Castellana Properties, a Spanish REIT (socimi) focused on the acquisition, management and refurbishment of retail real estate assets, has today, in its Shareholders’ Meeting, approved the acquisition of Morzal Property Iberia, S.L., owner of a portfolio of four shopping centres in Spain, originally purchased from Unibail-Rodamco-Westfield on July 31st, 2018.

Castellana Properties has purchased 100% of Morzal´s shares, and therefore its property portfolio, for a total price of €490M, equivalent to the initial transaction price. This transaction was executed through a capital increase subscribed by a non-monetary contribution of the shares in Morzal’s share capital, at a price of €6 per Castellana Properties’s share, which makes Morzal a 100%-held subsidiary of Castellana Properties.

Through this acquisition, Castellana Properties has added the following shopping centres to its portfolio: Los Arcos in Seville, Bahia Sur in Cadiz, El Faro in Badajoz and Vallsur in Valladolid. These four centres have a total GLA of over 121,300 m2.

This transaction increases Castellana Properties’ average asset value from €27M to €48M and reduces its portfolio vacancy from 3.3% to 1.8% and increases its lettable area from 197,322 m2 to 318,622 m2.

After this transaction, Castellana Properties will be the ninth largest Socimi in Spain by market capitalisation, with a market cap of €460M.

Alfonso Brunet, CEO of Castellana Properties, explains: “This transaction, which doubles the value of the assets to reach a total value of around €900M, is an important step forward for the Company. He further added: “The acquisition of four shopping centres allows us to significantly strengthen our portfolio, diversifies our tenant mix and retail offering, and reaffirms our commitment to retail real estate in Spain”. Castellana Properties currently has a weighted average unexpired lease term of nearly 15 years with 92% of rentals coming from recognised national and international retailers.

About the new shopping centres

Bahía Sur is a regional shopping centre with a total gross lettable area of 59,300 m2, of which 24,760 m2 would be part of the acquisition, located in a strategic location in San Fernando, within the Bahia de Cadiz area, in a unique environment. Bahia Sur is the leading shopping centre within its catchment area which includes the city of Cadiz, Puerto Real and San Fernando. 87% of the tenants are operators with an international and national footprint including Inditex Group, Mango, Cortefiel and Disney Store. Bahia Sur has a large fashion component of 70% of the GLA and is complimented by a large owner-occupied department store (El Corte Ingles) and hypermarket (Carrefour).

El Faro is a regional shopping centre with a total GLA of 66,300 m2 of which 43,423 m2 would be part of the acquisition, situated in Badajoz, a city in the southwest of Spain, close to the Portuguese border. El Faro is the leading shopping centre not only in Badajoz city, but also in the surrounding areas, including Portugal, which comprises 20% of the annual footfall. 92% of the tenants at the centre are companies with an international and national footprint, including Inditex Group, Bricor, Media Markt and Primark.

Los Arcos, with a GLA of 44,000 m2 of which 17,906 m2 is part of the transaction, is the largest shopping centre in Seville. The centre was one of the first retail schemes opened in the city and was completely refurbished in 2013. With more than 90 tenants, Los Arcos has the largest and widest commercial mix in the region, with key brands such as Inditex Group, Hipercor and Sfera, turning it into an urban reference for retail in Seville with a wide range of services. There is opportunity to further strengthen Los Arcos’ position by enhancing the centre’s leisure offering.

Vallsur is a 36,000 m2 shopping centre (of which 35,211 m2 would be part of the acquisition) located in Valladolid, the 13th largest city in Spain. It is strategically placed within a mid-to-high class residential area. 93% of the tenants are operators with an international or national footprint, including Inditex Group, New Yorker, Carrefour and recently, Yelmo Cines Premium, the second Yelmo Premium cinema in Spain.