Grand City Properties (GYC) Q3 2024 earnings summary

Executive summary

• Nine-month 2024 results show strong like-for-like rental growth of 3.5% YoY, with in-place rent reaching €9.0/sqm and a low vacancy rate of 3.9%, driven by supply-demand imbalances in Germany and London.

• Net rental income rose 3% YoY to €317 million, with adjusted EBITDA up 5% to €250 million, reflecting operational efficiencies and higher rents.

• Portfolio comprises 62,000+ units, diversified across Berlin (23%), NRW (21%), London (19%), and Dresden/Leipzig/Halle (13%).

• Disposals totaling €230 million signed YTD, with €170 million completed, mainly in London and NRW, at a slight discount to book value.

• Proactive debt management included over €500 million debt repaid YTD, successful perpetual notes exchanges with 85% acceptance, and a €500 million bond issuance in July 2024.

Financial highlights

• Net rental income for nine months reached €317 million (+3% YoY); adjusted EBITDA rose 5% to €250 million; FFO I stable at €141 million (€0.82/share); AFFO at €83 million.

• Property revaluation and capital losses were €197 million, a 65% reduction from €569 million in 2023.

• Net loss narrowed to €17 million from €398 million in 2023, mainly due to lower negative revaluations.

• Property operating costs down 9% YoY, mainly from lower utility expenses.

• Cash and liquid assets increased 18% to €1.46 billion, representing 32% of total debt.

Outlook and guidance

• FY 2024 guidance confirmed: FFO I €180–190 million, FFO I/share €1.04–1.10, like-for-like net rent growth over 3%, LTV below 45%.

• Expect to reach the top end of guidance for 2024; 2025 guidance to be published with full-year results.

• Anticipate continued strong rental growth, especially in London, and stable to slightly positive valuation trends into 2025.

• Expectation of rental growth outpacing inflation, with reversionary rent potential at 24%.

• Full-year impact from higher perpetual notes coupon payments and higher financing costs to offset adjusted EBITDA increase.