Vukile’s Spanish assets pass €1bn after its 19th purchase
The property fund owns 72.2% of Castellana Properties, which was recently listed in Madrid and is the ninth largest real estate investment trust in Spain
JSE-listed Vukile Property Fund’s Spanish investment has topped €1bn (R16bn) following the purchase of a mall in Algeciras, Cadiz, its 19th retail asset in the country.
Vukile first invested in Spain two years ago as it looked to mitigate against economic and political risks in SA, and for growth offshore. Spain’s recovery after the 2008/2009 global recession and housing market collapse began to gain momentum about three years ago.
CEO Laurence Rapp said on Thursday that Vukile’s listed Spanish subsidiary, Castellana Properties, had bought the “high-quality, 30,000m2 Puerta Europa shopping centre” via a mix of debt and equity.
“Puerta Europa is a dominant, modern shopping centre, distinguished by impressive sales ratios and low average rentals relative to the market, and we see exciting potential to grow its income streams,” Rapp said.
Vukile is the only JSE-listed property company with assets in Spain. Through Castellana it owns a mix of retail parks and shopping centres, many of which are located in coastal towns that benefit from tourism. Spain was the second most visited country in the world after France in 2018.
Vukile now owns 72.2% of Castellana and Rapp sits on its board. The company was also recently listed in Madrid and is the ninth largest real estate investment trust in Spain.
Castellana owns malls in cities and towns including Cadiz, Alicante, Sevilla, Badajoz, Madrid, Valladolid and Granada, among others.
Rapp said Vukile has managed to find a strong investment partner in Castellana Properties while other SA funds are investing in central and eastern Europe.
The group aims to increase its Spanish asset base to €1.5bn or R24bn in its 2020 financial year — the size of a large SA property mid-cap. After acquiring Puerta Europa, as much as 47% of Vukile’s assets will be in Spain, while 3% will be in the UK through a holding in Atlantic Leaf Properties. About 50% of Vukile’s assets are exposed to Southern Africa.
Castellana’s CEO Alfonso Brunet said that while the company could consider spreading its investments into Portugal, there are enough investment opportunities across Spain and it will remain focused on that country.
The Spanish economy is set to expand 2.2% this year, twice the pace of the eurozone area. Unemployment has fallen sharply to about 14.7% from 25% in 2012. This as SA’s economy is expected to see less than 1% growth in 2019, given the Reserve Bank’s latest forecasts. SA’s unemployment rate is nearly 30%.