Today the Board of Directors of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A. (“IGD”or the “Company”), one of Italy’s leading owners and managers of retail shopping centers and listed on the STAR segment of the Italian Stock Exchange, examined and approved the Interim Management Statement at 31 March 2015 and the new business plan 2015-2018 during a meeting chaired by Gilberto Coffari.

“With the new business plan 2015-2018, IGD intends to focus with determination on growth and to strengthen, with assets of more than €2 billion at the end of the plan period, its position as one of the main players of the Italian retail market”, Claudio Albertini, IGD – Immobiliare Grande Distribuzione SIIQ S.p.A.’s Chief Executive Officer stated “The Plan calls for the completion of the committed pipeline with investments of more than €250 million, along with double digit growth of all the main financial-economic indicators, like funds from operations, while maintaining a balanced, solid financial structure and counting solely on organic growth. We believe we have overcome the prolonged critical phase of the global market conditions with good results and are now in a position to seize the market opportunities that may materialize going forward including extraordinary transactions, like asset contributions, which create further value for our shareholders”.

Principal consolidated results at 31 March 2015

Core business revenue amounted to €31.1 million, an increase of 4.6% with respect to the same period of the prior year, while revenue from trading attributable to the Porta a Mare project (relating to the sale of a residential unit and appurtenances) amounted to €258 thousand.

The shopping centers continued to perform well with tenants’ sales at Italian shopping centers rising 6.8% (including the extensions) and footfalls stable.

Rental income came in at €29.9 million, an increase of 5% against the same period 2014; the change is explained primarily by:

• an increase in like-for-like revenue in Italy, net of the planned or strategic vacancies, of 0.3%;
• for €1.5 million, the new openings made in 2014 (expansion of Centro d’Abruzzo, the first retail area in Piazza Mazzini, Livorno, the reformatted Le Porte di Napoli center and the acquisition of a portfolio of core real estate assets post-capital increase);
• an increase in revenue in Romania, net of the vacancies needed to proceed with the investment plan, of  +3.8%.

The core business Ebitda Margin came to 67.5%, while the Ebitda Margin for freehold management reached 77.5%.

The consolidated pre-tax profit for the period amounted to €9.7 million, up 26% against 2014, as a result of, in addition to the increase in EBITDA, fewer negative fair value adjustments and significant improvement in financial expense (-€1.3 million or – 11.6% against 1Q 2014).

The Group’s portion of net profit amounted to €9.2 million, an increase of 49% against the same period 2014.

Funds From Operations (FFO) came to €10.5 million, an increase of 21% with respect to first quarter 2014.

The IGD Group’s net debt at 31 March 2015 amounted to – €940 million, largely unchanged with respect to 31 December 2014, and the loan to value came to 48.2%.

The Business Plan 2015-2018

The IGD Group’s Business Plan 2015-2018 takes into account the first concrete signs of a reversal in the global economic trend, reflected in the upward revision of all the growth forecasts for Italy, along with the increase in consumer confidence and the positive impact of the ECB’s monetary policy.

The plan also takes into account the results achieved by the Group over the last few years, during which IGD strengthened its financial and capital structure, even while proceeding with an ambitious investment plan (approximately €800 million was invested between 2009 and 2014), accessed the capital markets (debt and equity) more frequently, balancing the resources gathered through the bond market and the banking system, and continued with portfolio rotation.

Based on the Business Plan 2015-2018 all the financial and economic indicators are expected to rise significantly: CAGR for rental income is expected to reach 5%, while like-for-like revenue is projected to grow at a CAGR of around 2%. Overall, rental income is expected to increase approximately 20% by the end of the plan period. As for profitability, the IGD Group has set a year-end 2018 target for the freehold EBITDA margin of above 80%.

Noticeable improvement in financial management will be recorded thanks to a further reduction in the cost of debt⁽¹⁾(estimated to reach3% by the end of the plan period with the interest cover ratio above 3x). IGD, moreover, also plans on obtaining a rating from a premiere rating agency in order to access the bond market at even more favorable conditions.

Over the period 2015-2018, the Group intends to complete the committed pipeline presented in the Business Plan 2009-2013 with investments of more than €250 million, approximately €185 million of which relating to expansions and development projects and approximately €10 million to sustainability targets with a focus on the quality, as well as the efficiency, of the shopping centers and enhancement of the “spaces to be lived in “ concept.

With regard to extensions and development projects, the Plan calls for the opening of the Clodì Shopping Center in Chioggia (in May of this year); extensions of the ESP center in Ravenna, Porto Grande in Ascoli Piceno and Gran Rondò in Crema; the opening of two newly constructed shopping centers like  Officine Storiche in the historic heart of Livorno and Grosseto (transaction announced in April).

IGD’s solid financial and capital structure also leaves room for new investment opportunities, which could include the acquisition of a new shopping center, in addition to the one in Grosseto.

The Group also expects to complete the €150 million in disposals included in the previous plan, approximately  2/3 of which have already been or are about to be sold at levels equal to or higher than book value.  As for the multi-purpose project Porta a Mare, disposals totaling some €40 million are also planned driven by the sale of residential units at Piazza Mazzini and Officine Storiche,  in addition to office spaces.

The proceeds generated by the disposals will be used to maintain a balanced financial and capital structure, as well as facilitate portfolio rotationin order to take advantage of any buying opportunities that might materialize on the market.

Funds from Operations (FFO) are also expected to rise significantly (estimated CAGR of more than 18%).

These performances will also directly benefit shareholders: the Group intends, in fact, to distribute approximately 2/3 of the FFO as a dividend, reserving the right to propose a Dividend Reinvestment Option as it has in the past, market conditions permitting.

The commercial strategies used to achieve the results described above will focus on maintaining a high occupancy rate and sustaining revenue; careful attention will be paid to changing consumer trends, constantly updating the merchandising mix, finding new domestic and international brands, as well as introducing personal services.  We will continue to focus on joint marketing plans in order to increase a shared sense of identity and optimize costs.

New technologies will have a key role resulting in centers that are increasingly more connected, a greater use of social networks as the primary means of communication and shopping centers that will act as physical platforms for the virtual. There will also be spaces that can be used as showrooms by retailers committed to vertically integrated commerce.

The asset management activities will be focused on the revision/remodeling of the internal spaces in “real time’ based on commercial needs and consumer trends (for example, particular attention will be paid to changes in food anchors, the introduction of temporary shops and corners, remodeling of spaces, creation of midsize stores with particularly appealing tenants). Restyling in prime shopping centers (like Centro Borgo in Bologna and CentroSarca in Milan) will continue in order to maintain a high level of appeal. Great attention will also be paid to energy efficiency in order to limit general expenses, as well as attract tenants sensitive to environmental issues.

Lastly, with this new business plan IGD intends to continue its commitment to making sustainability part of its business planning process.

The targets included in the Plan concern five main areas, beginning with increasing the quality and efficiency of the centers: the environmental impact of the structures will be lowered – above all, in terms of energy consumption, something that IGD has been committed to for years resulting in a drop of 13% in consumption between  2011 and 2014; work will also continue on making centers accessible to all, regardless of physical abilities. The contact and dialogue with investors and financial partners will be increased, confirmation of the importance given to transparency and accessible information. We will also use specific initiatives to involve and raise the awareness of all our stakeholders on topics relating to sustainability.

The concept of the shopping centers as “Spaces to be liven in” will be reinforced by shifting from a vision of the shopping center as just a place for shopping, to a place with a social role; for this reason the target is for local events to make up 30% of the events organized.

We will continue, lastly, to develop our corporate welfare project focused on increasing the wellbeing of our employees.

⁽¹⁾ net of charges on loans (both recurrent and not)