Vukile Property Fund has unveiled the first transaction in a new phase of its Iberian growth strategy, signalling a decisive shift toward higher-growth shopping centres.
Source: Supplied. Berceo Shopping Centre, in the centre of Longrono, La Rioja in Northern Spain.
The consumer-focused retail REIT is recycling capital following the €279m disposal of its Spanish retail park portfolio, redeploying proceeds into assets with stronger long-term fundamentals.
The initial acquisition marks the start of a firm pipeline in Spain and Portugal, fully funded through the landmark sale and existing cash resources, reinforcing Vukile’s commitment to disciplined, value-accretive expansion in Iberia markets.
Vukile, the third-largest South African REIT, has R54bn in property assets with around two-thirds of its assets and net property income generated in Spain and Portugal via its 99.7%-owned subsidiary, Castellana Properties.
Last week, Vukile announced that Castellana had concluded an unconditional agreement to dispose of its portfolio of retail parks across Spain to Ares Management Corporate for a cash purchase consideration of EUR279m, representing a disposal yield of 7.1%. The transaction is value-accretive for Castellana and furthers Vukile’s hallmark asset rotation.
The portfolio includes Vukile’s inaugural Spanish assets, which served as an entry point into the country’s retail property market. Since acquiring it in 2017, Castellana’s management has increased its net operating income by around 23% (€3.7m) and implemented a range of value-enhancing asset-management initiatives.
Accretive market exit
Castellana has decisively grown its investment portfolio and is approaching EUR2bn in assets and expanded its Iberian footprint, while increasing the average size and value of its assets. As the business has grown, these retail parks have become less strategically important to the group. With the prevailing keen investor appetite for retail parks in Spain driving up asset pricing, it created a unique opportunity for Castellana to divest at accretive levels.
The agreed sale price, in line with current external valuations, represents a 13% uplift in the portfolio’s net asset value under Castellana’s ownership, which coincided with some of the most challenging conditions seen in this market, from Covid to higher interest rates driven by the Russia-Ukraine war.
Recognising Castellana’s expertise in the Spanish market and the competitive edge it brings to these assets, Ares has contracted Castellana to provide asset and property management for the retail park portfolio under a five-year agreement from the disposal date, set for 1 April 2026.
Source: Supplied. The exterior of Berceo Shopping Centre.
Laurence Rapp, chief executive officer of Vukile Property Fund, comments, “At Vukile, we believe that knowing which assets to sell, and when to sell them, is just as integral to effective asset management as knowing where and when to invest for better-yielding future growth. We see higher growth potential and better value in the Iberian shopping-centre segment."
New shopping-centre development in Spain remains highly constrained, limiting availability, supporting relative value, keeping pricing attractive and creating compelling growth opportunities for local, on-the-ground specialists such as Castellana. This is particularly significant for Castellana, given its strong track record of value-add investment in Spanish and Portuguese shopping centres.
Rapp notes, “Vukile intends to redeploy proceeds from the retail parks transaction, together with cash resources from our October 2025 capital raise, into fully funded Iberian shopping-centre acquisitions. As the first step of this asset rotation, we are pleased to announce that Castellana has agreed to acquire Berceo Shopping Centre in the north of Spain.”
High-quality asset acquisition
Berceo Shopping Centre, in the city of Longrono, La Rioja, is being acquired from Euronext Paris-listed Barings Core Spain by Castellana for EUR101m at a 7% yield.
Berceo is the dominant shopping centre in its area, where it enjoys virtually no competition, and serves a large and growing catchment area with a market distinguished by high per capita GDP.
Of the centre’s 49,416m², Castellana will own 34,416m², with the remaining portion owned and occupied by Carrefour hypermarket. The high-performing centre is anchored by top brands like Zara, Primark and MediaMarkt.
The acquisition strengthens Castellana’s portfolio by diversifying it in the north of Spain. It also presents value-add opportunity, including enhancing the food and beverage and leisure component.
“This rotation of capital into accretive acquisitions of well aligned, higher-growth assets, reinforces Vukile’s strategic growth as a European retail property specialist,” says Rapp.
Vukile is well-known for its astute capital allocation. It has successfully repositioned from a small, diversified property portfolio to a leading retail specialist and grown to become the third-largest South African REIT.
Most recently in 2024, it sold its stake in Lar Espana generating a capital profit and redeploying proceeds into the largest shopping centre in Spain’s Valencia province, Bonaire Shopping Centre, which is trading strongly under Castellana’s ownership.
