2 August 2019 11:43

Results as at 30 June 2019

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 Half-Year Financial Report at 30 June 2019 during a meeting chaired by Elio Gasperoni.


  • Recurring Net Results (FFO): €41.8 million (+7.6%);
  • Rental income: €77.3 million, +4.4% (LFL Italy -0.6%, Romania +1.8%)
  • Net rental income: €68.6 million, +13.0% (+4.6% adj. ex IFRS16[1])
  • Average cost of debt 2.4%
  • Market value of the portfolio €2,388.3 million (-0.99%);
  • Outlook revised for FFO FY2019: +4/5%


[1] Adj ex IFRS16: for the sake of comparability, the 2019 figure was restated excluding the impact of IFRS 16 application


“The retail sector has been undergoing rapid and continuous change for several years and IGD, as shown in the Business Plan 2019-2021, wants to have a starring role; the amount of work underway on remodeling spaces is proof of this, beginning with the downsizing of several hypermarkets, the introduction of new innovative brands, the constant evolution of the merchandising mix with increasingly more room for services, food courts and entertainment” stated Claudio Albertini, IGD’s Chief Executive Officer. In this environment of change we  recorded a significant increase in recurring net profit in the first half of 2019 also and we expect to confirm this growth path in the second half as well, albeit with a more prudent approach given the rather weak market conditions in Italy and the temporary impact of the work underway in a few of our shopping centers. We have also seen several positive signals, like the recovery in footfalls recorded in the second quarter and the positive trend in the pre-letting of vacant spaces reported in July, which allow us to look ahead to the coming months with confidence”.




Retailers’ sales in the Group’s Italian malls were in line with the same period of the prior year, while footfalls were down (-2.9%); this performance reflects a particularly difficult first quarter, while signs of a recovery in terms of both sales (+0.2%)  and footfalls (+0.6%) were recorded in the second quarter and the figures available for the month of July confirm this positive trend. The first half performances were impacted negatively by the peculiar weather conditions, above all in February, with spring like weather that was decidedly mild given the season, and May which was particularly cold and fall like: these prolonged anomalies affected the clothing sector, above all, as the merchandise offered did not reflect the weather conditions.  The operating performance of the malls was also affected by the lackluster performances of a few hypermarkets, especially the ones where remodeling and restyling work is underway.

In terms of merchandise, growth was recorded for the network as a whole in Electronics (+7.5%), Services (+9.3%) and Restaurants/Food (+3.0%). During the year 162 leases (98 renewals and 64 new leases) were signed with an upside of 1.1%[1].

High levels of occupancy, which reached 96.3%, were maintained, albeit down slightly compared to 31 December 2018 (97.2%) due mainly to the vacancies created in the midsize retail areas which the Company is in the process of re-marketing (1,300 m2 leased to date, which bring current occupancy to 96.6%); also in this instance (similar to the hypermarkets), remodeling of the spaces that is more in line with the market’s needs is being considered.


In Romania, the economy continues to perform brilliantly with GDP and consumption on the rise; these factors, along with careful and effective asset management, have had a positive impact on the operating performance recorded in the half: the occupancy rate (96.5%) was confirmed at a high level and the upside on renewals reached +8.1%.



Rental income rose 4.4% to €77.3 million explained by:

  • for around €6 million, higher revenue not like-for-like linked to the 4 malls and retail park acquired in April 2018, the opening of the Grand Rondò mall extension in Crema in May 2018 and the strategic vacancies needed for ongoing fit out work;
  • for around €0.1 million, higher like for like revenue in Romania (+1.8%);
  • for around €0.4 million, the like-for-like decrease (-0.6%) in Italy. Malls were down (-0.9%) due mainly to the vacancies created in a few midsize retail areas and an increase in temporary discounts, while hypermarkets were basically in line with the prior year (-0.1%).

Net rental income amounted to 68.6 million, an increase of 13.0% against the same period of the prior year.

Net revenue from services came to €0.5 million, basically in line with the prior year.

No trading revenue was generated by the Porta a Mare project in the half, while in first half 2018 a preliminary sales agreement had been signed (the sale closed in 2019).

Core business Ebitda amounted to €62.9 million (€57.9 million adj. ex IFRS16), an increase of 13.1% compared to 30 June 2018. The core business Ebitda Margin amounted to 78.2%, while the core business freehold Ebitda margin (relative to freehold properties) reached 80.0%.

Financial expense adj. ex IFRS16 at 30 June 2019 fell (-3.7%) to €15.4 million, despite the higher net financial position. The downward trend in the average cost of debt, therefore, continued, coming in at 2.4% (vs 2.70% in December 2018).

The Group’s portion of net profit amounted to €7.1 million in the reporting period, lower than in the same period 2018, due mainly to the change in writedowns and fair value adjustments which were negative for more than €38 million in the reporting period, versus a negative impact of around €2.6 million in 2018.

 Recurring Net Results (FFO) rose 7.6% compared to 30 June 2018 to €41.8 million.



The restyling projects at the Casilino Shopping Center in Rome the Fonti del Corallo Shopping Center in Livorno were basically finished.  Both projects called for the restyling of the centers’ interior and exterior.  In the case of Fonti del Corallo the pre-letting of the new spaces created by downsizing the hypermarket is being completed, including by introducing personal services that will make the shopping center more appealing for visitors, including new ones.

Consistent with the Business Plan 2019-2021, work begun on remodeling a few hypermarkets, specifically in the Le Maioliche, Conè and Portogrande shopping centers.  At Maioliche and Conè work is being done on reducing the size of the hypermarket and creating new spaces inside the malls.  In both cases the work is expected to be completed by February 2020. At Portogrande, in addition to downsizing the hypermarket, a complete restyling of the center along with further earthquake proofing will be carried out; the work is expected to be completed by September 2020.

With regard to the Porta a Mare project, work on the Piazza Mazzini section is basically finished: on 28 June binding agreements were signed for the sale by IGD of Palazzo Orlando (an office building included in this section) and, at the same time, the purchase of 50% of the Darsena City Shopping Mall in Ferrara, of which IGD is currently joint- owner; in this way IGD will be able to focus more on its core business. Moreover, 72 out of 73 units in the residential portion are sold/committed.

Work on the Officine Storiche section, which has been moving full steam ahead, is expected to be completed by the end of 2020. The project calls for 15,000 m2 of retail space with the creation of 30 shops, 10 restaurants and 1 fitness center: currently more than 60% of the space has been let/pre-let.  The area will connect the city’s downtown with the waterfront and will transform the old-style spaces into a totally new concept with a unique design and a rich retail offering.



The market value of the IGD Group’s real estate portfolio reached 2,388.3 million, a decrease of 0.99% compared to December 2018.  More in detail:

  • malls fell 1.32 % (-€7 million), with a gross initial yield of 6.43%;
  • hypermarkets fell 0.38% (-€2.2 million), with a gross initial yield of 6.07%.

This decrease is explained, for around 60%, by the change in market rates and, for 40%, by other changes in cash flow (linked specifically to a forecast reduction in variable rents).

In Romania the value of the real estate portfolio reached €151.2 million at 30 June 2019, lower than the €154.8 million posted at 31 December 2018, with a gross initial yield of 6.94%.

 The Net Initial Yield, calculated using EPRA criteria, reached 5.40% for the Italian portfolio (5.40% topped up) and 5.8% for the Romanian portfolio (6.20% topped up).

 The EPRA NNNAV reached €1,189.9 million or €10.78 per share.  The figure is 5.8% lower compared to 31 December 2018; this result reflects the dividend which was paid entirely in the first half (-€0.50 per share against a total decrease of -€0.67 per share).



On 9 April 2019 Moody’s downgraded IGD’s rating from Baa3 (with outlook negative) to Ba1 (with outlook stable); the rating agency’s decision was based largely on the risks connected to the current global market conditions and other exogenous factors. At the same time, however, on 23 April, IGD received a new investment grade rating of “BBB-“ with outlook stable from S&P Global Ratings. The economic conditions of the bonds issued were, therefore, unchanged[2]  and the Company was able to continue along the path undertaken to reduce the average cost of debt, as shown above, and increase the Interest Cover Ratio to 3.8x (3.7x adj. ex IFRS16) versus 3.5x at  31 December 2018.

The IGD Group’s net financial debt came to1,185 million at 30 June 2019, (€1,127 million adj. ex IFRS16), a slight increase with respect to December 2018 (€1,108 million). The loan-to-value came to 48.2% (47.0% adj. ex IFRS16), while the gearing ratio was 0.97x (0.93 adj. ex IFRS16). These indicators were also impacted by the dividend which was paid entirely in the first half.



The Company expects to continue along its growth path, in line with the Business Plan 2019-2021.

In light, however, of a few factors that could impact the Group’s economic results, such as a weak consumer trends, the slight increase in strategic vacancies resulting in higher costs which cannot be rebilled and the temporary impact of remodeling the midsize retail areas and hypermarkets, the Company has decided to revise the FFO guidance for FY 2019 from +6/7% to a range of between +4% and +5%.



The Company is continuing the process of changing the merchandise found in its shopping centers in order to better satisfy the needs and demands of visitors by adding new brands and services (1 new dentist’s office was opened at Centro Conè in Conegliano (Tv), in addition to the 20 that are already operative). Services as a percentage of the total sales made at IGD’s shopping malls has, in fact, more than doubled in the past 4 years (rising from 2.2% to 5.3%).

For IGD the shopping center is a space at the service of the local community, that actively involves visitors through the creation of a series of services, spaces and opportunities conceived to directly involve those who live near the shopping center.

As for Sustainability, progress has been made on several fronts since the beginning of the year:

  • + 3 centers ISO 14001 certified (Maremà, Città delle Stelle and Centro Leonardo)
  • + 2 centers BREEAM IN USE certified (Centro ESP and Puntadiferro)
  • + 2 solar panels installed at two shopping centers (Katanè and Gran Rondò)
  • + 5 shopping centers with charging stations for electric cars (Puntadiferro, Centro Lame and Centro Nova; Centro Leonardo e Centro Le Maioliche) as per the agreement signed with Enerhub;
  • + 1 charging station for electric bicycles installed (Clodì).


The documents will be made available to the public – as well as published on IGD’s website https://www.gruppoigd.it/Governance – at the Company’s registered office, Borsa Italiana S.p.A. and on the authorized storage system www.emarketstorage.com in accordance with the law and applicable regulations.


[1] Excluding the lease for the multiplex cinema  at Centro Sarca
[2] as a result of the investment grade rating with a stable outlook, in accordance with the respective regulations,  the increase or “step up” of 1.25% in the annual interest rate paid on the “300,000,000 2.500 per cent notes due 31 May 2021” and the “€100,000,000 2.25 per cent Senior Notes due 11 January 2024”, will not be triggered.