Vukile Property Fund (JSE: VKE), the leading specialist retail real estate investment trust (REIT), has confirmed that its 99.5% held Spanish subsidiary, Castellana Properties, has signed a €254 million financing agreement with Aareal Bank A.G.. The five-year agreement is supported by Banco Santander and BBVA, further diversifying Castellana’s sources of funding.
The milestone funding agreement has successfully refinanced the loan associated with the El Faro, Bahía Sur, Los Arcos, and Vallsur assets, and will continue financing active asset management and repositioning projects across various assets, thereby increasing the portfolio value.
As part of the transaction, €50 million of the previous debt has been repaid, reducing Castellana’s leverage and improving its Net Loan to Value (Net LTV) from 39%, as reported in their last financial results, to 34%. This transaction also extends Castellana’s average debt maturity from 2.7 years to 5.1 years compared to the figures in their most recent financial results. Additionally, the loan has been fixed for three years, improving Castellana’s interest rate hedge ratio to over 90%.
Laurence Rapp, CEO of Vukile, comments, “We are pleased to report that Castellana has further strengthened its financial capacity as it continues to grow, add value and reinforce the dominance of its portfolio.”
Vukile is a leader in convenient, community-focused, needs-based retail centres. It owns 32 urban, commuter, township, and rural malls in South Africa, its Castellana portfolio of 15 shopping centres in Spain, and three shopping centres in Portugal that Vukile recently agreed to acquire in a milestone transaction expected to close on 1 October 2024. After this acquisition, around 64% of Vukile’s assets will be located in the Iberian Peninsula, and almost 56% of its property net operating income will be in Euros.
Rapp confirms that Vukile remains dedicated to its strategy in South Africa and the Iberian Peninsula. “Robust financial capacity enables us to pursue suitable opportunities that are strategically aligned and financially accretive.”
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