The company described the transaction as transformative and accretive, adding that it would boost its offshore exposure to above 40percent.
If approved, the transaction would increase the value of the portfolio in Castellana Properties, Vukile’s 98percent-owned Spanish real estate investment trust subsidiary, from 390m to circa 870m. The transaction is expected to be concluded by the end of this month. It coincided with Vukile yesterday raising R1.63bn through the placing of 86.7m new shares in an oversubscribed accelerated bookbuild process.
The four shopping centres in Spain were to be acquired by a separate investment property company (PropCo) created by Lee Morze, Vukile’s lead investment partner in Spain, from Unibail-Rodamco-Westfield
The transaction was part of the 3bn of disposals to be made by Unibail-Rodamco-Westfield during the next several years as part of its European asset rotation programme.
The portfolio being acquired comprises, the 43423m2 El Faro shopping centre in Badajoz, near Spain’s border with Portugal, the 24789m2 Bahia Sur shopping centre in Cadiz, the 17906m2 Los Arcos shopping centre in Seville, and the 35220m2 Vallsure shopping centre in Valladolid.
It would be funded by a combination of 257m in debt provided by European banks to the PropCo, 80m equity investment by a Morze-controlled vehicle, a 35m investment by Capricorn Capital and a 123m equity investment by Vukile.
Laurence Rapp, the chief executive of Vukile, said the fund had clearly stated its intention to grow its investment in Spain and they were thrilled to secure this sizeable transaction that was consistent and fully aligned with their strategy.
“This is an excellent quality portfolio, one of the best we have seen in the market so far.
“At a yield of 5.9percent, it is attractive and accretive to Vukile representing a cash-on-cash yield of 8.1percent in its first year,” he said.
Rapp said the transaction fast-tracked Vukile’s Spanish strategy.
“Vukile’s offshore exposure is now 47percent of assets, of which 43percent are in Spain and 4percent in the UK,” he said.
The fund first entered the Spanish retail property market in July last year.
The transaction will increase the average asset value in Castellana from 27m to 48m, reduce its portfolio vacancy from 3.3percent to 2.7percent, grow its lettable area from 197000m2 to 318000m2, increase its exposure to fashion retail from 16percent to 26percent of rental and decrease its rental exposure to electronics retailers from 13percent to 6percent.
Castellana is scheduled to list on the Alternative Equity Market of the Spanish Stock Exchange next week.
Shares in Vukile dropped 4.37percent on the JSE yesterday to close at R18.81.
- BUSINESS REPORT