South African real estate investment trust Vukile Property Fund is expanding its presence in Europe with the acquisition of three shopping centres in Italy.

The move marks the group’s first investment in the Italian market and adds another growth avenue alongside its established operations in Spain and Portugal.

Vukile, one of South Africa’s largest listed REITs, has steadily increased its international exposure through Castellana Properties, its 99.7-percent-owned subsidiary with a €2.2 billion($2.5 billion) portfolio across the Iberian Peninsula.

The latest acquisitions lift Vukile’s total assets to R63.7 billion($3.88 billion), with close to 70 percent now located in Europe. The company said Italy offers attractive fundamentals, supported by resilient consumers and limited retail supply.

Chief Executive Officer Laurence Rapp said the expansion follows the group’s strategy of building specialist retail platforms in key markets.

Three shopping centres added

The company acquired Le Due Valli in Turin, Le Centurie in Padua and Quarto Nuovo in Naples for a combined €115 million($132.28 million) after the end of its 2026 financial year.

Vukile’s entry into Italy follows its acquisition of a 35-percent stake in Pradera, a pan-European retail fund and asset manager with €5 billion($5.75 billion) in assets under management. Pradera has managed the three centres for about a decade and will continue to oversee the properties.

“We are replicating our proven Castellana playbook to build Esperia in Italy, where we see the potential to create a portfolio worth more than €500 million($575.11 million) over time,” Rapp said.

More deals already planned

According to Rapp, two additional acquisitions with a combined value of €200 million($230 million) have already been identified and are expected to deliver cash-on-cash yields of about 9 percent.

Vukile said Italy’s low e-commerce penetration and strong tenant sales growth create favourable conditions for retail property owners. The company believes active management and long-term tenant relationships will support future income growth.

Strong earnings outlook

For the year ended March 31, 2026, Vukile reported 9.3-percent growth in both funds from operations per share and dividends.

The group expects funds from operations per share to increase by between 8 percent and 10 percent in the 2027 financial year, while dividend growth is forecast at between 10 percent and 12 percent.

“We have started the new financial year focused on our strategy and the opportunities ahead,” Rapp said.