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Acquisition of Islazul Shopping Centre
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE share code: VKE NSX share code: VKN
Bond company code: VKEI
(Granted REIT status with the JSE)
("Vukile" or the "Company")
ACQUISITION OF ISLAZUL SHOPPING CENTRE
1. Introduction
Shareholders are advised that Vukile's 99.7% held subsidiary, Castellana Properties SOCIMI, S.A. ("Castellana"),
has concluded a sale and purchase agreement (the "SPA") with Nutwood Invest S.L. (the "Seller"), pursuant to which
Castellana will acquire Islazul Shopping Centre, a dominant, large-scale retail destination located in Madrid, the
capital city of Spain ("Islazul" or the "Property") (the "Acquisition"). The Seller is held 95% by HPREF II Spanish
Holdings S.a r.l. ("Henderson Park") and 5% by EG Iberia Retail I, S.L. ("Eurofund"). Henderson Park and
Eurofund are international private equity and real estate managers.
In terms of the SPA, Castellana will purchase the entire issued share capital (the "Acquisition Shares") of the
Property-owning company, Islazul HoldCo S.L.U (the "Acquisition Company"), which in turn is the owner of two
dedicated property companies —Islazul Centro Comercial S.L. and Islazul Shopping S.L.
This landmark transaction represents a strategic milestone for Castellana, marking its entry with a sizable shopping
centre into one of Europe's most dynamic and fastest-growing major capitals. The Acquisition further strengthens
Castellana's portfolio and geographic diversification, positioning the company to capture future growth in a city and
neighbourhood with exceptional retail potential.
2. Rationale
The Transaction represents a unique opportunity for Castellana to acquire an iconic shopping centre of institutional
quality which is complementary to its existing Iberian portfolio. The investment also marks Castellana's strategic
expansion in Madrid, one of Europe's most attractive and resilient metropolitan markets, characterised by strong
economic fundamentals, sustained population growth and a dynamic consumer environment. Madrid has established
itself as a key economic engine in Spain, benefiting from robust employment trends, rising household income and a
diversified economic base. The city has been the major beneficiary of the positive immigration and sustained
economic growth experienced in Spain and continues to attract record levels of domestic and international tourism,
reinforcing retail demand, footfall and long-term asset performance, and further enhancing its appeal as a prime
destination for long-term real estate investment.
The Property, which exhibits attractive yields compared to historical averages, is located in southern Madrid, a dense
residential node and an area that has experienced robust population growth over the past 10 years, outpacing the
national average (c.10% vs 4.5%, respectively). This demographic momentum, combined with improving
infrastructure and increasing consumer density, underpins a strong and durable outlook for the retail performance of
Islazul.
Islazul, which is ranked amongst the top 10 shopping centres in Spain, offers attractive growth prospects off the back
of low average rental levels for an asset of this nature of c. EUR 20 per m2 per month which, accompanied by strong
sales performance, suggests potential for positive rent reversions.
The Property's performance will benefit significantly from being added to Castellana´s retail-specialist asset
management platform. The Property is primed for value enhancing asset management initiatives which will result in
substantial upside, including enhancement of the retail mix, accessibility and customer experience, as well as
substantial ESG and other enhancement initiatives which, taken together, are expected to unlock additional net
operating income ("NOI") of c. EUR 2.2 million over a five-year period.
3. Profile of the Property
Islazul opened in 2008 and with a gross lettable area ("GLA") of 90 933m2. The Property is located in one of the
most densely populated urban zones of Madrid, offering unmatched scale and visibility. The Property benefits from
100% ownership without co-owners.
The Property has 4 100 parking spaces, as well as excellent public transport connectivity. The centre sits within the
heart of its dense catchment area, where over 40% of visitors arrive on foot or via transit, reinforcing Islazul's urban
integration with its primary catchment area. Connectivity will be further improved by the new Madrid metro line 11
stop, which is set to be completed in 2027. Islazul has a densely populated catchment area, with c.600 000 inhabitants
coming from the Carabanchel, Latina and south Usera Madrid neighbourhoods. In addition, the Property has an
extended reach of over 1.9 million people within a 15-minute drive. This large and well-defined catchment supports
strong footfall (c.11.5 million visits per annum) and exceptional performance.
Islazul was recently awarded the highest BREEAM certification globally and is recognized as the "most sustainable
shopping centre in the world." Since its opening in 2008 and a subsequent partial refurbishment in 2019, Islazul has
consolidated its retail and leisure offer with more than 180 brands, including key operators such as MediaMarkt,
JD Sports, Homa, Milbby and Lidl, complemented by a strong leisure and food & beverage offering with
40 establishments, including Yelmo Cines, Ilusiona, Burger King, McDonald's, Tony Roma's and Foster's
Hollywood. Fashion and accessories account for nearly 50% of the Property's monthly gross rental income, featuring
leading Intidex brands including Zara, Stradivarius, Lefties and Pull&Bear, along with other leading brands Mango
and Primark.
4. Terms of the Acquisition and Closing
The effective date of the Acquisition is expected to be 30 April 2026 (the "Closing Date").
The Acquisition is based on a gross asset price of EUR 340 000 000. After applying a discount for latent capital
gains, the agreed asset value is EUR 318 382 000 (the "Agreed Asset Value").
The Acquisition Shares (and indirectly, the Property) will be sold and transferred to Castellana on the Closing Date.
The purchase consideration payable for the Acquisition Shares is EUR 202 154 000 (the "Purchase
Consideration"), which has been calculated based on the Agreed Asset Value and customary working capital and
balance sheet adjustments (including the balance of existing debt). The Purchase Consideration may ultimately be
adjusted based on the financial statements of the Acquisition Company as at the Closing Date. However, it is not
expected that there will be a material adjustment to the Purchase Consideration.
Castellana and the Seller have agreed that a portion of the Purchase Consideration, being an amount of
EUR 30 000 000, will be deferred and paid by Castellana to the Seller by no later than 15 December 2026 (the
"Deferred Payment"). The balance of the Purchase Consideration will be payable in cash on the Closing Date.
Based on the Agreed Asset Value, the Property is being acquired at a net initial yield of c.6.5%. When applying the
anticipated interest cost on the proposed senior debt, the Property is expected to deliver a cash-on-cash yield in excess
of 8%. The cash-on-cash yield has been calculated including the costs associated with projected capital expenditure
in the first year post-acquisition.
The SPA includes market-standard warranties, indemnities and undertakings for a transaction of this nature.
Completion of the Acquisition is not subject to any conditions precedent.
5. Funding
The Acquisition will be funded by a combination of existing cash resources and in-country debt of EUR 163 200 000,
representing a loan-to-value ratio of c.48% (based on the gross asset price of EUR 340 000 000). The entire issued
share capital of the Property-owning company will be acquired by Castellana.
Additionally, Castellana will fund a separate capital expenditure tranche of EUR 12 500 000, which will be used to
fund Isalzul's ongoing value-add capital expenditure program of c. EUR 23 000 000, also at a c.48% loan-to-value
ratio. This program has already been assessed and approved by Castellana and will generate an expected return of
c.10% when considering the expected additional NOI of c. EUR 2.2 million.
6. Property specific information
Details of the Property are set out in the table below:
Purchase Value
Consideration attributed to
Weighted for the the Property as
average rental Acquisition at 26 February
Property Geographical GLA per m2 Shares 2026
name location Sector (m2) (EUR/m2/month) (EUR) (EUR)
Islazul Madrid, Spain Retail 90 933 20.28 202 154 000 340 000 000
Shopping
Centre
The Property was valued in accordance with Royal Institution of Chartered Surveyors standards by Colliers
International, an independent external property valuer.
7. Financial information
Set out below are the forecast rental and recovery income, net property income, net profit after tax and profit available
for distribution relating to the Property (the "Forecast") for the 11 months ending 31 March 2027 and the 12 months
ending 31 March 2028 (the "Forecast Period").
The Forecast has been prepared on the basis that it includes forecast results for the duration of the Forecast Period.
The Forecast, including the assumptions on which it is based and the financial information from which it has been
prepared, is the responsibility of the directors of the Company. The Forecast has not been reviewed or reported on
by the Company's auditors.
The Forecast presented in the table below has been prepared in accordance with Vukile's accounting policies, which
are in compliance with International Financial Reporting Standards.
EUR Forecast for the 11 months Forecast for the 12 months
ending 31 March 2027 ending 31 March 2028
Rental and recovery income 22 773 973 25 562 725
Net property income 18 919 268 22 840 145
Net after tax profit 18 919 268 22 840 145
Profit available for distribution 11 332 269 14 364 075
The Forecast incorporates the following material assumptions in respect of revenue and expenses:
1. The Forecast is based on information derived from lease contracts, budgets and additional information
provided by the Seller.
2. The Forecast has been prepared for the Acquisition only. It is assumed that the Property will not be sold during
the Forecast Period.
3. Rental revenue has been forecast on a lease-by-lease basis.
4. 87% of rental and recovery income for the Forecast Period is contracted. The remaining 13% of rental and
recovery income is near-contracted and represents renewals which have been forecast at current market rates.
5. Contracted revenue comprises rental and recovery income based on existing lease agreements, including
stipulated increases, all of which are valid and enforceable.
6. Near-contracted revenue comprises rental and recovery income from leases expiring during the Forecast Period
which are assumed to renew at current market rates, unless the lessee has indicated its intention to terminate
the lease. Such revenue is classified as near-contracted rental revenue from the date of expiry of the lease.
7. No fair value adjustment is recognised.
8. There will be no unforeseen economic factors that will affect the lessees' ability to meet their commitments in
terms of existing lease agreements.
8. Categorisation
The Acquisition is classified as a category 2 acquisition in terms of the JSE Listings Requirements and accordingly
does not require Vukile shareholder approval.
27 February 2026
JSE sponsor NSX sponsor
Java Capital IJG Securities (Pty) Ltd
Date: 27-02-2026 07:05:00
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