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

Irea: Hotel Inv’t Amounted To €1,363M In YTD Sept 2016

17 October 2016 – Europa Press

Hotel investment in Spain has continued its strong momentum during the first nine months of 2016 to reach €1,363 million, according to a report about hotel investment in the real estate sector prepared by Irea. The report also shows that the figure could rise to €1,800 million by the end of the year. Despite the fact that the investment figure is 16% lower than the level recorded during the same period last year, it is the second best year ever.

Investor interest in hotel assets is still very high and if some of the main operations that are currently on the market are actually closed as a result of the year-end effect then the figure could end up exceeding €1,800 million by the end of 2016. The profile of investors has changed considerably with respect to 2015, when the Socimis (primarily Hispania and Merlin) were the stars and investment involving asset portfolios accounted for half of the total investment volume.

In 2016, operations involving individual assets are clearly dominating the market and are spreading in a general way across the whole country, versus the trend in recent years when there was a higher concentration of investment in traditional destinations.

The increase in the number of hotels sold to date in 2016 has been noteworthy (97 hotels compared to 83 last year), however, the average size per number of rooms has decreased significantly to 142 rooms from 214.

Madrid leads investment with €310 million.

In geographical distribution terms, Madrid leads the investment table for the second year in a row, with €310 million, followed by Barcelona with €302 million (the two regional capital cities account for 45% of total investment). The Balearic and Canary Islands are ranked in third and fourth places with €206 million and €198 million, respectively.

Whilst the figures in the Balearic Islands have remained stable compared to 2015, they have decreased in the Canary Islands after the high volume of investment seen in 2015, when it was the main investment destination in Spain.

Finally, there has been a notable increase in contributions to total investment from secondary destinations. In 2016, hotel investment has been distributed amongst 68 municipalities so far, compared with 44 in 2015 and 25 in 2014, which shows that the hotel investment market is establishing itself in Spain.

Investment is now reaching regional capitals such as Gijón, Oviedo, Orense, Lugo, Granada and Alicante, for example, i.e. places where barely any activity had been recorded in recent years.

The Socimis decrease their level of investment

The profile of investors has also changed markedly since 2015, when the Socimis were the undisputed stars, accounting for almost 50% of total investment volume in the hotel market in Spain.

This year, the Socimis have faded into the background, accounting for approximately €85 million of investment (only 6.2% of total hotel investment), whilst other types of investors have grown.

International investors have invested €585 million to date, almost twice as much as they spent in 2015, led by the Dogus Group, which purchased the Hotel Villa Magna in Madrid and Westmont Hospitality, which acquired a majority stake in Torre Agbar in Barcelona.

In terms of national chains, they invested €276 million in total on the purchase of 32 hotels. Highlights included Hotusa, which was the most active group, purchasing five properties during the first nine months of the year.

Meanwhile, domestic investors spent €304 million on hotels in total. The star of that category was HI Partners, which has acquired seven hotels so far this year, primarily in the vacation segment.

Original story: Europa Press

Translation: Carmel Drake