Vukile Buys 2 Shopping Centres in Spain for €65.2M

7 December 2017 – Business Live

Local real estate investment trust (Reit) Vukile Property Fund closed weaker on Wednesday, following an announcement that it was acquiring two more shopping centres in Spain.

Vukile said it was set to buy the Alameda Shopping Centre and Retail Park in Pulianas, Granada for €54.5m and the Pinatar retail park in San Pedro del Pinatar for €10.7m. Vukile’s Castellana subsidiary, in which it holds a 98.3% stake, would conclude the transaction.

Vukile announced in July that Castellana had acquired a portfolio of nine retail parks in a €198m transaction and also established an in-country management team and operational platform. The acquisitions allowed Vukile, via Castellana, to leverage its operational platform and grow its Spanish portfolio of retail parks.

The territories in which Castellana operates, continue to experience strong demand for space with limited prime retail park availability, which will enhance Castellana’s retail offering, Vukile said.

Vukile was down 3.3% to R19.72 (equivalent to approximately €1.23 on 7 December 2017). It has gained 5.57% in 2017.

Vukile is the only South African-based Reit with noteworthy exposure to Spain. The other listed players that have a small exposure to the region include Schroder European Real Estate Investment Trust, Greenbay Properties and Intu.

Vukile is following in the footsteps of many local property groups by diversifying from local operations into international assets, predominantly in eastern Europe.

Catalyst Fund Managers investment analyst Mvula Seroto said local Reits have been affected by the lacklustre economic environment. “We see the potential for negative earnings surprises in some listed funds.”

Despite this, most South African-focused listed property firms were trading at discounts to their net asset values. This puts management teams in a tough position to raise new equity to fund acquisitions.

Original story: Business Live (by Maarten Mittner)

Translation: Carmel Drake

The Fund Polygon Asks Slim To Raise His Bid For Realia

15 March 2016 – Expansión

The British fund Polygon is legally mobilising itself to try to obtain the maximum value from Realia. The fund, which controls an 8.53% stake in Realia through various financing vehicles, considers that the price of €0.80 per share that the Mexican tycoon Carlos Slim is offering in his takeover bid “is clearly a long way from a fair price”. The fund, which is headquartered in London, is demanding at least €1.78 per share, more than double the bid price. In letters to the National Securities Market Commission (CNMV) and the Board of the real estate company, Nicolas Dautigny, one of the Directors of European Investment at Polygon, says that the price of €0.80 per share that Slim is proposing, through Inmobiliaria Carso, “is not fair” and “significantly undervalues the company’s assets”.

The letters, to which Expansión has had access, copy in the law firm Araoz y Rueda Abogados, advisors to Polygon, and thereby begin the legal procedure to demand a higher price for the takeover.

In its letter to the Board of Realia, Polygon urges the governing body to engage an independent investment bank and to look for “alternative buyers” for the company “in order to maximise its value”. “Otherwise, Slim will take control of Realia without paying the fair price”, he adds.

Meanwhile, in its nine-page letter to the CNMV, the fund lists a number of arguments that, in its opinion, justify that the price of the takeover bid should be higher. The first is the net asset value (NAV) per share that the company itself assigns its assets. According to Polygon, the company has set a net asset value of €1.40 per share. That should be the starting point. Polygon says that the takeover bid should be higher than that price because “the value of the assets published by the company is too conservative compared with other companies in the sector in terms of the appreciation of its real estate assets in Spain in 2015”. Specifically, “if we apply the same increase that Colonial saw in its assets during 2015, i.e. 16%, then Realia has a NAV value of €1.78 per share”, explains Polygon.

Serious violation

Polygon warns the CNMV about the financing agreements between Slim and Realia, which are happening in parallel to the takeover, and says that it understands that “the Board’s duty of neutrality has been breached” by Realia, which may constitute a “serious violation” of the Securities Market Act, and it calls upon the CNMV to investigate this matter.

Original story: Expansión (by M. Á.Patiño)

Translation: Carmel Drake