Castellana Properties SOCIMI makes a debut investing 193 million euros in 9 retail parks
Vukile Property, South African REIT, partners with the Morze family to buy nine retail parks for 193 million euros, with a total surface for rent of 117,670 square meters. Vukile closed the transaction through the subsidiary Castellana Properties.
The nine retail Parks were previously owned by Redevco Iberian Ventures, a joint venture between dutch real estate company Redevco, and Ares Management. These nine assets make of Spain the second market of reference for Vukile, after South Africa, as well as the operation base for the coming business growth strategy in Western Europe.
The South African investment fund specializes on long term retail park management with a conservative approach to the financial management.
Vukile has 45 retail parks in South Africa with a total surface for rent of 795,000 square meters and a market value of 18,700,000,000 Rands (approximately 1,300,000,000 euros. It is listed in the Johannesburg and Namibia stock markets.
By means of Castellana Properties, the fund expects growing in Spain. With this new nine acquisitions, assets out of South Africa represent 21% of the total assets managed by the fund.
The portfolio acquired comprehends retail parks integrated in shopping and leisure centres. It consists of retail areas in Parque Oeste, in the municipality of Alcorcon (Madrid), and Parque Principado, next to Oviedo (Asturias). The total surface for rent adds up to 30,000 square meters.
The additional 90,000 square meters for rent are distributed between the retail parks Mejostilla (Caceres, Caceres); La Heredad, (Merida, Badajoz); La Serena (Villanueva de la Serena, Badajoz); Motril, named after the municipality where it is located, in the province of Granada; Kinepolis (Granada, Granada), Ciudad del Transporte (Castellon, Castellon), and Marisma del Polvorin (Huelva, Huelva).
95% of the gross income from rents in these new parks come from Spanish and international companies, such as Media Markt, Sprinter, Worten, Aki, or Mercadona, among others.
Vukile will fund 103 million euros with its own resources of the total 193 million euros cost of the transaction, up to 198 million euros including the cost of acquisition. The additional 94.8 million euros will be funded by Castellana Properties through a pool of banks including Santander, CaixaBank, BBVA, and Bankia, among others.
The properties have been acquired with a 6.2% pre-leverage return.
Redevco Iberian Ventures was assessed by JLL and Dentons in the operation. Vukile was assessed by RPE, Grant Thornton, and Ashurst.
Redevco will continue to manage the nine retail parks through a transitory period of six months. In this period, Vukile will develop and implement the structure of Castellana Properties as an investment fund specialized in profitable retail assets in Spain.
The fund has identified an executive team specialized in the Spanish retail market who will be joining to Castellana once their respective non-competence clauses conclude, with a deadline of six months.
Likewise, Castellana Properties and future acquisitions will be reinforced through the collaboration between Vukile, and Lee and Chad Morze, renown and successful South African businessmen living in Spain. The Morze family will be part of Castellana Properties and their expertise and know-how will strengthen the differential value of the new REIT.
The CEO of Vukile Property Fund, Laurence Rapp, highlighted that, with the present operation, the company “obtains a qualified platform for growth in one of the most attractive investment sectors in the Euro Zone. We are highly satisfied with the scope and conditions of the agreement as an investment, serving as solid and strategic ground for future operations”. Furthermore, Rapp assessed the opportunities and transparency offered by the Spanish market, with one of the highest growth rates in Europe and fundamental assuring long term development. On the other hand, Rapp is thankful to Spanish advisors RPE and the legal firm Ashurst given their key role in such operation.