Argan (ARG) H1 2024 earnings summary

Executive summary

• Portfolio fair value rose to €3.8 billion by June 2024, reversing prior declines, with a cap rate of 5.3% and 100% occupancy maintained for the sixth consecutive quarter.

• Rental income increased 8% year-over-year to €98.1 million in H1 2024; recurring net income rose 7% to €67 million.

• Net income rebounded to €91 million, supported by positive fair value adjustments and stable capitalisation rates.

• Debt ratios improved, with EPRA LTV down to 46% (from 50% at end-2023) and net debt/EBITDA improved to 9.5x.

• €150 million capital increase in April 2024 issued over 2 million new shares to support deleveraging and growth.

Financial highlights

• Rental income for H1 2024: €98.1 million (+8% YoY); recurring net income (group share): €67 million (+7% YoY); EBITDA margin steady at 94%.

• Portfolio valuation at €3.8 billion (+2% vs. end 2023); NAV EPRA NTA per share: €78.9 (stable YoY); NRV: €89.7 per share.

• Dividend per share proposed at €3.30 for 2024; payout of €52.5 million in H1 2024.

• Net cash flow from operations: €89.7 million; net investing cash flow: -€44.8 million; net financing cash flow: -€33.6 million.

• Cost of debt stable at 2.3%, with over 97% of debt fixed or hedged.

Outlook and guidance

• 2024 targets confirmed: rental income €197 million (+7%), recurring net income €135 million (+7%), dividend per share €3.30 (+5%).

• Portfolio expected to reach €3.9 billion and 3.7 million sqm by year-end 2024.

• LTV targeted to decline to 44% by December 2024 and 38% by 2026; net debt/EBITDA to fall below 8x by 2026.

• Average annual rental income growth of 7% targeted for 2024-2026; asset sales program of €180 million planned for 2024-2026.

• No new debt planned until at least 2026; focus on amortizing loans, equity raise, and asset disposals.