ARGO Properties (ARGO) Q2 2023 earnings summary

Executive summary

• Q2 same-property rent per sqm rose 9.4% YoY; new-lease rents increased 5.4% to €11.17/sqm.

• Q2 net loss attributable to shareholders was €0.254m, as €2.25m of fair-value losses offset operating growth.

• At June 30, the portfolio comprised 3,649 residential units, with €651m book value and €23.5m annualized rent at full occupancy; pro forma holdings at Aug. 1 were 3,776 units and €698m of property value.

Financial highlights

• Q2 rental income rose 32% YoY to €5.281m from €4.000m; H1 rental income was €10.112m versus €7.626m.

• Q2 revenue was €14.528m versus €10.639m in Q2 2022; operating profit was €4.913m versus €3.293m.

• Q2 fair-value loss on investment property was €2.25m; H1 reported a €27.022m fair-value gain.

• H1 net income was €27.275m versus €10.446m; operating cash flow was €8.842m and investment cash outflow was €155.469m.

Outlook and guidance

• New-lease rent of €11.17/sqm versus average in-place rent of €7.68/sqm indicated 45% rental upside at current market levels.

• Annualized FCPF was modeled at €35.7m as of June 30, assuming rent convergence to ERV, 50% refinancing LTV and reinvestment; it is a forward-looking, non-IFRS measure.

• Privatization work was brought forward, with initial projects targeted to start within 12 months; annual disposals target ~10%, with proceeds reinvested in properties for enhancement.

• Four additional loan refinancings were being advanced, with expected incremental cash proceeds of €14m–€19m.