In This Article:
Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Grand City Properties SA (GRNNF) reported a 3% year-over-year increase in net rental income and a 5% rise in adjusted EBITDA, indicating strong operational performance.
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The company successfully launched exchange offers for its perpetual notes with a high acceptance rate of 85%, improving its balance sheet and credit rating metrics.
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The vacancy rate remains low at 3.9%, with in-place rent increasing to EUR9 per square meter, reflecting strong demand in key metropolitan areas.
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Grand City Properties SA (GRNNF) maintains a robust liquidity position with EUR1.5 billion in cash and liquid assets, comfortably covering debt maturities.
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The company has a diversified portfolio with significant presence in Berlin, North West Germany, and London, allowing it to capitalize on favorable market dynamics.
Negative Points
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Despite strong operational performance, Grand City Properties SA (GRNNF) reported a moderate loss of EUR17 million for the nine months of 2024, primarily due to negative revaluations.
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The company's leverage remains a concern, with a net debt to EBITDA ratio of 9.1 times, although it has improved from 10 times at the end of 2023.
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There is uncertainty regarding the continuation of existing regulatory frameworks in Germany, which could impact future rental growth.
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The company has not yet decided on dividend payments for 2024, pending market conditions and further evaluation.
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Grand City Properties SA (GRNNF) remains cautious about potential acquisitions, focusing instead on maintaining a strong liquidity position and reducing leverage.
Q & A Highlights
Q: Could you provide some insights on your operating market trends and development? A: As highlighted in the presentation, the fundamentals driving the widening supply and demand gap continue to support our strong operational achievements. We expect a persistent supply and demand gap over the long term, which is likely to drive market rent growth and maintain low vacancy rates. Inflationary pressures have decreased across Europe, supporting rent affordability and the overall rental market. Our portfolio in Germany and London is benefiting from these favorable market trends, with accelerated like-for-like rental growth and substantial upside potential relative to market rent.
Q: Could you give a more detailed breakdown of your like-for-like rental growth? What was the growth rate in London? Which regions were the main contributors? A: The total like-for-like rental growth was 3.5% as of September 2024, with 3.6% in-place rental growth. The main contributor was strong reversionary potential, contributing 2.1%, while indexation was 1.5%. Growth was strongest in London at around 5%, as rents there are not restricted. In Germany, regions like Dresden, Leipzig, and Munich showed strong growth. We expect continued strong like-for-like rental growth, driven by the gap between in-place and market rents.