When the real estate investment trusts (REITs) law was reformed a little over a decade ago, the Spanish government aimed to pique the interest of institutional investors (as well as retail investors) to revitalize a sector as crucial to the Spanish economy as real estate.
Since 2008, the sector had been directly impacted by the international financial crisis and remained entrenched in a discouraging landscape. Wisely, the government believed that the ideal solution was to offer specialized real estate companies a specific investment vehicle – the SOCIMIs, equivalent to the well-known Real Estate Investment Trusts (REITs) in much of the world.
It is highly likely that a significant part of the success story of the Spanish real estate sector in the last decade can be attributed to the creation and growth of SOCIMIs. They have been a key formula to professionalize the sector and, at the same time, provide companies with the highest standards of professional management, transparency, and financial rigor.
In particular, the four SOCIMIs listed on the Continuous Market have provided a reliable, predictable, and attractive investment opportunity. This holds true for long-term institutional investors, many of whom are international, as well as for the thousands of individual investors who have chosen to invest in a vehicle offering offices, hotels, logistics warehouses, data centers, or shopping centers managed at the highest level.
At Lar España, we were fortunate (and responsible) to be the first SOCIMI to go public, and we did so on the Continuous Market. Along with the other SOCIMIs listed in this market, our free float and liquidity form a specific and distinctive chapter within the framework of national SOCIMIs, characteristics that partly align with the criteria used by the European Public Real Estate Association (EPRA) to welcome its members.
According to reports by PwC, in just the first five years of existence, SOCIMIs distributed nearly three billion euros in dividends, including issuance premiums. The four on the Continuous Market have injected liquidity and, above all, confidence into a sector that had practically disappeared with the international financial crisis of 2008.
Ten years later, nine out of every ten of our investors are international, collectively representing 69% of investments in our companies.
If we consider the complete ten years, the figure will be substantially higher. In Lar España alone, nearly 400 million euros will have been distributed during that time, leading the national listed companies in shareholder remuneration. It is also worth noting that the company’s shares appreciated by 45.5% last year.
Grupo Lar has been doubly committed to this endeavor. Since the creation of the SOCIMI, we have been Lar España’s reference shareholders and have also taken on the global management of its assets and investments. Over time, the Group has increased its stake in Lar España to the current 10%, underscoring our commitment. We commit through management, our name, and are a significant part of its shareholding.
Other shareholders have also demonstrated stability and confidence, with stable and long-term investors, including very relevant investors and leading global brands in the investment world. Financial investors, insurers, pension funds, real estate-specialized funds, and significant family offices constitute a substantial portion of the current shareholder base.
In the year Lar España emerged, retail investments grew by almost 1%. It was an encouraging figure, breaking the downward trend that began in 2008. Our SOCIMI believed from the outset in the resilience of retail and its recovery, even though very few analysts and experts saw a future for it at the time. The rise of e-commerce and signs of the model’s exhaustion in the United States or England unanimously labeled it as the most exposed sector of all.
In reality, over the past ten years, the sector has managed to first overturn the retail apocalypse, one of the most unfounded clichés of the decade, and then overcome the most devastating pandemic of the century, in addition to very complex geopolitical situations.
Shopping centers and retail parks have emerged stronger from these challenges. In summary, these have been ten very intense years that Lar España has overcome thanks to a single masterful formula: continuous adaptation to the end customer, focus on their shopping experience, and omnichannel management. It is a proven fact that online and offline commerce need each other more than ever, and at this intersection, centers have solidified as the endpoint for many digital and physical transactions.
Innovation is the other great present and future tool of our sector. The structure itself, interior design, periodic modernizations, and the distribution of surfaces in state-of-the-art centers confirm this. It is evident that even major online stores are opening iconic physical spaces as a tool for consolidation. Digital commerce allows the application of customer knowledge and constant dialogue with them, understanding their needs, anticipating their preferences, and adapting at all times to their demand for leisure and entertainment.
Above all, if there’s one thing we’ve learned in these 3,653 days of the first ten years of Lar España, it is that in retail, management is everything. Our sector is always a concert for three voices: the company, the merchant, and the end customer, where only high-quality professional teams can extract the best melody. Retail is probably the most complex and innovative real estate business of all. It also delivers the best results when omnichannelity is structured, planned, and achieved daily. Well-managed centers and parks will continue to be ahead of their time and will have a future as brilliant and enjoyable as we would like to continue building for Lar España’s shareholders and customers.
