Vukile Property Fund has agreed to splash out €305m (R6.1bn) to buy a shopping mall in Spain, bulking up its exposure to one of Europe’s biggest economies with its biggest deal yet.
The real estate investment trust (Reit) is entering a market that is experiencing positive economic growth, with a GDP increase of 3.2% last year. However, growth is expected to moderate to 2.5% in 2025. Inflation remains stable, staying near the 2% target set by the European Central Bank.
In terms of the deal, Vukile will pay €305m to secure Bonaire Shopping Centre in Valencia province, from Unibail-Rodamco-Westfield (URW) after pausing the deal in October due to flash floods.
The acquisition, which hands Vukile a top 10 retail asset in Spain, was financed from the proceeds of the €200m sale of its stake in Lar España, a retail property investor listed in Spain.
The deal strengthens Vukile’s presence in Spain, the fourth-largest economy in the eurozone, where tourism is a key economic driver, making it the world’s second-most popular tourist destination. Spain’s booming tourism sector is attracting demand for prime retail spaces in popular areas such as Madrid and Barcelona.
Vukile already has operations in Spain through subsidiary Castellana, which runs 19 retail assets across the country as well as Portugal.
“We are thrilled to have secured this exceptional asset from URW further cementing Castellana’s position as a leading player in the Iberian retail property market. This accretive deal is our biggest by value to date and furthers our growth in Spain with a market-leading institutional grade asset,” Vukile CEO Laurence Rapp said.
Still, the deal exposes Vukile to Valencia, one of Spain’s hotspots for flooding identified in a journal published by Taylor & Francis.
Bonaire reopened on February 13 to increased footfall after repairs to flood damage, the group said.
URW revamped the ground floor, upgrading common areas and retail units that were damaged by the floods. While the repairs on Bonaire were carried out, tenant retailers in the shopping centre also refreshed their stores. As part of the Bonaire deal, Castellana has locked in an 18-month guarantee for net operating income.
Vukile has had a presence in Spain for more than seven years, giving it a front-row seat on the trends in the property industry and the confidence to boost its exposure.
“We have been bullish on the prospects of the Spanish economy, particularly the retail sector, for quite some time. The current strength we are seeing in the economy, along with the GDP growth forecast for this year and into next year, which is outperforming the eurozone (as is Portugal), is not a sudden signal for us, but rather a continuation of positive trends,” Rapp said.
In the past five years, Valencia has drawn the third-highest level of investment in Spain. The centre benefits from connections to both local and international markets, with access to Spain’s second-largest port and the fifth largest in Europe, Vukile said in a statement.
The centre is almost fully leased, with a range of popular brands including Zara, Primark, JD Sports, Cinesa, Mango, H&M and Fnac, the group said.
Vukile has experienced strong growth over the past year, marked by Castellana’s expansion into Portugal with the acquisition of four shopping centres since September 2024.
“We’ve seen our retail portfolio perform exceptionally well over time, not only from a fundamental perspective but also due to the management initiatives we’ve been implementing. The combination of these factors has given us the confidence to pursue further acquisitions across Iberia,” he said.
“We are not only growing in scale and becoming a significant player in the Iberian market where we are a top five in terms of market share overall, but we look to add value to the asset,” Rapp said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.