Argan (ARG) H1 2024 earnings summary

Executive summary

• Portfolio fair value increased to €3.8 billion at end of June 2024, reversing previous declines, with a cap rate of 5.3%.

• Rental income rose 8% year-over-year to €98 million, and recurring net income increased 7% to €67 million.

• Debt ratios improved, with LTV down to 45.9% from 49.7% at end of December 2023, and net debt/EBITDA improved to 9.5x.

• Occupancy rate remained at 100% for the sixth consecutive quarter.

• €150 million capital increase completed in April 2024 to accelerate growth and reduce leverage.

Financial highlights

• Rental income for H1 2024: €98.1 million (+8% year-over-year); projected 2024 rental income €197 million, marking eight consecutive years of growth and a 14% CAGR since 2016.

• Recurring net income group share up 7% year-over-year to €67 million; margin on rental income at 68%.

• EPRA NTA stable at €78.9 per share, with positive contributions from net income and asset revaluation, offset by equity raise and scrip dividend dilution.

• Dividend per share proposed at €3.30 for 2024 (+5% vs. 2023), subject to shareholder approval.

• EBITDA margin steady at 94%.

Outlook and guidance

• 2024 targets confirmed: rental income €197 million (+7% vs. 2023), recurring net income €135 million (+7%), dividend per share €3.30.

• 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 decrease 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, with €78 million targeted in 2024.