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Lar Espana retail REIT boosts 2017 net by 48%, proposes div at 5% yld

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Madrid retail-focused REIT/SOCIMI Lar Espana Real Estate boosted 2017 net profit by 48% to €135.6m, with rental income driving the surge, up 29%yy. It will propose a dividend of €0.49 per share, up 48% on 2016, and giving a yield of 5%.

One of the main drivers of the results was a stellar performance by its shopping centres, which are key to its strategy, Lar said in a results release. In 2017, the centres welcomed 56.9m visitors, up 2.7% on 2016 and topping the national average rise of 1.8%. Sales totalled €636.2m, up 3.3%. The Basque Country was the leading region in terms of rental income last year.

"Shopping centre revenue was particularly noteworthy last year, accounting for 85% of the total year-end figure, comfortably outstripping offices (8%) and logistics (7%)," Lar Espana said. Moreover rental income is set to become even more predominantly retail over the next few years as Lar Espana implements its business plan and concentrates on adding more retail to its portfolio and divesting other less strategic assets.

Asset management was also key in achieving the climb in centre revenue. Lar completed 128 operations that involved renovations, replacements, relocations or re-lettings, and had a 10% tenant rotation rate across the portfolio - with occupancy at 93.4% by year end. Portfolio investment rose to €47.5 m in 2017, mostly into development projects.

At year-end, Lar owned 32 properties valued at €1.54bn, and carried debt of €590.2 m, giving LTV of just 35% at an average cost of 2.20% and average maturity of 5.3 years. Of the total portfolio, €1,18bn related to shopping centres, while it owned €85m in office buildings, €87m in logistics properties, and €85m in development projects. Proposing a dividend distribution costing €45m, it said this yield of 5% is one of the highest on the Spanish stock exchange. Lar Espana noted that its share price performance last year was also very positive, achieving a 26.2% value uplift.

Chairman José Luis del Valle commented: “Once again, the company has demonstrated that it is capable of continually - and significantly - improving its results. The successful implementation of our business plan and our faultless asset management has once again allowed us to deliver when it comes to the commitments made to our shareholders.”

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