Lar España is active in the real estate sector through the acquisition and management of real estate assets, with a focus on commercial assets throughout Spain, all within the framework of an ambitious high-growth investment project. Lar España has 14 assets distributed throughout Spain. Specifically, the company is present in 8 Autonomous Communities (Andalucía, Castilla la Mancha, Castilla y León, Cataluña, Comunidad Valenciana, Galicia, Madrid, and País Vasco).
It is also present in the provinces like Albacete (Albacenter Shopping Centre), Alicante (Vistahermosa Shopping Centre, Portal de la Marina Shopping Centre), Barcelona (Ànecblau Shopping Centre), Bilbao (Megapark Barakaldo Shopping Park), Guipuzcoa (Txingudi Shopping Centre), Leon (El Rosal Shopping Centre), Lugo (As Termas Shopping Centre), Madrid (Rivas Futura Shopping Centre), Palencia (Las Huertas Shopping Centre), Seville (Lagoh Shopping Centre), Toledo (Abadía Shopping Park), Valencia (Vidanova Parc Shopping Park) and Vigo (Gran Vía de Vigo Shopping Centre).
Why Lar España? What Makes them Stand out From the Rest?
Lar España is the Spanish market leader in retail, with more than 550,000 square meters for rent and 1.47 billion euros in asset value. The company is listed on the Spanish Stock Exchanges, incorporated as a SOCIMI “Sociedad Anónima Cotizada de Inversión en el Mercado Inmobiliario” in March 2014. The company’s objective is to invest in the Spanish real estate sector, especially in the retail segment. In 2015 Lar España was included in the FTSA EPRA/NAREIT Global Index, a selective global index designed to represent general trends of listed real estate companies worldwide. It was also included in the Ibex Top Dividend index in 2018. In September 2022, for the eighth consecutive year, Lar España received the EPRA Gold Award for the quality of the financial information made available to its main stakeholders. As regards the information published on ESG, Lar España has obtained the highest distinction from EPRA, achieving the Gold Award for the fifth consecutive year.
Jon Armentia, Corporate Director & Chief Financial Officer at Lar España shares, “Lar España has been able to undertake emblematic projects, unanimously recognized for their efficiency, profitability, and innovation. The quality of our real estate assets, proven by their constant revaluation, continues to be our best cover letter. In this search for the highest quality relational value, we have not only incorporated the most modern techniques and projects in the sector, but we always try to maintain collaborative, integrating, and respectful behaviour with each of our peers and stakeholders. Furthermore, we are fortunate to have expert leadership and a recognized management team with more than 50 years of experience in the sector. All this without forgetting the ESG component, a commitment that we have always been part of and that has allowed us to position ourselves before it became a fundamental part of the real estate business.”
Lar España is unique among its competitors in that it owns 100% of its 14 assets. They are the leading Spanish-listed company in the retail market. It is noteworthy that the company is committed to innovation in all areas of society, as well as to the efficiency and sustainability of its assets, which has enabled it to adapt to the changing needs of the market, with a great capacity to react to meet the expectations and needs of its main stakeholders. The company has a portfolio of prime assets with great potential, with a varied commercial mix, and in which constant improvement processes have been carried out. They focus on providing their customers with an exceptional experience. Lar España has adapted to the new retail reality that focuses on the new phygital paradigm. To this end, they have adopted measures that promote omnichannel shopping in their centres. They also offer a variety of leisure and dining options. In this way, visits to shopping centres become an experience beyond the physical purchase. They become spaces where people can enjoy their free time with a multitude of options.
Jon shares their philosophy, “Lar España’s philosophy is to seek the highest value creation and, in this way, generate high returns for our shareholders through a significant annual dividend distribution. The dividend paid this year was 36-euro cents per share, for a total of 30 million euros and a yield per share of 7%, one of the highest on the Continuous Market. In addition, sustainability principles are a very important pillar of Lar España’s philosophy. In short, we focus on contributing in an ethical, responsible, and sustainable manner, generating a positive impact on our environment and, specifically, on our shareholders.”
The Leader with A Purpose: Jon Armentia
Jon believes, “Given the philosophy of Spanish professionals, the real estate business in Spain is probably one of the most exciting industries.” With this belief, Jon Armentia Mendaza joined Lar España Real Estate SOCIMI in 2014. In 2006, he was named CFO of Grupo Lar, with responsibility for retail. He previously worked with Deloitte (formerly Arthur Andersen) for four years. Jon has a degree in Business Management and Administration from the University of Navarra and over 17 years of experience in accounting, finance, and the real estate industry, where he has been and continues to be a member of many Committees and Boards.
Jon has led and completed Lar España capital expansions totalling €282 million. It is also worth highlighting Lar España’s strong performance during the bond issuance, which totalled €840 million. Concerning the two most recent bond issuance, it is noteworthy that they are 100% green and were issued in July 2021 at a 1.75% interest rate with a 4x oversubscription and in November 2021 at a 1.84% interest rate with a 5x oversubscription. Furthermore, it should be highlighted that 100% of the company’s debt is now green and due in 2027 at a fixed rate of 1.8%. As for the share buybacks (SBB), which have been executed in the last two years, 13% of the share capital has been redeemed to increase shareholder returns in times of pandemic.
Jon is also proud of the progress of Lar España’s balance sheet and its performance during the pandemic. Between 2020 and 2022, they were able to achieve optimal cash levels while keeping lease incentives to a minimum. This financial capacity has allowed them to reduce their debt, reducing the company’s LTV in the process.
Trends, Challenges & Predictions: The Lar España Plan
Customer satisfaction has always been at the centre of Lar España’s concerns and interests. In their case, it is essential to maintain a high level of satisfaction with both their tenants and end customers. Jon explains, “On the one hand, we maintain a close and collaborative relationship with our tenants. The interest in energising each centre and retail park is mutual. On the other hand, we work every day to offer the best experience to our end customers. Thus, Lar España has not only managed to keep all shops open over the last few years but also increased our GLA in the process. The satisfaction of our customers is demonstrated by the level of occupancy which has always remained stable. During the pandemic, we renegotiated all 1,400 contracts we had, except for six that could not continue with us because of the crisis. Also, despite the shop closure plan, we have the highest number of Inditex shops compared to our Spanish competitors.” The retail sector has always demonstrated its capacity for adapting and resilience in a complex and changing market. It is worth noting that shopping centres maintain a yield of around 5.3%, two points above the Spanish bond. Retail parks, for their part, have shown their resilience during the pandemic and maintain a yield of around 5.45%, making them one of the most attractive assets in the real estate sector. Lar España also expects an increase in rents as 100% of their contracts are indexed to the CPI and they have one of the lowest effort rates in the sector. Jon believes that “The management of the shopping centres and retail parks has increased their positioning and value in these three years and this allows me to be reasonably optimistic. Moreover, in our case, we have made the right decisions to preserve cash, optimise financing, and reduce debt. We have maintained a sustained growth in total revenues and profits, which in turn has allowed us to anchor ourselves in a dividend policy that is among the best in the market and highly attractive to our shareholders as a whole.”
Looking ahead real estate market has its concerns like inflation, rising interest rates, and valuation adjustments, but Lar España is ready with its business plan that is scheduled to run until 2023, with which they intend to consolidate its position as a leading REIT in terms of profitability and asset quality. Under this new plan, Lar España intends to invest more than €500 million in prime quality assets with dominance in their areas of influence. In parallel, they will divest more than EUR 400 million in less strategic assets, around 40% of the portfolio. In short, they want to increase shareholder returns to double digits (more than 10%), without raising leverage above 40%.
With exciting prospects and promises of better times to come Jon signs off with this snippet from his leadership style mantra for success, “Methodology, attention to detail, and a high degree of communication with internal and external teams.”