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Conclusion of irrevocable undertaking to dispose of shareholding in Lar Espana
VUKILE PROPERTY FUND LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2002/027194/06)
JSE share code: VKE NSX share code: VKN
Bond company code: VKEI
(Granted REIT status with the JSE)
("Vukile" or the "Company")
CONCLUSION OF IRREVOCABLE UNDERTAKING TO DISPOSE OF SHAREHOLDING IN LAR ESPANA
1. Introduction
Shareholders are referred to the announcement published by Vukile on 23 July 2024 regarding the proposed voluntary
cash tender offer (the "Offer") for the shares of Lar Espana Real Estate Socimi S.A. ("Lar Espana") to be made by
the consortium formed between Hines European Real Estate Partners III SCSp and a vehicle controlled by Grupo
Lar Inversiones Inmobiliarias, S.A. (together, the "Consortium") at a price of EUR 8.10 per share (the "Offer
Price"), which will be reduced by any distribution that Lar Espana may declare during the offer period, based on the
offer announcement published by the Consortium on 12 July 2024 (the "Offer Announcement").
Vukile, through its 99.5% held subsidiary Castellana Properties Socimi S.A. ("Castellana"), holds 24 090 411 Lar
Espana shares (c.28.8% of the issued share capital of Lar Espana). Lar Espana is a Real Estate Investment Company
("SOCIMI") listed in Spain which invests in and operates retail properties across Spain.
Following a careful evaluation of its strategic alternatives, Castellana has negotiated an improved Offer Price of
EUR 8.30 per share. Based on the improved Offer Price, Castellana has concluded an irrevocable undertaking (the
"Irrevocable Undertaking") with Helios RE, S.A. ("Helios" or the "Offeror"), a special purpose vehicle
incorporated by the Consortium for purposes of executing the Offer, in terms of which Castellana will tender its
24 090 411 Lar Espana shares (the "Subject Shares") into the Offer for an aggregate cash consideration of
EUR 199 950 411.30 (the "Disposal").
The Offer will be made by the Offeror within the regulatory framework provided for under Spanish takeover law.
The Disposal proceeds are expected to be received by Castellana by the end of December 2024.
2. Rationale for the Disposal and use of Proceeds
The Disposal will allow Vukile (via Castellana) to realise a significant return on the Lar Espana investment,
generating an internal rate of return of c.45% p.a. since January 2022 in ZAR terms. This represents an investment
return of almost 3 times money in a period under 3 years and presents an opportunity for Vukile to redeploy the
Disposal proceeds into other strategically aligned and financially accretive opportunities with significantly lower
operational and execution risks.
Vukile remains committed to its growth strategy in Spain and the Iberian Peninsula, where it has (through Castellana)
established a significant presence and pipeline of opportunities.
Following Vukile's recent capital raise and, given the significant pipeline of opportunities, with a number under
active consideration in both Spain and Portugal, Castellana intends to redeploy the Disposal proceeds in line with its
expansion strategy in these key markets.
3. Salient terms of the Irrevocable Undertaking
3.1. Increase of the Offer Price
The Offeror undertakes to increase the Offer Price from the initial announced cash price of EUR 8.10 per share
to EUR 8.30 per share, subject to the terms and conditions of the Offer, and take all necessary steps to
formalise the increased Offer Price and proceed with the Offer.
If, for any reason, the Offer Price is further increased by the Offeror at any time in future, Castellana
shall be entitled to receive such improved Offer Price upon its acceptance of the Offer.
3.2. Acceptance of the Offer
Castellana has undertaken to accept the Offer in respect of all the Subject Shares for the increased Offer Price
of EUR 8.30 per share.
Castellana may not accept any third party offer in relation to the Subject Shares (even if such competing offer
consideration is higher than the Offer Price, whether in the form of cash, shares or a combination of both)
unless the Offer is withdrawn or not authorised by the Spanish Securities Market Commission (the
"Commission").
3.3. Amendments to the terms and conditions of the Offer
Subject to Spanish takeover law requirements, the Offeror is entitled to extend the acceptance period of the
Offer or to modify the terms and conditions of the Offer (but not to reduce the Offer Price).
3.4. Withdrawal of the Offer
The Offeror may only withdraw the Offer once launched in the circumstances permitted under Spanish
Takeover Law.
3.5. Voting rights attached to the Subject Shares
Castellana undertakes to exercise the voting rights attached to the Subject Shares against any Lar Espana
shareholder resolutions which (if passed) will result in any condition in the Offer not being fulfilled or which
will impede or frustrate the Offer. Castellana also undertakes not to vote the Subject Shares in favour of any
Lar Espana shareholder resolution to issue securities, raise corporate financing, approve any M&A transaction
or corporate restructuring, amend the articles of association or approve any transaction requiring shareholder
approval.
3.6. Standstill commitments
Castellana has undertaken not to deal in Lar Espana shares pending disposal of the Subject Shares to the Offeror
under the Offer.
3.7. Termination
The Irrevocable Undertaking shall terminate automatically if, inter alia, the Offer is not approved by the
Commission on or before 31 December 2024.
3.8. Representations and warranties
The Irrevocable Undertaking contains reciprocal representations and warranties that are standard for a
document of this nature.
4. Conditions precedent to the implementation of the Offer
The settlement of the Offer will be subject to the satisfaction of the conditions precedent, as disclosed by the
Consortium in the Offer Announcement, principally:
4.1. authorisation by the Spanish merger control authority imposing no conditions on the economic concentration
resulting from the Offer;
4.2. the Offeror achieving a minimum level of acceptances in respect of Lar Espana shares representing at least
56.38% of the shares to which the Offer is made (i.e. all Lar Espana shares excluding those already attributable
to the Consortium);
4.3. Lar Espana's current portfolio of assets remaining unchanged;
4.4. Lar Espana not having approved (before the Offer closes) certain amendments to its constitutional bylaws or
having waived its qualification as a SOCIMI;
4.5. Lar Espana not having agreed (before the Offer closes) to a merger, winding-up or assignment of its assets and
liabilities; and
4.6. no material changes in Lar Espana's net debt/cash position based on its latest publicly available quarterly report
for the quarter ended 31 March 2024.
5. Financial information
The following financial metrics are attributable to Lar Espana for the six months ended 30 June 2024. The information
has been extracted from Lar Espana's reviewed half year results published on 26 July 2024.
EUR
EPRA net tangible assets per share 10.22
EPRA earnings per share (six months) 0.39
Dividend per share* -
* Although no interim dividend was declared, a final dividend of EUR 0.79 per share for the year ended
31 December 2023 was declared and paid in May 2024.
6. Categorisation
The Disposal is classified as a Category 2 transaction in terms of the JSE Listings Requirements and accordingly
does not require Vukile shareholder approval.
7. Shareholder webcast
Vukile will be hosting a shareholder webcast on Monday, 7 October 2024 at 14h00 (SA time). The webcast can be
accessed using the following link: https://www.corpcam.com/Vukile07102024
Shareholders that are interested in setting up one-on-one calls following the webcast, can contact Marijke Coetzee
at: marijke.coetzee@vukile.co.za
3 October 2024
Corporate advisor and JSE sponsor NSX sponsor
Java Capital IJG Securities (Pty) Ltd
Date: 03-10-2024 07:15:00
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