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Lar Espana Real Estate to increase dividend 66% on back of strong results

Lar Espana Real Estate, the Spanish-listed REIT that invests in retail property, has reported a 5.0% increase in EPRA net tangible assets (NTA) in 2022, bucking the trends of falling valuations across the real estate sector.

The company, which owns nine shopping centres and five retail parks across Spain, said EPRA NTA was €10.93 per share at the end of 2022, versus €10.41 a year prior. The EPRA NTA on a pro-forma basis (following a €110m bond buy back in January 2023) was €11.16 per share.

The value of the group’s portfolio rose 3.5% over the year to €1.473bn (up 3.2% in the first half of the year and 0.2% in the second half), with gross rental income up 6.9%.

The company carried out 176 lease agreements during the year (20 new lettings, 50 re-lettings and 106 renewals), which was almost double the number concluded in 2021. This achieved a rental uplift of 1.3% and saw occupancy increase to 96.6% (from 96.1%).

The company has proposed a dividend for the year of €0.60 per share – a 66.7% increase on the level paid in 2021. This would offer a dividend yield of 14.2% on the share price at 31 December 2022. EPRA earnings per share was €0.48 per share – up 71.4% year-on-year.

The company has €660m of debt (following the partial bond buy back), the majority through green bonds, with an average cost of debt of 1.8% and average maturity of 4.8 years. 100% is fixed and unencumbered. The company has €115m in cash, giving it a loan to value ratio of 37.1%.

Performance of assets

Sales reported by its tenants reached €1.051bn in 2022 – the highest in the company’s nine year life and the first time that final sales have exceeded one billion euros – equating to an annual growth of 13.9% and 10.6% up on 2019. Last year also saw 80.5 million visits to its assets, which is up 8.1% on the previous year.

Chairman comments

José Luis del Valle, chairman of Lar España, said: “The combination of an increase in recurring revenues, of an occupancy rate close to maximum, record final purchases, significant net profit and a solid financial structure, with long-term maturities and fixed rates, has led us to raise our dividend proposal by 66%, to €50m, pending shareholder approval.

“The company begins 2023 stronger and, in addition, the partial repurchase of green bonds for €110m at an 18% discount will have a positive impact of around €20m on the 2023 income statement.

“The technical situation of full occupancy and a tenant effort rate, including expenses, of just 9.2% of sales, one of the lowest in the sector, allows us to attract the best tenant mix to our assets and give us an advantage to reinforce our current leadership and take advantage of opportunities.”

LRE : Lar Espana Real Estate to increase dividend 66% on back of strong results

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