IGD’s story in the eyes of the investors

After having presented the new 2024 Business Plan last 14 December, IGD’s management met with a few investors during a roadshow in the middle of January.

The broker that organized the meetings gathered anonymous feedback which provided us with some concise and stimulating comments from those who see the Company from the outside.

Let’s take a closer look at this feedback with Claudia Contarini, who is at the helm of the Investor Relations Team.

How did the market receive the new 2024 Plan?

The response we received pointed to a renewed interest in our equity story, including in light of the very low multiples at which the stock is trading. The market has shown interest in having a better understanding of what is behind the targets we have set for 2024. Above all investors wanted to verify how we interpret the new consumer trends and how we plan to navigate this new context. All of this in order to explore whether or not the conditions for having good returns as Company shareholders exist. If we look at how IGD’s stock price has performed since the day on which the Plan was presented through today, it’s clear that there has been an increase of more than 20%: I would say, therefore, that the Plan was very well received.

Which aspects of this Plan have investors been the most enthusiastic about?

The Plan as a whole was deemed valid, in terms of both operational management and the choices underlying the financial strategy. The greatest appreciation was, however, expressed for the dividend distribution policy because it provides a very clear demonstration as to how confident the Company is in its ability to achieve the economic-financial targets set and the desire to share an important part of the value created with its shareholders each year – which is, after all, part of our DNA as we are a REIT (“SIIQ”). After the mandatory parenthesis in 2020, when the pandemic severely impacted the results seen in our financial statements and the Company opted not to pay a dividend in order to preserve its financial solidity, it is very clear in this Plan that IGD wants to, once again, have an equity story based on attractive dividend payouts. With a Plan that calls for the dividend to reach 50 euro cents by 2024, if the results delivered over time are consistent with a solid execution of the strategy, the investors believe that the stock’s fair value will be able to close a significant part of the discount with which the stock now trades against its NAV.

Which aspects do the investors you met with seem be the most concerned about?

The most recurring theme was most definitely the uncertainty as to the timing and way in which a scenario dominated by the pandemic will be overcome. In the opinion of a few of the portfolio managers we met, part of the difficulties in sales and footfalls seen in this period is not attributable to COVID-19 alone, but rather to the excessive rigidity in the restrictions placed on the shopping centers which disrupted the operating conditions more than was necessary, making ours one of the sectors that was hit the hardest. A few asset managers were also interested in understanding how successful the disposals of non-strategic assets called for over the three-year period would be: these are not, however, activities that must be completed by the end of the Plan, but are optional. Lastly, a few investors are afraid that eCommerce might weaken the in-person sales of a few merchandise categories if the retailers are not quick to provide omnichannel options. All these elements, however, are offset by the uniqueness of the portfolio and the actions taken by IGD. We pointed out that the mid-size urban assets in our portfolio, which are well rooted in the local area, gives us flexibility in meeting the changing needs of our shoppers. The decision to include more services in the merchandising mix was greatly appreciated, as was our ability to maintain a dialogue with the tenants in order to ensure a satisfactory level of rent collection and the structure of our leases which protects us from inflation.

What would the investors like you to do that was not included in the Plan?

Many said that they see aggregations and M&A transactions as a great opportunity for the future in order to leverage on the solid platform that IGD has built and proven to know how to manage even in difficult moments. A recurrent theme in many comments was the appreciation expressed for the management, beginning with our CEO who was able to complete an important transformation and provide IGD with international recognition, as well.