Castellana Properties Socimi S A : emerges stronger than ever after the pandemic with close to 100% occupancy, and signs 116 new lease agreements

• The specialist retail firm has published its results for the last financial year, covering the hardest months of the pandemic, from 1 April 2020 to 31 March 2021

• Castellana Properties currently manages a portfolio of 18 properties, 16 of which are shopping centres and retail parks, with a combined gross lettable area of 367,015 sqm and a gross value of almost €1,000 million.

• During the pandemic, and having acquired several spaces from El Corte Inglés, the company opened 51 new stores at Los Arcos (Seville), El Faro (Badajoz) and Bahía Sur (Cadiz), investing around €29 million

Castellana Properties today published its results for the last financial year, covering the hardest months of the pandemic, from 1 April 2020 to 31 March 2021. The company posted an EBITDA of €26.5 million after providing its tenants with temporary rental discounts during the pandemic.

Since the outset of the pandemic, Castellana has supported all of its tenants and the communities where it operates, starting by voluntarily cancelling all minimum guaranteed rent payments for stores that were unable to open as usual between the months of April and May 2020. Since day one, the company has strived to go above and beyond a typical landlord-tenant relationship, helping everyone to pull through the situation together and continue to act as a key provider of growth and employment in the various regions where it operates.

The company has focused heavily on strengthening its long-term relationships by offering its support to each and every one of its tenants. For instance, it offered a total of €19 million in temporary rental discounts during the pandemic, which directly impacted the company's profits. However, this assistance helped the company to keep the overall occupancy rate for its portfolio at close to 100%, with an average lease term of 13.4 years. In addition, the company is now receiving more than 95% of its rental income.

Gross income from recurring rent payments amounted to €58 million, up 5% on the previous financial year, while Funds from Operations (FFO) reached €13.6 million. Castellana Properties currently manages a portfolio with a combined gross lettable area of 367,015 sqm and a gross value of almost €1,000 million (€987 million).

The company's financial results have also been impacted by the Covid-19 pandemic, posting a net loss of €31.9 million, primarily due to a 1.6% decline in the valuation of its properties over the past 12 months. At the start of the pandemic, the company proactively adjusted the valuation of its properties due to the pandemic, which brought the valuation down by a total of 4%. Although the whole of the last financial year was impacted by the pandemic, Castellana Properties still holds a robust cash flow position, its comfortably solvent and liquid and anticipates a return to pre-Covid levels in a matter of months.

Castellana maintains a high occupancy rate across its properties

At the end of March 2021, the company almost reached maximum occupancy, with a rate of 98.3%. Over the past 12 months, the company has also signed 116 lease agreements, 67 of which related to new signings and 49 to renewals. These agreements generated an additional net operating income (NOI) of €4.5 million and these stores amount to 34,000 sqm, or 10% of the company's total retail portfolio. The average rent for these spaces increased by 7.52%.

During the pandemic, and having acquired several spaces from El Corte Inglés, the company continued with its repositioning projects at Los Arcos (Seville), El Faro (Badajoz) and Bahía Sur (Cadiz), opening 51 new stores at these shopping centres and investing around €29 million. The company has been engaged in these three projects since 2019, which occupy a total gross lettable area of almost 38,000 sqm, generating an additional net operating income (NOI) of €3.86 million.

As part of Castellana's steadfast commitment to the active management of its portfolio, the firm recently acquired a four-storey office building comprising over 4,600 sqm GLA next to Los Arcos shopping centre, in which it plans to invest €15.6 million. This new space will form part of the shopping centre and be converted into a new leisure area and food court, with 12 new brands.

The company has also declared its commitment to innovation and the importance of omnichannel retailing, with the official launch of iCast. This project sets out to analyse potential solutions and suggest new initiatives to keep improving Castellana's shopping centres and turn them into truly omnichannel spaces. The initiative involves every member of the company, and underscores the role of innovation as one of its core values for the future.

Sales and footfall bounce back faster than anticipated

Since shopping centres reopened at the end of May, Castellana Properties recorded a satisfactory recovery in footfall and sales figures, which bounced back faster than anticipated. For instance, over the months of September and October when restrictions and limits were relaxed, footfall climbed back to 85% and sales to 95% (of pre-pandemic levels), demonstrating the resilience and durability of the company's portfolio. Conversion rates and average spends were also up, which helped sales figures to recover faster. Broken down by property type, retail parks - which account for 43% of Castellana's portfolio - posted the best performance, with much healthier growth than in previous years.

Alfonso Brunet, CEO of Castellana Properties, assured that 'the potential of the Spanish retail sector has clearly been demonstrated by the swift recovery in footfall and sales across our shopping centres, which have exceeded our expectations, and we are certain that we will see a return to pre-Covid levels once again in the next few months. Castellana Properties remains firmly committed to retail and the active management of our portfolio, keeping our shopping centres at the forefront of the sector and meeting the needs and demands of all of our clients and tenants'.