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Vukile extends its consistent strong operational performance

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Vukile Property Fund (JSE: VKE), the leading specialist retail real estate investment trust (REIT), delivered a strong pre-close trading update for the five months from 1 April to 31 August 2025, confirming it is confidently on track to meet its full-year guidance of at least 8% growth in funds from operations (FFO) and dividends per share (DPS).

Operational strength is evident across Vukile’s portfolio of well-located, high-performing shopping centres, which are designed and managed around the customers and communities they serve. Driving positive momentum is the active integration of recently acquired assets in Spain and Portugal, with both Iberian portfolios delivering outstanding metrics, supported by top-tier performance from the South African portfolio.

Through its 99.5%-held Spanish subsidiary Castellana Properties, Vukile acquired its fifth Portuguese asset, Forum Madeira, for EUR63 million at a yield of 9.5% in April 2025. The transaction places 65% of the group’s more than R50 billion of assets, and 60% of its net property income, offshore.

“We signalled to the market that our operational priority was integrating, optimising and unlocking value from our newly acquired Iberian assets. Significant progress has already been made, including the alignment of processes and data management, allowing the Castellana team to start implementing their expertise in value-add asset management initiatives,” confirms Laurence Rapp, CEO of Vukile Property Fund.

The Iberian portfolio demonstrated significant strength. Occupancy across the portfolio is 99%. Positive rental reversions totalled 3.4% — 2.8% in Spain and 6.17% in Portugal. Sales grew 5.7% in Spain and 4.1% in Portugal, or 5.1% in total, with footfalls up 3.0% across the board.

In the South African portfolio, all key metrics improved or remained in line with the prior period’s excellent results. Like-for-like net operating income grew 8% and vacancies remained below 2%, reflecting sustained high occupancy and strong demand for Vukile’s retail space across all segments. Vukile reported positive rental reversions for the fourth consecutive year, which are now growing at around 1.6%, with 83% of leases agreed at positive or flat rental levels. Portfolio trade and footfalls increased, led by township and rural malls. Vukile successfully reduced its cost-to-income ratio yet again, to 13%, led by additional solar PV installed and targeted cost efficiencies.

Vukile continued to enjoy excellent support in the local debt capital market, with its R500 million bond issuance in August 2025 six-times oversubscribed and 21 investors participating. It achieved the lowest margins since the DMTN programme launched in 2012. In addition, GCR upgraded Vukile’s credit rating to AA+(za) with a stable outlook.

“Vukile has commenced FY26 with robust and sustainable operational and financial strength. We remain open for business with an early-stage pipeline of deal opportunities, which will be subject to our disciplined capital allocation ensuring the deals we do are both strategically aligned and financially accretive,” says Rapp.

Vukile Property Fund will update the market with revised guidance when it reports results for the six-month interim period to 30 September, on 26 November 2025.

Vukile acquires flagship Spanish mall in EUR305 million deal

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Vukile Property Fund (JSE: VKE), the leading specialist retail real estate investment trust (REIT), through its 99.5% held Spanish subsidiary Castellana Properties, has acquired the largest shopping centre in Spain’s Valencia province, the iconic Bonaire Shopping Centre, from multinational retail REIT Unibail-Rodamco-Westfield. The purchase consideration of EUR305 million represents an attractive entry yield of approximately 7%.

 The acquisition of the centre, considered a Top 10 shopping centre asset in Spain, was initially delayed due to torrential flash flooding in the Valencia Region in October 2024. As part of the centre’s reinstatement, Unibail-Rodamco-Westfield fully refurbished the ground floor’s common areas and retail units, with many retailers simultaneously taking the opportunity to upgrade their stores and introduce new concepts.

Bonaire Shopping Centre reopened to record footfalls on 13 February 2025, further confirming its position as the leading shopping centre in its region.

Laurence Rapp, CEO of Vukile Property Fund, comments: “We are thrilled to have secured this exceptional asset from Unibail-Rodamco-Westfield further cementing Castellana’s position as a leading player in the Iberian retail property market. This accretive deal is our biggest by value to date and furthers our growth in Spain with a market-leading institutional grade asset.”

 The acquisition is being funded with the EUR200 million proceeds from the sale of Castellana’s stake in Lar España.

Rapp adds, “We made a tremendous profit of around EUR80 million on the Lar España trade and to redeploy the proceeds so quickly into such a high-quality asset and ensure no cash leakage is testament to our team’s deal making expertise.”

Further emphasising the transformational year of growth for Vukile, Rapp highlights Castellana’s strategic expansion into Portugal, where it has acquired four shopping centres since September 2024, funded with proceeds from the R1.5 billion raised by Vukile in September 2024.

These transactions are testament to Vukile’s and Castellana’s entrepreneurial and agile edge in the Iberian retail market, where local market knowledge, speed and creative deal-making are critical to success.

As part of the acquisition of Bonaire, Castellana has received an 18-month net operating income (NOI) guarantee. The centre currently has ample parking readily available, and its underground car park is expected to be reinstated and reopen by mid-2025 at no additional cost to Castellana.

Bonaire Shopping Centre is in Valencia, the third largest city, fourth most popular tourist region and third most populous residential area in Spain, boasting consumers with incomes well above the national average. Valencia has attracted the third highest level of investment in Spain over the past five years. It enjoys exceptional links to local and international markets, with the second largest port in Spain and the fifth largest in Europe. It connects to all major cities in Spain via Spanish high-speed AVE trains, which operate on the longest high-speed network in Europe. Furthermore, the Valencia Airport is located very close to the centre.

As the leading and top-performing shopping and leisure destination in Valencian province, the open-air centre has a proven trading track record with market-leading, above-market sales density and footfall averages. It boasts an impressive 99% long-term occupancy rate with a diversified mix of highly attractive brands, appealing to customers from across the entire region. Tenants include six Inditex fashion brands including Zara, as well as Primark, JD Sports, Cinesa, Mango, H&M and Fnac, to name a few. Bonaire also features a top-floor leisure, food and beverage area that was refurbished in 2016. The 138-store, 55,800sqm gross lettable area (GLA) centre acquired by Castellana is linked to an Alcampo hypermarket, which takes the total property to 78,000sqm. Further, Bonaire is part of a powerful retail node of 135,200sqm and 151 stores, including Leroy Merlin, Decathlon and leasing Scandinavian furniture retailer JYSK.

For Castellana, the transaction further strengthens its already strong portfolio of dominant shopping centres in Iberian regional cities and expands its footprint on Spain’s east coast. Vukile and Castellana excel at consistently adding value to high-quality retail assets, and the 10,000sqm of immediate expansion potential at Bonaire creates ideal strategic alignment with Castellana’s on-the-ground asset management and development expertise. Bonaire also aligns with its ESG goals, having earned an “outstanding” BREEAM score for management and an A-grade EPC certificate.

For Vukile, the deal scales up its Spanish investment. From a zero base in July 2017, following the Bonaire Shopping Centre acquisition approximately two-thirds of Vukile’s assets will be offshore in the Iberian Peninsula, in the high-growth, attractive markets of Portugal and Spain.

Vukile’s Spanish subsidiary completes €254 million refinance

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Vukile Property Fund (JSE: VKE), the leading specialist retail real estate investment trust (REIT), has confirmed that its 99.5% held Spanish subsidiary, Castellana Properties, has signed a €254 million financing agreement with Aareal Bank A.G.. The five-year agreement is supported by Banco Santander and BBVA, further diversifying Castellana’s sources of funding.

The milestone funding agreement has successfully refinanced the loan associated with the El Faro, Bahía Sur, Los Arcos, and Vallsur assets, and will continue financing active asset management and repositioning projects across various assets, thereby increasing the portfolio value.

As part of the transaction, €50 million of the previous debt has been repaid, reducing Castellana’s leverage and improving its Net Loan to Value (Net LTV) from 39%, as reported in their last financial results, to 34%. This transaction also extends Castellana’s average debt maturity from 2.7 years to 5.1 years compared to the figures in their most recent financial results. Additionally, the loan has been fixed for three years, improving Castellana’s interest rate hedge ratio to over 90%.

Laurence Rapp, CEO of Vukile, comments, “We are pleased to report that Castellana has further strengthened its financial capacity as it continues to grow, add value and reinforce the dominance of its portfolio.”

Vukile is a leader in convenient, community-focused, needs-based retail centres. It owns 32 urban, commuter, township, and rural malls in South Africa, its Castellana portfolio of 15 shopping centres in Spain, and three shopping centres in Portugal that Vukile recently agreed to acquire in a milestone transaction expected to close on 1 October 2024. After this acquisition, around 64% of Vukile’s assets will be located in the Iberian Peninsula, and almost 56% of its property net operating income will be in Euros.

Rapp confirms that Vukile remains dedicated to its strategy in South Africa and the Iberian Peninsula. “Robust financial capacity enables us to pursue suitable opportunities that are strategically aligned and financially accretive.”

 

Vukile expands Iberian Peninsular exposure

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Vukile expands Iberian Peninsular exposure with EUR176 million shopping centre portfolio acquisition in Portugal.

Continuing Vukile Property Fund’s (JSE: VKE) Iberian expansion, its 99.5% held Spanish subsidiary, Castellana Properties, has agreed to acquire a high-quality, blue-chip-tenanted portfolio of three shopping centres in Portugal.

In a landmark transaction, Castellana will acquire the assets from a Harbert European Real Estate Fund subsidiary at an attractive initial yield of around 9%, which is expected to deliver a compelling cash-on-cash yield of some 10% in Euros.

Laurence Rapp, CEO of Vukile, comments, “We have clearly signalled our confidence in the Iberian Peninsula and the good opportunities it holds. We are thrilled to capitalise on this opportunity in Portugal, extending and complementing the strong platform that Castellana has already established in Spain.”

Rapp adds, “Building on our successes in Spain, Castellana’s robust and proven on-the-ground management capability make this expansion a natural progression. With a strong team, experienced in the Portuguese market, we are perfectly positioned for this next step.”

The Portuguese retail property portfolio includes two shopping centres in Lisbon and one in Porto, all with great retail fundamentals including dominant market positions, excellent locations, easy access, great visibility, attractive tenants and strong and loyal shopper bases.

Castellana is acquiring RioSul, a two-storey shopping centre in Seixal, southern Lisbon. Similarly, in the north of Lisbon, Castellana is acquiring Loures, also a two-storey shopping centre. Both feature an exceptional list of national tenants including Zara, Bershka, Pull&Bear, Stradivarius, Foot Locker and C&A, as well as various popular food offerings and a cinema multiplex. In both cases, the centres are tenanted by grocery anchor, Continente Hypermarket, which owns its own stores.

RioSul attracts an annual footfall of nearly 8 million consumers and achieves sales of around EUR98 million a year in a market where both the population and its spending power is growing. Loures is in a growth-node of Greater Lisbon and busy undergoing preparations to be integrated into a new metro station, set to open in 2026.

Castellana is also acquiring 8a Avinda, the only shopping centre in São João da Madeira, an industrial and manufacturing town south of Porto. Its strong tenant mix includes national brands Lefties, Bershka, Pull&Bear, Stradivarius, Cortefiel and C&A, together with a selection of well-loved food choices and a cinema multiplex. Similar to the Lisbon assets, the centre is shadow-anchored by Continente Hypermarket. 8a Avinda boasts an annual footfall of 6 million people, generating sales of around EUR58 million.

The assets will be held in a subsidiary, in which Castellana will have an 80% interest and RMB Investments & Advisory the remaining 20% interest.

Vukile is a leader in consumer-focused shopping centres. Its commitment to customers shines through in its convenient, community-focused, needs-based retail centres. It entered this transaction with an existing portfolio of 32 urban, commuter, township, and rural malls in South Africa and its Castellana portfolio of 15 shopping centres in Spain. With the three new shopping centres acquired in Portugal, post the transaction, around 64% of Vukile’s assets will be located in the Iberian Peninsula, and almost 56% of its property net operating income will be in Euros.

Rapp confirms that Vukile remains committed to its stated strategy in South Africa, Spain and now Portugal and continues to evaluate opportunities that are strategically aligned and financially accretive.

The transaction remains subject to the usual conditions precedent and is expected to close on 1 October 2024.