Vukile's Spanish unit sells R5.3bn retail park portfolio to focus on shopping centres

 Vukile Property Fund's Spanish subsidiary Castellana is selling its retail parks portfolio for R5.3 billion so it can re-allocate capital into higher growth opportunities in shopping centres in the country and in Portugal.

JSE-listed Vukile said Wednesday its 99.7% held subsidiary in Spain, Castellana Properties, had concluded a share sale and purchase agreement with Ferrel SPV 2025, for Castellana to dispose of its retail parks across Spain for €279 million, cash.

The disposal comes barely a week after Vukile announced the acquisition of a 35% stake in Pradera Limited, a leading specialist retail property investment fund and asset manager with a 25-year track record across the UK, Europe, China and the Middle East. Vukile and Pradera had already shared close ties, as Castellana CEO, Alfonso Brunet, had spent 11 years at Pradera's Madrid office before joining Castellana in 2017.

Proceeds from the Castellana disposal, with existing cash resources, most specifically the funds raised in October 2025 (about R2.65 billion through an accelerated bookbuild) will be deployed into value-add investments already in the pipeline and all at an advanced stage, Vukile's directors said.

The purchaser is owned by funds managed by global alternative investment manager Ares Management Corporation, a publicly traded company listed on the New York Stock Exchange.

Vukile has grown the retail parks portfolio since its acquisition in 2017, increasing the net operating income by €3.7m or 26%. Many accretive asset management initiatives were implemented.

"Given the strong demand for retail parks in Spain, it is the opportune time to dispose of the portfolio and re-allocate the capital into higher growth opportunities in shopping centres, further leveraging its (Castellana's) strong track record of value-add investing in Spanish and Portuguese shopping centres with high growth potential," Vukile's directors said.

While new shopping centre development in Spain was "highly constrained", retail park development was increasing, driven by strong investor demand. This was placing upward pressure on retail park pricing. In contrast, the limited availability of shopping centres supported their relative value, meaning their pricing remained attractive and offered growth potential for local, on-the-ground retail specialists such as Castellana, the group said.

The portfolio was sold at a 2.5% discount to Castellana's latest external valuations. Castellana would provide asset and property management services for the portfolio for 5 years, for which it would receive market-standard fees.

"The disposal is value-accretive for Castellana, as it crystalises gains from the properties' revaluation achieved through active asset management and strong operational performance. Overall, the revaluation of net asset value between acquisition and disposal represents a 13% net gain for Castellana."

The market environment has been tough since 2017, considering challenges that have included a sharp rise in interest rates, Covid and the Russia-Ukraine war. Vukile's share price notched up 1.01% to R24.93, a price well up from R17.57 a year before.

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