Vukile clinched control of the small-cap mall owner in February in a move lauded by the market. Companies rating agency Global Credit Ratings (GCR) has now acknowledged the merger, improving the A and A1 national scale issuer ratings, to "positive outlook" in the long- and short-term respectively, from "stable" previously.
Since his appointment four years ago Vukile CEO Laurence Rapp has aggressively added more than R4bn worth of properties to Vukile's portfolio.
The head of corporate ratings at GCR, Eyal Shevel, said the positive outlook could be attributed to "Vukile's success in recent years in significantly expanding its portfolio and realigning it". This was achieved by upgrading its key retail assets and disposing of marginal properties.
Shevel said the Synergy takeover would, together with pipeline acquisitions of about R1bn, bring the value of Vukile's overall property portfolio to about R14.4bn.
"Much of this was achieved in a toughening property market and we are impressed that recent growth has been strongly supported by shareholders, with a cumulative R3.2bn raised from linked unit holders," he said.
"As a result, debt declined 17% to R2.8bn at the end of September last year, translating to a loan-to-value (LTV) of 25%."
When Vukile acquired Synergy, analysts were pleased that it could refine its retail asset portfolio through the deal.
Stanlib listed property funds head Keillen Ndlovu said Synergy's retail assets would be a good strategic fit for Vukile's portfolio. Vukile already has a 53% bias towards retail.
"Vukile's income growth prospects going forward are expected to be relatively more attractive than those of Synergy. Vukile also has a stronger balance sheet with better debt capacity, which will enable it to further grow its portfolio if the need arises," Ndlovu said.
Shevel said Vukile's successful integration of new acquisitions, coupled with a proven ability to broaden its reach into new property sub-sectors, could see the company receiving a further rating improvement.
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