Vukile Property Fund, the specialist retail real estate investment trust (REIT), has concluded an oversubscribed auction of senior unsecured notes, attracting bids of R3.65 billion, resulting in the issuance being over 3.3 times subscribed.
The notes include three maturity tranches, all priced well below initial guidance, achieving a weighted average margin of 102bps over ZARONIA. The South African Rand Overnight Index Average (ZARONIA), based on actual overnight market transactions, is succeeding Jibar as South Africa's benchmark interest rate, ahead of Jibar's final publication at the end of 2026.
“We are pleased with the strong demand and supportive pricing in this auction, showcasing Vukile's exceptional credit quality, which GCR reaffirmed in July as an AA+(ZA) issuer rating with a stable outlook. The results reflect the market's continued confidence in Vukile's diversified retail portfolio and our disciplined approach to capital allocation,” said Laurance Rapp, Vukile CEO.
The auction comprised three tranches: R272 million for three years, R408 million for five years, and R420 million for seven years, clearing at margins of 83bps, 96bps, and 119bps over ZARONIA, respectively. All tranches priced materially inside the lower end of guidance, demonstrating strong investor appetite and resulting in an attractive funding outcome for Vukile. The notes are expected to settle on 27 August 2026.
“The results reflect the market's continued confidence in Vukile's high-quality, diversified retail portfolio and our disciplined approach to capital allocation,” he said.
FirstRand Bank Limited, acting through its Rand Merchant Bank division, was the sole lead arranger for the auction.
“The strong investor interest, with 17 diverse bidders participating and a subscription cover ratio of 3.3 times, reflects Vukile's continued standing as a regular and credible issuer in the debt capital markets. The successful execution and attractive pricing achieved across all three tranches reflects the market’s positive view of Vukile’s credit fundamentals, resilient balance sheet, and clear strategic direction,” said RMB DCM co-head Trishalia Naidoo.
“This auction was executed against the backdrop of the market's transition to ZARONIA, and the positive pricing across all three tranches continues to lower Vukile’s cost of debt while extending our maturity profile,” said Vukile head of treasury Maurice Shapiro.
Last month, GCR Ratings affirmed Vukile's national scale issuer rating at AA+(ZA) for the long term and A1+(ZA) for the short term, with a Stable Outlook, following its latest review.
According to GCR, the rating reflects Vukile's “large, geographically diverse retail portfolio, with proven asset enhancement strategies supporting consistently strong operating performance,” and the company's “demonstrated capital discipline, having grown its property portfolio materially over the last two and a half years via a balanced mix of debt, equity, and asset recycling, with a sound financial profile expected to be maintained.”
Vukile is a uniquely customer-led specialist retail property group and the third largest primary JSE-listed South African REIT (real estate investment trust) with a total asset value of R63.7 billion and 70% of its portfolio invested in Spain, Portugal, and Italy. The group is rooted in South Africa, where it has a portfolio of township, rural, urban, and commuter malls.