Grand City Properties (GYC) Q2 2024 earnings summary

Executive summary

• Net rental income rose 3% year-over-year to €212 million, driven by 3.4% like-for-like rental growth and higher in-place rents, despite a 4% decline in total revenue due to lower recoverable operating income.

• Adjusted EBITDA increased 4% to €166 million, while FFO I remained stable at €94 million, reflecting strong operational profitability and cost efficiency.

• Portfolio value declined 2% to €8.4 billion, reflecting a -2% like-for-like revaluation, but operational growth offset much of the yield expansion; optimism that devaluations are near bottom.

• Successful return to capital markets with a perpetual exchange, heavily oversubscribed €500 million bond issuance, and proactive liability management, strengthening liquidity and balance sheet.

• Enhanced corporate governance with board expansion to five members, now 80% independent/non-executive and 40% female.

Financial highlights

• Net rental income: €212 million (+3% year-over-year); adjusted EBITDA: €166 million (+4%); FFO I: €94 million (flat); AFFO: €53 million (-6%).

• Net loss narrowed to €74 million from €402 million in H1 2023, mainly due to lower negative property revaluations of €198 million.

• EPRA NAV/NTA per share fell 2-3% to €22.8, mainly due to revaluation losses, partially offset by operational profit.

• Property operating costs down 12% year-over-year, mainly due to lower utility costs.

• Cash and liquid assets stood at €1.1 billion, covering debt maturities into 2027.

Outlook and guidance

• FY 2024 FFO I guidance raised to €180–190 million, FFO I per share €1.04–1.10, and dividend per share €0.78–0.83, with LTV expected below 45%.

• Like-for-like net rent growth expected to exceed 3% for FY 2024.

• Management expects robust internal growth for years to come, driven by strong market dynamics and significant revisionary rent potential.

• Ongoing disposals and proactive liability management are expected to further support deleveraging and financial flexibility.