1

Letters

Letters

Chapter download
It has been a particularly relevant year for Árima, one in which we began to see tangible results of the effort exerted since the IPO in 2018.

Mr. Luis Arredondo Malo

Chairman

On the publication of our annual report, I would like to thank you for your invaluable support and trust during 2022.

It has been a particularly relevant year for Árima, one in which we began to see tangible results of the effort exerted since the IPO in 2018. During these twelve months, thanks to the dedication of our team and to the high-quality portfolio, our strategy has taken shape with the completion of significant refurbishment projects and the signing of excellent lease contracts with high quality covenants.

In this report, we would like to share in the clearest manner possible these highlights which transparently illustrate our financial performance, the progress of our portfolio and the environmental, social and corporate governance initiatives that underpin our commitment to society.

+
Our capacity for growth remains significant thanks to projects in their final phases of development which comprise some 40% of our gross leasable area.

Mr. Luis López de Herrera-Oria

Chief Executive Officer and Vice-Chairman of the Board of Directors

May I begin by extending my sincere thanks to our Chairman, the members of the Board and our shareholders for their invaluable support and collaboration throughout the past year, in addition to everyone else involved in making Árima’s extraordinary performance possible.

Despite the challenging economic environment, we have been able to deliver sound operating results and positive growth during 2022. In these past months, our first refurbishment projects –totalling 14,000 sqm– have been completed and new leases have been signed for more than 16,000 sqm. These contracts reflect an average rental increase of 156% post refurbishment.

The value of our portfolio has continued to grow, reaching 380 million at year-end, up 11% year-on-year, reflecting the improvements undertaken and the increase in occupancy. Our EPRA NTA stands at €12.4 per share, up 29% since the Company’s IPO in 2018 and up 5% this past financial year.

+

2

At a Glance

At a Glance

Chapter download
December 2022

Annual results: portfolio valued at €380 million at 31 December Árima announces its results for the 2022 financial year, with highlights including the growth achieved in the portfolio valuation, which stood at €380 million at 31 December 2022 (+11% y-o-y on a like-for-like basis). The valuation was carried out by CBRE Valuation Advisory in accordance with RICS (Royal Institution of Chartered Surveyors) valuation standards.

Efficient management of capital structure A further four debt tranche drawdowns were arranged to increase the Group’s liquidity position and keep it aligned with its financial needs. These drawdowns are linked to the completion of certain milestones and bear very competitive financial interest.

Early termination agreed with tenant at Pradillo Early termination negotiated and signed for the existing lease agreement at Pradillo 58, allowing the Company to continue as initially planned with the demolition work. The completion of demolition works at Pradillo 54 and 56 allows the scheduled redevelopment work to remain on course.

October 2022

Refurbishments that meet the most exacting of sustainability standards and accredited by independent experts We completed the carbon analysis for two of our most significant refurbishments: Cadenza and Botanic. According to the study conducted by external independent experts, a total of >300 kgCO2e/sqm of embodied carbon emissions were avoided, the equivalent to planting 7,000 and 6,000 trees per property respectively.

Habana building handed over to new tenant After completing the refurbishment works, the property was fully delivered to the new tenant, a renowed law firm. The lease agreement, signed ahead of works completion, equates to a post-refurbishment rental uplift of +265%.

Árima maintains 4-Stars rating in 2022 GRESB assessment Árima remains a leader in ESG. With a 4* rating and 86 points in the 2022 GRESB assessment, the prestigious accreditation body rates Árima well above the European average and its peer group companies.

September 2022

María de Molina reaches 100% occupancy María de Molina, the first of our refurbishment projects to be completed, is fully let. The new rents signed post improvements achieved a 60% uplift over the pre-refurbishment rent.

Energy improvements at the logistics platform The works to improve energy efficiency at the San Agustín de Guadalix logistics platform are successfully completed, introducing measures designed to reduce energy consumption such as: a new LED lighting system with motion sensors, new loading bays designed specifically for the facility and rooftop solar panels. 100% of the solar energy produced at the facility, is used on site. This, together with the other measures rolled out, succeeded in cutting the platform’s overall energy use by 37% in 2022.

Árima renews its Sustainability Gold award: EPRA sBPR The Company once again received the highest accolade from the prestigious organisation EPRA (European Public Real Estate Association), obtaining the GOLD award in recognition of the major advances in sustainability shown throughout the year, and detailed in the 2021 Annual Report.

July 2022

Share buyback plan launched A new plan to repurchase shares for a maximum of €20 million or 2,000,000 shares so as to reimburse capital to shareholders or make payments in kind.

June 2022

Árima portfolio valued at €382 million at 30 June 2022 The Group’s properties achieved value uplift of 11% on a 6-months like-for-like basis. The portfolio was valued by CBRE Valuation Advisory in accordance with RICS (Royal Institutition of Chartered Surveyors) professional valuation standards.

General Shareholders’ Meeting The General Shareholders’ Meeting held on 28 June 2022 approved all the resolutions included in the Agenda, providing shareholders with all of the related documents prior to the meeting.

May 2022

Árima signs a financing agreement with Abanca for 2.7 million euros The agreement will have a duration of 3 years with the aim of financing the energy efficiency improvements carried out in the San Agustín de Guadalix warehouse.

February 2022

Community Engagement Programme Árima launched the corporate community engagement programme in conjunction with a highly-renowned NGO to help victims of the armed conflict in Ukraine. Over the course of the year, the Company worked with six organisations focusing on a variety of vulnerable groups (education, the elderly, people with disabilities and autism).

January 2022

Annual CAPEX plan launched The annual portfolio refurbishment works get underway, involving the properties: Habana, Botanic, Cadenza and Dune, while analysis and demolition works continue at the Pradillo project.

Continued value creation
€380M

Gross asset value December 2022

11%

Annual portfolio growth

101,927 sqm

Lettable area across 9 assets

€1,000M

New investment opportunities under consideration

Tangible growth potential
16,000 sum

Leases signed (occupancy up +10% LfL)

+156%

Average rental uplift post-refurbishment

+80%

Gross rent LfL1

~6.5%

Total expected YOC2

Awards and certifications
>80%

LEED/BREEAM and WELL certified short and medium term

100%

Projects with improved EPC3 ratings

★★★★

GRESB (Global Real Estate Sustainability Benchmark)

Gold

EPRA sBPR
Highest rating

Robust financial position
+€90M

Liquidity4

12.8%

Net Loan to Value

1.3%

Net financial cost of debt5

€9.4M

Gross rent6 December 2022

EPRA NET Tangible Assets
€12.4 per share

+5% vs Dec 21

29%

Growth since IPO

5%

Annual growth

LfL growth

Above average compared to peer group

Benchmark in sustainability
100%

Green financing

>300 kgCO2e/sqm

Embodied carbon avoided7

+37%

Energy savings at logistics assets thanks to solar panels

Commitment 20308

-55% decarbonisation Carbon neutral by 2050

  • Passing rent generated by the property portfolio’s occupied assets at 31 December 2022 compared to the passing rent for the same properties at 31 December 2021.
  • Yield on cost defined as expected post-capex GRI divided by total investment (net acquisition cost plus expected capex).
  • Energy Performance Certificate.
  • Includes, cash and cash equivalents, short-term investments and financing lines not utilised at year-end.
  • Weighted average; includes spread, upfront costs and hedging, offset by the revenues generated from short-term investments.
  • Passing rent generated by the property portfolio’s occupied assets at 31 December 2022.
  • Based on the in-depth study carried out for Botanic and Cadenza by independent external experts.
  • Compared to the portfolio’s carbon footprint in 2019 in terms of CO2e per occupied sqm.

Share price performance1

  • Data re-based for graphical representation (base at 01/01/2022 = Árima’s share price).
  • Spanish REITs listed in the main market.
  • LHS:
    • Árima
    • Peer group²
    • Ibex Small Caps
    • EPRA EMA
  • RHS:
    • Average daily volume

3

Our Company

Our Company

Chapter download
Transformational projects
  • Highly experienced team finding and securing opportunities with true potential.
  • Proven ability to create offices that provide exceptional experiences, and that give workers a sense of belonging.
  • Refurbishments focused on carbon footprint minimisation and occupant welfare.
High quality space
  • Alleviating Madrid’s lack of Grade A space.
  • Fulfilling post-pandemic requirements for corporates to safeguard employee well-being.
  • Exemplary sustainability in carbon footprint and working conditions.
Generating Alpha
  • Prudent, value-driven, off-market strategy keeps entry costs low.
  • Significant growth still to come from ongoing refurbishments.
  • Rent-roll conservative forecast to threefold, evidenced by contracts signed thus far.

Árima’s success is built on the tried and tested experience of its management team, a group of professionals offering expert knowledge of the real estate market and who work tirelessly to achieve the Company’s objectives and to repeat and improve on the successes of previous projects.

The members of its management team each have over 20 years of experience in the sector and have been working together as a team for several years. This unrivalled expertise allows them to identify high-potential opportunities and create unique workspaces where inspiration thrives and occupiers feel a real sense of belonging, all while ensuring the very best returns for investors. The ultimate goal is to create value for shareholders, offering occupiers spaces that have been designed and executed to the most exacting of standards and that place sustainability and the use of state-of-the-art technology at the heart of their design.

Árima Investments The company joined the Árima Group in 2021 when the acquisition of Pradillo 56 and Pradillo 58 was completed – a highly strategic deal that was closed following the acquisition of Pradillo 54 in 2020.

ÁRIMA I+D+i This is the Company that encompasses all initiatives relating to innovation and sustainable development within the Group.

Árima Real Estate Socimi Árima Real Estate SOCIMI is the Group’s parent company, holding 100% of the shares of its two subsidiaries. It oversees most of the real estate and asset management operations, as well as the refurbishment works of the Cadenza and Dune buildings and the management of its occupied properties.

Investor location and profile

  • Spain
  • Europe
  • Canada
  • UK
  • USA
  • Others
  • Real Estate Specialist
  • Private Wealth Management
  • Long-only Funds
  • Management team

Debt maturity profile as of 31/12/2022

4

Our Asset Portfolio

Our Asset Portfolio

Chapter download

Árima’s goal is to create value via sustainable projects with the potential to transform. To do this, the Company explores and identifies suitable assets in up-and coming areas, then works to transform them, obtaining the most exacting of environmental certifications and significantly lowering their carbon footprints as part of the process.

Its extensive experience in the real estate sector makes Árima a point of reference for both tenants and shareholders.

9 assets

8 offices, 1 logistics warehouse

€380M

Gross Asset Value

101,927 sqm

Total Gross Leasable Area

+16,000 sqm

In new leases

1

Habana

2

María de Molina

3

Pradillo

4

Ramírez de Arellano

5

Botanic

6

Play

7

Cadenza

8

Dune

9

Guadalix

  • CBD
  • Inner Madrid (M30)
  • A2/M30
  • Campo de las Naciones
  • Las Tablas/Manoteras
Previous - Next
1
Habana

Fray Bernardino Sahagún 24, Madrid

Back
  • Asset type

    Offices

  • Location

    CBD

  • GLA

    4,356 sum

  • Parking spaces

    65 (+25% electric)

Asset

A stand-alone Grade A office building located in Madrid’s prime CBD. The property offers a GLA of 4,356 sqm arranged over five floors and features bright, flexible office spaces. Each floor comprises approximately 1,000 sqm, while the property also benefits from a large roof terrace and 65 underground parking spaces.

The property boasts excellent visibility and is ideal for housing a flagship corporate headquarters. Refurbishment works began in H2 2020 and were completed at the end of 2022. This project, the work of architects Fenwick Iribarren, has resulted in a new layout and building entrance, upgraded office and communal spaces, new fixtures and services and improvements to the façade. The main entrance is now at street level to the front of the building, enhancing its visual presence. The entire property has been let to a single top-tier tenant, who took up occupancy in late 2022.

Location

Located in the northern part of Madrid’s CBD, Habana boasts excellent visibility from Paseo de la Habana and immediate access to Paseo de la Castellana. It offers first-rate transport links, and with Cuzco and Pío XII metro stations just a short walking distance away, it offers a quick connection to Madrid Barajas airport. The M-30 ring road is also easily accessed via Alberto Alcocer. A wide selection of local amenities are within easy reach of the property, with a multitude of shops and restaurants to choose from, as well as a number of schools and hospitals.

Previous - Next
2
María de Molina

María de Molina 39, Madrid

Back
  • Asset type

    Offices

  • Location

    CBD

  • GLA

    4,025 sqm

  • Parking spaces

    24

Asset

Prime office building located in the heart of Madrid’s CBD and acquired from different owners in several phases. The property offers a light-filled, flexible office space of approximately 1,200 sqm – qualities that are not easy to come by in this area. The three vacant floors have been fully refurbished, reinforcing floor structure, installing windows in the façade, new toilets, a new HVAC system, raised floors, suspended ceilings and upgrading the lift and lobby areas with premium finishes. The addition of a new external fire escape has also doubled the building’s permitted occupancy levels. Sustainability and innovation play a key role in Árima’s refurbishment project, creating optimal work environments with high-efficiency equipment. 90% of the workstations benefit from natural light, as well as individual temperature, humidity and lighting control per halffloor. The offices are also equipped with an optimised ventilation system that eliminates polluting particles via photocatalysis and continually monitors the quality of the indoor air.

Location

The property is located on Calle María de Molina, one of Madrid’s main arterial roads, boasting excellent access and communications. This area is highly sought-after by coworking companies as it benefits from a wide range of public transport options and an outstanding range of high-quality local services.

Previous - Next
3
Pradillo

Pradillo 54-56-58, Madrid

Back
  • Asset type

    Offices

  • Location

    Inner Madrid

  • GLA

    11,925 sqm

  • Parking spaces

    180 (20 EV charging points)

Asset

The property was acquired from multiple owners via several complex off-market transactions during 2020 and 2021. The acquisitions have been combined to create a large institutional lot with significant potential in one of Madrid’s best office submarkets close to the CBD. The acquisitions cover a total GLA of 10,225 sqm, with the potential to expand the buildable area to approximately 11,925 sqm after completion1. We are currently tendering the architectural design project and negotiating the early termination of existing leases prior to the start of construction works. The refurbishment will be sustainable, taking account of the well-being of both the environment and the end-users and maintaining the Company’s commitment to creating green, landscaped areas. On completion of the refurbishment, the building will feature 180 underground parking spaces, 20 of which will be equipped with electric vehicle charging points.

Location

Located in north Madrid, close to the CBD. The area is currently home to many tech company headquarters and is also undergoing a rapid transformation with new high-end residential schemes being developed. The Alfonso XIII and Concha Espina metro stations are located within walking distance from the building, providing a quick connection to Madrid Barajas airport. The M-30 ring road is also easily accessed from the property. The building benefits from a wide selection of local amenities within walking distance, with a multitude of restaurants and shops to choose from, as well as a number of schools and hospitals.

Previous - Next
4
Ramírez de Arellano

Ramírez de Arellano 21, Madrid

Back
  • Asset type

    Offices

  • Location

    Inner Madrid

  • GLA

    6,759 sqm

  • Parking spaces

    110

Asset

A prime office building designed by architect Rafael de la Hoz in 2008, the property comprises a total of 6,759 sqm arranged over six floors, plus a basement floor housing 110 parking spaces. The property benefits from a double-height lobby and highly efficient, column-free floorplates of over 1,000 sqm. A generous internal courtyard floods all floors with natural light. It is a modern-look building, offering premium quality spaces and materials and benefits from LED lighting, a clear height of 2.8m and natural light in 85% of its spaces. It features a curtain wall façade, VRV air conditioning systems with centralised temperature and flow control, and a solar thermal installation for sanitary water that covers 70% of the property’s water requirements. In addition, to improve occupier well-being and in keeping with its natural surroundings, the property has a generous landscaped courtyard. It is BREEAM “Very Good” certified, indicating compliance with certain management, health, well-being, energy, transport and materials criteria.

Location

Located in the consolidated submarket of Avenida de América-Torrelaguna Madrid, close to the junction at which the A-2 motorway meets the M-30 ring road. The building is strategically located next to the Spanish headquarters of AXA and BNP Paribas. This A-2 area is within close reach of the CBD (7 minutes by car), the M-30 and Madrid Barajas airport (7 minutes by car). The Arturo Soria and Avenida de la Paz metro stations and the Arturo Soria Plaza shopping centre are all within walking distance.

Previous - Next
5
Botanic

Josefa Valcárcel 42, Madrid

Back
  • Asset type

    Offices

  • Location

    A2-M30 Madrid BD

  • GLA

    9,902 sqm

  • Parking spaces

    224 (36 EV charging points)

Asset

Prime office building, highly visible from Madrid’s A2 highway, with 9,902 sqm of GLA and 224 parking spaces (16% equipped with electric vehicle charging points). This nine-story building has excellent floor-to-ceiling height, natural light in more than 90% of the workstations, three greenhouses, gymnasium, a restaurant and, above all, spectacular landscaped outdoor areas of more than 2,000 sqm. The refurbishment works aim at making the asset 33% more efficient than a conventional building, thanks to a photovoltaic installation on the roof that will serve as a source of renewable energy. In addition, the project will incorporate VCR air conditioning systems with photo catalytic filters and a fast access control system with biometric scanner through the Digital Platform developed by Árima®. Árima is working to create a sustainable and healthy environment for its tenants. Therefore, the project will incorporate anti-glare LED lighting, a curtain wall façade with acoustic insulation and solar protection, materials with low environmental impact and natural spaces that promote greater well-being. The new building has been designed by the architectural firm Álvarez-Sala, and is expected to receive LEED Platinum, WELL Gold and WELL Health and Safety certifications.

Location

The building is located close to the centre of Madrid, in the consolidated M30-A2 submarket, and with easy access to the airport. It stands out for its strategic location and its proximity to the CBD (7’ drive), the M30 freeway and Madrid Barajas airport (7’ drive). The building has excellent public transport connections and local amenities in the immediate vicinity, including a shopping centre. Notable tenants include Banco Santander whose headquarters are located in in the vicinity.

Previous - Next
6
Play

Vía de los Poblados 3, Madrid

Back
  • Asset type

    Offices

  • Location

    Campo de las Naciones

  • GLA

    10,936 sqm

  • Parking spaces

    202 (70 EV charging points)

Asset

An independent, highly efficient, LEED Gold-certified, Grade A office building located in the consolidated Cristalia Business Park, within the Campo de las Naciones submarket. The office buildings are arranged around an extensive, carefully manicured landscaped area and include a hotel, nursery, gym, several restaurants, paddle tennis court and security service. The building offers 10,936 sqm of modern office space arranged over six floors and a column-free floorplate area of more than 1,800 sqm per floor, each of which can be divided into three modules. The property also boasts an extraordinary amount of natural light thanks to its fully glazed façade. The building is already equipped with a modern ventilation and photocatalysis system to remove harmful particles, as well as with sensors for monitoring indoor air quality. It features 202 parking spaces, 35% of which are equipped with electric vehicle charging points.

Location

Located in the Campo de las Naciones area, historically considered the most consolidated and attractive office market in Madrid, it is strategically located between the airport and the CBD. The San Lorenzo metro station is located just a few minutes’ walk away. The complex benefits from very good access to the following main motorways: M-40, M11, A-1, A-2 and R-2. It also boasts excellent visibility, ideal for corporate signage.

Previous - Next
7
Cadenza

Vía de los Poblados 7, Madrid

Back
  • Asset type

    Offices

  • Location

    Campo de las Naciones

  • GLA

    14,302 sqm

  • Parking spaces

    215 (21 EV charging points)

Asset

Originally designed as a data processing centre, this Grade A office building offers large floorplates (approximately 2,800 sqm) with excellent floor to ceiling height. The property comprises five above-ground floors, with a total area of approximately 14,302 sqm and two basement floors accommodating 215 parking spaces, 21 of which are due to be fitted with electric vehicle charging points as part of the property upgrade. The property benefits from excellent visibility, ideal for corporate signage. In order to enhance occupier well-being, the communal areas and the quality of the interior spaces are being improved, energy-saving measures are being implemented, CO₂ emissions and utility consumption are being reduced and the outdoor areas are being landscaped. The upgrade includes a new three-level curtain wall façade and a central atrium is being added, which once complete will increase the property’s GLA and significantly improve the amount of natural light entering the building. The renovation project – designed by Estudio Lamela – includes a new lobby and pays particular attention to the gardens. The project is expected to receive LEED Gold, WELL Platinum, and WELL Health & Safety certifications.

Location

The property is located in the Campo de las Naciones area, historically considered Madrid’s most consolidated and attractive office market and strategically located between the airport and the CBD. The San Lorenzo metro station is located a few minutes’ walk away. The complex benefits from very good access to the following main motorways: M-40, M-11, A-1, A-2 and R-2. It also boasts excellent visibility, ideal for corporate signage.

Previous - Next
8
Dune

Avenida de Manoteras 28, Madrid

Back
  • Asset type

    Offices

  • Location

    Las Tablas / Manoteras

  • GLA

    12,000 sqm

  • Parking spaces

    241 (30 EV charging points)

Asset

Based on the design proposal by the renowned Spanish architect Carlos Rubio, this free-standing office building will comprise six above-ground floors totalling approximately 12,000 sqm, and two basement floors with 241 parking spaces, 30 of which will be equipped with electric vehicle charging points once the refurbishment is complete. The Grade A design offers large, bright, column-free, flexible floorplates (approximately 2,000 sqm per floor) and good floor-to-ceiling height. Considering that bright and airy open spaces and the possibility of accessing outdoor areas help improve tenant satisfaction and productivity, Árima has ensured the property’s new-look communal areas, which will be significantly upgraded as part of the refurbishment, will do just that. The upgrade will also see the addition of a generous rooftop terrace and extensive landscaped areas on the ground floor. The complex will be built in line with the Business Services zoning classification, which accommodates technological and most office activities. It is expected to receive LEED Platinum, WELL Gold and WELL Health & Safety certifications.

Location

Excellent location in the up-and-coming area of Manoteras, the northern extension of Madrid’s CBD. Its proximity to the Paseo de la Castellana means it is very well connected to the rest of the city and also strategically located in terms of reaching Madrid Barajas airport – just a few minutes away with both good public and private transport connections (A-1, M-11, M-30, and M-40). The building is just metres from the metro station ‘Virgen del Cortijo’ and the regional ‘Fuente de la Mora’ train station. The area has a wide range of services and is home to several public entities, as well as being a hub for tech and industrial-based companies.

Previous - Next
9
Guadalix

Ctra. A-I Km 3, San Agustín de Guadalix, Madrid

Back
  • Asset type

    Logistics

  • Location

    Madrid (2nd Ring)

  • GLA

    25,694 sqm

  • Loading bays

    29

Asset

Logistics warehouse developed on a turnkey basis by Gazeley in 2008 for the current tenant, Eroski. It is currently used as a fresh produce strategic distribution centre. The property comprises 25,694 sqm, set on a 35,000 sqm plot of land. It has direct access to the A-1 highway that connects Madrid with the north of Spain. The interior of the property features 24,474 sqm of warehouse space (including a basement with 3,035 sqm of cold storage); as well as 1,220 sqm of office space. The warehouse is divided into several cold storage chambers with different temperatures depending on the product stored. These vary from positive cold areas for fresh products; areas for the preparation of meat and fish; and negative cold chambers (down to -23ºC) for frozen products. The warehouse has 29 loading docks and a floor to ceiling height of 9.50 m. Árima will implement a series of measures to reduce the high level of electricity consumption at the warehouse. These include the installation of photovoltaic panels, better roofing and dock insulation and LED lighting. Following their installation and depending on subsequent performance, Árima will analyse the possibility of obtaining an energy efficiency certification.

Location

The warehouse is located at km 32 of the A1 highway, which runs between Madrid and the Basque Country and France. It is situated 30 minutes from the centre of Madrid and 11 km from the A1 and M50 ring road junction, providing excellent connections to the national road network. Other companies in the surrounding area include Schaeffler, Deco Pharma, Omega, Iberdrola and Mitsubishi.

At Árima, we work day in, day out to offer the users of our properties an outstanding working environment that meets their needs and gives them an unbeatable experience in terms of health and well-being.

To this end, we take a proactive approach to managing our portfolio, continually seeking improvements with small tweaks and fixes that make a big difference.

  • Electric vehicle charging points: In 2022, we installed electric vehicle charging points at two of our occupied properties.

9,050 Kg CO2 savings

10.118 L Replaced fuel

  • Digital building management systems: Árima conducted a review of the BMS in place in each of its occupied properties to identify areas for improvement in conjunction with a market study to select a partner for implementation.
  • Renewable energy production: The Cristalia building’s solar panels originally offered a capacity of 5 kW. In 2022 this was upgraded to 30 kW.

Screenshot from the solar panel monitoring application at the Guadalix logistics platform

Chart showing one month of solar power generation at Cristalia following upgrade

380 M€ GAV Dec 20221

+11% 12-month LfL2

+30% vs. total investment since IPO

Over the course of 2022, Árima’s active management resulted in steady growth in the value of its assets, reaching a total of €380 million at 31 December 2022. This equates to growth on total investment of approximately 30%, up +11% y-o-y on a like-for-like basis.

  • Based on the external independent valuation carried out by CBRE Valuation Advisory (RICS) as of 31 December 2022.
  • 12-month like-for-like compares the properties at 31/12/2022 that were also part of the portfolio at 31/12/2021.
Asset type
Offices Logistics Total
Properties 8 1 9
GLA (sqm) 76,233 25,694 101,927
Parking spaces (units) 1,281 0 1,281
Net acquisition price (EUR million) 212.5 16.4 228.9
Acquisition price (€/sqm) 2,864 638 n. a.
Market value (EUR million) 345 35 380
Gross LTV 31.9% 34.1% 32.1%

5

2022 Full year

2022 Full year

Chapter download

Despite various headwinds that included the war in Ukraine and high inflation, Spain’s economy grew by 5.5% in 2022. This performance was helped by increased tourism, domestic consumption, an improved employment situation and lower than expected inflation. Forecasts for 2023 suggest a more modest 1.4% although Spain remains ahead of many of its European peers in this respect. Unemployment fell to 12.8% which is the lowest figure since 2008 and approximately half the rate at the height of the GFC. Inflation grew by 8.3% in 2022. Once again this is a more favourable figure that in other European countries and prices are expected to increase more moderately in 2023 with the latest forecast 4.4%.

Madrid and Barcelona Take Up

  • Take Up Madrid
  • Take Up Barcelona
  • Madrid Average
  • Barcelona Average
  • Source: JLL

The Árima Group’s current portfolio offers significant growth potential. According to our (conservative) internal projections for rental growth –based on the 15-year average for each applicable submarket, adjusted for quality– on the completion of ongoing refurbishment works we should see a rate of return of between 6.2% and 6.7%. Yield compared to the average of prime offices in Madrid, 3.9% according to JLL Research.

  • Source: JLL Research 2022.
  • Passing rent divided by total portfolio acquisition cost.
  • Projected passing rent after CAPEX divided by total investment (acquisition cost plus projected CAPEX).
  • Gross annualised income.
  • Projected income growth following refurbishment and upgrade works.
  • Projected gross rental income on realisation of reversion potential, adjusted for rental growth due to quality improvements in refurbished properties.

Key income statement metrics at 31/12/2022

€ 6,237 thousand Gross rental income-GRI1 € 5,192 thousand at 31/12/2021

€ 5,521 thousand Net rental income-GRI1 € 4,589 thousand at 31/12/2021

€ (628) thousand Recurring operating profit/(loss)-EBIT € (1,133) thousand at 31/12/2021

€ 12,992 thousand Change in fair value of assets € 28,598 thousand at 31/12/2021

€ 10,478 thousand Net profit € 26,125 thousand at 31/12/2021

€ 0.39 Earnings per share 0,94 at 31/12/2021

Key balance sheet metrics at 31/12/2022

€ 379,700 thousand Gross asset value-GAV € 343,600 thousand at 31/12/2021

€ 48,640 thousand Net debt € 15,704 thousand at 31/12/2021

32% Gross LTV 30% at 31/12/2021

€ 92,568 thousand Liquidity2 € 103,000 thousand at 31/12/2021

1.3% Net financial cost 1.8% at 31/12/2021

100% Green financing 100% at 31/12/2021

  • Recurring.
  • Includes, cash and cash equivalents, short-term investments and financing lines not utilised at the year-end.

To provide greater transparency and comparability, Árima Real Estate has been a member of the European Public Real Estate Association (EPRA) since its inception, and has adopted its best practice recommendations (BPR). The table below details EPRA´s key performance measures:

EUR Thousand
(unless specified)
EPRA Definitions 2022
EPRA Adjusted Earnings Adjusted earnings from operational activities. (2,002)
EPRA Earnings Earnings from operational activities. (2,514)
EPRA Net Reinstatement Value (EPRA NRV) Assumes that entities never sell assets and aims to represent the value required to rebuild the entity. 328,438
EPRA Net Tangible Assets (EPRA NTA) Assumes that entities buy and sell assets, thereby crystallising certain levels of unavoidable deferred tax. 328,192
EPRA Net Disposal Value (EPRA NDV) Represents the shareholders’ value under a disposal scenario, where deferred tax, financial instruments and certain other adjustments are calculated to the full extent of their liability, net of any resulting tax. 330,955
EPRA Net Initial Yield (EPRA NIY) Annualised rental income based on the cash rents passing at the balance sheet date, less non-recoverable property operating expenses, divided by the market value1 of the property, increased with (estimated) purchasers’ costs. 1.2%
EPRA “Topped-up” NIY Incorporates an adjustment to the EPRA NIY in respect of the expiration of rent-free periods or other unexpired lease incentives. 3.3%
EPRA Vacancy Rate Estimated Market Rental Value (ERV) of vacant space divided by ERV of the whole portfolio. 24%
  • Market value based on the external independent appraisal determined by CBRE Valuation Advisory (RICS) at 31 December 2021.

6

Environmental, Social and Corporate Governance Commitment

Environmental, Social and Corporate Governance Commitment

Chapter download

This report follows the European Public Real Estate Association’s (EPRA’s) recommendations on sustainability best practices (sBPRs), which are themselves based on the Global Reporting Initiative (GRI) Standards. In accordance with these recommendations, we take into account the company’s business model, strategy and main corporate risks; the topics most relevant to our industry; and the interests of our stakeholders; as well as the impact on society of the work Árima carries out and the regulatory environment.

Throughout the review process carried out in 2022, we also followed a double materiality approach that also covers how the potential economic impact of the material topics identified should be taken into consideration.

ENVIRONMENTAL
  • Decarbonisation
  • Consumption efficiency
  • Waste Management
  • Sustainable mobility
  • Responsible landscaping
  • Sustainable refurbishments
SOCIAL
  • Well-being, health and safety1
  • Training and development
  • Inclusion and diversity2
  • Trusting relationships
  • Impact on the local community
CORPORATE GEVERNANCE
  • Control over reported information
  • Regulatory compliance
  • Standards and recommendations
  • Strategy and objectives
  • Risk management
ECONOMIC
  • Investor alignment
  • Value creation
  • Sound investments
  • Level of financial debt
  • Analyst opinion
  • Combining the topics from 2021: “Tenant welfare” and “Health and safety”.
  • Added in 2022.

Achieved objectives

Incorporate sustainability (green) clauses into 85% of lease agreements that Árima signs with tenants.

Offer social engagement programmes for the local community in 50% of Árima’s buildings.

Conduct an ESG assessment of 50% of the Company’s Tier 1 suppliers.

Obtain a high score in the GRESB assessment.

Maintain an average employee satisfaction score above 80%.

100% of the common areas in the 2020 portfolio powered by an electricity supply with a Guarantee of Renewable Origin.

Continue offering training to 75% of the workforce.

Obtain coverage of 95% of properties’ energy and water consumption data.

Ongoing objectives

80% of the 2020 portfolio LEED/BREEAM-certified.

75% of the 2020 portfolio equipped with electric vehicle charging points.

Digital systems to control efficiency introduced across 80% of our portfolio.

100% of repositioning projects to obtain at least WELL GOLD certification.

Achieve an energy efficiency rating of A for all newly constructed buildings.

  • Based on certifications obtained at the date of publication.

Decarbonisation strategy

2030 Goals

  • Reduce net operational carbon emissions based on area occupied (CO2/sqm) by at least 55% compared to 2019 across the Company’s portfolio.
  • 40% of our portfolio supplied by energy with Guarantees of Origin.
  • Increase energy efficiency by 36%-39% where refurbishments are carried out.

2050 Goals

  • Carbon neutral.

2022 INITIATIVES

  • BMS implementation: Firm in the belief that you can’t manage what you can’t measure, in 2021 Árima decided to carry out a significant upgrade of the BMS (Building Management Systems) for its currently occupied Cristalia and Ramírez de Arellano assets.
  • Sustainable refurbishments: The result is assets with a 360-degree approach to sustainability, addressing every detail in the process to ensure an outstanding result that can be tangibly recognised by Energy Efficiency Certifications.

Investors and Analysts

Árima aims to maintain an open and constructive dialogue with shareholders, analysts and the entire investor community overall. We are committed to provide transparent disclosure and a clear investment case on a regular basis, and welcome any engagement with any market participant.

+160 Meetings during the year

76% Of Árima shareholders met at least once during 2022

Employees: Árima’s team

At Árima we believe that our employees are the key to the success of any project. We see the living proof of this every single day at our head offices, where our team of 13 professionals demonstrate the importance of their know-how, involvement and integrity day in day out. Árima’s Employee Engagement Plan, with its four focus areas, is our handbook for promoting best practices and looking after the well-being and professional development of our team.

Employee engagement program

Communication and Trust

Training

Work-Life Balance and Well-Being

Inclusion and Diversity

Suppliers and contractors

Árima could not carry out its day-to-day work without the help of its suppliers and contractors. To successfully carry out our projects, we draw on the experience of the very best specialists, fully trusting in their expertise and professionalism. To make sure we are working with the very best, Árima has developed a selection and communication process that helps us establish trust and promote a positive working environment.

Supplier Selection and Procurement Policy

ESG Supply Chain Engagement Programme

ESG Supplier Certification Programme

Trusting relationships

Tenants

The people who occupy our buildings every day are one of the Company’s most important stakeholder groups and a key part of our business. At Árima, we are particularly focused on supporting the wellbeing, health and safety of our tenants, making sure that we are meeting their needs and offering exceptional spaces where they can do their best work.

80% Promoter index in Net Promoter Score

Lighting and Location Most-valued aspect in workplace

Local community

At Árima we pay special attention to the impact our business activity has on our local areas and communities. We work to create quality assets that are able to transform the areas in which they are located, benefitting not only our tenants themselves, but the wider community as well. With this goal in mind, we have continued to pursue our Community Engagement Programme at both portfolio and corporate levels:

Community Engagement Programme: portfolio level

61% Offices with an engagement programme

100% Logistics facilities with an engagement programme

Community Engagement Programme: corporate level

The aim is to support and contribute to their work through a range of initiatives that make the world a better place. It focuses on three main areas:

  • Education and sport
  • Charity and healthcare
  • Heritage, culture and environment

The General Shareholders’ Meeting is the Company’s highest decision-making body.

Its designated powers include the appointment of directors, the approval of the remuneration policy and the distribution of dividends, all of which are detailed in the Regulations of the General Shareholders’ Meeting.

Compliance with recommendations

5% Under analysis

95% Complies

Under the umbrella of the General Shareholders’ Meeting, the Board of Directors is entrusted with managing and overseeing the Company’s activities and is responsible for establishing the Company’s strategy and goals, as well as for defining the policies by which these activities will be governed. Árima has a majority of Independent Directors who bring years of experience and expertise in the real estate, financial and legal sectors, at national and international level.

7 Board meetings in 2022

98% Attendance at Board meetings

Board Committees

Audit and Control Committee

The main role of the Audit and Control Committee is to support the Board of Directors in its supervisory duties by regularly reviewing the process of preparing the economic and financial information, its internal controls and the independence of the external auditor, paying special attention to the adequate control of the information reported and the Company’s risk management. During 2022, the Audit and Control Committee met six times.

Appointments and Remuneration Committee

The Appointments and Remuneration Committee supports the Board of Directors in the proposals for appointment, re-election, ratification and dismissal of directors; in drawing up and controlling the Remuneration Policy; in ensuring directors fulfil their duties, and in supervising compliance with the Internal Codes of Conduct. In 2022 the Appointments and Remuneration Committee met on five occasions.

Good Governance

Values: ethics and transparency

Árima is governed by corporate values of commitment, value creation and diligence in the Company’s daily operations. These values are based on ethical behaviour and transparency, as reflected in the Code of Conduct, drawn up in accordance with Good Governance recommendations.

0 Complaints received through the Whistleblower Channel

Information Security

The security of computer systems and the protection of the Company’s information are issues of the utmost importance for Árima.

0 Security breaches in 2022

Real sustainability

The Group is guided by the most prestigious international standards, among others, the Sustainable Development Goals from the United Nations 2030 Agenda. In order to develop its sustainability strategy, Árima has selected the five goals that have the greatest impact on its business activities and environment, with these goals being used as the basis for defining the Company’s corporate and portfolio objectives. Árima does not simply identify theoretical objectives, it actively works to achieve true sustainability, rolling out initiatives and making improvements where necessary – both at corporate and portfolio level – to ensure those goals are achieved.

Good health and well-being
  • Renewal of efficiency control systems
  • Installation inspections in occupied assets
Clean water and sanitation
  • Responsible landscaping
Affordable and clean energy
  • Installation of solar panels at logistics platform
  • Installation of higher capacity solar panels at office buildings
  • Increase in no. of electric vehicle charging points
Sustainable cities and communities
  • Reuse of materials during building and refurbishment works
  • Local community engagement programme
  • Analysis of embodied carbon emitted during refurbishment works
  • Analysis and reduction of energy used
Climate action
  • Definition of the Company’s decarbonisation strategy

Global Real Estate Sustainability Benchmark (GRESB)

In the 2022 GRESB assessment, Árima was once again rated with 4 stars, scoring 86 points out of a maximum of 100. Árima’s achievement is even greater when considering how much it outperforms the average score obtained in the assessment and by other companies in Árima’s peer group, many of which are much larger companies.

European Public Real Estate Association (EPRA) sBPR

For the second year running, Árima obtained the highest score, being awarded the Gold certification in recognition of its exceptional compliance with EPRA sustainability standards. EPRA gave a very positive assessment of other actions taken by the Company, such as its engagement of a third party to verify its Annual Report, its increased coverage of tenant consumption data, and the more detailed information provided in its Annual Report.

We have introduced a set of key indicators to our Environmental Policy that allow us to monitor our properties so we can continue to offer exceptional quality, promote user well-being and make a positive difference to our environment.

Key sustainability indicators1

Sustainable certifications

% portfolio to be certified (LEED/BREEAM)

Energy production

portfolio % with facilities for the production of renewable energy

Green energy

% portfolio in operation with green energy from renewable sources in common areas

Accessible buildings

portfolio % fully accessible

Average energy and water consumption

Consumption in office portfolio

2022 134.60 kwh/sqm/yr

2021 156.37 kwh/sqm/yr

Average energy use intensity

2022 0.26 m3/sqm/yr

2021 0.19 m3/sqm/yr

Average water use intensity

Consumption in logistics portfolio

2022 210.34 kwh/sqm/yr

2021 255.72 kwh/sqm/yr

Average energy use intensity

2022 1.65 m3/sqm/yr

2021 1.58 m3/sqm/yr

Average water use intensity

Carbon footprint

2022 20.9 kgCO2/sqm/yr

2021 29.8 kgCO2/sqm/yr

Average CO2 emissions2

  • Key consumption indicators have been calculated based on the scope of this report. Further information can be found in section 8 of this Report.
  • Based on certifications obtained at the date of publication. (3) Considering average annual occupancy, as described in our decarbonization strategy. (4) Habana and Botanic were certified in Q1 2023.

7

Risk management

Risk management

Chapter download

Continuing with its goal to create a strict internal monitoring system, Árima has implemented a number of management guidelines that are included in its Risk Control and Management (RMS) Policy and are explained in further detail in its Risk Management Manual.

These documents are regarded as key tools for the management of uncertainty and for reducing and mitigating the potential threats facing the Company. All of these are shown graphically, in a systematic and organised way, in the Risk Map.

8

EPRA Sustainability Indicators

EPRA Sustainability Indicators

Chapter download

Árima’s reporting of non-financial information has been carried out in accordance with the guidelines set out in the third edition of the EPRA Sustainability Best Practice Guidance and Recommendations (sBPR) (3rd version, 2017). The guidelines are largely based on the Global Reporting Initiative (GRI) Standards on environmental, social and corporate governance disclosures, specifically for the construction and real estate sector.

Continuing with its goal to create a strict internal monitoring system, Árima has implemented a number of management guidelines that are included in its Risk Control and Management (RMS) Policy and are explained in further detail in its Risk Management Manual. These documents are regarded as key tools for the management of uncertainty and for reducing and mitigating the potential threats facing the Company. All of these are shown graphically, in a systematic and organised way, in the Risk Map.