January 27 2025 19:45
Vukile Property Fund CEO Laurence Rapp
JSE-listed Vukile Property Fund saw its South African and Iberian retail property portfolios deliver “impressive increases in performance in November and December 2024”, signalling a “successful Black Friday and holiday trading period”, according to the group.
“The robust trade of our assets and the vibrant demand from both shoppers and retailers for our shopping centres, particularly in the township and rural markets, remains encouraging. These impressive trading figures bode well for income and valuation growth,” CEO Laurence Rapp said on Monday.
The South African Portfolio achieved 6.1% growth in trading density during the combined November and December 2024 period, compared with the same months in 2023. This was strong considering that prevailing consumer price inflation (CPI) was around 2.9% on average in 2024.
This continues the portfolio’s positive annualised trading density momentum, which was 2.4% in March 2024 and 4.2% in September 2024, Vukile said in a statement. To date, the 2025 financial year has continued to show improved and sustained growth as anticipated, driven by an improved macroeconomic environment, governmental reforms on electricity and pension funds, and continued positive sentiment following the formation of the government of national unity.
During the two-month period, township shopping centres were the best performing portfolio segment with trading density growth of 9.6%. Rural and urban centres delivered trading density growth of 5.9% and 4.6%, respectively, indicating strong festive shopping demand within the communities we serve, the group said.
Retail categories with the most significant turnover growth were unisex wear with plus 7.7%, groceries with plus 7.2%, fast food which managed plus 6.3% and home furnishing which achieved plus 6.0%. These increases “demonstrate strategically sound category exposure particularly in the non-discretionary segments of the market”, according to Vukile.
Shopper visits in November 2024 increased 5% compared with November 2023, reflecting stronger Black Friday trade over the month. December 2024 footfall remained consistent with the same period last year, the group said.
Vukile’s subsidiary is Castellana Properties, a group which invests in Spanish and Portuguese retail assets. Vukile reported that the trading activity within the portfolio during November and December 2024 underscored the robust growth outlook for Spain and Portugal, primarily fuelled by private consumption. The projections for 2025 were positive, buoyed by strong employment figures, healthy savings, and manageable inflation. These factors are likely to continue driving interest rate cuts, thereby enhancing consumer spending power, the group said.
Sales rose 4.9% in November 2024 compared with November 2023, with all retail segments experiencing growth. Notably, the leisure sector jumped by 21.1%, food and beverage climbed 12.2%, and health and beauty saw a 7.3% rise.
December sales rose 4.8%, with homeware leading at 9.4%, followed by leisure at 7.8%, and sports and adventure at 5.6%.
In Spain, shopper visits surged 9.7% in November 2024 compared to the previous November, with a remarkable 17.0% increase during Black Friday Week. On Black Friday itself, Castellana’s Spanish shopping centres saw a 10.8% uptick in visits.
December 2024 footfall in the Spanish portfolio grew 2.4% year-on-year, while the Christmas period (from December 1 2024 to January 6 2025) saw a 2.9% increase.
November sales climbed 8.5% year-on-year, with all categories showing improvement. Household and furniture led with a 17.5% increase, accessories rose by 12.9%, electronics grew 11%, and fashion went up 7.4%.
December sales increased 2.8%. Leisure was the top performer with a 26.9% rise, followed by household and furniture at 15.1%, accessories at 5.8%, and fashion at 5.0%.
In Portugal, footfall increased 4.6% in November 2024 compared with the previous year and surged by 15.9% over Black Friday Week, with a noteworthy 21.2% rise on Black Friday. In December 2024, footfall in the Portuguese portfolio rose 2.1% compared to December 2023.
Castellana is in discussions to acquire the largest shopping centre in Spain’s Valencia province, Bonaire Shopping Centre, from multinational retail Reit Unibail-Rodamco-Westfield. The transaction’s closing was extended because of the tragic 2024 floods in Spain. Unibail-Rodamco-Westfield is making progress towards reinstating and reopening the centre, which is expected mid-February 2025.
On December 27 2024, Castellana closed the sale of its 28.8% stake in Lar España, receiving proceeds of around €200m after negotiating an improved cash offer of €8.30 per share, delivering a total profit of around €108m through a combination of dividends received (c. €38m) and capital appreciation (c. €70m) and an internal rate of return of circa 45% per annum since January 2022 in ZAR terms.
Through the Lar España exit, Castellana has created an opportunity to recycle capital into other strategically aligned and financially accretive growth opportunities with attractive yields and with significantly lower operational and deal execution risk.
Continuing its expansion into Portugal, on December 19 2024 Castellana acquired 50% of Alegro Sintra shopping centre in Lisbon from Ceetrus, represented by their subsidiary Nhood, the real estate arm of ELO Group. This leading French retail conglomerate owns Auchan, Leroy Merlin, Decathlon, and Kiabi, among other brands. The 50% stake was priced at €46.5m. The asset is valued at €180m, representing a first-year net initial yield of 8.00%.
Alegro Sintra is a shopping centre located in the north of Lisbon, a dense and growing residential node, with an annual footfall of 8.7-million visits and a total gross lettable area (GLA) of 58,000m2, including a Pingo Doce supermarket. The centre is anchored by a complete fashion offering, including Inditex brands and Primark and a strong food court.
Castellana acquired 50% of the company that owns 42,255m2 of the shopping centre’s GLA, with the Pingo Doce supermarket being owner-occupied and excluded from the transaction. The shopping centre offers strong and growing income with opportunities to add value through strategic asset management initiatives together with our joint venture partners.
Through this joint venture Castellana is partnering with an institutional real estate business in Europe with strong synergies, both in terms of on-the-ground know-how and presence in Portugal, as well as access to further opportunities across Iberia and the rest of Europe.
alistair@propertyflash.co.za
