The REIT Report Episode 7: A bank’s perspective on funding the SA REIT recovery

In the seventh episode of The REIT Report on Classic Business (Fine Music Radio), Vanessa Murray, Divisional Executive at Nedbank Corporate and Investment Banking Property Finance joins hosts Michael Avery and Alistair Anderson of Property Flash to give a banker’s perspective on the current state of the South African REIT sector, the deal pipeline crossing her desk and what management teams are telling their funders behind closed doors.

The conversation opens on the broader market backdrop. After a 30% sector return last year and three strong post-Covid years that briefly saw seven or eight REIT shares trade at a premium to net asset value for the first time in close to a decade, the market reversed sharply in March 2026 as the conflict in the Middle East drove inflation expectations and prompted the SARB into a fresh rate hike ,with the possibility of more to come. Murray characterises the current environment as a mixed bag, with a strong development and acquisition pipeline at the start of the year, ongoing deal activity, but a clear new layer of caution as the lag effect of higher rates works its way through balance sheets and tenant trading lines.

On where the bank is putting its money to work, the conversation surveys each major subsector. The Cape region stands out, with low single-digit office vacancies and active development across retail, industrial and affordable residential. Industrial remains a structural favourite, with demand for both modern large-format precincts and the smaller mini-industrial units targeted at the SME market. Beyond premium office nodes such as Attacq’s Waterfall City and Rosebank, which continue to perform strongly, the office story is increasingly one of conversion to residential rather than new development. Non-metro retail still attracts capital but has tapered as competition builds, with Nedbank doing deeper due diligence on micro-markets before backing each project.

Murray’s central message on balance sheets is that South African REITs are probably the best positioned they have ever been, with stronger earnings, lower leverage and lower funding costs coming through the most recent reporting season. The 60% loan-to-value cap remains the regulatory ceiling, but the market now treats sub-40% as the magic threshold for institutional comfort. Debt capital market pricing has compressed by around 50 basis points and around R6 billion was raised on the equity capital market in 2025, with Vukile recently following up with a R2.8 billion raise to fund its Italian expansion. Funding structures have become highly competitive and bespoke, requiring banks to offer flexibility on gearing, covenants and tenor rather than simply meeting a target rate.

The discussion closes on two themes that punch above their weight. The first is township retail, where Nedbank has anchored the Township Retail Investment Summit and where Murray argues that strong trading has long been a feature of the segment, with growing visibility, modernisation and tenant aspiration now drawing fresh institutional capital. The second is what the sector needs from here, which Murray identifies clearly as economic growth, a benign interest rate path and structural reform through initiatives such as Operation Vulindlela, with functional local government called out as the single biggest unlock for developers.

The REIT Report is a twelve-part podcast series produced in partnership with the SA REIT Association and Property Flash.

Listen to Episode 7: https://iono.fm/e/1682452

Itumeleng Mothibeli

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Managing Director – Southern African division of Vukile Property Fund

Itumeleng Mothibeli

Chairperson of the Research Committee

Itumeleng Mothibeli is the Managing Director for the Southern African division of Vukile Property Fund, a real estate investment trust (REIT) listed on the Johannesburg Securities Exchange. He oversees a substantial property portfolio valued at around R16 billion. His role includes setting the strategic direction, leading a team of 13 senior managers, and handling operations that generate over R1 billion in net property income annually. His operational focus includes property redevelopment, reducing vacant space, and aggressive financial management. Itu’s journey with Vukile began in 2012 when he was hired as an Asset Manager. He was promoted in 2017 to oversee the asset management department and then took on the leadership of the entire Southern African business in 2019. The swift progression speaks to his proficiency in real estate investment and management.

Before joining Vukile, Itu started as a Research Analyst in real estate at Old Mutual Property in 2007. Here, he specialised in researching opportunities in African and International Emerging Markets. He later joined the Old Mutual SRI Real Estate Fund, where he was part of a small investment team that grew the fund’s assets from R158 million to R520 million in just two years. His focus was primarily on portfolio performance management and driving operational efficiencies.

Itu holds a BCom in Accounting & Management, an MCom in Financial Management and an MPhil in International Business. With 15 years of experience in real estate investment, five at the executive level, he brings a wealth of knowledge to his role. Outside his professional commitments, Itu is dedicated to sustainable business practices and community involvement, notably with the Eluxolweni Children’s Shelter. He also enjoys ultra-marathon running in his spare time.

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