Castellana Properties Socimi S A : increases EBITDA by 11.7% to €55.1 million

• Over the last financial year, the company grew its gross rental income by 8.9% and net operating income by 11%, demonstrating its impressive performance and adding to its excellent track record over the last few years

• Castellana Properties' portfolio is now valued at €1,201 million (gross) as of the end of March 2024, marking a year-on-year uplift of 7.4%

• The company continues to dominate in terms of occupancy and collection rates, posting the highest figures in the market at 98.9% and 99.3% respectively

• Castellana Properties has been awarded the highest accolade in the EPRA sBPR awards for 2024, the second consecutive year. Furthermore, 100% of its properties had their BREEAM certificates renewed for another year, remaining in close alignment with the EU taxonomy for sustainable activities. The company also received a four star out of five rating from GRESB, having upped its score by 15% (86 points)

Castellana Properties, the specialist listed retail property firm, has published its results for the last fiscal year from 1 April 2023 to 31 March 2024. The company posted gross rental income (GRI) for the period of €70.5 million, up 8.9% year on year. In turn, its net operating income (NOI) grew by 11% in like-for-like terms, reaching €64.4 million. Thanks to this positive pattern of growth, the company's net operating income margin stood at above 90%, driven primarily by an increase in rental income, the stabilisation of certain value-add projects that have now been completed and a prudent approach to spending, painting an overall picture of a company in excellent command of its portfolio.

Accordingly, Castellana Properties was able to report an operating profit (EBITDA) of €55.1 million, an 11.7% gain on the previous financial year, for a net profit of €22.4 million. This figure has come down since the same time last year, due to a depreciation in asset value of €11.5 million. This can be attributed to conditions in the investment market, currently driving up valuation discount rates across the sector, and to heavier debt financing costs as a consequence of higher interest rates.

The company's portfolio, which comprises 16 shopping centres and retail parks with a combined gross lettable area (GLA) of 373,815 sqm, had a gross asset value of €1,201 million on 31 March 2024, confirming growth of 7.4%. This figure includes its stake in Lar España Real Estate. Thanks to robust growth in NOI and sound asset management, Castellana Properties succeeded in increasing the value of its own shopping centres and

retail parks by 1.4%. Meanwhile, the company's net value of tangible assets (EPRA NTA) climbed to €687 million - 6.4% higher than the previous year, equating to €6.80 per share - and its Net Loan to Value (Net LTV) dropped to 38.8%.

The company concluded 182 lettings over this period (111 new leases and 71 renewals). All together, these contracts represent a GLA of 33,986 sqm and €9.1 million in rental income, with a 9.7% step-up in average rent.

Moreover, the company has maintained its market-leading occupancy and collection rates for the third consecutive year, reported as 98.9% (considered full occupancy) and 99.3% respectively. These results make Castellana Properties the market leader with respect to this pair of indicators. They demonstrate the particular advantage enjoyed by the company's shopping centres and retail parks within their catchment areas, and the outstanding work of its management team.

Footfall and sales continue to break records and increase across the country

Castellana Properties closed out FY24 on a final tally of 45 million visitors across its portfolio, setting a new record for the third consecutive year with a +5.5% advance on FY23 (which itself saw visits rise by 1.2% compared to the prepandemic baseline). All of the company's shopping centres increased the number of visitors during this period (up +6.9% at Los Arcos, +6.7% at Bahía Sur, +9.7% at Habaneras, +5.2% at Puerta Europa and +5.6% at Vallsur). At El Faro, visitor numbers were on a par with 2023, despite a partial closure for refurbishment.

Overall sales rose +6.4% year on year, setting another new record for the company. By the end of the reporting period, shopping centre tenants registered an average 7.4% rise in sales (+6.5% at El Faro, +9.0% at Los Arcos, +7.7% at Bahía Sur, +9.2% at Habaneras, +5.5% at Puerta Europa and +7.1% at Vallsur). Retail park tenants sold 3.9% more than in the previous financial year.

The strongest growth came from culture, media and technology (16.9%), health and beauty (11.7%) and food and beverage (10.1%). The retail sector's most fail-safe segments, fashion and accessories and homewares, also made gains - 6.1% and 4% respectively y-o-y.

Castellana Properties doubles down on the Spanish retail sector

While widely anticipated, Lar España's strong performance in 2023 lends weight to Castellana Properties' decision to take a 28.7% stake in the leading Spanish REIT. It now stands to receive a dividend of €19 million, which translates to a return of approximately 15%. This healthy sum shows the shrewdness of this investment, part of the company's strategy of investing in the retail sector to secure the best possible shareholder return. The net capital value has now appreciated by around €40 million (30%) compared with the initial outlay.

Castellana Properties has also demonstrated a commitment to continuous investment in its own portfolio and to excellence in management. Over the course of the year, the company invested around €26 million in improvements and value-add projects. One example is its acquisition of the former Hipercor headquarters in El Faro Shopping Centre. The final deal, €22.3 million for 100% ownership, secured a space of 17,800 sqm - setting in motion a highly successful value-add project and cementing its pole position in the region.

Meanwhile, renovation work is progressing on the first floor of Vallsur Shopping Centre, which the company aims to transform into the region's number one dining and leisure destination. The company is set to invest a total of €16.7 million in the project, remodelling a gross lettable area of 10,557 sqm. La Chismería, a new leisure and dining zone opened in December, has proved a runaway success just three months in. With all units let, footfall is showing a slight edge on the prepandemic period (up +6.1% in March 2024 compared with March 2019), and average dwell time has risen by 7%.

Precisely because of its solid financial management and capability for investing in its assets, Castellana Properties was awarded a credit rating of BBB- (Investment Grade) by Fitch Ratings for the second year running. Fitch evaluates companies, local authorities, regions and countries on their ability to repay their debts and attract investment. Castellana Properties was highly praised for its proactive management approach; the ratings agency made particular reference to the latest refurbishment projects at Vallsur and El Faro, currently under way.

Castellana Properties: leading the way in sustainability and innovation

From the outset of FY24, Castellana Properties has implemented a new ESG strategy that will run from FY25 to FY29. For the second consecutive year, the company received the EPRA Gold Award in the Sustainability Best Practices (sPBR) category from the European Real Estate Association. It has also successfully steered 100% of its portfolio through the international BREEAM certification process and remains firmly aligned with the European Taxonomy for Sustainable Activities. Castellana Properties has also been certified by SGS following the introduction of an Environmental and Energy Management System at corporate level, in accordance with international standards ISO 14001 and ISO 50001. This certificate covers all properties in the company's portfolio.

Furthermore, it has upgraded its GRESB rating, raising its score by 15% to 86 points and receiving four stars out of five. Finally, it has obtained the GPTW certificate for the third consecutive year, with an employee trust index of 92% - the highest in the sector. Among its current objectives is an analysis of climate-related financial risks following the TFCD framework, which encourages companies to educate investors about climate-related risks and how they can be managed.

In terms of social impact, Castellana Properties has continued to build on its track record of innovative initiatives and forums for community engagement, of which the recent Pulguitas campaign is just one example. The campaign, aimed at preventing pet

abandonment, ran in seven shopping centres and made a positive impact on public awareness in surrounding regions. Footfall at participating centres rose 3% compared to the week before. In another highlight of the year, three of Castellana Properties' shopping centres - El Faro, Bahía Sur and Los Arcos - became AIS certified (Accessible Information Standard). This scheme promotes inclusivity for people with disabilities by assessing services, facilities and products on their level of accessibility.

With respect to digital strategy, the company launched new, upgraded versions of all of its apps and websites, creating a unified user experience across all centres. Another means of boosting brand engagement, these tools are the most advanced of their kind in the Spanish shopping centre market. A 100% user-centric design was chosen for both platforms, making use of gamification and linking to the company's loyalty programmes. They offer a number of unique features, such as the use of AI to read a customer's till receipts and allocate points that can be redeemed for rewards. As well as through purchases, points can be earned by attending events, using certain services and other forms of engagement.

Alfonso Brunet, CEO of Castellana Properties, remarked, "This very pleasing set of results is a testament to the hard work and dedication of the entire Castellana Properties team. The strength of this company is more apparent with every passing year, confirming its position as one of the most exciting names in the Spanish retail sector. Thanks to our capacity to adapt to an ever-changing world, our financial position and regional leadership have only grown more solid over time, and we are proudly leading the way in sustainability and innovation."