An important step along the path to a stronger financial profile

IGD will use the proceeds from the disposal of 13 assets to reduce the level of debt

The signing of the definitive agreement for the sale of a portfolio comprising 13 assets marks a fundamental step toward improving IGD’s loan-to-value, which pro-forma reached 44.4%, significantly lower than the 48.0% recorded at 31 March 2024.

Thanks to the completion of this high-impact transaction, there is already evidence of the new Board of Directors’ commitment to accelerating the repayment of the debt obtained at higher rates.

Let’s take a look at the immediate benefits this transaction will bring, as well as the positive repercussions this deal might have for the future.

A disposal of €258 million which was close to book value…

After the preliminary agreement signed on 23 February 2024, the sale of a portfolio comprising 13 assets (8 hypermarkets, 3 supermarkets and 2 shopping malls) which generate rental income of approximately €17 million per year, closed on 23 April 2024 at a total valuation of €258 million.

The sales transaction, completed for an amount which is very close to the appraised value at year-end 2023, is consistent with the disposals called for in the 2022-2024 Business Plan which aim to reduce the Group’s financial leverage.

As a result of the transaction IGD transferred the portfolio to a closed-end real estate investment fund, the “Food Fund”, established and managed by Prelios SGR. No debt was transferred to the fund.

… generated a cash in of €155 million

IGD then sold 60% of the fund units (class A shares with preferred returns) to a Special Purpose Luxembourg vehicle (held 50% by Sixth Street and 50% by Starwood Capital) for €155 million. IGD maintained ownership of the remaining 40% (class B shares with subordinated returns).

The proceeds will be used entirely to repay high-cost debt

The €155 million received as a result of the sale, net expenses, will make it possible to repay:

€90 million (therefore, around one third) of the bond issued on 17 November 2023;
€62.5 million of the green secured loan;
€0.71 million of the green unsecured loan.

These are three financial instruments which are currently having a significant impact on IGD’s cash generation: which is also made clear by the FFO recorded in the first quarter of the current year.

The sale is a sign that there could be an increase in market transactions going forward

In addition to creating the conditions needed to reduce the cost of debt as of the second quarter of 2024, the characteristics of this transaction also bode well for the future.

The nature of the counterparties involved – large American players – testifies, in fact, to the renewed interest of international investors in the Italian retail segment and, in general, represents a guarantee of greater liquidity for real estate assets.

IGD has the expertise to develop a budding third-party asset management business

IGD was also granted a mandate by Prelios SGR for the project, property & facility management of the 13 properties sold: the goal is to enhance the portfolio over the next few years and then sell it on the market at the best conditions possible. This decision, in addition to generating commission income of approximately €600 thousand yearly and reducing operating costs (which, overall, should have an estimated positive impact on EBITDA of around €2 million), confirms the expertise that the Company is known for in the management of retail properties, as was the case when the Juice portfolio was sold in 2021. IGD already has active asset management mandates for 20 more assets.

This is a revenue line which does not absorb cash and, as it makes it possible to maintain a significant presence in property management, has potential for future development. By following an entrepreneurial and professional approach, interesting opportunities for interactions and partnerships with important market players could be created for IGD.