Vukile Property Fund says the macroeconomic tailwinds from recent interest rate cuts are beginning to lift activity across its shopping centers, with top tenants showing renewed appetite for expansion as trading metrics strengthen across the retail sector.
The Dobsonville Mall owner has upgraded its 2026 guidance and now expects growth in both funds from operations per share and a dividend of at least 9%, the group said in its results for the six months to end-September.
“This environment has given some reprieve to hard-pressed consumers and we’re seeing stronger trading across the portfolio. Key tenants are showing renewed appetite for new store openings, especially in well-positioned dominant centres,” the group said.
With interest rates down 125 basis points since 2024, the easing cycle is already filtering through to retailers. Pepkor —Vukile’s largest tenant in South Africa — has outlined plans to open 250-300 new stores in its aggressive rollout, having already added 95 Pep outlets.
Vukile has stepped up leasing activity in the first half of 2026, completing 367 transactions — 268 renewals and 99 new deals — with a total value of R919m, up from R733m in the same period last year.
Vukile operates in townships and rural areas in South Africa, while also owning a portfolio of shopping centres in the Iberia region through its subsidiary Castellana Properties.
The group said its SA portfolio delivered like-for-like retail net operating income growth of 10%, driven by topline growth and a tight focus on reducing costs. The cost-to-income ratio reduced from 15.3% to 12.5%, driven by solar PV and operational efficiencies.
“In addition to strong demand in South Africa from fashion retailers, we’re seeing growing interest from grocery operators using innovative smaller formats — a segment we expect to become more competitive as exclusivity clauses fall away in 2026 and Walmart enters the market," the group said.
The company is also on track with its 50% acquisition of Chatsworth Centre in KwaZulu-Natal, for R620m, from Sanlam Life Insurance. Transfer is expected in December.
The Competition Commission has approved the sale of the Midrand Ulwazi Centre to IndluKhaya Properties for R160m, while Vukile is also in advanced due diligence stages for another township mall acquisition.
In Spain and Portugal, where recent acquisitions serve as a springboard for further expansion, it reported like-for-like gross rental income growth of 8.2% and normalised like-for-like net operating income growth of 8.7%.
It said in the first half of the year it successfully integrated the recently acquired assets in Spain and Portugal into its core operations.
“These assets are now contributing meaningfully to the portfolio’s performance and have strengthened our presence in Iberia, creating a high-performing and scalable platform that positions us well for sustained growth in the years ahead,” it said.
Vukile reported a 36.9% rise in gross property revenue to R2.9bn in the six months with profit attributable to the owners up 90.1% at R2.36bn.
Funds from operations of 83.9c per share and the interim dividend of 60.2c per share were up 9%.
Vukile ended the first half with a strong balance sheet. It has available cash balances of R2.3bn and undrawn debt facilities of R2.4bn. It also has additional cash of R2.65bn raised from October’s equity raise.
For the year to end-March 2026, the group has upgraded its guidance and expects funds from operations per share of at least 173.1c and a full-year dividend of at least 143.6c per share, both up at least 9%.
“This improved outlook is supported by a well-capitalised balance sheet, which provides a solid foundation to navigate the second half of the year with confidence and agility,” it said.
The funds raised from last month’s equity raise will be deployed into strategic, value-enhancing acquisitions in South Africa and Iberia, ensuring continued growth in the medium to long term.
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