“These results show what a focused strategy, disciplined execution and strong operating platforms can deliver in the right environments, while also laying the foundation for further growth,” says Laurence Rapp, CEO Vukile Property Fund.
Vukile, the leading customer-centric specialist retail real estate investment trust (REIT), holds a total of R54 billion in property assets. Approximately two-thirds of its assets and net property income are generated in two of Europe’s major economic drivers, Spain and Portugal, through its 99.6%-held subsidiary, Castellana Properties. Its South African portfolio of township, rural, urban and commuter malls serve some of the country’s most compelling consumer markets.
Vukile’s operational strength is evident across its well-located, high-performing shopping centres. Both portfolios delivered excellent performance, with like-for-like net operating income growth (NOI) of 10% in South Africa and 8.7% in Iberia.
The South African portfolio continues to deliver consistent outperformance, benefiting from driving operational efficiencies and an improved macroeconomic environment
“Strong top-line growth is supported by proactive cost management and sustainability initiatives, encompassing both electricity and water, that operate as a growing profit centre for Vukile,” notes Rapp, adding, “Structural changes, particularly around electricity supply, are most certainly making the operating environment better than it’s been in a long time and this is starting to bear fruit.”
The retail portfolio value increased by 5.9% to R17,7 billion. Vacancies remain exceptionally low at 1.8%, supported by active letting with rental on the new deals increasing by a pleasing 5%. The portfolio continues to deliver positive rental reversions, edging upwards by 2.5%. Nearly 85% of space is let to national retailers.
Increased promotional activity driven by Vukile’s shopper-first approach boosted footfall and sales growth. The total portfolio recorded trading density growth of 5.4%, with the township and rural portfolio outperforming at 5.9%. Portfolio footfalls grew by 1.9%.
The redevelopment of Mall of Mthatha has added significant value to Vukile’s South African portfolio, transforming the centre into a top-tier retail destination. Since being acquired in May 2024, the mall’s turnaround has delivered measurable gains with the asset value up by nearly 40%.
Sustainability as a profit centre
Vukile further reduced its South African portfolio cost-to-income ratio from 15.3% to a record-low 12.5%, reflecting the benefit of additional solar PV installations and targeted efficiencies.
The retail REIT’s solar PV rollout in South Africa has been highly successful, boosting margins and advancing its path to carbon neutrality. Vukile has a solar PV capacity of 38.2MWp across 41 installations, adding 2.23MWp during the six months. A further 4.42MWp is presently under construction, progressing towards a total target of 10.6MWp for the year, at attractive yields.
Castellana achieves market-leading results
Spain continues to be a major economic engine in Europe, with GDP projected to grow by up to 2.9% in 2025. The economy is being driven by strong household consumption, a resilient labour market with rising wages and the lowest unemployment in nearly 20 years, and record-breaking tourist arrivals and spending. Inflation is easing gradually, and population growth is mainly from skilled immigration.
Portugal’s economy is on track to grow by up to 2.4% in 2025, driven by rising private consumption and historic high employment levels with wages expected to rise. Inflation has eased to 2.4%, while household finances continue to improve, with higher savings and lower debt. Tourism is heading for a record year, boosting demand in key regions such as Lisbon and Madeira.
“The Iberian portfolio continued to perform in a league of its own delivering outstanding operating metrics. Our newly acquired Portuguese assets have been successfully integrated, with value-add projects identified set to drive further momentum,” reports Rapp.
Castellana’s EUR1.8 billion portfolio remains effectively fully let, with marginal vacancies of 1.3% and more than 95% of space let to blue-chip international and national tenants. It achieved positive rental reversions and new lets of 7.5% (9.55% in Portugal, 7.12% in Spain), representing impressive growth in real terms, and well ahead of economic growth in both cases. The portfolio has a weighted average lease expiry of 8.9 years. Excellent trading metrics saw footfall up 3.5% and sales increasing by 4.2%.
Balance sheet strength and capital allocation
Vukile has significant liquidity of nearly R7.65 billion available to deploy into suitable growth opportunities. It has an active pipeline of financially accretive and strategically aligned deals in Iberia and South Africa, which it expects to close by mid-2026.
GCR upgraded Vukile’s credit rating to AA+(za) with a stable outlook, while Fitch upgraded Castellana’s rating to BBB, with both promotions signalling confidence in strategic direction, financial strength and operational excellence.
The REIT continues to focus on recycling non-core assets as a way of funding further expansion in its core markets, with a number of deals in progress.
In South Africa, it is acquiring 50% in Chatsworth Centre from Sanlam, which will remain a co-owner, with a R620 million investment representing an 8.75% yield. The 42,400sqm dominant centre in the KwaZulu-Natal community of Chatsworth is a strategically aligned, high-performing asset and expected to transfer in December 2025. Vukile is also well advanced in due diligence for another township mall acquisition.
Strength through strategic execution
Vukile entered the second half of its financial year in a strong position, well placed to deliver its upgraded guidance and continue its market-leading performance.
“Following our successful capital raise and ongoing strategic asset rotation, we’re ready to unlock an exciting pipeline of deals and projects. We’re focused on value-add opportunities, operational excellence and disciplined growth, always aligned with our strategy. Our goal is to deliver sustainable, real earnings growth for our shareholders across all time horizons,” concludes Rapp.