On this latest edition of The Property Pod, we zone in on both the South African and Spanish retail property markets.
“We’ve got the BT Ngebs City [shopping centre] acquisition, which is still in process. We have a number of redevelopment expansions within our Spanish portfolio which are very exciting projects. Very accretive yields coming from there.” “In answer to your question, it was a very attractive pipeline of opportunities to deploy capital [in]. And when the opportunity arose, we felt the timing was right, went to the market, and were very happy to get that that upsize, from R500 million to R700 million.”
“We bought the first quarter of those shares just over a year ago, and we felt that now was a very good time to exercise the call option and buy those shares.” Are you in a position to comment on what the value of your Spanish investments are now within the context of taking up this call option? “We’ve got a great team in Castellana, which is really self-sufficient in terms of all its own expertise and skillset that they need.”
“There’s nothing that one can say to sugar-coat that; they simply have been wrong in their analysis.” Coming back to the capital raise, it was done at around a roughly 5% discount in terms of average share price at the time. With most SA Reits trading at a discount already, including Vukile, what are your comments around this?
“The cynic will say, well, nobody believes the net asset value anyway, and therefore what the market feels is the real value of the underlying assets, because you do tend to get this divergence between the price of a physical asset and then the price of a Reit, which is simply an accumulation of assets.”
“So, when we raised the money, we looked and said, well, what yield are we raising the money at, and what can we deploy that money at in our business? On that basis we think we can raise the money at the levels we did, and deploy it in an accretive way for our shareholders, where the money in fact increases their distribution going forward.”