Vukile Pproperty Fund’s board said yesterday they would review an offer for Lar España Real Estate Socimi S.A. (Lar España), a strongly performing asset in the portfolio of Vukile subsidiary Castellana Properties Socimi S.A.
A consortium between Hines European Real Estate Partners III, and a vehicle controlled by Grupo Lar Inversiones Inmobiliarias, has made an offer for Lar España at a price of €8.10 per share (which will be reduced by any distribution that Lar España may declare during the offer period), an offer that values the company at €677.91 million (R13.55 billion).
Vukile’s board said in a statement that they had not had any discussions with the consortium regarding to the potential transaction, and that as 28.7% owner of Lar España, through Castellana, it would review the offer in detail and analyse its various strategic alternatives. Business Report calculated that Vukile could realise more than R3.8bn in cash if it accepts the offer.
Lar España, according to its website, is a big player in the retail sector in Spain, with a portfolio of 12 real estate assets, including nine shopping centres and three retail parks, valued at close to €1.4bn.
Lar España reported €25.5m of revenues in the first quarter of 2024, an increase of nearly 3% over the same quarter last year. Recurring net profit was €17.4m, 21% higher than in the first quarter of 2023.
It paid a dividend of 79 euro cents per share, totalling €66.2m. Since its creation in 2014, it has distributed nearly €400m in dividends. An online search showed that last year, Lar España provided the highest dividend yield at year-end of all Spanish real estate listed companies and European listed companies specialising in retail property.
The portfolio has close to 500 000 square metres for rent and a current occupancy rate of 97.1%.
The transaction was considered friendly, as one of the bidders was on the Lar España board, and there was no intention to delist the company from the stock market in Spain. The price offered represented a premium of 16% over the last quoted price and 25% of the weighted average price over the last six months. Yesterday, however, the share price was trading at €8.20, above the offer price.
Of Vukile’s about R40bn property portfolio, 61% is held in Spain. Last year, in fact, Vukile increased its stake in Lar España by 3% because of the large discount to net asset value that the company was trading at on the Spanish market.
Vukile has no immediate need of cash, as in the year to March 31, 2024, it held R2.4bn of cash and some R2.9bn of undrawn facilities. This after a year of strong results including a 10.5% increase in dividend per share to 124.2 cents per share, and 6.7% growth in its funds from operation to 154.2cps.