Castellana Properties today published its results for H1FY21, spanning April to September 2020. During this period, the company posted an EBITDA of €9.2 million and Funds from Operations (FFO) of €2.3 million, while its gross rental income stood at €15.2 million.
Since the outset of the pandemic, Castellana has strived to support its tenants and the local communities and cities that it serves. As part of these efforts, the firm created a Charitable Fund, which it has used to donate €100,000 in essential goods, educational material and healthcare goods in the cities where it operates. The company stands shoulder to shoulder with its tenants in the face of the pandemic, and as part of this commitment it provided €15 million in rent abatements between April and September, in a bid to ensure a long-lasting rapport with them. This action will have a positive impact over the coming years and has helped to increase occupancy across the firm's shopping centres to 98.5%. All of these measures have been well received and demonstrate Castellana Properties' unwavering commitment to keeping stores open, helping businesses to stay afloat and driving employment and local economies.
The company's proactive policy of rent abatements and helping tenants with payment terms resulted in a €15 million decline in rental income, which has impacted its annual accounts along with the effect of COVID-19 on its property values (-1% during H1, -3.4% accumulated). As a result, the company reported losses of €18.9 million, which it hopes to reconcile over the next six months as rent abatements come to an end. The net value of the company stands at €519 million, with €473 million in net debt and a net loan to value (LTV) ratio of 47.56%. The company's results clearly demonstrate its excellent positioning in the market and its strong potential. Castellana Properties therefore anticipates a full recovery and a return to normal business activity once the pandemic is over, to then continue expanding in Spain.
By striking this strategic alliance with its tenants, Castellana Properties has already managed to reach agreements with 82% of its tenants, with a further 8% in the final stages of negotiation. Thanks to these new measures and its active management strategy, the company has managed to increase the lease terms on its retail properties based on minimum guaranteed rent by 5.6%, with the average term rising from 10.6 to 11.2 years. In recent months, Castellana Properties has also continued to promote new activities at its properties, rolling out a wide range of promotions and campaigns to support its tenants, as well as enlarging its terraces and creating new outdoor spaces. All of these actions have been conducted in strict compliance with the safety and hygiene measures currently required.
Footfall and sales approaching pre-COVID levels
Castellana Properties currently holds a portfolio of 18 properties, including shopping centres, retail parks and offices, with a gross lettable area of 373,478 sqm, with a total value of €993.84 million. 97% of its portfolio comprises retail properties, all of which have implemented the strictest safety measures, making each shopping centre and retail park a safe and welcoming space for shoppers to enjoy.
Sales and footfall figures have picked up faster than anticipated, growing steadily every month since the company reopened its properties in May, and are now approaching pre-COVID levels. In October, shopping centre footfall reached 84% of the figure achieved in the same month the year before, while sales grew even faster, bouncing back to 93% of last year's figure in September (the last reported month). The strongest growth was registered by DIY, electronics, pet and homeware stores, where sales were up by a very healthy 20% y-o-y.
Active management strategy
In recent months, Castellana Properties has continued to implement its active management strategy across its entire portfolio. The company continues to make good headway with projects started prior to the pandemic at Los Arcos, Bahía Sur and El Faro, bringing added value to these shopping centres with a total CapEx investment of €29 million. As these projects near completion, some of the new stores have already opened and received glowing reviews from customers, such as the Mercadona supermarket at Los Arcos (Seville) and the Zara and Lefties stores at Bahía Sur (Cadiz). So far, 91% of new space has already been pre-let, and once renovation works are completed, Castellana Properties anticipates footfall and sales to continue to rise and even exceed pre-COVID levels.
Between April and September, the company completed 54 lettings, including renewals and new leases. These lease agreements cover 14,399 sqm of retail area, with the average rent per sqm rising by 4.61%. As a result, the company's occupancy rate has risen by 0.2% to 98.5%, nearing maximum occupancy.
Alfonso Brunet, CEO of Castellana Properties, said that “our shopping centres have proven themselves to be safe spaces, where risk of COVID-19 infection has been minimal. This is reflected in our footfall and sales figures, which have bounced back faster than expected in recent months, with zero cases of infection reported to date. Our firm commitment to all of our tenants, which goes above and beyond the typical landlord-tenant relationship, is now bearing fruit, taking our occupancy rate up to 98.5% across all our properties. Once the pandemic is over, we are confident that our properties will make a full recovery in just a few short weeks”.