March 12 2025 17:10
Bonaire Shopping Centre
Vukile Property Fund (JSE: VKE), the specialist retail real estate investment trust (Reit), through its 99.5% held Spanish subsidiary Castellana Properties, has acquired the largest shopping centre in Spain’s Valencia province, the Bonaire Shopping Centre, from multinational retail real estate investment trust (Reit) Unibail-Rodamco-Westfield. The purchase consideration of €305m represents an entry yield of approximately 7%.
The acquisition of the centre, considered to be one of the best shopping centres in Spain, was initially delayed because of torrential flash flooding in the Valencia region in October 2024. As part of the centre’s reinstatement, Unibail-Rodamco-Westfield refurbished the ground floor’s common areas and retail units, with many retailers simultaneously taking the opportunity to upgrade their stores and introduce new concepts.
Bonaire Shopping Centre reopened to record footfalls on February 13 2025, “further confirming its position as the leading shopping centre in its region” according to Vukile.
“We are thrilled to have secured this exceptional asset from Unibail-Rodamco-Westfield further cementing Castellana’s position as a leading player in the Iberian retail property market. This accretive deal is our biggest by value to date and furthers our growth in Spain with a market-leading institutional grade asset,” said CEO of Vukile Property Fund, Laurence Rapp.
The acquisition is funded with the €200m proceeds from the sale of Castellana’s stake in Lar España.
“We made a tremendous profit of around EUR80 million on the Lar España trade and to redeploy the proceeds so quickly into such a high-quality asset and ensure no cash leakage is testament to our team’s deal making expertise,” said Rapp.
Rapp stressed that Castellana had completed its strategic expansion into Portugal, where it has bought four shopping centres since September 2024, funded with proceeds from the R1.5bn raised by Vukile in September 2024.
“These transactions are testament to Vukile’s and Castellana’s entrepreneurial and agile edge in the Iberian retail market, where local market knowledge, speed and creative deal-making are critical to success,” said Rapp.
As part of the acquisition of Bonaire, Castellana has received an 18-month net operating income (NOI) guarantee. The centre currently has ample parking readily available, and its underground car park is expected to be reinstated and reopen by mid-2025 at no additional cost to Castellana.
Bonaire Shopping Centre is in Valencia, the third largest city, fourth most popular tourist region and third most populous residential area in Spain, boasting consumers with incomes well above the national average. Valencia has attracted the third highest level of investment in Spain over the past five years. It enjoys links to local and international markets, with the second largest port in Spain and the fifth largest in Europe. It connects to all major cities in Spain via Spanish high-speed AVE trains, which operate on the longest high-speed network in Europe. Furthermore, the Valencia Airport is located very close to the centre.
The open-air centre has a 99% long-term occupancy rate with a mix of brands, appealing to customers from across the entire region. Tenants include six Inditex fashion brands including Zara, as well as Primark, JD Sports, Cinesa, Mango, H&M and Fnac.. Bonaire also features a top-floor leisure, food and beverage area that was refurbished in 2016. The 138-store, 55,800 square metre gross lettable area (GLA) centre acquired by Castellana is linked to an Alcampo hypermarket, which takes the total property to 78,000 square metres. Bonaire is part of a powerful retail node of 135,200 square metres and 151 stores, including Leroy Merlin, Decathlon and leasing Scandinavian furniture retailer JYSK.
For Castellana, the transaction strengthens its portfolio of shopping centres in Iberian regional cities and expands its footprint on Spain’s east coast.
For Vukile, the deal scales up its Spanish investment. From a zero base in July 2017, following the Bonaire Shopping Centre acquisition approximately two-thirds of Vukile’s assets will be offshore in the Iberian Peninsula, in the high-growth, attractive markets of Portugal and Spain.
alistair@propertyflash.co.za
