South Africa's well-known specialist retail real estate investment trust, Vukile Property Fund delivered a strong pre-close trading update for its financial year ended 31 March 2025, underscoring its dealmaking dexterity, strategic expansion and robust operational delivery.
Vukile confirmed it is on track to meet its full-year guidance of 2% to 4% growth in funds from operations (FFO) per share and 6% growth in dividends per share (DPS).
Reflecting strong business momentum and high-quality earnings, Vukile also provided preliminary guidance on FFO and dividend per share growth for FY26 of at least 6%, based on conservative assumptions and without anticipating any need for new equity capital.
The transformative year has been underpinned by strategic execution. Driven by disciplined dealmaking and decisive capital deployment, Vukile’s gross asset value now exceeds R50bn.
Through its 99.5%-held Spanish subsidiary Castellana Properties, Vukile grew its asset base in Spain and Portugal by nearly 60%. It exited its investment in Lar España at an impressive profit of €82m, swiftly redeploying capital to acquire the iconic Bonaire Shopping Centre in Spain’s Valencia province at a compelling cash-on-cash return of over 8%, avoiding cash drag and securing sustainable earnings from a top-quality asset.
Adding a new engine of growth to its strategy, Vukile entered Portugal with four high-quality retail acquisitions. A fifth deal is well advanced and already fully funded.
All-in-all, the Iberian portfolio grew around 60% over the 12 months, cementing Vukile’s dominant position across two of Europe’s strongest economies − Spain and Portugal. Approximately two-thirds of Vukile’s assets and 60% of earnings are now offshore.
Strategic growth and optimisation
In South Africa, Vukile acquired a 50% stake in Mall of Mthatha (formerly BT Ngebs) in May 2024, where early turnaround performance has exceeded expectations. The mall’s vacancy rate has decreased dramatically from 18% to just 1.8%.
These assets were acquired at a favourable point in the cycle, expanding Vukile’s footprint and growing its Iberian portfolio with strategically aligned, high-performing assets that are delivering strong cash flows with further upside through targeted asset management.
“We’ve come through a phase of explosive growth. Now, we’re focused on integration, optimisation and crystallising value from these assets. Vukile remains open to opportunities but will prioritise deepening value within its current footprint, and for the time being we don’t expect to raise capital,” confirms Laurence Rapp, chief executive officer of Vukile Property Fund.
Operational strength has stood out across Vukile’s portfolio of high-performance, strategically located shopping centres, with limited exposure to new competition and strong pricing power.
In South Africa, like-for-like net property income (NPI) grew 6.4%, vacancies remain below 2%, and 84% of rental reversions were positive or flat. The portfolio has recorded growth in both sales and footfall. The cost-to-income ratio reduced to 15%, with ongoing progress in solar and water initiatives enhancing sustainability metrics and efficiencies.
In the Iberian portfolio, like-for-like NPI increased by almost 2% and with various value-add projects now complete, significant upward momentum can be expected in the year ahead. Vacancies in both portfolios remain below 2%. Positive rental reversions were a standout 23.6% in Spain and 6.15% in Portugal. Sales grew 4.3% in Spain and 6.7% in Portugal.
“With a well-hedged balance sheet, minimal near-term debt expiries of just 2% maturing in FY26 and strong liquidity, Vukile is closing FY25 in an exceptionally positive position,” says Rapp.
