The Board of Directors approves the Interim Financial Report at 31 March 2018
The main results:
- Further significant growth in recurring net income (FFO): €3 million (+17.5%)
- Rental income: €6 million, +5.2 % (LFL Italy +1.9%, Romania +4.1%)
- Net rental income: €29 million, +6%
- Group net profit: €7 million (+16.7%)
- Sales of retailers in Italian malls +2.9%; significant upside on renewed leases (Italy +3%; Romania +1.5%)
- Loan-to-value 46.9%; average cost of debt 2.75 %
Today the Board of Directors of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A. (“IGD” or the “Company”) examined and approved the interim financial report at 31 March 2018 during a meeting chaired by Elio Gasperoni.
“Excellent operating and financial results were posted during the quarter. Funds From Operations, in fact, rose 17.5% and is largely in line with the FY2018 guidance of +18/20%, even though the positive impact of the acquisition has yet to show as it closed on 18 April and despite the conclusion of the capital increase on 23 April” stated Claudio Albertini, IGD’s Chief Executive Officer. “The FFO guidance will be updated when the first-half results are approved”.
POSITIVE FINANCIAL RESULTS CONFIRMED (FFO +17.5 %)
More in detail, rental income rose +5.2% to €35.6 million due to:
- like-for-like growth (+1.9%) in Italy of around €0.6 million. Malls were up (+2.5%) while hypermarkets were in line with the prior year; inflation had an impact of 80 bps;
- higher revenue not like-for-like of around €1.1 million linked to the opening of the ESP extension on 1 June 2017;
- higher revenue like-for-like in Romania of around €0.09 million (+4.1%).
Net rental income reached €29 million, an increase of 6% against the same period of the prior year.
Revenue from services came to €1.5 million, down with respect to the prior year due to the pre-letting of Centro Poseidon in 1Q2017.
Core business Ebitda amounted to €26.5 million, an increase of 6.0% compared to 31 March 2017. Operating costs fell even further as a percentage of core business revenue and, consequently, the core business Ebitda Margin rose 70 basis points against the prior year (70.7%) to 71.4%. The recurring freehold Ebitda margin (relative to freehold properties) came to 80.2%, an increase of 50 basis against March 2017.
Financial expense fell (-13.3%) to €7.9 million, while the NFP was basically unchanged. The result is attributable to the recent liability management activities, as well as the decrease in the notional amount of a few IRS. The downward path of the average cost of debt was, therefore, confirmed (2.75% vs 3.1% in March 2017).
The Group’s portion of net profit amounted to €16.7 million, an increase compared to the €14.3 million posted in the same period 2017 (+16.7%).
Funds from Operations (FFO) rose 17.5% against the first three months of 2017 to €18.3 million. The Group confirms the full year guidance for 2018, disclosed to the market in February (+18/20% at year-end 2018), and expects to update it when the results for the first half are approved.
The IGD Group’s net financial debt came to €1,049.4 million, basically unchanged with respect to March 2017 (€1,046.8 million). Slight improvement was recorded in capital structure ratios like the gearing ratio (0.92x) and loan-to-value (46.9%).
OPERATING PERFORMANCE
The positive trend in pre-letting reported last year continued: in Italy 42 leases, 29 renewals and 13 turnover, were signed with an average upside of +3%; in Romania the average upside on renewals reached +1.5%.
Retailers’ sales fell in the first 2 months of 2018 as a result of the calendar effect (one less Sunday and one more Thursday compared to 2017) and weather conditions (snowstorms also occurred in central and southern regions) which were more than offset by the excellent performance recorded in March linked also to Easter festivities. Sales for retailers in Italian malls were 2.9% higher, while footfalls rose +0.9% against the prior year.
Average occupancy was stable at 96.8% in Italy and higher in Romania at 97.1%.
IGD PORTFOLIO NEWS
On 3 April the Livorno City Council approved the variance for the Officine Storiche section of the Porta a Mare Project. The Company had been waiting for this variance for some time. It will make it possible to accelerate completion of the work on this section and the retail portion (additional 15,000 m2 of retail space) is expected to open by 2H 2019.
Preletting of the residential section of Piazza Mazzini continued: 15 preliminary agreements have been signed and are expected to close in 2018 (total residential units sold or subject to preliminary agreements at 90.7%).
On 18 April the closing of the acquisition of the portfolio comprising 4 shopping malls and a retail park from Eurocommercial Properties for a total investment of €195.5[1] million was finalized.
The new midsize store, as well as the complete restyling of the exterior and the multi-level parking garage (2017), at the Gran Rondò Shopping Center (Crema) was opened on 3 May, as forecast in the Business Plan.
[1] This amount refers to the total value of the portfolio of €187 million, in addition to transfer tax and ancillary charges of €8.5 million.
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