JSE-listed Vukile Property Fund is expanding its European presence with the purchase of Forum Madeira Shopping Centre in Funchal, Portugal.
The purchase price of the property is EUR 63.3 million, to be paid in cash. The transaction reflects an initial net operating income yield of approximately 9.5%, with an expected cash-on-cash yield of 11.8% before tax and transaction costs.
The deal is being carried out through Vukile’s Spanish subsidiary, Castellana Properties, which owns 99.5% of the acquiring company.
The purchase will be made by Caminho Propício, a company that Castellana owns 70% of, through an agreement with the current owner, German investment manager DWS Grundbesitz GmbH.
The REIT marked its entry into the Portuguese market in 2024 with the acquisition of four high-quality retail centres.
Vukile said it delivered a strong pre-close trading update for its financial year ended 31 March 2025, noting that it is on track to meet its full-year guidance of 2% to 4% growth in funds from operations (FFO) per share and 6% growth in dividends per share (DPS).
The Iberian portfolio grew around 60% over the 12 months, cementing Vukile’s increasing position across Spain and Portugal. Approximately two-thirds of Vukile’s assets and 60% of earnings are now offshore.
Forum Madeira is a prime open-air shopping destination in Western Funchal, the capital of Madeira Island. The centre comprises 21,472m² of gross lettable area across three floors, anchored by leading international and local brands including the Inditex Group, Pingo Doce, and Cinema NOS – the most frequented cinema on the island.
The Centre boasts impressive metrics, including: 5.4 million annual visitors; sales of EUR 4,694 per m² and 100% occupancy rate.
It also boasts a strong catchment base of approximately 250,000 residents and 2.3 million tourists annually
Vukile sees Forum Madeira as a high-performing, low-risk retail asset with strong fundamentals and growth potential. The centre is uniquely positioned as the only mall in Madeira offering the full range of Inditex brands. Its location in a growing tourism and luxury residential hub adds further appeal.
Madeira’s strong economic indicators bolster the investment rationale: 23.4% GDP growth since 2019; unemployment decline from 11.1% (2017) to 5.9% (2023) and over 10.9 million overnight stays in 2023, making Madeira Portugal’s third most visited destination after Lisbon and Porto.
The acquisition will be financed through a blend of existing cash reserves and local debt financing of EUR 28 million, representing a loan-to-value ratio of 38.5%. Caminho, the acquiring entity, is 70% owned by Castellana and 30% by Rand Merchant Bank (RMB).
The deal is expected to close by 30 April 2025.
