Vukile continues its consistently strong operational performance

Pre-close trading update for the five months to 31 August 2025
Vukile Property Fund (JSE: VKE), the leading specialist retail REIT, has reported another period of strong operational performance across its South African and Iberian portfolios. For the first five months of FY26, from April to August 2025, the group confirmed that it remains firmly on track to meet its full-year guidance of at least 8% growth in funds from operations (FFO) and dividends per share (DPS).
Iberian integration and growth momentum

Through its 99.5%-owned Spanish subsidiary, Castellana Properties, Vukile completed the acquisition of its fifth Portuguese asset, Forum Madeira, in April 2025 for €63 million at a 9.5% yield. This acquisition has increased offshore exposure to 65% of assets (over R50 billion) and 60% of net property income, highlighting the central role of Iberia in Vukile’s growth strategy.

CEO Laurence Rapp confirmed that the group’s operational priority has been integrating, optimising, and unlocking value from the newly acquired Iberian assets. This process has advanced well, with Portuguese properties now fully embedded into Castellana’s systems, enabling the rollout of value-added asset management initiatives. “We signalled to the market that our operational priority was integration. Significant progress has already been made, including the alignment of processes and data management, allowing the Castellana team to implement their expertise in asset management,” Rapp said.

Performance in Iberia has been strong. Occupancy sits at 99%, with rental reversions averaging +3.4% (2.8% in Spain, 6.17% in Portugal). Sales increased by 5.7% in Spain and 4.1% in Portugal, while overall portfolio footfall rose by 3.0%. Notably, Spain’s Alfano centre saw a 30% surge in footfall after a successful redevelopment project, while Portugal’s Bonari centre is expected to benefit further once parking renovations are complete.

South African portfolio strength
Vukile’s South African assets continue to perform strongly within the sector. Like-for-like net operating income increased by 8%, driven by both revenue growth and tight cost management. Vacancies remain extremely low at below 2%, with high demand across all sectors.

The fund achieved positive rental reversions for the fourth consecutive year, averaging 1.6%, with 83% of leases agreed at positive or flat rental levels. Over 300 leasing deals were concluded during this period, including 207 renewals and 88 new contracts, with new rentals securing an average uplift of 14.7%.

Tenant demand was especially strong in grocery, fashion, and home décor categories. Strategic anchor replacements further enhanced portfolio performance, such as replacing Pick n Pay with Shoprite and launching new stores for Boxer and Dis-Chem in township and rural malls.

Trade and footfall metrics remain resilient: township and rural malls grew 7.6% and 4.6% respectively, driving overall portfolio growth of 5.3%. Rental escalations, collection rates above 100%, and arrears down 35% demonstrate the portfolio’s strength. At the same time, targeted efficiency measures — notably solar PV installations and tariff optimisation — reduced the cost-to-income ratio to 13%, further enhancing returns.

Financial markets and funding confidence
Vukile continues to receive strong support from the debt capital markets. In August 2025, the group raised R500 million through a bond issue that was six times oversubscribed, attracting participation from 21 investors. The issue achieved the lowest margins since the DMTN programme was launched in 2012, highlighting investor confidence in the business.

Further strengthening this position, GCR upgraded Vukile’s credit rating to AA+(za) with a stable outlook.

Disciplined growth strategy
Although there was strong performance, management emphasised the importance of discipline in capital allocation. While Vukile continues to evaluate an early-stage pipeline of opportunities in Iberia, it remains selective, pursuing only transactions that are strategically aligned and financially beneficial.
Rapp compared it to the Ryder Cup, mentioning that the group recently withdrew from a Spanish bidding process when prices went beyond disciplined limits. “Sometimes coming second is not a bad thing. It shows our processes and discipline are working correctly,” he said.

Outlook
Vukile enters the remainder of FY26 with confidence. The successful Iberian integration provides a solid foundation for growth, while South African assets continue to deliver strong operational metrics. Guidance of at least 8% growth in FFO and DPS is reaffirmed, with the potential for an upward revision once two more months of trading data are available.

The group will provide updated guidance when reporting interim results for the six months to 30 September on 26 November 2025.

In closing, Rapp highlighted Vukile’s strong positioning:
A robust, diversified portfolio across South Africa, Spain, and Portugal.
High occupancy and rental growth, underpinned by tenant demand.
Continued success in cost containment and renewable energy initiatives.
Strong capital markets support and a strengthened credit profile.

“Vukile has begun FY26 with solid and sustainable operational and financial strength. We remain open for business with an early-stage pipeline of opportunities, subject always to our disciplined approach. We are confident that FY26 will deliver another year of strong growth from a solid foundation,” Rapp concluded.