After experiencing a transformative year in the 12 months ended March 31, driven by its growth strategy, JSE-listed Vukile Property Fund reported improvements in most of its performance metrics across a R50-billion investment portfolio across Spain, South Africa and now Portugal.  

The company declared a final dividend of 76.5c a share, or R953-million, which is 6% higher compared with the prior financial year. The full-year dividend amounts to R1.42, compared with R1.31 in the prior year.

Attributable profit for the year amounted to R3.2-billion, marking a 102% year-on-year increase, while basic earnings a share improved by 77% year-on-year to R2.70.

Net income from property operations improved by 9.5% year-on-year from R2.6-billion in the prior year to R2.9-billion in the year under review.

Vukile closed the year with an investment portfolio of 33 urban, commuter, township and rural malls in South Africa, 15 shopping centres and retail parks in Spain and five shopping centres in Portugal.

The group’s net asset value increased by 3.9% year-on-year from R21.55 apiece to R22.39 apiece.

Notably, the company reported like-for-like retail net operating income growth of 6.4% year-on-year in the South African portfolio.  

Vukile reduced its South African retail vacancies to 1.7% from 1.9% in the prior year and decreased its cost-to-income ratio to 15.3% in the year under review.

This while its retail portfolio value, on a like-for-like basis, increased by 8.5% in South Africa.

Valued at R16.7-billion, Vukile’s South African retail portfolio delivered strong performance and growth. The value of this retail portfolio increased by 8.5% year-on-year, while positive rental reversions of 2.4% were recorded.  

Notably, CEO Laurence Rapp says 85% of leases were signed at the same or higher rental levels, with tenant retention at 91%. The total portfolio recorded trading density growth of 5.2% compared with 2.4% in the prior year – with its township and rural portfolio outperforming at 6.7% - driven by Vukile’s shopper-first approach, which continues to boost footfall and sales.

The South African portfolio’s cost-to-income ratio was 15.3%, marking the lowest level in a decade and reflecting proactive cost management, with the benefit of solar energy contributing to significant efficiency gains.

LOCAL VALUE ADD

Vukile added 14.4 MW of solar power to its South African properties in the year under review to reach a total capacity of 36 MW. Rapp confirms that solar power now supplies 27% of the portfolio’s energy needs.

Another 10.6 MW of solar power is expected to be added in the 2026 financial year, as well as two wheeling projects totalling 2 MW.

Moreover, the company spent R113-million to redevelop the Mall of Mthatha in the year under review, following its acquisition of 50% of the property in May 2024. Vukile managed to reduce the Mall of Mthatha’s vacancies from 16% to 2% by March 31.

Vukile also spent R141-million on strategic upgrades at the Bedworth Centre, in Vanderbijlpark, which now offers better convenience, better access, community-focused retail offerings, an enhanced tenant mix, and better aesthetics, amenities and security.

Rapp says the South African portfolio is still experiencing consumer spending pressure, but Vukile’s malls continue to trade strongly and at its lowest vacancy rates ever. He anticipates household consumption will trend upward in the new financial year, resulting in improved footfall, spend and growth in the South African portfolio.

INTERNATIONAL OPERATIONS

Vukile entered the Portugal property market in the year under review through its Spanish subsidiary Castellana Properties, capitalising on Portugal’s strong economic growth and fragmented retail property sector that is ripe for consolidation.

Notably, Castellana acquired a 70% interest in Caminho, which is based in Portugal. Caminho, in turn, acquired three shopping centres in Portugal for €176-million in the year under review, as well as a 50% interest in the Alegro Sintra mall for €83.4-million.

Rapp says the company has achieved further scale abroad, transforming from a price taker to a partner and achieving more relevance in the market. 

The Spanish and Portuguese economies grew by 3.2% and 1.9%, respectively, in 2024, with both countries experiencing strong household spending and disposable income growth.

Castellana’s R32.9-billion, 20-asset Iberian portfolio remains effectively fully let, with marginal vacancies of 1%.

The Spanish and Portuguese portfolio reported like-for-like net operating income growth of 6.4% in the year under review, driven by footfall (2.4%) and sales (4.23%) increases in the year.

Vukile ended the year with a stable loan-to-value ratio of 40.9% and enters the new year with a well-hedged balance sheet and minimal debt maturities of less than 2% of group debt, as well as cash and undrawn facilities of R4.6-billion.

Rapp is confident the company is well placed to deliver sustainable growth by maintaining operational excellence, advancing value-added projects within existing portfolios and pursuing further opportunities in the company’s core markets.

He expects Castellana to account for 60% of the company’s net operating income in the new financial year, with the company and its subsidiary continuing to focus on new shopping centre acquisitions.

Vukile is poised to deliver growth in funds from operations (FFO) per share and dividend per share of at least 8% in the 2026 financial year, which will equate to FFO per share of at least R1.71 apiece and a full-year dividend of at least R1.42 apiece, respectively.