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Vukile’s Socimi Plans to Grow its Asset Portfolio by 2.5x to €1bn in 3 Years

25 June 2018 – Expansión

Castellana Properties is accelerating its growth plans with the aim of becoming the largest Spanish Socimi specialising in the retail sector in Spain and fighting off competition from its rivals Lar and Merlin. The company controlled by the South African fund Vukile Property is seeking to grow its asset portfolio to €1 billion over the next three years, which would see it multiply the size of its current portfolio, comprising 15 properties with a value of around €400 million and spanning 197,000 m2, by 2.5 times.

“We are going to do this through organic growth, in other words, by buying new assets”, explains Alfonso Brunet, CEO of Castellana Properties. The director has extensive experience in the real estate sector, in particular in retail, after his time at the fund Pradera and the consultancy firm CBRE.

“We are an income fund – over the long term – and we seek stable, predictable rental income, with potential for future growth. Given the current macroeconomic environment and recovery, we see clearly that there is upwards potential in the retail market”, he says.

To achieve its objective, the Socimi is analysing the purchase of both portfolios and individual assets, above all in secondary cities and prime locations. Currently, the company “is studying operations worth €2 billion”.

In terms of its immediate plans, Castellana Properties will make its debut on the Alternative Investment Market (MAB) before September. “We are not going to undertake any capital increases ahead of the MAB debut. We want to grow in size so that, in the future, we will be able to attract new investors to help us grow”, he adds.

The firm’s objective involves achieving sufficient volume to make the leap onto the main stock market. “Our main shareholder is Vukile, which is a Reit (an entity equivalent to a Socimi) and it is interested in securing new investors.

Background

Castellana Properties started life in December 2015 with the purchase of two office buildings in Madrid and Sevilla. A year later, the South African fund Vukile purchased 98% of its share capital and prepared its next major operation: the purchase of a portfolio of nine retail parks spread over several Spanish towns for almost €200 million. The latest acquisition in May of this year involved the purchase of the Habaneras shopping centre in Alicante for €80 million.

Currently, the firm owns 13 retail parks and shopping centres and two office buildings, and its activity accounts for 21% of Vukile’s business.

Brunet acknowledges that, after the start of the recovery in Spain, the prices of real estate assets have risen due to interest from investors. “We think that there is a lot of potential for rental incomes to rise following the decreases of the crisis. Given that we are an income fund, that is what interests us the most”, he adds.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake