Good afternoon, ladies and gentlemen, and welcome to Lar España full year 2021 financial results conference call. I would now like to turn the conference over to Mr. Hernán San Pedro, Lar España Investor Relations and Corporate Communication Director. Please go ahead, Hernán.
Good afternoon, everyone, and thank you for joining us today. This is Hernán San Pedro. Welcome to our full year 2021 results presentation. As always, the presentation and the press release has been sent to our distribution list, and all the financial information is available to you in our website and at the CNMV official website. Presenting for us today are José Luis del Valle, Chairman of Lar España Board of Directors, Miguel Pereda, Chairman of Grupo Lar, José Manuel Llovet, Chief Executive Officer of Commercial Real Estate of Grupo Lar, and Jon Armentia, Corporate Director and CFO of Lar España. After the presentation, we will answer any questions you may have. Now let me hand the call over to José Luis del Valle.
Thank you, Hernán. Good afternoon, and welcome everybody. 2021 has been a busy year for all of us. Earlier in the year, we executed the sale of our portfolio of 22 supermarkets as part of our asset rotation strategy. In June, we signed an extension of our investment management agreement with Grupo Lar in revised and more attractive terms. Later in the year, we closed our third share buyback program, and 5% of our share capital was later amortized. A key highlight of the year was the issuance of two green bonds, achieving both maturity extensions and improvement in our cost. EUR 400 million were issued in July, and EUR 300 million were issued in October.
With all this, we have been able to maintain strong balance sheet and to keep a sound cash position, while at the same time, getting our operating results back to pre-pandemic levels and continuing to improve our portfolio. Let me now turn over the call to our Vice Chairman and Chairman of Grupo Lar, Miguel Pereda, for more details.
Thank you, José Luis. Good afternoon, everybody, and thanks for joining us in our full year 2021 results. As José Luis has rightly said, 2021 has been the year of recovery for Lar España. In 2020, GDP fell globally by around 4% and in Spain by more than 10%. In the face of that slowdown in the economy, as can be seen in the AECC data, 2021 has returned to positive figures and stabilized in the forecast for the following years. The phenomenon is true for all developed economies. This is also the case for Spain, where the latest IMF data indicate growth forecast of 5.8 for 2022, and 3.8 for 2023. It is important to note that this growth comes with high levels of inflation, which are lasting a little bit longer than initially was expected.
Also, with the situation that we are facing with the Ukrainian conflict, it's difficult to predict completely what the final impact might be, depending on the final outcome. If we focus on real estate sector, and that's slide 8, experts also agree on the recovery phase that is being experienced. Talking specifically about retail, the forecast for retail sales growth are strong for both the Eurozone and Spain. The same for the growth of rents in shopping centers directly linked to them, with a forecast between 2021 and 2025 of 2.2% for Spain. If we go to next slide, 9, we can see some very interesting data. Much has been said over the years about the declining trend of malls in the United States. Many also predicted that the same would happen in Spain.
As can be seen in the charts, the realities of the two countries are very different. The shopping center sector in the U.S. was already in its maturity phase, but in Spain, we are far from that point, with 0.34 sq m per inhabitant versus the 2.35 in the U.S. that represent close to seven times. In addition, shopping centers in Spain are much more modern and much more weighted with leisure and restaurant activities, which cannot be done digitally. On top of that, the penetration of e-commerce in Spain, despite the pandemic, still far from the rates in the U.S. or other European countries. As we said before, the situation is not comparable, and the realities are clearly very different. I would like also to elaborate on what José Luis commented earlier.
2021 has been the year of recovery, thanks to the decisions taken and well managed by our company. As a result, we can see not only the occupancy has not suffered, but that we are already seeing clear signs of improvement. Our asset valuations are solid and have already returned to positive figures. Our financial position is excellent, both in terms of cash and debt. Our tenant relationships maintain very strong and is one of the pillars of our strategy, and we have no cases in litigation. Finally, I would also like to highlight the high levels of collections. We can be very proud of the results, have been an excellent demonstration of the resilience of the portfolio.
It's very important to say that having a full refurbished portfolio, totally adapted to the industry trends, and also the use of a broad set of innovation tools, allowed us, during this period, to be very selective in the CapEx investments. At the corporate level, we focused our portfolio in shopping centers and retail parks, divestment of the supermarkets, renew the IMA, and improving the conditions. At a financial level, we achieved an excellent profile, both in terms of cost and maturities. All these decisions, together with the quality of our portfolio, have allowed us to be in a privileged situation in the market. As we can see in slide number 11, Lar España stands out from its main European competitors in most of the key indicators for the sector.
Now it is José Manuel Llovet, who will turn and go into more detail in more operational milestones of the period.
Thank you, Miguel. Hello, everyone. Very focused today on post-pandemic performance and the fundamentals of Lar España portfolio to keep being a European leading company in the retail sector in the coming years. As you can see on slide 13, today, thanks to the vaccination strategy and the gradual elimination of restrictions in all regions, we have 100% of our portfolio open and operating. In the following pages, we will see why Lar España has reacted strongly and quicker and better than others. Two main reasons. First, quality of the assets, and second, the professional management that implemented the right strategy for an extraordinary complex moment. In page 14, we can see at a glance the main quality of our portfolio. Fully refurbished centers, all with BREEAM Excellent or Very Good certificate, technically full occupancy, and leaders in their area of influence.
We acquired excellent assets at good prices that reposition, refurbish, and brought the best tenants. The quality of the assets and the management strategy are the reasons of success and differentiations within the industry. Highlight very much this slide. It is very simple, and everything is concentrated here. All these green points are the key of the company, good performance and our resiliency in times of pandemic. It is a unique portfolio, not comparable with many others in Spain. Strong dominant centers are one of the main portfolios of retail parks within the continent. On page 15, you can see this is the proof of what I've been saying. The resiliency of our portfolio, the ability to recover both in sales and visits once the restrictions have disappeared, have been truly remarkable.
All the sector of shopping centers, and especially retail parks in Spain, have recovered once restrictions were over. Lar España, same as ever since 2014, has beat the market again. In page 16, let me, for a second, recall what we planned in March 2020 and what were our targets. First was keep occupancy. Second, maintain rents. Third, defend our value. Four, do not judicialize our relationship with our tenants. To achieve these targets, we met personally with each of the tenants and reached agreements with 100% of the GLA, more than 1,200 addenda, a huge effort of communication and negotiation never seen before. As of December, 94% of the rents had been collected. More than 70% of the contracts expire beyond 2024.
Eventually, the excellent relationship with our tenants is a must to get high results. As you can see in the slide, they grew very significantly compared to 2020 and are very close to 2019 numbers. On the next page, number 17, we see the leasing activity. The leasing activity has also improved. Now we have rotated 27,000 sq m within the year, signing 94 deals. EUR 5.7 million in rents were negotiated with an increase of 3.9%. Effort ratio is fully controlled, standing at 84.4% below the Spanish and the European averages. All this while maintaining high occupancy levels during the pandemic that even rose during the last quarter of 2021. On the following page, number 18, you can see some excellent examples of operations signed this year for which we feel especially proud.
Names like AliExpress, IKEA, Leroy Merlin or Primaprix, which are all of them, leaders of their sectors. Just to complete my part in page 19, I could not end my speech without talking about one of Lar España main growth drivers, which is innovation for increasing margin. We are now fully aware of the new trends in the retail sector, and we have adapted our assets to offer solutions to our tenants that facilitate their transition to the omni-channel world. One of the main projects this year is click and collect, which will allow consumers to shop online in the stores of our centers. Other is pay per use of the common area for kiosks and promotions using online reservation and digital contract.
Our catalog of digital services is very wide, and you know that we have been pioneers in these initiatives. CRM or data client feed by loyalty clubs, marketing actions, digital services, online marketplace, delivery services, and a large et cetera of digital tools. All them provide us with a very important information with the client, improve our communication with them, and all this for generating new revenues. Now let me give the word to Jon Armentia.
Thank you, José Manuel, and good afternoon, everyone. Let's start by looking at the slide 21, and I will run you through the highlights of the 2021 year. We have had good results in terms of both gross rental income, EUR 79.1 million, and net operating income, EUR 69.9 million. Also noteworthy is the improvement in net profit, EUR 25.8 million, which is back in the black after the negative figures of 2020 marked by the pandemic. Gross value increased to EUR 1.4 billion, with a positive variation of 0.9% compared to the previous valuation in June 2021. EPRA per share reaches EUR 10.41. When analyzing the evolution of this figure, it's important to take into account the dividend paid in Q2 2021, 31 cents per share.
As José Manuel commented earlier, the collection figures are also doing very well, reaching levels around 95%. Our assets are performing better than the Spanish and European markets, and at the end of December, we present an EPRA top-up yield of 5.9% and an occupancy rate of 96.1%. WALT stands at 2.7 years with 70% of the retail leases with expiration dates beyond 2024. On the corporate side, we're going to propose to the next annual general meeting, based on 2021 results, the payment of EUR 30 million in dividends or EUR 0.36 per share, all in cash dividend. This means a 7% dividend yield over market cap.
Our refinancing process has been successfully completed thanks to the issuance of two green bonds for a total amount of EUR 700 million, both with an oversubscription of more than 4 times the offer. Thanks to this refinancing process, we have significantly improved the average cost of debt and the average debt maturity of the company. Our cash position as of December 2021 stands at EUR 313 million, and our leverage closed 2021 at a level of 40.7%, with an average cost of debt of 1.9%. This figure decreased to 1.8% after the repayment of the 2015 bond in February 2022. In September 2021, and for the seventh consecutive year, Lar España has been awarded the EPRA Award for the quality of financial information made available to its stakeholders.
Regarding information published about ESG, Lar España has also obtained the highest distinction by EPRA, achieving for the fourth consecutive year the Gold Award. This highlights the international recognition for the information reported by Lar España and made available to its stakeholders. In relation to ESG, in slide 23, you know how important it is in Lar España. Although you can find more details of our policies and achievements in our 2021 results report, I would like to mention some of them here. Firstly, I would like to highlight that we have received a triple B ESG rating from MSCI. We have also registered our 2020 activity for carbon footprint, and once we register our 2021 activities, we expect to obtain the Reduzco seal from the Spanish government. In relation to BREEAM certification, we have also made great progress.
In 2021, we have renewed eight certifications with a higher rating than they previously obtained in most of them. Besides, we have obtained a new certificate in Parque Abadía with very good rating. We now have 12 certified assets, most of them with an excellent or very good rating. Our commitment to governance remains very strong, and we are constantly updating our policies to adapt them to new recommendations. Thanks to this year the company continues in compliance with 100% recommendations of the CNMV Good Governance Code. Finally, I would like to highlight that for the fourth consecutive year, we have participated in the GRESB assessment, achieving a score of 86, which means a 25% improvement compared to 2020.
In slide 24, we can see that over the last six months of 2021, Lar España has achieved significant improvements in all its EPRA figures. As of December 2021, EPRA NTA reached to EUR 870 million, and EPRA NTA per share rose to EUR 10.41. Undoubtedly, a significant increase in both figures during the period. EPRA earnings amounts to EUR 23.9 million, and EPRA earnings per share rises to 28 cents per share. In terms of yields, EPRA initial yield and EPRA top-up initial yield rose to 5.7% and 5.9% respectively. As we can see in slide 25, Lar España's debt profile after the two green bond issuances for a total amount of EUR 700 million is remarkable.
As of December 2021, the net financial debt amounted to EUR 579 million, with our net loan to value at 40.7%. As of today, after the repayment of the 2015 bond in February 2022, the maturity, and the average cost of debt are six years and 1.8% respectively, with 100% of the debt at a fixed rate and encumbered and green. Now let's turn to slide 26 to go over the P&L. Our assets generated revenues of EUR 76.3 million, a lower amount than the figure obtained in 2020, as we expected.
The main reasons of the decrease are the leasing centers impact derived mainly from COVID-19 of EUR 14.6 million, and the temporary impact due to the supermarket's divestment in February 2021 amounting to EUR 3.3 million. Lar España presented a positive operating result amounting to EUR 49.4 million. Now focusing on the profit for the period, it was up, reaching EUR 25.8 million, which is back in the black after the negative figures of 2020, marked by the pandemic. In slide 27, I would like to focus on explaining the main variations that exist in the revenues and the differences between P&L and cash flow.
Considering the cash impact of the incentives on revenues instead of accounting impact, cash revenues plus incentives in 2021 amounted to EUR 85.2 million, which represents a 21% annual increase versus 2020 and a 27% increase on a like-for-like basis. Let's now look at the portfolio valuation in slide 28. Lar España gross asset value rose to EUR 1.4 billion. The total portfolio have risen 48.8% versus acquisition price, 0.5% since December 2020, and 0.9% since June 2021, recovering from the pandemic. It's important to point out that Lar España has a resilient portfolio of dominance of its centers and retail parks in attractive catchment areas with assets 100% owned, delivering flexibility, control, and full decision capacity.
A solvent and diversified tenant base with a weight of 2.7 years and close medium- and long-term relationships and an active management employing the latest trends in technology, omnichannel strategy, and customer knowledge experience. On page 29, we can see how the valuation of our portfolio has evolved during the pandemic and the rapid recovery of asset values. The reason for this resilience, the high quality of our shopping centers and retail parks, which are leaders in their area of influence, modern, sustainable, and also adapted to the new trends. Reflecting the Spanish financial strength, the board is going to propose to the next annual general meeting based on 2021 results, the approval of a dividend of EUR 0.36 per share, amounting in total to EUR 30 million, a 7% dividend yield over market cap.
This dividend positions us among the leading Spanish listed companies in terms of direct shareholder remuneration. As you can see on slide 31, we are committed to profitability, always maintaining a prudent cash position with detailed liquidity analysis. We are one of the most profitable options in the Spanish strong market, both in terms of dividends and share capital reduction. Now let me hand the presentation over to José Luis for the closing remarks.
Thank you, Jon. As a result of what has been presented to you today, we can conclude that our strong and resilient leadership in Spanish retail is what makes Lar España an extremely attractive company. The retail sector presents an opportunity to enter now at attractive values with yields of 6% for prime shopping centers. Our strong value creation over the years is not reflected in the share price, particularly when the refurbishment plan was almost completed before the pandemic. We are now trading at about a 50% discount versus NTA. We have the highest percentage of positive sell side recommendations among European peers, 90% of them. According to them, we present a potential revaluation of close to 40%.
We have an attractive dividend policy, and it has been, as it has been discussed, our proposal to the shareholders meeting represents a 7% dividend yield over end-of-year market cap. We have achieved strong operating results. We have a well-balanced mix of tenants and solid relationships with the tier one retailers. Our GRI on a cash basis has increased by over 25% on a like-for-like basis versus 2020. 70% of our contracts are maturing in 2024 and beyond. All this with the best-in-class management of assets, reinforced by a revised IMA in line with the best practices and costs in the sector. In summary, we have significant upside potential. As we are leaders in a clearly recovering market, we have shown that we are resilient through cycles. We have a sound balance sheet, moderate debt, and a strong cash position.
We are also innovative with focus on online channel. We are top in class in ESG practices and truly committed to value creation and shareholder profitability. In summary, good portfolio, good management, and as a result, good profitability. Thank you all for attending your call. Now back to Hernán.
Thank you very much, José Luis. Can we remind all the people attending the call, the way they have to make questions?
Ladies and gentlemen, we will now start a Q&A session. If you want to ask a question, please use the webcast functionality "Ask a question." I now hand over the call to Hernán San Pedro.
The first question is from Buy-Side People, for Jon Armentia, our CFO and Corporate Director. Can you explain a little bit more the level of net profit obtained during the previous year?
Thank you, Hernán, for the question. Well, as we can see, fortunately, we have been able to recover the net profit in the company after the 2020 that we had. The main difference when we compare with 2020 has been the performance of the valuation of our portfolio. While in 2020 we had a decrease of 4.9% during that year, in 2021, we have had a positive impact, increasing in 7.5% the market value of our portfolio. I think that this difference is the one that explains better the comparison of 2021 with 2020.
Thank you very much, Jon. The second question is for you too. A member of sell-side would like to know where are the main reasons for the results in terms of valuations.
Well, in this case, the increase that we have had, the one that I have said, 0.5% in comparison with December 2020 and 0.9% in comparison with June 2021, comes only because of the increase of the net operating income of our assets, of our retail parks and shopping centers. We have not had any kind of yield compression in this year in our valuations. 100% coming from the increase of the net operating income of the cash flow of our assets.
Another question for you, Jon, from the same person. Looking at page 27, do you consider P&L revenue and cash flow figures for 2022 are going to be the same, better, worse?
Okay. Thank you. Thank you for the question. Well, what we expect is that the amount, as you know, when we compare cash flow and PNL, we have to take into account that the cash flow effect comes just the year that we give that lease or those lease incentives to our tenants. But how we register this in our accounting and following IFRS standards is that impact, we divide it during the term of the lease agreement. Taking into account this, we have presented the differences. When we analyze the performance of 2021, it's very important to take into account that in terms of cash flow, we have improved significantly the picture versus 2020.
For 2022, we don't expect to have an additional COVID-19 lease incentives in our portfolio. What is true is that, as of December 2021, we have in our balance sheet EUR 70 million that will be an impact, will be an amount that will have a P&L effect in the coming years, following what I have just said, on the basis of how we register it. That impact won't have any kind of cash flow effect in our company.
Okay, thank you very much, Jon. The next one is for our Chairman, José Luis del Valle. Please, can you explain us a little bit your vision about your new shareholder base after Castellana Properties bought 21% of the stake?
Thank you, Hernán. The entry of a new shareholder, such as Castellana Properties, could be a sign of our current under-valuation in the public market, as well as it shows the support and confidence of a relevant international investor in our strategy. What we can tell all our shareholders is that we will continue to work in their best interest to deliver our business plan and the strategy that we have communicated to the market, that what we expect will yield substantial value over time for all our shareholders.
Very much, José Luis. The next one is for the Chairman and Vice President of Lar España, Chairman of Grupo Lar. Can you please comment, Miguel, on the sale process of the two assets that you had in the past held for sale?
I mean, it's part of the study of the company having an active rotation study for assets that we consider are more mature. Also is looking for the best moment to proceed with this. As you might seen in the past two years, liquidity in the market has been low because of the situation with COVID. We are not in a pressure. Our financial situation is super strong. We look for the best moment to implement investments and divestments.
Thank you very much, Miguel. The next one is for José Manuel Llovet. Excuse me.
We don't hear you, Hernán.
Yeah.
We don't hear you.
Okay, one moment because I have lost the program where I can see all the questions. Only one moment.
Okay.
Okay. The next one is for José Manuel Llovet. Can you elaborate a little bit more on your expectations about full-year sales in January and February? Can you give us a vision about what can happen during 2022?
Well, yes. We have already done our business plan for all the assets. We have the strategy for all of them, and we have done the analysis on all the clients, service that we used to do at yearly basis. Of course, what we see is the recovery path is there. We have seen in general, as I said before, that, as soon as the shopping centers were open, the people came back, customer came back. We are very confident on this in the centers and more in Lar España assets. Now we have beaten the market again. We are growing. We are in very close numbers to 2019.
We have to take into account that there are still some activities that are a little bit below, like cinemas or leisure, which in which we are having a return is being a little bit less fast than in others. In general, what we think about 2022, of course, last news of the last days, the unfortunate news that we are having from Russia and Ukraine is a new question mark on what is going to be the impact. If we move this apart, our perspective is quite positive in 2022. We see in Spain employment increasing, the level of savings of the people is bigger than ever. Consumer confidence is growing.
We are now similar to the percentage that we had in 2019, in the second half of 2019. We are seeing also how the minimum salary is growing, so this is going to provide more purchasing power to the people. It is true that on the other side, there is an impact of the CPI growth. We have to take this into account. This is an impact in first round and also in the second round. What we are seeing is that the forecast of CPI in Spain is growing very much. It is about 7%.
This is going to be an opposite driver, whilst the other get improved the purchasing power, this CPI, it is decreasing the same. In terms of general activity in the operational point of view, we think that there are not going to be a strong impact on tenants once the help that we are providing are over, because the effort ratio that the tenants have in our centers is quite controlled, as I said before, below the average in Spain. We do not foresee problems of Chapter 11 or bankruptcy in the tenants that we have. Just a quick view on the investment market. We see how in Europe it is coming back.
We are seeing transactions in many different places around Europe. First focused in supermarkets, then it was, and it has been retail parks. Now we understand and we anticipate that we are going to see transactions of shopping centers in the coming months. The general perspective is positive. Of course, taking into account what I said before. Now, the moment is, again, complicated, and we have to see how this problem evolve in the coming weeks.
Thank you very much, José Manuel. One question more from buy-side people. Given the high discount in the price NAV, can we expect another buyback program? I think that José Luis could answer the question.
Thank you, Hernán, and thank you for the question. At the present time, we are not contemplating any additional share buyback programs, but we will always review the situation in light of value creation and the opportunities that we might have in the market.
Okay. Thank you very much, José Luis. There are no more questions. Can you please remember the way they have all the people connected in order to make questions?
As a reminder, if you want to ask a question, please use the webcast functionality, Ask a Question.
Okay, no more questions. In the name of Lar España and our manager, Grupo Lar, thank you very much for attending the call. Please remember that all the teams are at your complete disposal. Please, feel free to contact with us for any additional information you could have. Thank you very much and good afternoon.