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Good afternoon, ladies and gentlemen, and welcome to Lar España First Quarter 2022 Financial Results Conference Call. I would now like to turn the conference over to Mr. Hernan San Pedro, Lar España's Investor Relations and Corporate Communications Director. Please go ahead, Hernan.
Good afternoon, everyone, and thank you for joining us today. This is Hernan San Pedro. Welcome to our Q1 business update presentation. On this occasion, as in the last Q1 and Q3 quarters, the presentation will be limited to a brief summary of the quarter made by Jon Armentia, Corporate Director and CFO of Lar España; Miguel Pereda, Chairman of Grupo Lar; and Vice Chairman of Lar España Real Estate SOCIMI; and Jose Manuel Llovet, Chief Executive Officer of Commercial Real Estate of Grupo Lar will be at your disposal for the Q&A session.
As always, the press release and the presentation, which includes a review of the operating performance, financial and yearly information are available on the web for consultation. After the presentation, we will answer any questions you may have.
And now let me hand the call over to Jon Armentia. Please, Jon?
Thank you, Hernan, and good afternoon, everybody. First of all, I would like to thank all of you for being here for this business update. Before we start analyzing the first quarter of 2022, I think it's important to highlight where we come from and the important activity carried out during 2021.
Last year proved to be a very active one at corporate level. Lar España continued to carry out actions aimed at creating value for our shareholders, always with a focus on remaining the retail leaders in Spain. We divested 22 supermarkets leased EROSKI to focus our portfolio on shopping centers and retail parks.
In June, we renewed the IMA with very advantageous conditions for the company. We also completed our first share buyback program, amortizing 5% of the capital. In July and in October, we issued 2 green bonds for a total amount of EUR 700 million. And all this while striving every day to return operating results to pre-pandemic levels and maintaining a strong balance sheet and a healthy cash flow.
As can be seen on Slide #5, 2022 has begun with great challenges for the global economy. Post-pandemic forecasts have had to be revised downward by the IMF. In the case of Spain, the GDP growth forecast for 2022 stands at 4.8%, and this figure falls to 3.8% for 2023. Moreover, inflation levels at historic highs and the behavior of energy prices [ not ] suggest that this trend will change in the short term. As can be seen in the last graph, forecast for increasing prices in Europe are not promising. To all this, we must add the conflict in Ukraine, which has set us an unprecedented humanitarian crisis and which will undoubtedly exacerbate the economic slowdown we are experiencing.
Despite all this, we can be optimistic regardless the high levels of inflation, it does not appear that this will continue in the long term, although it's true that we still have a few months of high levels ahead of us. If we look at the national level, our economy has already recovered pre-pandemic levels, and there is still room for improvement because currently it's not 100% at pre-pandemic rates.
Experts also point out that [indiscernible] is in the price of oil and various studies point to the fact that the forecast either the price of a liter or barrel will gradually return to normal values. At Lar España, we have a very good relationship with our tenants. We were with them during the pandemic and we are very proud to be their preferred choice of major referring brands. In this regard, I think it's important to remember that all our contracts are indexed to the CPI and that energy costs can be passed on like so many other costs to our talents.
At Lar España, we did things right during the pandemic and have proven to be a resilient company that is well positioned to take advantage of the economic recovery as indicators return to normal. Our portfolio has been maintained over the last few years. The decrease in G&A is due to the rotation of nonstrategic assets for the company. As for occupancy, footfall and sales, as can be seen in the graph, care levels are already even higher than those of 2019. The effort rate remains at similar rates. And as for loan-to-value, the company's financial policy is allowing this ratio to be reduced year after year.
For Lar España, our tenants are more than just numbers. At Lar, we knew that we all have to come out of the pandemic together and that is how we faced the situation that was unexpected for all of us. We met personally with each of them and reached agreements with 100% of the GLA. As of March, 95% of the rent invoiced in the first quarter of the year have been collected. We'll have a high level of revenue security with more than 60% of the contracts maturing beyond 2025. As a result of this commitment to our tenants, our leasing activity has increased in this first quarter of 2022.
We turned over 15,000 square meters in the quarter, signing 36 operations, EUR 2.8 million in rents were negotiated and a remarkable 6.3% increase in rents was achieved. At this point, it's important to note that the effort level stands at 9.4%. All these while maintaining high occupancy levels.
At Lar España, we could not be prouder of the work we have done. We have closed the first quarter with a recurring GRI of EUR 24.5 million and a recurring net profit of EUR 13.6 million. EPRA NTA per share rises to EUR 10.5. During the first quarter of 2022, the company generated a EUR 10.7 million cash flow, a remarkable figure. And all this while maintaining a solid financial position, a healthy balance sheet and a proven leverage. Loan to value declined in the quarter to 39.9% with an average cost of debt of 1.8%. Our cash position is EUR 200 million, which is sufficient to cover expenses for the next 4 years.
Finally, I would like to remember that reflecting the Lar España financial strength, the last annual general meeting approved a dividend of EUR 0.36 per share, amounting to EUR 30 million, a 7% dividend yield over market cap that will be paid on May 27. This dividend positions us among the leading Spanish-listed companies in terms of guidance for the remuneration.
Thank you for your attention, and now we can open the Q&A session.
Thank you very much, Jon. We have a couple of questions. The first one is for you from sales side people. In terms of cash flow generation, in the reported figure around EUR 11 million could be a good guidance for the next part of the year?
Thank you, Hernan, for the question. Yes, as you have said, 10% has been the cash that we have generated in this first quarter. We can -- guidance will be to having the whole year, 4x that, that came in. That's correct.
Thank you, Jon. The next one is for ocean Jose Manuel Llovet. Jose Manuel reported sales after COVID or pre-pandemic levels. What do you expect for the rest of the year? And can you give us some color about the impact of inflation and other things over the relation with the retailers?
Okay. Hernan, thank you for the question. Yes. I mean as you have seen in the presentation, we are -- in the main KPI, we are clearly recovering the level of 2019. In visits, we are currently 8.4% below -- but in sales, we are 7.7% above 2019. This recovery is not the same in all the activities. There are some activities that are still [ brightening ] very much, like food. As you know that this has been growing for all the COVID period, and it is still very strong. We are -- in the first quarter, they are like in double digits. Home is also in double digits. And we are happy because we are seeing that fashion is recovering. They had a very, very tough year 2019 and 2020. And in 2021, we have started to recover, and now we see that they are close to be in below 10% in our portfolio in comparison with 2019.
So we are happy to see this recovery. Later, it is still a little bit weak. We are in levels of minus 20%. So if you put together all these activities, you will see that in general terms, we are like fairly similar to 2019 with some differences that we think they are going to stabilize by the end of the year.
In terms of what is happening and how it is affecting to the business. I think that it is clear that the challenges is the inflection of course, on how it is moving the global inflection to core inflection, and this will have an impact in the family budgets. Also the distribution bottlenecks in the ships, the jumps in Shanghai and similar things that are bringing some difficulties also and they are creating a moment in which the margins are a little bit tightening. Energy prices, of course, the same. But on the other side, we have positive drivers. We see that consumption is very strong. Of course, the most important thing that COVID probably ends. And we see that the tenants are very strong. We haven't seen the signs of weakness in the tenants. Most of them are working well. And we -- well, the good proof is that we are in an occupation of 96%, and the numbers of employment in Spain are being quite positive as well. So we have these 2 drivers. One is positive, the other one is negative, and we have to see how they evolve.
And in terms of the market in general, we see that the -- well, we feel that there are more activity in capital markets as well. We are seeing a first quarter and the 2 months of the second quarter in which we are -- there have been some transactions, important transactions. We have seen retail parks and shopping centers transacted and this is also very positive. Last year was supermarkets and hypermarkets, now as we forecasted, is the moment of shopping centers and retail parks, we have seen some specific transactions that make us think that the market is coming back. And also, we are reading some papers from analysts and some from some economic newspapers that try to reflect that there is a new traction for these kind of assets in the capital markets. And this is, in general, how we see the moment of the industry right now.
Thank you very much Jose Manuel. Another one for you. Knowing the strategic plan of Inditex. Can you explain us the impact on Lar España Real Estate SOCIMI portfolio in terms of closure of points?
Yes. Yes, I mean we all know that what is Inditex doing in the Texas, reducing number of shops, but also enhancing and expanding the dominant ones. And in our portfolio, you know that I always mentioned that we have a lot of Inditex brands to be precise, we have today, 55 brands of Inditex Group. And at the moment, we acquired the assets, we have less -- we have around 50. So we have grown in a number of brands of the group. And at the same time, we have like in terms like-for-like terms. We are like 10%. We have shops that are 10% bigger than what we used to have.
So most of them have been expanded. For us, it is a sign of the strength of the portfolio and dominance and the good relation that we have with this company. And this company is only going to be in the best place to this is the growth of the quality of the -- of each asset in the customer area. So we are okay. We have spillover of plans for improving the stocks of Inditex. And we have done some very special things now in -- for instance, in Portal de la Marina or Ànec Blau where you have -- we have the biggest shopping center in Catalonia. So we expect that the relation continue at this or get improved.
Thank you very much, Jose Manuel. The next one is from buy side people for Miguel. Figures improving and the discount of NAV maintained around 50%. Any special reason, do you see something changing in retail world. It's possible to see given the present year reduce -- significant reduce in the discount...
Thank you, Hernan, and Miguel speaking. Well, I think that at the end, this difference between private and public market cannot live forever. So after 2 years of -- difficult years has been proven that the fear on valuations and the fear of the activity collapsing is not anymore there. So that should give confidence to go to the market in general that the value for assets and the value of the shares is strong and resilient. Also the fact that -- so -- and that's something that we can demonstrate with figures now. That was more difficult a year ago. It was a conviction, but now it's there. And as Jose Manuel and Jon were saying the fact that NOI is resilient, the fact that the occupancy is even improving and the fact that the effort rates are maintained is the best proof of that.
In the other hand, we are going to start seeing -- we have seen already, and that will increase the amount of transactions on the private market. And that's in conjunction with the valuations of the year-end that we've already seen how the balance were improving. And I'm sure that valuations in June, all that will be factors that should give confidence of the market. At the end, the discount is a reflection of, I think, that the market not being sure or having uncertainty of where income and values were going. And I suppose that we are going to give -- and we are giving strong reasons to take that uncertainty out of them.
Thank you, Miguel.
[Operator Instructions] I now hand over the call to Hernan San Pedro.
Yes, we have another one for Miguel. In terms of capital allocation, what's the idea of the company for this year and coming years. Any news regarding a possible rotation on your asset portfolio? Or are you thinking maybe to make more share buybacks?
Well, there's no factors out of or no things that will not be considered. Today, clearly, we believe that the market is improving. And then asset rotation is probably our priority. It's not that -- I mean, we've done share buybacks the past. But clearly, our priority will be to rotate assets and change one for another. So that means selling those that we consider are more mature and where it's less value to be created and take advantage of the situation of the market of our platform in order to acquire things that itself are -- create value but also that create value for the portfolio in general. And so the asset rotation is still on the top of the list of our...
Thank you very much. Is there any other question?
There is no more questions.
Okay. Thank you very much. Thank you for attending the call. I'm pleased to remember that all the company and all the departments are at you complete disposal. Thank you very much, and good afternoon.