The Board of Directors approves the Interim management statement at 30 September 2016
The main results:
- Core business revenue: €101.4 million, +7.8% (LFL Italy +18%, Romania +2.2%)
- Group net profit: €37.2 million (+22.1%)
- Core business FFO: €39.9 million (+18.7%); 2016 target confirmed: +15/16%
- Financial occupancy on the rise in Italy (97.4%) and in Romania (95.7%)
- Loan-to-value 48%; average cost of debt 3.3%
Today the Board of Directors of IGD – Immobiliare Grande Distribuzione SIIQ S.p.A.(“IGD”or the “Company”), one of the main players in Italy’s retail real estate market and listed on the STAR segment of the Italian Stock Exchange, examined and approved the Consolidated Interim Management Statement at 30 September 2016 during a meeting chaired by Gilberto Coffari.
POSITIVE ECONOMIC AND FINANCIAL RESULTS (FFO + 18.7%)
Total consolidated revenue amounted to around €102 million, up 6.6% against the same period of the prior year.
More in detail, rental income rose 8.0% to €97.5 million explained by:
- for around €1.4 million, like-for-like growth (+1.8%) in Italy. Malls were up (+2.6%) and hypermarkets were in line with the prior year
- for around €6.3 million, higher revenue not like-for-like
- for around €0.1 million, higher revenue like-for-like in Romania (+2.2%)
- a decrease in revenue (-€0.7 million) linked to the sale of the City Center property on via Rizzoli at the end of May 2015 and other minor changes
Growth was also recorded in revenue from services (+2.3%) which amounted to €3.9 million.
Core business Ebitda amounted to €70.5 million, up 10.7% against 30 September 2015. Operating costs fell further as a percentage of core business revenue causing the core business Ebitda Margin to rise by 180 basis points against the prior year to 69.5%. The freehold Ebitda margin came to 78.9%, an increase of 130 basis points against September 2015.
Financial expense rose slightly (+1.1%) to €30.3 million as a result of the increase in average debt linked to the investments and acquisitions made in the period, as well as the recent liability management initiatives which resulted in short term credit lines being substituted with more expensive medium/long term bonds. In any case the downward path of the average cost of debt was confirmed (3.3% vs 3.8% at September 2015).
The Group’s portion of net profit amounted to €37.2 million, a marked increase against the €30.4 million posted in the same period 2015 (+22.1%).
Funds from Operations (FFO) rose 18.7% against the first nine months of 2015 to €39.9 million. In this instance, as well, the Group confirms the growth targets disclosed (+15/16% at year-end 2016).
The IGD Group’s net financial debt came to €1,004.7 million, an increase against 30 September 2015 (€931.4 million) as a result of the investments and acquisitions made in the period mentioned above. At the same time the capital structure ratios like the gearing ratio (0.95x) and loan to value (48%) were largely unchanged.
The positive trend in pre-letting reported in the first half continued: in Italy 176 contracts, renewals and turnover, were signed with an average upside of +2.4%; in Romania 175 contracts were renewed with an upside of +1.3%.
The positive performance of the Italian shopping centers held in the first nine months of 2016, with the sales of mall retailers rising 2.8%, despite a slowdown in the third quarter of the year (the first negative quarter after 11 consecutive quarters of growth), and footfalls down slightly (-0.9%): with respect to the same period 2015, the third quarter was impacted by a less favorable calendar, as well as seasonality (including linked to a warmer autumn).
In Romania there was a significant increase in footfalls (+3.3%) supported by the completion of various improvements and new marketing initiatives.
The financial occupancy in Italy reached 97.4% (average malls and hyper) and was higher compared to the previous quarter (97.3%), as it was in Romania (95.7% versus 95.1% at 30/06/2016).
INAUGURATION OF MAREMA’ IN GROSSETO AND INVESTMENTS
The Maremà Shopping Center in Grosseto was inaugurated on 27 October. The center was well received by the local community and in the first 6 days of operation around 160,000 visitors were recorded, well above expectations.
Pre-letting continued after the inauguration and negotiations are currently underway for the last two spaces dedicated to services. Once these transactions are finalized occupancy will be 100%.
IGD’s investment (in the shopping mall alone, excluding the hyper and external midsize stores) will be around €47 million, including ancillary charges (the payment is expected to be made by year-end). Taking into account rental income at capacity, the yield on cost will be higher than 8%.
The investment pipeline is moving forward as per the business plan with work proceeding on the ESP extension (expected to be completed by the end of 1H 2017) and Officine Storiche (expected to be completed by year-end 2018). Work on the extension of the Gran Rondò center in Crema will start shortly and is expected to be completed in 1H 2018.