‘We’re not going into Italy as newbies’ – Vukile boss Laurence Rapp

Vukile Property Fund has closed its first three shopping centre acquisitions in Italy for a total purchase price of €115 million (around R2.17 billion), group CEO Laurence Rapp confirmed in a FY2026 results media presentation on Wednesday.

While the trio of centres represent its debut in the Italian market, Rapp confidently declared: “We’re not going into Italy as newbies”.

His comments come as some analysts have said Vukile will find it tougher to expand in this new market, compared to its huge success in entering and growing in Spain over the last decade.

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Rapp said the first three deals in Italy were finalised and closed on Monday.

He explained that Vukile’s strategic purchase of a 35% stake in leading Pan-European property services and retail asset asset management group, Pradera, gives it greater insights into the broader European market.

“We believe Pradera’s track record in Italy de-risks Vukile’s first foray into the Italian market, giving us confidence to move into the country,” he said.

Rapp added that the move will also see the establishment of Vukile’s new Italian holding company, Esperia Properties as a platform for further expansion in the country, which is Europe’s fourth largest economy. Spain comes in as Europe’s fifth biggest economy (when Russia is excluded).

While the JSE-listed retail property giant will own the assets, the day-to-day running of the portfolio will be managed by Pradera. During FY2026, Vukile acquired the stake in Pradera.

The transaction of the three shopping centres – Le Due Valli in Turin, Le Centurie in Padua and Quarto Nuovo in Naples – is priced at €115 million million, for a net operating income of around €11.5 million in year one and a net initial yield of 10%.

“Vukile is replicating our proven Castellana playbook to build Esperia in Italy, where we see the potential to acquire a portfolio in excess of €500 million over time,” said Rapp, following the release of Vukile’s annual results.

Read: Vukile’s South African property valuations surge over 12%

Castellana Properties is the group’s Spanish subsidiary, which is also leading its investment and expansion into Portugal.

With post-year-end acquisitions, Vukile now holds a total property portfolio of around R64 billion in assets, with close to 70% of its assets in Europe.

Its R19.5bn South African portfolio of township, rural, urban and commuter malls serve some of the country’s most compelling consumer markets.

Transaction details

The latest acquisitions in Italy has been financed, in part, by its recent R2.8 billion equity capital raise.

The equity raise comprised of a non-pre-emptive placing of around 123 million new ordinary shares in the company, and was significantly oversubscribed, according to Rapp.

He said the expansion into Italy, after Spain and Portugal, has been received well by shareholders.

“We did drop enough hints that Italy was next on our list, so nobody was surprised. When we did mention the Italian move, during the capital raise, we had only positive feedback from investors.”

Investment case for Italy

Vukile said Italy offers a compelling combination of improving macro-fundamentals and a resilient consumer, noting that Italian households carry exceptionally high net wealth and low debt, with a consumer culture that prioritises discretionary spend on fashion, food and beverage, and experiential retail.

According to the group, Italy has the lowest e-commerce penetration in Europe, at just 10%, and ranks second for cumulative tenant sales growth since 2019.

Read: Hammerson doubles down on retail experience to counter e-commerce disruptions

“These dynamics translate into an attractive investment case. Building off our experience and track record in Spain and Portugal, we see a clear opportunity to build specialist platform for institutional, permanent capital and unlock income growth through active management, strong tenant partnerships and a lower cost of capital,” said Rapp.

Since 2019, Italy’s GDP has grown roughly 1.2% per annum, outperforming the UK, and Germany. The country also has high household net wealth and low private debt, which underpins consumer spending.

As its beds down its entry to the Italian shopping centre market, Vukile’s capital allocation focus will remain on accretive opportunities in its core markets of South Africa, Spain, Portugal and Italy.

Watch/listen: Dealmaker deluxe: Vukile’s Laurence Rapp sees more deals coming in Spain and SA