Growth in the market value of Vunani's units was 21.8%‚ or 1‚005c. The fund said the past financial year was the toughest trading year it had experienced in its eight-year history. It failed to meet its target of growing assets under management by R1bn and new acquisitions totalled only R84.6m.
The fund obtained linked unit-holders' approval subsequent to the year-end to raise R455m through a rights offer‚ the proceeds of which will be used to fund the acquisition of quality A-grade properties in Greenstone Hill Office Park and to pay off R179.1m of existing debt.
Vunani said the capital raised would enable it to buy assets of R750m without recourse to unit-holders. It said it has a solid pipeline of acquisitions under negotiation and had put in place adequate resources to effect these deals. It anticipated accelerated but controlled acquisition activity in the coming year.
Vunani converted to a real estate investment trust (Reit)‚ from July and the conversion provides capital gains tax benefits and is expected to attract foreign interest as it provides a familiar benchmark for international investors.
On a portfolio level‚ Vunani said that despite continued low interest rates, the market remained tough. It said investor confidence had been shaken by domestic disruptions‚ labour unrest and the rand's volatility. With economic growth falling, a weaker economic outlook and slow consumer spending‚ tenants were now being more cautious when assessing their requirements for the coming year.
The office sector has not been immune to the dull economic forecasts but Vunani said it was comfortable that the office sector was at the bottom of its cycle. It said it had outperformed all property sectors by some margin. The fund's vacancy rate is a stable 5.6%‚ which compares well with the industry average of 10.7%.
Vunani expects vacancies could worsen in 2014 in nodes where speculative development may result in landlords competing for the same pool of tenants. The fund expects further distribution growth of between 84c and 86c per linked unit in the coming year.
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