Vukile to acquire Islazul Shopping Centre in Madrid in landmark EUR 318 million transaction

Vukile Property Fund (JSE: VKE) today announced that its 99.7% owned subsidiary Castellana Properties will acquire Islazul Shopping Centre in a significant EUR 318 million transaction that sees it enter the Spanish capital city of Madrid, one of Europe’s most dynamic and fastest growing economic powerhouses. Islazul is an iconic asset, ranked among the top 10 shopping centres in Spain, and is recognized as the “most sustainable shopping centre in the world” as the recipient of highest BREEAM certification globally.

 Islazul is being acquired from Nutwood Invest, which is held by international private equity and real estate managers Henderson Park (95%) and Eurofund (5%), at an initial yield of 6.5% and delivering a cash-on-cash yield in excess of 8%.

 The transaction is earnings accretive and will be fully funded by existing cash resources. Following completion, which is expected on 30 April 2026, subsequent to Vukile’s financial year ending on 31 March 2026, Castellana will hold 100% ownership of Islazul.  The transaction will not impact the forecast for the 2026 financial year.

 The acquisition of the flagship 90,933m2 shopping centre, with integrated value-add opportunities, continues Vukile’s ongoing capital recycling into higher-growth Iberian shopping centres. Earlier this month, it announced the acquisition of Berceo Shopping Centre, in the city of Longrono, La Rioja, for EUR101 million at a 7% yield.

 The Islazul investment marks Castellana’s strategic expansion into Madrid, one of Europe’s most attractive metropolitan markets, and further strengthens its portfolio and geographic diversification.

 Madrid is a key economic engine within Spain, benefiting from strong economic fundamentals, sustained population growth, robust employment trends and rising household incomes. The city continues to attract record-high domestic and international tourism, reinforcing retail demand, footfall and long-term asset performance. All these factors are further reinforcing its appeal as a prime destination for long-term real estate investment.

Demographic momentum, combined with improving infrastructure and increasing consumer density, underpin Islazul’s strong performance outlook.

The centre is located in one of the most densely populated urban zones of southern Madrid where it is ideally positioned to capture future growth in a city and a neighbourhood with compelling retail potential. The centre benefits from a catchment area that has recorded population growth of approximately 10% over the past decade, ahead of the national average of 4.5%. It draws an extended reach of more than 1.9 million people within a 15-minute drive, supporting footfall of approximately 11.5 million visits per annum and underpinning robust performance.

 Offering significant scale and visibility, it is deeply integrated with its surrounding urban environment, including excellent public and private transport links. More than 50% of visitors arrive on foot or by public transport, and a new metro line stop in the area is due to open in 2027, further boosting accessibility.

 The centre’s retail and leisure tenant base of more than 180 brands is performing strongly, with robust and growing sales across major occupiers. Key operators include leading Inditex brands Zara, Stradivarius, Lefties, and Pull&Bear, along with other fashion anchors Mango and Primark.  The tenant mix is further enhanced by MediaMarkt, JD Sports, Homa, Milbby and Lidl, complemented by a strong leisure and food and beverage offering with 40 establishments, including Yelmo Cines, Ilusiona, Burger King, McDonald’s, Tony Roma’s and Foster’s Hollywood. 

 The centre’s performance is expected to benefit greatly from integration into Castellana’s retail specialist asset management platform. Value-add projects of EUR 23 million have already been identified, scoped and approved and are expected to yield in excess of 10%. 

 Vukile entered the Spanish market via Castellana by acquiring smaller, simpler assets such as retail parks, and unlocking value through focused asset management and operational discipline. These assets provided income growth and local market insight, while building Castellana’s on-the-ground capability.

 With that platform in place, it expanded into dominant shopping centres in secondary cities in Spain and into Portugal, targeting dominant assets with strong catchments, resilient tenant demand and clear repositioning potential. This strengthened both earnings quality and portfolio profile and continues to be an investment focus for Castellana.

Today, around two-thirds of Vukile’s assets and net property income is generated in Spain and Portugal, and it has grown to become the third largest South African REIT.  Castellana has strategically curated a premium retail real estate portfolio in Iberia, that ranks alongside leading established portfolios across Europe. It’s market standing and delivery record supports access to further opportunities as Vukile progresses its firm pipeline of acquisitions in both Iberia and South Africa.

ENDS/