Castellana Properties Socimi S A : Consolidated Audited Financial Statements - April 2020 to March 2021

Castellana Properties Socimi, S.A. and its subsidiaries

Auditor´s report

Consolidated Annual accounts at March 31, 2021 Management report

This version of our report is a free translation of the original, which was prepared in Spanish. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our

report takes precedence over this translation

Independent auditor's report on the consolidated

annual accounts

To the shareholders of Castellana Properties Socimi, S.A.:

Opinion

We have audited the consolidated annual accounts of Castellana Properties Socimi, S.A. (the Parent company) and its subsidiaries (the Group), which comprise the balance sheet as at 31 March 2021, and the income statement, statement of other comprehensive income, statement of changes in equity, cash flow statement and related notes, all consolidated, for the year then ended.

In our opinion, the accompanying consolidated annual accounts present fairly, in all material respects, the equity and financial position of the Group as at 31 March 2021, as well as its financial performance and cash flows, all consolidated, for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and other provisions of the financial reporting framework applicable in Spain.

Basis for opinion

We conducted our audit in accordance with legislation governing the audit practice in Spain. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated annual accounts section of our report.

We are independent of the Group in accordance with the ethical requirements, including those relating to independence, that are relevant to our audit of the consolidated annual accounts in Spain, in accordance with legislation governing the audit practice. In this regard, we have not rendered services other than those relating to the audit of the accounts, and situations or circumstances have not arisen that, in accordance with the provisions of the aforementioned legislation, have affected our necessary independence such that it has been compromised.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Most relevant aspects of the audit

The most relevant aspects of the audit are those that, in our professional judgment, were considered to be the most significant risks of material misstatement in our audit of the consolidated annual accounts of the current period. These risks were addressed in the context of our audit of the consolidated annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these risks.

PricewaterhouseCoopers Auditores, S.L., Torre PwC, Pº de la Castellana 259 B, 28046 Madrid, España	1
Tel.: [phone], Fax: [phone], www.pwc.es

R. M. Madrid, hoja 87.250-1, folio 75, tomo 9.267, libro 8.054, sección 3ª

Inscrita en el R.O.A.C. con el número S0242 - CIF: B-79 031290

Castellana Properties Socimi, S.A. and its subsidiaries

Most relevant aspects of the audit

Valuation of Investment Property

Investment properties make up 95% of the Group's assets. As described in Note 3.3, the Group applies the fair value model in accordance with IAS 40 and has recognised a negative change in fair value of investment property amounting to €45,464 thousand in the consolidated income statement for 2021, as described in Note 6. Total Investment property recognised in non-current assets on the consolidated balance sheet totals €987,160 thousand at 31 March 2021.

The Group recognises the fair value of investment properties based on independent expert valuations. Valuations are performed in accordance with the Appraisal and Valuation Standards published by the Royal Institute of Chartered Surveyors (RICS) of Great Britain and in accordance with the International Valuation Standards (IVS) published by the International Standards Valuation Committee, whose methodology is described in notes 2.3 and 6 to the accompanying consolidated annual accounts.

In calculating the values, the Group considers specific factors such as the lease contracts signed. Similarly, they apply certain assumptions with respect to variables such as discount rates and estimated market rent, in order to arrive at a final valuation.

In notes 4.1.e and 6.e of the consolidated annual accounts, it is mentioned that the Group's external valuers have included a "material valuation uncertainty" regarding shopping centers and a medium-sized store as a consequence of the COVID-19 pandemic. Consequently, they consider that less degree of certainty and a greater degree of care should be attributed to the valuation of these assets. This represents a significant estimation uncertainty in relation to the valuation of these investment properties.

The significance of the estimates and judgements involved in these valuations, coupled with the fact that a minor difference in percentage terms in the valuation of a property could result in a material figure, means that the valuation of investment properties is considered a most relevant aspect of the audit.

How our audit addressed the most relevant aspects of the audit

We have obtained the valuation of investment properties carried out by independent experts on which we performed the following procedures, among others:

• Verification of the expert's competence, capacity and independence by obtaining confirmation and corroborating its professional standing in the market.
• Verifying that the valuations were performed according to accepted methodology.
• Discussion of the principal key assumptions of the valuation through meetings with the expert valuer and management, evaluating the coherence of estimations and taking into account market conditions.
• Performing selective tests to verify the accuracy of the most relevant data provided by Management to the valuer and used by it in the valuations.

We considered the adequacy of the disclosures made in note 6 in the consolidated annual accounts. This note explains that there is a significant estimation uncertainty, as a consequence of the COVID-19 pandemic, in relation to the valuation of shopping centers and a medium-sized store.

Additionally, we assessed the sufficiency of the information disclosed in the consolidated annual accounts.

As a result, we consider that Management's approach is reasonable and supported by the available evidence.

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Castellana Properties Socimi, S.A. and its subsidiaries

Other information: Consolidated management report

Other information comprises only the consolidated management report for the 2021 financial year, the formulation of which is the responsibility of the Parent company's directors and does not form an integral part of the consolidated annual accounts.

Our audit opinion on the consolidated annual accounts does not cover the consolidated management report. Our responsibility regarding the consolidated management report, in accordance with legislation governing the audit practice, is to evaluate and report on the consistency between the consolidated management report and the consolidated annual accounts as a result of our knowledge of the Group obtained during the audit of the aforementioned financial statements, as well as to evaluate and report on whether the content and presentation of the consolidated management report is in accordance with applicable regulations. If, based on the work we have performed, we conclude that material misstatements exist, we are required to report that fact.

On the basis of the work performed, as described in the previous paragraph, the information contained in the consolidated management report is consistent with that contained in the consolidated annual accounts for the 2021 financial year, and its content and presentation are in accordance with the applicable regulations.

Responsibility of the Parent company's directors for the consolidated annual accounts

The Parent company's directors are responsible for the preparation of the accompanying consolidated annual accounts, such that they fairly present the consolidated equity, financial position and financial performance of the Group, in accordance with IFRS-EU and other provisions of the financial reporting framework applicable to the Group in Spain, and for such internal control as the aforementioned determine necessary to enable the preparation of consolidated annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated annual accounts, the Parent company's directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the aforementioned directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the consolidated annual accounts

Our objectives are to obtain reasonable assurance about whether the consolidated annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with legislation governing the audit practice in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated annual accounts.

As part of an audit in accordance with legislation governing the audit practice in Spain, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated annual accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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Castellana Properties Socimi, S.A. and its subsidiaries

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Parent company's directors.
• Conclude on the appropriateness of the Parent company's directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor´s report to the related disclosures in the consolidated annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated annual accounts, including the disclosures, and whether the consolidated annual accounts represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated annual accounts. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Parent company's directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

From the significant risks communicated with the directors of the Parent company, we determine those risks that were of most significance in the audit of the consolidated annual accounts of the current period and are, therefore, considered to be the most significant risks.

We describe these risks in our auditor's report unless law or regulation precludes public disclosure about the matter.

PricewaterhouseCoopers Auditores, S.L. (S0242)

Original in Spanish signed by

Rafael Pérez Guerra (20738)

May 28, 2021

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