Wereldhave Nv

Good morning, everyone. Welcome to the Wereldhaven Full Year 2024 results webcast. I'm Matthijs Storm, the CEO of Wereldhaven. I'm here today with Dennis de Vrede, our CFO, familiar to most of you. We do the usual format. We'll take you through some slides with the highlights of the results. Towards the end of the presentation, we will answer the questions you might have. During the presentation already, you can type your questions in the text box below the screen. So let's start with the presentation and the highlights. I go to slide number three. First of all, the net profit. So this is a combination of the direct result, the recurring cash flow, but also the revaluation of the investment properties at $140 million. That's the highest number since 2007. I think that's quite remarkable. It's 18 years ago that we achieved such a high profit. I think back then it was a little bit over $200 million. But since then, we never had a result like this. I'm really proud of the teams at Wereldhaven who have worked very hard last year to achieve this. The direct result itself at 176, Dennis will get back to it later, and what were the different components of the small increase versus the guidance of 175. Thirdly, very important, what you've seen in 2024 is that we faced several bankruptcies. In Belgium, in the first quarter, first and foremost, we've reported about this. But also later in the year, we've had the bankruptcy in the Netherlands of a homeware and household goods chain blocker. Not unexpected. It's been a red flag in our portfolio since ages, but it did occur in 2024. We'll get back to that later. But also in Belgium, the food and beverage chain Lunchgarden. the old part of the Grand Bazaar, the GB grocery store chain, went bankrupt with six locations in the Wereldhaven portfolio. Despite all that, we had an occupancy rate of 97.3% for the core portfolio at the end of 24, which is significantly higher than at the end of 23, which I think is a very good result. We also disposed one Dutch asset we've mentioned earlier in the Q3 and in the H1 call last year. We were in the process of selling two Dutch assets. One, Winkelhof in Leiderdorf, has been sold. Dennis will elaborate on that asset and the rationale later. We're also in the process of selling a second Dutch asset. The revaluations of the portfolio were positive, plus 3%. I've mentioned that already. What's important to us, it's primarily driven by an increase in market rents and not so much by yield compression. The dividend for 2024, we will propose €1.25 per share to our shareholders at the AGM in May, which is plus 4% versus last year. The outlook then for 2025, €170 to €180, call it roughly stable versus this year, which I think is a good outlook because we will face taxation in the Netherlands in 2025 and onwards of about €4 to €5 million per annum. And we also, of course, have the dilutive impact of the Winkelhof disposal in the Netherlands. If we then go to some operational figures, the direct result per share I've already mentioned to you. If we look at the APRA NTA per share, formerly LAV, is up 7%, quite good. Loan-to-value at 41.8% down versus December last year, and this is excluding the effect of the disposal of Winkelhof. The pro forma loan-to-value, including the disposal of Winkelhof, is 40.8%. Lastly, the APRA cost ratio. We were above peers in the past, as you know. We're now at 22.4%, which we believe is below average, and it's also below the 23.5 target that we set internally Dennis, again, will elaborate later in the deck on the several cost-saving initiatives that occurred in 24 and which contributed to that APRA cost ratio. And going deeper into the results, rental income like for like NRI growth, 6.7% in the Netherlands, very strong, I think. Belgium were used to a higher figure, but it was impacted by the bankruptcies, as you can see in the call-out here on this slide as well. Overall, 4.1% for the core portfolio. Leasing, I think what you see in today's markets, again, I've mentioned that word several times, there's a polarizing leasing market. We see bankruptcies on the one hand, but we also see an increasing demand from existing retailers and also new retailers entering the market. So volume wise, it's been strong last year and it continues to be very strong in 2025. I think also in the month of January, I've never approved as many leasing deals as this year, so that is a really good sign. From a rental level perspective, if you look at Belgium, we continue to sign above old rent and above ERV. In the Netherlands, we're still a little bit below old rent. The volumes are really good. We do see rental growth in line with inflation, but not more than that. So that's the difference between the Netherlands and Belgium. But again, volume-wise, very strong in the occupancy rate, as you can see on this slide. has increased to 97.3%. We have more and more full-service centers. As part of our Life Central strategy, we're transforming traditional shopping centers into full-service centers. We now have nine full-service centers completed. This year, we will have two more completions in Kronenburg, Arnhem, Phase 1, and also in Nivelle in Belgium. If you look at the performance on this slide, for example, the leasing spread, 8.5% positive, but also tenant sales growth, which I believe is the best forward-looking indicator for future performance, plus 4.9%. If you compare that to the assets in transformation, but also to the traditional shopping centers, minus 0.3%, you can see that our concept is working. Football was more or less in line with the market. I think you can see that on these slides. I've mentioned tenant sales. If you look at the Netherlands and Belgium, 3% to 4% growth. Maybe shortly zooming in on different categories. In the Netherlands, of course, homeware and household, minus 3% impacted by the bankruptcy of Blocker and the big bazaar stores towards the end of 23. So that will be a better figure in 25, I think. In Belgium, we had, of course, the impact from the bankruptcy of Lundgaard. If we then look at the resilience of our rental income profile, we always focus on the daily life exposure in the portfolio, the percentage of the rental that is focused on non-discretionary items, convenience, daily life, it's all the same. It has increased further to 68%. Again, when we launched the strategy, which you can see on the left-hand side, In the donut, it was only 51%. It means, again, and I've also mentioned that in some of the interviews this morning in the media, I think we've become a very resilient company. It means that if the economy is going to grow 4%, 5%, 6%, we might underperform a bit, but it's still positive. But in the market where we are today with a lot of economic uncertainties, I think this is the kind of income profile that you want. Okay. On the leasing side, I'm not going to mention all the information on this sheet, but focusing in on Lunch Garden in Belgium. I think at the end of the day, this was a good bankruptcy for us, how strange it might sound. I'm mentioning that because four out of six stores are continuing at a higher rent, and the two other ones we actually needed for transformation, the one in Bruges, but also the one in Kortrijk, are part in our drawings, in our blueprints of the full service center project. So for us, I think it's a positive that we've now been able to deal with that. In the Netherlands, the blocker locations, most of them have been leased out in the meantime. And for the other ones, we do have LOIs in place. We actually have tenants to choose from. The blocker locations are good locations. So again, I think we're in a good situation. Last slide from my side before I give over to Dennis. The occupancy cost ratios, pretty stable versus the last couple of decks, 13, 14%. I think, as I always say, in Belgium, there's a little bit more upside to that OCR because we have a higher sales productivity. There's a linear relationship, positive relationship between sales productivity and the occupancy cost ratio. In the Netherlands, 14% I think is the right ratio, and I think that will stabilize, rents will grow in line with the sales growth of the individual tenants. We'd also like to hand over to Dennis.

Thank you, Matthijs, and also welcome from my side, obviously. For 2024, we've been very much focusing on the cost savings in our company. I think this slide explains the different buckets we've been focusing on. Primarily on the net service charges, we've been able to push that down. with 19%, but also on the property expenses and even on the direct Gen X, we were able to push it down a little bit to the numbers you see here, 1.5 million and 0.4 million for respectively property expenses and for direct Gen X. And for the direct Gen X, we expect 2025 to be flattish despite the indexations. The direct result, Matthijs just mentioned it, I think a very solid year, as we have been saying before, primarily driven, this 9%, by the acquisition, of course, of Paul de Plein, which was late 2023. But also the Netherlands and Belgium, both their NRIs have been contributing basically to the positive 9% or 7.3 million of direct result increase. This was offset by the higher interest expense. That was not a surprise, obviously, to us, but you can see the impact of that on our direct result. For 2025, we are guiding towards the 170 to 180 direct result per share, as you can see on this slide. Again, that is including the negative impact of the disposal of Binkhoff, which I will come back to you in a few more slides, and the four to five million expected Dutch corporate income tax, which we have to start paying from 25 onwards. I think also on this slide, on the very right-hand side of this slide, you can see that we will be proposing, we are guiding towards an increase in our dividend per share for the year 2025. And that will be proposed and ultimately, of course, on the AGM in 2026. That's another 4% up. If I then go to the transactions, the biggest disposal and the most recent disposal we signed the SBA last night was with our asset in Leiderdorf-Binkelhof. I think it's the very first larger step, I would say, in our capital rotation actions. We are actively looking to dispose non-core assets in the Netherlands. driven by, on one hand, the IRRs, which would be not meeting our threshold of 8%, and on the other hand, of course, it will also help us reduce our tax expense in the Netherlands. For Winkelhof itself, I think also important to know is that we are selling this very close to book value. We do not believe internally we could make this a full service center given the size, given the building structure of Winkhof. And also from an ESG side, we would be needing to invest a lot of ESG capex to push it towards the levels that we would like to have the asset. So all in all, I think we are very happy that we are able to sign the deal last night. Moving back to Matthijs.

Thank you, Dennis. The strategy, Life Central, and the progress we've made last year, starting with the bar chart on the bottom right, you can see this further increase of the mixed use to 16%. Again, we think once all the assets are full service centers, we will be at 20% to 25%. Then the two transformations that we'll complete this year, that's first of all Nivelle in Belgium, our shopping center just south of Brussels. So it's been a very strong center for us. I think the strongest opportunity here is the F&B opportunity. So we're expanding the F&B area, F&B tenants, but also some terraces outside. At the same time, we're refurbishing the facades of the shopping center and some other smaller projects that we'll complete this year. Secondly, larger project, Kronenburg in Arnhem, a shopping center that's been in the Wereldhaven portfolio since 1979, actually acquired from the contractor back then. Always been a very strong local shopping center. We're transforming that into a full-service center, and that's going very well. This year, we will complete phase one of the Kronenburg transformation. And later in the future, there will be also a phase two and phase three. Again, I think Nivelle and Kronenberg, these two completions this year will also help to drive both the value growth as the other completions did in the past, but also some earnings growth. Then the full service centers and the KPIs. You can see here, we continue to add more and more full service centers to the portfolio. It's nine at the moment. As I've mentioned previously, footfall, I think that's a very strong outperformance, but also in terms of retail sales, plus 5%, versus plus 2% for the other assets. And also from a total return perspective, These are unlevered IRRs that we focus on, 9% versus 5% for the other assets. As you know, we're sticking very closely to that IRR framework that Dennis will also elaborate on later in the deck in order to allocate and reallocate our capital. Winklevoss, as just mentioned by Dennis, is a good example of that. In the CAPEX for the coming years, we now have almost 80% invested of the roughly 300 million that we dedicated for the strategy. Next year, we will spend about 25 and the other 40 million in the coming years. Talking about the IRR framework, we have a threshold of 8% unlevered IRR, which is based on the weighted average continental European IRR as published by Green Street Advisors, as you can see on this slide. We want to do better than that. You can see that most of the assets qualify, a combination of full service centers and projects in transformation. You can also see there's still one asset left to sell in the Netherlands. I've already mentioned that, but you can also see that is the case from an IRR perspective. And we have two assets in the whole bucket, which means we're fine tuning little things in the programs in order to increase the IRR above that level of 8%. Yield shift for our assets is continuing, particularly yield compression in some cases, also yield softening, but we do compare that to the market, and you can see for some of the Belgium assets, the yield has increased, but the market yield, according to Cushman and Wakefield, has increased 100 basis points, so relatively, I think that case still stands. Residential profits, we always have one slide on that. It's going slow, and it takes a lot of time. However, in 2025, we do expect to get $6 million in gains in, amongst others, the Tilburg project that you see on the top right. I think that's about $3 million, Dennis? Correct. That's part of the $6 million that will come in this year, and in 2026, another $8 million. It's not hugely significant, but I think it's nice to have from a free cash flow perspective and also from an earnings perspective. Can we go to financing and valuations?