June 17 2026 17:45
SOUTH AFRICA
Vukile Property Fund (JSE: VKE), the retail real estate investment trust (Reit), on Werdnesday released its results for the financial year to end-March 2026, delivering 9.3% per share growth in both funds from operations (FFO) and dividends.
The group which has had exposure to South Africa, Spain and Portugal is one of the most reliable property funds listed on the JSE. Vukile’s performance exceeded guidance while strengthening its Iberian portfolio and investing for the first time in Italy.
“This robust set of results demonstrates consistent delivery on our focused strategy. Operational excellence, value-add projects, key acquisitions in core markets and strategic deals in new territories collectively played a pivotal role in delivering results ahead of guidance,” said Laurence Rapp, CEO of Vukile Property Fund.
Through its 99.7%-owned subsidiary Castellana Properties, Vukile is invested in a €2.2bn portfolio across Spain and Portugal. During the financial year, it acquired a 35% stake in Pradera, a pan-European retail fund and asset manager with €5bn of assets under management. With Pradera’s assistance, Vukile entered the Italian market post year-end with an inaugural €115m portfolio of three shopping centres.
It established a new Italian holding company called Esperia Properties which will act as an investment platform. With post-year-end acquisitions, Vukile holds a total of R63.7bn in assets, with close to 70% of its assets in Europe. Since Rapp took the helm on August 1 2011, Vukile’s asset base twelve-fold.
Vukile’s market capitalisation sits at R36.2bn. In terms of market capitalisation, the group sits just behind Redefine which has a market capitalisation of R45.1bn and Growthpoint Properties which has a market capitalisation of R59.3bn.
In South Africa, Vukile invests in markets where retail is most valued, it said. Its R19.5bn South African portfolio of township, rural, urban and commuter malls serve some of the country’s most compelling consumer markets, it said.
Vukile’s operational strength translated to excellent performance in its portfolios, with like-for-like net operating income (NOI) growth of 10.3% in South Africa and 7.9% in Iberia. Managing Director for Southern Africa, Itumeleng Mothibeli, said the South African portfolio produced a standout performance across all key metrics. Retail sales grew 5.4% with increases across almost all categories and footfall increased 2.2% showing healthy growth. Vacancies remained low at 1.7%. Rental reversions continued positive momentum at 3.7%, up from 2.3%, with 90% of leases expiring renewed at positive or the same levels.
The portfolio’s cost-to-income ratio improved from 15.3% to 12.4%, with electricity savings being a key contributor, owing to Vukile’s solar PV installations now exceeding 40.3MWp and generating 29% of electricity in the portfolio. Vukile’s like-for-like SA portfolio was valued 12.3% higher.
Castellana’s Iberian portfolios, meanwhile, also delivered compelling results. Retail sales grew 4.5% and footfall 3.6%. Vacancies stood at 1.1%, reflecting robust tenant demand across the portfolio, which is occupied by 95.3% blue-chip international and national tenants. Rental reversions were strongly positive at 9.1%. Collections neared 100%, improving in Portugal from 91% to 97.4% with the benefit from a full year of Castellana’s management. Castellana’s like-for-like shopping centre portfolio value grew 8.9%.
Vukile identified and invested in asset management initiatives that strengthened the quality, appeal, performance and resilience of its retail properties, Rapp said.
Among projects completed by Vukile’s subsidiary, Castellana in Spain, Vallsur was repositioned with a €16.7m investment at
a 6.3% yield, creating a leisure and dining hub and introducing outlet fashion concepts, that broaden the number of brands offered and strengthen the centre’s income base. Castellana is undertaking a major expansion and reconfiguration at Los Arcos, which is already fully let, with new leisure options including food and beverage and bowling, representing a €32m investment.
In South Africa, at East Rand Mall, a R71m project repurposed over 5,000sqm of former cinema space into a multi-tenant retail offering, expanding retail variety, enhancing shopper appeal and boosting rental growth potential. Vukile is investing R76m in a 3,200sqm extension and refurbishment of Nonesi Mall, with the pre-let project designed to strengthen its market position, improve its tenant mix and generate accretive returns on a 9.5% yield.
Vukile’s capital allocation has been lauded.
“The financial year was defined by decisive, disciplined capital allocation, made possible by a strong balance sheet, accretive capital recycling and well-supported capital raising,” said Rapp.
After raising R2.65bn in October 2025, Vukile’s team sought opportunities across its markets. Shareholders unanimously approved a 9% extension to Vukile’s authority to issue shares. The company raised R2.8bn in the largest capital raise the sector has seen in the past five years, with a heavily oversubscribed bookbuild where over half of the demand received was from international investors
“Because we were primed for growth, when windows of opportunity opened, we moved deftly and with discipline,” said Rapp.
The Vukile team has created value of €132.5m in Iberia and R134.5m in South Africa over the past 18 months through discerning deals.
“Having cash resources strengthens our negotiating position, allowing us to buy well and deliver significant value to our
shareholders through total return growth,” said Rapp.
Vukile ended the year with significant liquidity of nearly R8bn available. Its loan-to-value ratio decreased to 38.4% and its interest cover ratio increased to 3.0 times. GCR upgraded Vukile’s credit rating to AA+(za) with a stable outlook, while Fitch upgraded Castellana’s rating to an investment grade BBB. Securing bolt-on acquisitions in core markets. In SA Vukile concluded R1.7bn of transactions in the reporting period.
The company disposed of R630m of assets while increasing its exposure to core retail centres with robust income streams and upside potential. Vukile invested in renewable energy infrastructure and sustainability initiatives. It took transfer of a 50% stake in
Chatsworth Mall, a high-quality regional shopping centre in Chatsworth, KwaZulu-Natal, which it acquired for R620m at a yield of 8.7%.
Vukile bought Botshabelo Mall in the Free State’s largest township from Liberty Two Degrees for R433m, which is expected to yield 8.6% and should transfer in July 2026.
In Spain, Vukile completed transactions worth €902m. Castellana disposed of a portfolio of nine retail parks in Spain for €279m, recycling the proceeds into higher-quality, higher-growth shopping centres. Acquisitions included the Berceo shopping centre in La Rioja for €104m, with a cash-on-cash yield of 8.6%.
Post the reporting period, Castellana acquired the Islazul shopping centre in Madrid for €318m at an 8.6% cash-on-cash yield and
a 50% stake in the Splau shopping centre in Barcelona, in joint venture with retail giant Unibail-Rodamco-Westfield (URW), with Castellana’s share valued at €175m, which is expected to generate a cash-on-cash yield of 8%. These transactions have repositioned the Castellana portfolio as one of the strongest in Iberia, with dominant assets in compelling catchments in each of Spain’s three largest cities: Madrid, Barcelona and Valencia, CEO of Castellana Alfonso Brunet said.
Turning to Italy, Rapp said Pradera’s track record in the country de-risked Vukile’s first foray into the market through the purchase of three nodally dominant shopping centres; Le Due Valli in Turin, Le Centurie in Padua and Quarto Nuovo in Naples, for €115m at an initial yield of 10%. Pradera has managed these centres for a decade and will carry out the asset management of the Italian portfolio.
Le Centurie, Padua, Italy
“Vukile is replicating our proven Castellana playbook to build Esperia in Italy, where we see the potential to acquire a portfolio in excess of €500m over time. Two further acquisitions of a combined €200m are already lined up at an expected cash-on-cash yield of 9%,” said Rapp.
Italy offers improving macro-fundamentals and a resilient consumer. Italian households carry exceptionally high net wealth and low debt, Rapp said. The nation has a deep-rooted consumer culture that prioritises discretionary spend, on fashion, food and beverage, and experiential retail.
Italy has the lowest e-commerce penetration in Europe, at just 10%, and ranks second for cumulative tenant sales
growth since 2019. Shopping centres exhibit strong trading metrics and with limited supply, the market dynamics are favourable. It is difficult to get town planning approval to build new centres in much of the country.
“These dynamics translate into an attractive investment case. Building off our experience and track record in Spain and Portugal, we see a clear opportunity to build specialist platform for institutional, permanent capital and unlock income growth through active management, strong tenant partnerships and a lower cost of capital,” said Rapp.
Vukile expected continued robust operational results from its South African and Castellana portfolios and has value-add projects planned in Spain and Portugal.
As it beds down its entry to the Italian shopping centre market, Vukile’s capital allocation focus will remain on accretive opportunities in its core markets of South Africa, Spain, Portugal and Italy, Rapp said.
Every business in the Vukile group operates independently and growth in one exerts no operational pressure on the
others, according to Rapp.
Building on a year of strong organic growth and strategic acquisitive activity, Vukile forecast funds from operations per
share growth of between 8% and 10% and distributable income per share growth of 10% to 12% for the financial year to
end-March 2027.
“We have started the new financial year firmly focused on our clearly defined strategy, with a more robust,
more diversified retail portfolio, even deeper specialist retail expertise and a pipeline of value enhancing
opportunities to pursue,” said Rapp.
Head of Research at Meago Asset Managers, Lawrence Koikoi, said Vukile continued to report a pleasing performance for its local and offshore businesses, notwithstanding the geopolitical uncertainties globally and also a tough operating environment locally.
“Credit to management for the ability to consistently produce above average results and taking advantage of opportunities both in capital markets and the property markets especially in the Iberian market. The jury is out on how their latest Italian acquisition will play out but it is encouraging to see that they have a local Italian team on the ground,” he said.
alistair@propertyflash.co.za
