Encha Properties sold four properties to Vukile Property Fund (http://www.vukile.co.za/), in what was hailed as the one of the biggest BEE deal for the first quarter of 2013. The buildings are: Navarre Wachthuis, Koedoe Arcade and De Bruyn Park in Pretoria, as well as Fedsure Building in Bloemfontein.

In return, Encha acquired a 4.6% holding in Vukile.

Encha Property Services was then appointed property manager, while Encha Property Managers was appointed asset manager of the sub-portfolio.

The transaction was structured such that additional equity in Vukile would be acquired by Encha which would both entrench Encha’s strategic equity holding in Vukile and enhance Vukile’s empowerment credentials.

To date (July 2015), Vukile has had two capital raises in Sept 2014 and April 2015 which saw Encha’s holding increase to 8.7% direct holding.

Vukile is listed on the Johannesburg Stock Exchange (JSE: VKE) and Namibian Stock Exchange (NSX: VKN).

Rent Collection
Despite the difficult prevailing trading conditions, the portfolio has managed to collect 95% of its billings (less concessions and opening balances) during the period 1 January 2020 to mid-August 2020. Tenant arrears have however increased by R75 million during this period, with 38% of the balance due by SMME’s. In addition to the R108 million concessions communicated to the market at year-end, a further R12 million of concessions have been agreed with tenants who have had further interruptions in trade.

Leasing Activity
New shops in the portfolio amounting to 4 000 m2 have opened since the start of the lockdown and we currently have 48% of the portfolio vacancies under negotiation. Although new deal activity has slowed, bullish second tier tenants remain active, opening stores predominantly in rural and township centres, using the challenging trading environment to expand their reach. Due to the nature of the COVID-19 crisis, the focus has been on short-term relief, with limited appetite from national tenants to discuss long-term renewals. This has resulted in the portfolio weighted average lease expiry (WALE) decreasing from 3.7 to 3.3 years.

Rent Collections, Vacancies & Leasing Activity
Castellana is continuing to work with tenants to ensure a return to payment of full rentals. Over the past 3 months we have seen a steady and consistent increase in billing. At a portfolio level, we are currently at c. 82,1% of full rents and recoveries. In the current financial year (which commenced on 1 April 2020), only 14% of billed amounts are still outstanding from tenants.

Vacancies continue to be contained at 1.8% of GLA as reported at 31 March 2020, with no tenants to date indicating a desire to close any of their stores in the portfolio due to the pandemic.

As at 31 July 2020, 71% of the portfolio (by gross rental income) has had addenda to the leases signed, in respect of COVID-19 rent concession agreements with tenants, while discussions with tenants in respect of a further 14% of the portfolio are well advanced and are expected to be finalised within the coming weeks. The last 15% of rent concession discussions (also by gross rental income) remain to be concluded.