13 May 2022 9:00

Strong rise in IGD’s stock price


From the beginning of the year IGD has largely outperformed the reference indices. In addition to the noticeable discount against its P/NAV, the rally was driven by the convincing results achieved in 2021 and the appeal of the dividend which even at recent levels, after the recent rally, continues to provide a yield of almost 8%.

Let’s look closer at this analysis with Claudia Contarini, the head of the Investor Relations’ team.



From the start of the year IGD’s stock has risen almost 20%, noticeably outperforming the benchmark indices, particularly as of March. What do you think has attracted investors?

If we look at the chart above, it’s clear that IGD’s stock moved in the opposite direction when compared not only to the Italian stock market, the FTSE Italy All-Share, but also to the European real estate sector index, the EPRA/NAREIT Developed Europe: both, in fact, have fallen since the beginning of the year. IGD, however, has also outperformed the European retail real estate segment which is basically unchanged since the beginning of 2021. In our view, therefore, the drivers of this outperformance are mainly attributable to the opportunity that investors saw, specifically, in IGD.


What drove the significant performance that IGD has posted in the first four months of the year?

Undoubtedly, the publication in 2021 of a set of results that confirmed the Company’s ability to respond to the challenges of the market environment, building a solid platform upon which to build the future growth path, was key. Having maintained lease agreements indexed to inflation today allows investors who buy IGD’s stock to benefit from protection against the ongoing increase in prices. The market also appreciated the high collection rates achieved in the last year – which at 2nd May reached 95% in Italy and 98% in Romania for 2021 and 90% in 1Q 2022 – as well as the decided drop in the Loan-to-Vale, which came in below 45%, thanks also to the sale of a portfolio of supermarkets and hypermarkets at book value. And we can’t forget to mention the growth in FFO, which was well above the original guidance of 7-8%, coming in at 9.2%.


After the Board of Directors’ meeting held last 24 February the proposed dividend of €0.35 per share was disclosed. How important was this announcement which, based on the closing price of 23 February, entailed a yield of 8.6%?

The prospect of receiving such a high dividend on 11 May certainly increased the stock’s appeal which has resumed being a true dividend story. This characteristic is even more compelling if you consider the yields that markets can provide currently, even if the central banks have declared their intention to control inflation with restrictive monetary policies or, at any rate, less accommodative policies, which causes bond yields to increase, in reality currently the real interest rates are negative. Stocks that provide a sizeable dividend, like IGD, which are also trading at a discount to their P/NAV, therefore, provide investors looking for returns with an attractive opportunity.


Could the impact that the current uptick in inflation is having on families due to higher fuel and energy prices, and the slowdown in consumption, weigh on IGD’s performance?

IGD reacted quickly to the new scenario that materialized in the first part of 2022, finalizing, on the one hand, an innovative marketing plan focused on maintaining the loyalty of shoppers in its shopping centers and, on the other hand, making sure that the tenants are able to sustain rents. IGD did, in fact, intervene with a series of measures which include sliding scale payments, temporary discounts, as well as quarterly invoicing with monthly payments. There is also a factor tied to the presence of the food anchors, which typically account for around 20% of the total fair value, that helps to give a more defensive profile to the merchandising mix of IGD’s portfolio: a fact that was greatly appreciated by investors during this phase.