Eurocommercial Pptys N V

Good morning, everybody. My name is Luca Lucaroni, Investor Relations Director. I'm happy to be on this call with Evert-Jan Van Garderen, our CEO, and Roberto Fraticelli, our CFO, to present your commercial results for the year 2024. The agenda for this conference call is presented on this slide. Evert-Jan Van Garderen will talk about the operational results of the company, followed by Roberto Fraticelli, who will discuss in more detail the financial results. Eberkian will finish the presentation with some closing remarks. We will then open the call for any questions and comments you may have.

Thank you, Luca, for introducing us and presenting the agenda for today. Good morning, everyone, and thank you for joining us this morning. I will start with an overview of the operations of your commercial during the financial year 2024, and we'll finish this presentation with some remarks on the Share Buy Back program, the dividend proposal, and the guidance for 2025. 2024 was a year of internal growth, which we achieved through the re-merchandising of several of our shopping centres, including our flagships Volue Shopping in Belgium and Carosello in Italy. The current 3.9 billion retail property portfolio comprises 24 shopping centres and provides diversification in terms of geography, size and type. Our four countries, Italy, France, Sweden and Belgium, are shown here weighted by value. As a consequence of the external valuations at 31st December 2024, the portfolio spread changed slightly compared to December 23. Italy went up from 44% to 45%, Belgium and France remains the same at 14 and 21% respectively. Whereas Sweden reduced from 21 to 20%. In addition to providing a good country diversification, our shopping centers are well spread in those four countries and are all located in wealthy regions, like for example, Northern Italy or close to the Swiss border near Geneva, or in the wealthy catchment of all the way shopping in Brussels. This slide provides the maps of the four countries showing where our 24 shopping centers are located. Italy remains our largest market at 45% of the portfolio, a weighting that we're happy to maintain, as all the positive economic and retail indicators that initially attracted us to the Italian market remain, namely extremely high wealth levels in Northern Italy, and in particularly in Lombardy, where our three Italian flagships And Cremonapo and Kuno are located. Very low online penetration, which has only just reached 10%. Low levels of household debt. And more importantly, very low shopping center density and therefore competition. Partly because shopping center development started relatively late in Italy from the early 90s, meaning that even today retail densities in our Italian catchments are half of the French ones. The existing portfolio also provides asset diversification with its five flagship shopping centers balanced by the remaining 19 suburban hypermarket anchored shopping centers. The five flagships are located in their respective countries' capital or main economic cities and are important shopping centers in a national context and retail hierarchy. These flagships attract a broad international talent base and have a higher discretionary spend component. particularly fashion. By contrast, our 19 suburban hypermarket anchored shopping centers have different and more defensive characteristics with over 60% of the floor space devoted to a broad range of essential and everyday retail, including groceries. Most were strategically cited and originally developed by the hypermarket themselves in the wealthy catchments of important provincial towns and cities. And these types of shopping centers provide a broad mix of both national and regional tenants and an increasing range of services for their more local communities. The company showed a strong operational performance in 2024. On the slide, you see an overview of the important operational metrics for the year, which underpin that statement. I will comment in more detail on each of these metrics in the remainder of this presentation. Like-for-like rental growth was 3.5%, well above our 10-year average of 2.8%. The growth was driven by indexation and turnover rent, although the indexation was lower than in 2023 due to much lower inflation. The rental growth was obviously the driver behind the 5.9% net property income uplift. We are pleased to be able to report that on 275 renewals and re-lettings, an average rental uplift of 4.5% was achieved. And that is on top of indexation. These lease transactions represent 18% of the minimum guaranteed rent of the portfolio. We were able to attract new tenants with our 104 re-lettings, achieving a much higher uplift of 9.1% and confirming the continuing strong demand from retailers to open new stores in our centers. The highest uplifts were achieved in Belgium and Italy. Over the last 12 months, the Italian leasing team signed 92 new deals, resulting in an overall rental uplift of 7.9%. 47 of these transactions were new lettings, producing an overall increase in rent of 14.1%, with the highest uplift achieved in Colostrada, 22%. In Belgium, at Waterway Shopping, the leasing team successfully concluded 24 lease renewals and re-lettings, resulting in an overall rental uplift of 6.6%, including 13 new lettings producing an increase of 16.6%. These figures demonstrate that our prime portfolio continues to be well positioned for leasing retail space to an expanding tenant base under sustainable conditions at affordable rent levels, while active tenant rotation and the regular introducing of new concepts ensures that our shopping centers remain attractive and relevant for their customers. Low vacancy is usually a good indicator of the quality of the properties. Over the last four years, we have reported vacancy rates in our property portfolio ranging between 1.3% to 1.8%, with an average of 1.6%. Last year, the APRA vacancy rate reduced steadily down to 1.4% by the end of December. The company has always been known for its low occupancy cost ratios, and we are therefore pleased to report a 9.8% occupancy cost ratio for our portfolio as per the end of December 24. This percentage is still one of the lowest in the industry and implies that the rents are affordable and sustainable. as was also confirmed by the full rent collection figures that we have again reported. The service charges and property taxes have remained stable over the last three years, whereas the rent increased, resulting in a slightly higher OCR than three years ago. Last year, retail sales in our shopping centers increased by 2.7% compared to 2023, with all four markets producing positive growth. Belgium performed particularly well as a result of the re-merchandising at Walloway, a process we internally refer to as the musical chairs. If we look at the various sectors, we see that most sectors performed well last year with some clear winners, which were health and beauty, sport, books and toys, food and beverage, and services. This slide illustrates the fastest growing sectors in our malls over the last three years. i.e. since the pandemic. The growth in terms of retail sales, which were health and beauty, food and beverage, and sport and lifestyle, with growth of 13, 19, and 11% per annum respectively. The growth in the health and beauty sector was driven by a number of international brands expanding across our markets. Rituals have opened three more stores in our shopping centers, bringing their total number in our portfolio to 13. with Giordalizzo joining this autumn. The French fragrance designer Adopt opened in Passage du Havre and Les Atlantes. Wiken Cosmetics opened three additional stores in our Italian portfolio, taking the number to seven. The sector is also seeing the expansion of specialist beauty centers, such as Medimarket, who are substantially increasing their footprint and unit size to provide a range of in-store treatments in addition to their normal product range. Many markets have recently taken an enlarged unit in Wallyway and opened in Cremona Po. The food and beverage sector is continuing its rapid expansion with a range of new brands, concepts, and formats. To satisfy this increased demand from both customers and operators, we have recently completed several F&B projects in our markets, repositioning food and beverage as a central pillar of attraction, increasing both footfall and dwell time. The sport and lifestyle sector also continues its rapid growth with the increasing popularity of branded sport and leisure fashion. Many of these brands are increasingly operating cross-border, with JD Sports being particularly prominent, with whom we already have six stores covering France and Italy. Increasing demand for sneakers and training shoes has seen the expansion of specialist footwear retailers such as Courir, Foot Locker, Snipes, and Sketchers. This slide illustrates the fastest growing brands in our shopping centers over the last five years in terms of floor space. I just mentioned JD Sports, but on this slide, I would also particularly mention Normal, the expanding Danish value retailer, who is present in all our seven Swedish shopping centers and are also performing well in France, in both Passage du Havre and now in Modul, in the suburbs north of Paris. Fashion continues to be the cornerstone of our galleries, representing 37% in terms of mall floor space. However, the big change in this sector is that it now comprises fewer, but much larger stores. This is most evident with Inditex, who recently doubled and even tripled their store size at Voluwe and Carosello in order to showcase the latest full Zyra concept. All the Inditex brands are expanding their representation and we're currently having 26 of their stores, mainly in Italy and Belgium. This slide shows the concentration of floor space of the largest fashion groups in our portfolio who are demanding bigger stores in dominant shopping centers while vacating smaller stores in secondary retail locations. 47% of our fashion floor space is led to our five largest fashion retailers, as illustrated on this slide. With our ongoing re-merchandising projects, we can provide them with the right retail space in terms of size, layout and design. And I will show you two outstanding examples, which are Carozello near Milan and Wolio Shopping in Brussels. At Carozello, Media World relocated into the former COIN department store. thereby creating the retail space and opportunity for a major re-merchandising, including a new full-format Zara store of around 4,600 square meters, a new Bershka, and an enlarged Stradivarius. These Inditex stores were all completed and fully open for trading in early October 24, and collectively became their flagship representation, serving the eastern region of Milan. As part of the re-merchandising, H&M have relocated and established their latest concept in the former Zara unit next to the main entrance. During 2024, important re-merchandising improvements were completed at Walloway Shopping, with the successful spring opening of the new and large Zara store, 3,300 square meters, Carrefour Market, who replaced the Met supermarket in May, focusing on fresh and quality products to better serve the essential and everyday needs of Voluway's wealthy catchment. This was followed in June by the opening of the latest C&A concept store, and meanwhile Inno completed the refurbishment of their 12,000 square meters department store during the autumn, when the MediMarket Parapharmacy also relocated into a larger store of 675 square meters to provide a wider range of products where most recently Massimo Dutti relocated to a larger unit for its latest concept. Bolliwe and Carosello are examples of creating internal organic growth through delivering major re-merchandising projects to enhance the performance of our shopping centres, thereby growing the company's business while preserving the dominant position of its assets over the medium and long term. The impact of these re-merchandising projects is already visible. In the fourth quarter of 2024, Carosello's overall turnover was up by 18.1%, and the footfall numbers were up 5.7%. Furthermore, Carosello became even more dominant as Zara closed stores in competing centers, and the Inditex Group increased its presence in Carosello with a full-format Zara, an enlarged Stradivarius store, and a new Baerska. In the fourth quarter, Voliway also saw a significant increase of 6.1% in retail sales and a footfall increase of 18.7%. The re-merchandising has increased tenant demand, resulting in 100% occupancy and year-end valuation uplift of 3.3%. In Sweden, at Grand Samarkand, Växjö, the development of a new external retail store for the expanding value retailer Ekohallen is almost finished. The 8,200 square meters unit has been led on a 10-year lease and is scheduled to open at the end of this month. The development will provide a return of at least 8% on cost, which is a total amount of 130 million Swedish kronor. In the past, we developed a similar store for Ekohallen at Norsköping, illustrated in the picture at the bottom left of this slide, And we sold that investment at a yield of 6%. Our property portfolio has strong fundamentals to generate internal growth as we achieved with the re-merchandising strategy executed at Walloway and Carozello. To summarise, what are these strong fundamentals? It's the retailer's flight to quality, no supply of new retail space and strong demographics. Point one. Retailers are prioritizing fewer, but larger and fit for purpose stores. In order to create a unique customer experience, brands are increasingly offering new products and services, which can be easily accommodated in shopping centers in dominant commercial areas. Most retailers have an omni-channel approach and need physical stores to be successful. E-commerce is no longer a threat, but an opportunity. with consumers shifting towards experience driven retail, where physical stores play a crucial role in brand engagement. With our portfolio, we can serve this demand from retailers. Number two, while new large scale developments face restrictions in many countries and building permits are harder to obtain, this creates a competitive advantage for us. The limited new supply means that our existing high quality assets become even more valuable. reinforcing our dominant market position in our catchments. Point three, beyond financial considerations, demographics play a pivotal role in our success. Our presence in densely populated areas with above average purchasing power and low unemployment rates ensures a strong customer base with consistent demand for quality retail spaces. It is very clear that our strategy of creating internal growth through re-merchandising is already showing positive results. We intend to repeat this strategy over the next two years in Italy, at IGLI, Colostrada and Cremona Po, where we have opportunities to deliver growth from similar re-merchandising projects, but also in Ingolstadt in Sweden. In addition to those four shopping centres, we continue to identify similar opportunities at other assets in France, Italy, and Sweden. Before I hand over to Roberto for discussing the financial results, I would like to say a few words about some of the ESG activities listed on this slide. We finalized the double materiality assessment to identify key ESG topics and to evaluate your commercial's impact on the environment and society. We have identified six material topics on which we intend to report in the future. Three items concern environmental topics, two items concern social topics, and one item concerns a governance topic. However, the very recently published so-called omnibus proposal of the European Commission, if endorsed by the European Council and the European Parliament, will on the basis of currently available information imply that your commercial is no longer in scope for the corporate sustainability reporting directive, the CSRD. We are monitoring the further developments to understand what will be applicable for the company. Meanwhile, we will continue with all our planned ESG activities. The recertification of our assets under the new BREEAM in use protocol version six is progressing well and the certificates we received are either excellent or very good scores. We continue to make further progress with our sustainable finance goals, having added green and sustainability linked loans for financing Belgian, Italian and Swedish shopping centers during 2024, which loans Roberto will cover in more detail as part of the financial review. This slide provides the major ESG achievements reported over 2024, but also an update on the percentage of green leases out of the total leases per country and the electrical vehicle charges in our shopping centers, as well as the gas removal we are achieving. Much more detail regarding our ESG activities for each of our countries can be found in the comprehensive country commentary sections of our press release. This is the moment to hand over to Roberto, who will discuss in more detail the valuation of our property portfolio, the funding, and the financial results.

Thank you, Rekia, and welcome, everybody. We'll just have a quick look. The first slide is the financial performance in 2024. In this slide, we are giving you the overview of the most important financial metrics, and that's really important, and then we're going to look at them more in detail in the coming slides. As you see, as already said, property investments went up to 3.9 million. That's a plus 3.1%, which is very, very important. The loan-to-value ratio went down from 42.5%. It went down to 41.3%. That's also thanks to the fact that the debt actually remains stable to the 1.6 billion. So that's very important. That also, of course, caused an increase in the upper NTA per share, which went up 5.6% to 41.79 euros. If we then move to the property income and the profit and loss, we see that the net property income went up 5.9%. That's a strong increase, up to 197 million euros. That's mainly due to two things. One is, of course, these very good results of our property. And on the other hand, we also managed to do some savings in the cost. So we hope we appreciate that. And that leads, of course, to direct investment results of 2.39%. There, it's important to consider that the interest expenses were capped thanks to the 80% interest rate hedging level, which shielded us from the strong increase in the URIBOR this year. And then that allows us to propose a dividend of 1.80, which is also an important increase of almost 6% compared to last year. In the key financial metrics, you see the most important one. So the average cost of debt, as we said, stays stable, actually diminished a little tiny bit, but that's very important. The interest coverage, it went down from 3.7 to 3.5. That's due to increase, the 5 million euros increase in interest expenses. But you saw also the improvement in the net debt to EBITDA, which went from 8.9 to 8.5. We also showed the APRA LTV, 42.8. Of course, we believe our LTV ratio is much more relevant. But you also showed the average loan maturity from 2.7, it went up to 3.3. That's also thanks to the loan renewals that we did during this year, which we'll discuss further in the presentation. And also we were busy with hedging. So the average interest rate hedging maturity went up from 5.3 years to almost six years. If we then go to valuations, then what we see, it's really interesting because, you know, the valuations can depend on several factors. One of them is the net initial yield. And we see that the net initial yield is actually stable because it was 5.8 last year, and this year it's only 5.7, so a minimal change. So that means that the value is actually value which has been created in the properties, and that's due to an increase in the NGRs and the ERVs. So that's very important. I think we owe a big thanks to our property and leasing teams who have been working flat out to achieve these results. But it also tells us that if yields remain more or less stable, then for the future, we can also see that the possible increases in MGRs and ERV can have a possible important results on the valuation also for 2025. We look also at valuation split, which is something that we usually do. You see five dominant flagships. the yield actually stayed the same at 5.4, and there was a small improvement from 6.2 to 5.9 for hypermarket anchored shopping centers. But the value has increased for both, and that's extremely important. Now to a slide which we are particularly proud of. Luca, Jacopo, Tom, Emilie, they all contributed to this effort, and we thought it was also nice, as Erika mentioned before, to put some green color even there. because indeed the renewals of the loans that we did were actually green. It's either green and sustainability-linked, green loans, sustainability-linked loans. And there are three loans which are not green, but they're easy to explain. Let's say the last two, the small ones, we just extended their duration by one, one and a half, two years so that they could match the extension of the larger brothers which were expiring later. which we'll see on Fiordaliso and Iginio. And the other one is the 550 million corona in Valbo. We are finalizing the papers so that we can also, in discussion with the bank, also qualify that as a gridlock. So give us some more time on this. Then our usual financial summary, the 31st of December, 2024. What's important to see is, of course, total net borrowing stayed there at 1.6 billion. The average term of the edged increase from 5.3 to 5.9 and the overall interest stayed at 3.2. What we decided to do this year was also to give you a split of the loans which are expiring in 2026 and 2027, just to give you the overview. What you see, the main loans which are expiring in 2026 are on the three flagships, which is Italian flagships, sorry, which is Fiordaliso, Carosella and Igigli. And there is also an amount on C4, a Swedish asset. C4, we have already started discussions with the bank. We are optimistic about these discussions. In Italy, Luca and the team have already started those negotiations. Actually, on one of these loans, we are pretty advanced. So we hope we can finalize it by the end of H1. But we are very hopeful with these negotiations. If we look already at 2027, what you see is that Cournot is expiring. We're also very positive. We have a strong relationship with INGs, which is financing the asset, and also a very strong relationship with Nordea, which is financing the portfolio in Sweden, which expires in 2027. Lenders shares, as usual, 34% in the Netherlands, strong Italy and Germany with 25% and 22%. Now we've got Sweden at 13% and France at 6%. Then if we go to the interest hedging, also we need to thank Luca and the entire team in Amsterdam. As you see, the top gives to the past, the bottom gives you expectations and future so what you see is actually the hedging and being stable at 80 percent or slightly above or slightly below that helped us keep the um the interest expenses stable as we said and we also put for a comparison uh also the curve of the year rebar so that you can actually see the movements in your report during these years Bottom, you see the hedging ratio. As we said, our policy is to have the 80% of our loans, net loans, hedged. And that's also the case for the foreseeable future. So all in all, we think a very stable financial picture for you to take into consideration. If we then go to the financial position, and that's the Natterer team doing this fantastic job, we what we usually put here for you is the financial position on the right hand side with the frs figures so you see the increase in property investments you see the stable net borrowings and you see also the increase in the nta and of course per share the increase in both in no three items actually net asset value adjusted net asset value and mpr nta if we then go down to our bridge you see if we start from the 39.59 which we had the december 23 we add the investment results we add the direct investment result then we take out the dividend distribution then as you can see the share buyback equalized the stock dividend and that we that we had and then of course for forever then we have to adjust for the deferred taxes and the uh financial instruments And then we have the other is mainly exchange rates, the Euro SEC impact that we have in our accounts. And that gets us to a final NTA of 41.79, which you see. Then we go down to the income statement. There as well, as for the figures on the left-hand side, you see the rental income going up from the 215 to 219. So a nice increase of 4.4. Net income increased by 9.9 million. Direct investment result increased by 3.9%. And of course, there is the limited impact of the interest expenses, which is thanks to the 80% interest hedging that we have put in place. Then we're almost there. Direct investment results here also breached. Just to give you the overview of the impact on your direct investment results, you see we added 7.3 million euros of rental income. Then we have an amortization of lease incentives. As Evert-Jan has told us, we have a lot of re-merchandising that was done in our shopping centre, so that's really important. We also had a positive result for bad debts. We actually managed to collect some of the debt that we had already lost hope for. And so there are some one off here. Net service charges is also positive. So that means we managed to collect some more service charges than we used to. So the net result is actually more positive for the company for 3 million euros. Here you see the impact of the interest expenses, the 5.3 million euros. And then IT expenses, as you know, we are busy with that digitalization program. So we got some very nice investment, which Thijs has been making with his team to move us forward in this digitalization path. And then we had a one-off in Sweden for corporate income tax, which is also helpful. And now there is just a little mix of everything. And that gets us to the 127.9 of your direct investment results for 2024. And last but not least, we tried to give you also the picture to take into account the EBITDA. As you see, rental income, property expenses, net service charges, company expenses, other income and expenses. And that gives you to an EBITDA of 190 compared to an EBITDA of 181. So that's plus 5% compared to last year. And that, of course, then you see the impact on the recording earnings. And on this positive note, I would hand back over to Jan.