Puerta Europa Shopping Centre | Photo Collected From Google Maps
With long-term growth prospects, the Spanish REIT, 98% owned by Vukile guarantees that there is capital available to carry out new investments in the future. But the current situation marked by the pandemic may have stopped its plans, which included entering Spain’s Stock Exchange. «Castellana is very healthy and the goal is to keep growing while we can. Once the market clears the way, we will start investing again», stated Alfonso Brunet, Castellana Properties’ CEO, in an interview to Spanish Expansión.
For now, the market dictates that the company remain at BME Growth, the Spanish secondary market where it has been listed since 2018, since «for now there is no benefit in being on the continuous Stock Exchange since retail’s shares are very low», explained Alfonso Brunet who assumed that «with the pandemic, our plans [to enter the continuous market] were delayed, but the goal remains». The company’s long-term goal seems clear to the Spanish REIT’s CEO: «We want to be one of the players with a great share of the Spanish market and that can either be achieved by consolidation or by buying assets».
The fact is that the last time Castellana Properties invested in the Spanish market was last Summer when it bought the shopping centre Puerta Europa from Värde Partners for 56.8 million euro. This was one of three acquisitions Castellana Properties Socimi was involved in during 2019. The other two concern two stores within shopping centres Bahia Sur and Los Arcos with a total combined area of 23.000 sqm for 36.8 million euro, and the purchase of 3 Stores at Pinatar Park, in Murcia, for 3.6 million euro from Ativ-Group.
Leaving the purchases on standby for the moment, the Spanish REIT is preparing to divest, especially its office assets, since they are «non-strategic assets», and to streamline the retail assets’ rotation. At the moment, the company’s focus is on the sales recovery of its shopping centres and the continuous negotiation with its tenants. «Up until now we have reached agreements to 80% reductions including allowances and contract extensions», revealed Alfonso Brunet.
After 5 years, Castellana Properties has an 18 asset portfolio with a total combined area of 373.419 sqm, it can be read on the company’s official webpage. Its real estate portfolio felt the impact of the pandemic in March, when its value was reassessed at 1.003 billion euro, 2.38% less than December 2019.
The company informed, in a press release, that «the valuation from the 31st of March 2020 reflected the possible impact of the Covid-19 with rent discounts extensions considered for the period between April and December, the potential turnover rents and mall income also impacted, discount rates adjusted to reflect market sentiment and the lower market rental growth rates».
Despite this result, Castellana Properties did not lose heart and followed through with the refurbishment and expansion of three of its shopping centres: Bahía Sur (Cadiz), Los Arcos (Sevilla) and El Faro (Badajoz), on which it intends to spend 30 million euro.