. Vukile has a 15-year unbroken track record of distribution growth for its shareholders and has delivered a compound annual growth rate of nearly 20% since listing in 2004. Known for its active hands-on asset management, prudent financial management and strong corporate governance, it has a proven track record of establishing and rapidly growing new investment platforms.
A dedicated management company has been formed by AIH (70%) and Vukile (30%) for the asset management of Mbako and potentially other assets. The manco benefits from the experienced financial and business management of AIH with strong governance, while Vukile contributes its proven property and asset management expertise, as well as its skill in successfully managing third-party portfolios and corporate structures. The result is a powerful combination of skills and experience that deliberately includes a four-year programme of property expertise transfer from Vukile into Mbako, allowing it to transition into a fully independent fund.
Mabaso-Koyana adds, “We are thrilled to introduce Mbako Property Fund, which is structured to achieve superior returns and transformation through successful property investment. It is a diversified multi-asset property fund with an initial stable income-generating R700 million portfolio of investment-grade properties and backed by the highest calibre property asset management. As an unlisted fund, we believe Mbako is coming to market at the right time to attract funding and deal flow to take advantage of the depressed listed property market with opportunistic and value-add transactions.”
Mbako’s portfolio approach will balance a stable core portfolio with a value-added component that leverages the active asset management expertise of its manco. It is well placed to take advantage of distressed sales where it doesn’t pay for vacant space but can unlock value-add opportunities. It also sees opportunity in sale-and-leaseback agreements that help businesses unlock cash on their balance sheets. Mbako will continue to raise equity and funding to pursue its well-defined growth strategy.
The sizeable Mbako seed portfolio includes nine office and industrial properties, eight in the country’s commercial hub of Gauteng and one in Pinetown, KwaZulu-Natal. The biggest property is Allandale Industrial in Midrand, stretching over 21,300sqm of gross lettable area on a 12ha site with 60 tenants.
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