VUKILE Property Fund’s Spanish subsidiary Castellana Properties Socimi has acquired a 21.7 percent stake in its listed peer Lar España Real Estate Socimi for €100 million (R1.72 billion), a deal that might pave the way for further co-operation between them, Vukile chief executive Lawrence Rapp said yesterday.
He said in an online presentation that the shareholding became available from a private equity company and had presented an opportunity to buy a value accretive investment, with similar operations to Castellana, at a deep discount to net asset value, which held €200m in cash.
Both Socimis (Spanish real estate investment trusts or Reits) are specialist retail property investors with geographically complementary portfolios. The deal gives Castellana exposure to the entire Spanish peninsula, as Castellana’s shopping centres and retail parks are in the south-west, while Lar España’s are in the south-east, said Rapp.
The deal would be funded with €15m in cash from Castellana, a €10m Vukile shareholder loan to Castellana, while Vukile would provide a €75m short term facility to be converted into equity. The deal was not expected to impact Vukile’s loan-to-value.
Rapp said Castellana’s occupancies, vacancy rates, footfall growth and trading turnovers were showing that Spain’s shoppers were returning to shopping malls and retail parks post the Omicrom virus in the same way as had happened in previous stages of the Covid-19 pandemic.
In addition, tourism was expected to resume, Spain’s consumers held a strong consumption bias, the retail shopping market was not over-traded in terms of space, and the Spanish GDP per capita level was high and growing, he said. These factors boded well for their investments in the property retail shopping market in that country, he said.
“Castellana’s strong cash-flow position combined with the right opportunity to invest in Lar España shares, presented us with an exciting prospect to recycle capital into a compelling investment, with more attractive yields than other opportunities in the direct property market,” he said.
Lar España’s performance was similar to that of Castellana. In October and November 2021, Castellana’s footfalls were 99 and 98 percent of pre-pandemic 2019 levels, portfolio occupancy was consistent at around 97 percent, and collections were over 95 percent..
Like Castellana, Lar España’s portfolio of 14 assets had also bounced back strongly to pre-pandemic trading levels - Lar España’s occupancy rate was at 95 percent, with most of its tenants being large international and national tenants, including the most recognisable retail brands in Spain.
BUSINESS REPORT