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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Inmobiliaria Colonial SOCIMI SA (FRA:HSC2) reported a 15% increase in earnings to EUR 147 million for Q3 2024 compared to the previous year.
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Gross rental income reached EUR 293 million, marking a 6.5% like-for-like increase, which is at the high end of industry expectations.
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The company achieved a release spread of 8%, indicating strong rental growth compared to previous contracts.
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The Paris portfolio showed significant growth with a 7.4% increase in rental income and a 19% release spread.
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Moody's upgraded the company's rating, reflecting improved sustainability and lower leverage due to conservative financial policies.
Negative Points
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There is uncertainty regarding potential changes to the tax regime for REITs in Spain, which could impact the company's financials.
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The potential worst-case scenario of a new tax regime could lead to a 1-2% impact on EPS, despite the use of tax credits.
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The company faces challenges in the Spanish market due to ongoing discussions about changes in tax treatment for REITs.
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The occupancy rate for some new projects, such as the Magnum project, is still in progress, indicating potential risks in achieving full occupancy.
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The financial performance is partly reliant on the favorable conditions in the Paris market, which may not be sustainable long-term.
Q & A Highlights
Q: Is the increase in EPS guidance due to lower disposals, and how long will the 1-2% EPS impact from the potential tax regime change last? A: The EPS performance is driven by stronger-than-expected top-line growth and wise management of financial expenses, not by revised disposals. The 1-2% EPS impact from the tax regime change is based on limited annual use of tax credits, which can be replicated in future years without further impact. - Unidentified_1
Q: How do you interpret the CRE figures showing stable rents but rising capital values, and is there a slowdown in B growth? A: The CRE figures suggest strong fundamentals for rental growth, particularly in the Paris market, due to supply-demand imbalances. The slight decrease in B growth in Q3 is contract-specific and not indicative of a slowdown. We remain confident in continued rental growth. - Unidentified_3
Q: Can you confirm the 5 billion tax credit is included in the 1-2% EPS impact, and why is an 18.75% tax rate applied? A: Yes, the 5 billion tax credit is included in the EPS impact. The 18.75% tax rate results from a limited annual use of tax credits, which reduces the effective tax rate from 25% to 18.75%. - Unidentified_1