Growing across multiple countries is one challenge. Growing while increasing dividends is another.

In a recent conversation with EasyEquities investors, Vukile CEO Laurence Rapp shared how the company is balancing both as it expands across Europe while continuing to deliver income growth for shareholders.

More Than a South African Property Fund

Many investors still associate Vukile with South African retail property.

Today, the business looks very different.

Vukile has evolved into a specialist retail REIT with a portfolio worth approximately R64 billion spread across South Africa, Spain, Portugal and now Italy. Around two-thirds of its assets are located in Europe, with South Africa accounting for roughly 30% of the portfolio.

The common thread across every market is simple: retail.

Rather than diversifying across offices, industrial parks and logistics facilities, Vukile focuses almost exclusively on shopping centres occupied by large, established retailers.

That specialisation has become one of the defining features of its growth story.

Dividend Growth Started With Operational Performance

One of the headline outcomes from the latest results was 9.3% growth in both funds from operations and dividends, exceeding management's guidance.

According to Rapp, the performance wasn't driven by a single acquisition or major event.

Instead, it came from strong operational execution across existing assets.

South Africa delivered:

• 10.3% growth in like-for-like net operating income
• Vacancy levels of around 1.7%
• Continued efficiency improvements
• Growing energy independence through solar investments

Spain delivered:

• 7.9% growth in net operating income
• Growth well ahead of local inflation rates
• Strong tenant performance across the portfolio

The result was a business that generated enough growth to continue increasing shareholder distributions while investing for the future.

Why Italy Became the Next Growth Market

One of the biggest strategic developments during the year was Vukile's entry into Italy.

The move followed its investment in Pradera, a pan-European retail property platform managing approximately €5 billion in assets across multiple European countries.

For Vukile, the attraction wasn't simply scale.

Pradera brought:

• Deep local market expertise
• Established retailer relationships
• On-the-ground operational teams
• Access to deal opportunities that would otherwise be difficult to source

Soon after the partnership, Vukile acquired an initial portfolio of three Italian shopping centres valued at approximately €115 million. Management believes the Italian platform could eventually grow to more than €500 million over time.

What International Investors Are Seeing

Vukile's recent capital raise provides another clue about how the market views the business.

The company raised close to R3 billion in fresh capital, with demand reportedly reaching almost R12 billion. A significant portion came from international investors.

Rapp attributes that interest to several factors:

• Defensive retail-focused cash flows
• Consistent dividend payments
• Exposure to multiple economies
• Strong growth prospects
• Institutional-quality reporting and governance

For global investors seeking income alongside growth, that combination appears to be resonating.

How Vukile Thinks About Dividend Sustainability

According to management, Vukile has paid dividends throughout its 22-year listed history, including during the Covid-19 period. Every year except 2020 delivered dividend growth.

The company also takes a conservative approach to risks it cannot control.

To manage currency exposure, Vukile uses a layered hedging strategy that locks in future euro income streams over several years. Interest rate exposure is similarly hedged to reduce uncertainty.

The objective is not to predict market movements. It's to create greater visibility around future earnings and cash flows.

The Real Competitive Advantage

Throughout the conversation, one phrase surfaced repeatedly: operational excellence.

For Vukile, growth begins with ensuring that:

• Shopping centres remain attractive to customers
• Retailers perform well
• Occupancy stays high
• Rental income remains dependable

When those pieces work together, management believes the rest follows naturally.

1. Tenants stay longer.

2. Rental growth improves.

3. Earnings grow.

4. Dividends grow.

For a business now operating across four countries, that disciplined approach may be just as important as any acquisition.

Key Takeaways from the Conversation

1. Vukile now manages a R64 billion portfolio
   The company owns more than 50 retail-focused assets across South Africa, Spain, Portugal and Italy.
   
   

2. Europe now accounts for roughly two-thirds of the business
   Spain and Portugal have become major growth engines, with Italy representing the newest market.
   
   

3. Dividend growth reached 9.3%
   Both funds from operations and dividends increased by 9.3%, exceeding guidance.
   
   

4. South Africa remains a strong performer
   Local assets delivered 10.3% growth in net operating income despite concerns about the broader retail environment.
   
   

5. The company raised nearly R3 billion
   Investor demand reached almost four times the amount ultimately raised. 
   
   

6. Italy could become a €500 million platform
   Management sees significant long-term growth potential in the market.
   
   

7. More than 36,000 EasyEquities investors own Vukile
   Making it one of the most widely held property counters on the platform.
   
   

8. Dividend consistency is a core priority
   Vukile has paid dividends every year since listing, including during Covid.

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