- Like-for-Like Net Rental Income: Increased by 5.9% in the first half of the year.
- Total Net Rental Income: Grew by 9.9%, supported by the Quest acquisition.
- Earnings: Increased by 5.4%, slightly offset by higher admin and financial expenses.
- Like-for-Like Tenant Sales: Increased by 2.6%.
- Retail Occupancy: Landed at 95.2%.
- Average Rents: Increased by 4.10% compared to last year.
- Occupancy Increase: Increased by 30 basis points from the last quarter and 70 basis points compared to Q2 last year.
- Net Rental Income in Norway: Increased by 6.3%.
- Net Rental Income in Sweden: Increased by 10.7%.
- Net Rental Income in Finland and Estonia: Strong growth following the Kista acquisition.
- Net Rental Income Contribution: Sweden (21%), Finland (37%), Norway (28%).
- Early Termination Compensation: EUR2.4 million one-off payment.
- Reorganization Costs: EUR6.9 million booked in the first half of the year.
- Fair Value Gain: EUR23 million in the second quarter.
- Total Change in Fair Values: EUR69 million positive in the first half.
- Net Asset Value (NRV): Increased to EUR9.25 per share from EUR8.92 in Q1.
- Liquidity: EUR459 million total liquidity available.
- Loan-to-Value (LTV): IFRS LTV at 47.6%.
- Direct Operating Profit Guidance: Expected between EUR185 million to EUR195 million for full year 2024.
- EPS Guidance: Expected between EUR0.62 and EUR0.68 for full year 2024.
- Adjusted EBITDA EPS Guidance: Expected between EUR0.46 and EUR0.52 for full year 2024.
Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Like-for-like net rental income increased by 5.9%, supported by rent indexations and strong performance in core assets.
- Total net rental income grew by 9.9%, bolstered by the Quest acquisition executed in February.
- Retail occupancy remained solid at 95.2%, with strong tenant sales growth across main retail segments.
- Average rents increased by 4.10% compared to last year, indicating successful rent indexations.
- Operational performance led to a EUR23 million fair value gain in the second quarter, with a total positive change in fair values of EUR69 million for the first half.
Negative Points
- Higher administrative expenses due to one-time reorganization costs and increased financial expenses slightly offset earnings growth.
- Financial expenses increased by EUR9.6 million compared to last year, partly due to higher interest rates and the consolidation of Kista.
- The company incurred EUR6.9 million in one-time restructuring costs in the first half of the year.
- Leverage remains elevated, with IFRS LTV standing at 47.6%, though improvements are expected by year-end.
- The company faces ongoing challenges in executing divestments, with EUR350 million in remaining targets for the year.
Q & A Highlights
Q: The direct financing cost in the quarter increased significantly. Are there any one-offs or special fees contributing to this increase?
A: The increase is mainly due to the consolidation of Kista, which added around 5% to the cost. This includes the loan on our balance sheet and the loss of interest income from shareholder loans to the JV. There are no meaningful special fees contributing to this increase. (Sakari Järvelä, CFO)
Q: How much did the Concentra divestment contribute to the Q2 results?
A: The annual effect of the Concentra divestment is around EUR1.4 million of net rental income. I can provide the exact Q2 figure offline. (Sakari Järvelä, CFO)
Q: When do you expect to announce the ongoing divestments, and how do you expect the prices to compare to book values?
A: We expect to complete and announce the divestments after the summer holidays, likely in late August or September. We anticipate the prices to be in line with the book values, similar to the Concentra divestment. (Henrica Ginström, CEO)
Q: Are there any obstacles to turning the Letters of Intent (LOIs) into actual contracts?
A: At this moment, it is mainly a process of due diligence. (Henrica Ginström, CEO)
Q: Can you comment on the quantum of assets under LOI and their impact on the balance sheet?
A: We have EUR300 million in held-for-sale assets, and the majority of that is those under LOI. (Henrica Ginström, CEO)
Q: Is adding more secured debt part of the plan, or is the focus solely on disposals to de-lever the company?
A: Divestments are the key priority for liquidity. We will review our liquidity and refinancing options later this year or early next year, and secured debt remains an option if optimal. (Sakari Järvelä, CFO)
Q: How are discussions with S&P regarding your investment grade rating, and what is the minimum amount of disposals needed to sustain it?
A: We are in constant dialogue with S&P. They are closely monitoring our divestment plan. S&P's forecast includes EUR220 million of asset sales, which is the base for retaining our investment grade rating. (Sakari Järvelä, CFO)
Q: Can you describe the impact of the recent directed share issue to the Board of Directors on administrative costs and guidance?
A: The Board compensation is now paid in newly issued shares. This is a small amount and does not significantly impact our administrative costs or guidance. (Sakari Järvelä, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
