JSE-listed retail property trading company Vukile Property Fund added two Spanish retail parks, worth about €65-million, to its portfolio of 11 other Spanish retail parks.
CEO Laurence Rapp said in a note on Wednesday that the total value of the Spanish portfolio was about €290-million. Vukile’s Spanish real estate investment trust subsidiary, Castellana Properties Socimi, acquired the 25 500 m2 Alameda Park for €54.6-million at an initial yield on capital expenditure of 6.4%, and Pinatar Park for €10.7-million at an initial yield of 7%.
“We are pleased with the good deal flow that Castellana is experiencing and how quickly its presence has been established in Spain’s retail market,” said Rapp.
The 25 500 m2 Alameda Park in Granada, Andalusia, is a retail park and shopping centre with an occupancy rate of 98.6%. It has a strong national tenant component of 88%, including Decathlon, Mercadona and Maisons du Monde. It serves a good shopper base and has a catchment area of nearly 600 000 people with an average income of €20 000 a person per year.
Alameda Park is located next to Castellana’s existing asset, Kinepolis Retail Park and Leisure Centre, which is currently being upgraded in a €2-million refurbishment with a projected yield of over 15%. The internal and external improvements will elevate the centre’s look and feel and will bring in more natural light with larger shopfront windows. The upgrade responds to demand from retailers to take up space in the improved centre.
“The acquisition of Alameda has allowed Castellana to consolidate its position as the owner of the dominant retail park node in Northern Granada,” highlights Rapp.
Pinatar Park is located in San Pedro Del Pinatar, in Murcia, South-East Spain. The province is a new investment destination for Castellana, which is widening its footprint in the country.
Pinatar Park is a fully let 10 637 m2 retail park, anchored by strong retailers on long leases including AKI, Economy Cash and Jysk. All its tenants are national retailers. A highlight of this transaction is that Castellana has also secured the option to acquire an adjacent plot of land to extend the centre by a further 2 750 m2.
“Retail parks in Spain are a compelling investment proposition. They have proven to be resilient during the downturn, international brands dominate as tenants and there is a strong demand for space, certainly in the better shopper catchment areas.
“Retail parks are also well aligned to the latest shopping trends in the region and are best positioned for retailers’ omnichannel strategies, including click-and-collect points and distribution hubs,” Rapp explained.
The macroeconomic picture in Spain is promising. Its 2017 forecast gross domestic product growth is 3.1%, home consumption growth is 2.6% and consumer price inflation is 1.9%. It is the third most visited destination worldwide after the US and France. Spain had 11% growth in tourists in 2016 and is the second most popular international tourist shopping destination in Europe.
Castellana currently has assets worth €290-million. Around 91% of its portfolio by market value comprises retail properties. It has low vacancy levels of 0.5%, excluding development vacancy at Kinepolis Leisure Centre. Some 94% of its income comes from national tenants, and the portfolio has a long weighted average lease expiry profile of 17.5 years.