Vukile scales up in Spain


Vukile scales up in Spain

Published Date: 2018-07-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Vukile scales up in Spain

The property fund is buying a portfolio of four shopping centres which it may sell on to Spanish subsidiary Castellana

Vukile Property Fund is expanding its footprint in Spain with the acquisition of a controlling interest in a company that owns four shopping centres in the country.

The fund is subscribing for 66% of the shares in Morzal Properties Iberia for €152 million. Morzal is buying the Spanish portfolio from Unibail-Rodamco-Westfield for €489 million, including €30 million of transaction costs.

It says the deal will provide meaningful scale to its strategy to invest in the Spanish economy through retail property assets with strong fundamentals at an attractive yield of 5.9% and a cash-on-cash yield of 8.07% in the first 12 months.

The shopping centres in the portfolio include Bahía Sur near the city of Cadiz; El Faro in Badajoz in southwest Spain, close to the border with Portugal; Los Arcos in Seville; and Vallsur in the northwestern city of Valladolid.

Vukile said its 98% held Spanish subsidiary Castellana Properties was precluded from being party to the deal due to its planned listing on Madrid Junior Board later this month. However, after that, Vukile says it will offer to sell 100% of its stake in Morzal to Castellana at €6 per share, which represents Morzal's acquisition cost. The transaction, which will be offered on a shares-for-shares basis, will be subject to Castellana's own board corporate governance and it's under no obligation to go ahead with it.

Vukile may fund the deal using the proceeds of an accelerated bookbuild, launched yesterday. It raised R1.63 billion from investors, up from its targeted R1.3 billion, due to strong demand for the equity raise.

At the end of March, Vukile's Spanish portfolio was worth R4.5 billion.

Its shares closed 4.4% lower at R18.81 yesterday. The bookbuild was priced at R18.66 per share.

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