Results for the first half of 2023
- The SOCIMI achieves similar revenues to those of 2022 with a portfolio containing fewer assets, thanks to the signing of 33 new lease contracts, rent escalations on existing contracts, and their adjustment according to the Consumer Price Index (IPC)
- In 2023, SILICIUS initiates a strategic asset rotation and value generation plan for shareholders, based on the sale of assets above valuation and the amortization of higher-cost debt
- During the first semester, it divests from three non-strategic assets and completes sales amounting to 39.1 million, surpassing the latest RICS property valuation by 5.5%
- With these sales, the company has lowered the leverage ratio (LTV) to 37.6%, which is 200 basis points lower than at the close of 2022
Madrid, July 31, 2023– SILICIUS Real Estate, a SOCIMI specialized in the management of long-term properties with stable rents, has concluded the first half of 2023 with gross rents amounting to 14.8 million euros and net rents totaling 12.1 million euros. This is nearly the same figure as achieved last year during the same period, and represents an increase of 8% and 9.7% respectively, when analyzed on a Like-for-Like basis, an indicator that compares the amounts obtained from an asset portfolio in two different periods, without taking into account divestments or investments.
The SOCIMI has achieved these positive income results through a portfolio with fewer assets than last year, after divesting in three properties between January and June. This has been made possible through efforts in optimizing the operating asset portfolio, including rent escalations on previously signed contracts, rent updates based on the Consumer Price Index (IPC), and new lease agreements. Up until June 2023, there have been 33 new lease contracts signed, covering a gross leasable area of slightly over 14,000 square meters.
“During the first half of 2023, we have achieved positive results in terms of income, both in terms of gross rents and net rents. Despite initiating an asset rotation plan, which materialized in three non-strategic divestments and consequently a reduction in our asset portfolio, gross rents have increased by 8% on a comparable basis,” highlighted Juan Diaz de Bustamante, Managing Director of SILICIUS Real Estate. “Behind this milestone, which underscores the value of our ongoing management, lies a comprehensive effort in marketing, optimization, and asset management, formalizing long-term lease contracts with stable rents,” he noted.
One of the key highlights of this period is the improvement in income diversification, driven by the growth of gross rents, on a Like-for-Like basis, in the hotel (+22.9%) and residential (+23.6%) segments compared to 2022. Gross rents have shown positive variations in all categories, except Retail, due to the divestment of non-strategic assets.
On average, the operational asset portfolio maintained an occupancy rate of 83% in the first half of 2023, marking a slight decrease of 2.5% compared to the first quarter of 2023, primarily due to a law firm vacating the Obenque office building in Madrid, and the divestment of the San Onofre property. However, the average lease contract duration has significantly increased to 6.8 years due to the mandatory compliance periods of the new lease agreements.
In financial terms, in the first half of 2023, the SOCIMI achieved funds from operations (FFO) of 1.4 million euros, lower than the same period last year due to the increase in interest rates. The accounting EBITDA remained positive at 8.2 million euros, showing a slight decline compared to 2022. Concurrently, the result for this period amounted to -10.4 million euros, attributed to the independent expert’s valuation effect. In terms of valuation, there has been a comparable adjustment of -1.60%, resulting from the external valuer’s higher discount rates due to rising interest rates. Coupled with the nearly 40 million euros of sales during the period, this adjustment has led to a negative accounting impact.
Furthermore, the net financial debt stood at 258 million euros as of the end of June 2023, resulting in a Loan to Value ratio of 37.6%, a decrease of 200 basis points from the end of the 2022 period.
Rotation of non-strategic assets and shareholder value generation
During the first semester of 2023, SILICIUS initiated the execution of a strategic plan for asset rotation and shareholder value generation, which is based on selling assets above valuation and amortizing higher-cost financial liabilities. This initiative has materialized until June through the sale of three assets — totaling 39.1 million euros — and a commitment to sell an additional one (four in total), through transactions that exceed the last RICS property valuation by 5.5%.
These operations have allowed the mortgage debt associated with these assets to be paid off and the Loan to Value (LTV) ratio to be reduced to 37.6%.
No new acquisitions have taken place during this period. As a result, SILICIUS concludes this first semester of the year with a Gross Asset Value (GAV) of 662.6 million euros. On a Like-for-Like basis, the GAV has decreased by 1.7% compared to the previous year, driven by rising Exit Yields and return rates due to the increase in interest rates.
Specifically, as of June 30, 2023, the company had a portfolio consisting of 39 assets, which are distributed in terms of their value base as follows: 33% hotels, 24% shopping centers, 17% offices, 16% residential, and 9% logistics. Of all these, 45% of the assets that make up the GAV were located in Madrid.
Subsequent to the end of the period, in July 2023, SILICIUS formalized the sale of 100% of its equity interests in Atalaya Superficies Comerciales, a company specialized in the promotion and management of commercial parks, with assets in Salamanca and Pamplona. The company’s stake until June 31, 2023, was 21.87%. The sale price was 3.88 million euros, equal to NAV, resulting in a gross profit of 29% since its entry in 2019.
