Wereldhave N.V.: Results 2017

For the year 2017, Wereldhave posted a net profit of € 84.3m, against € 120.8m for 2016.

The direct result decreased by 0.6% to € 150.1m, or € 3.43 per share, in line with the given outlook (FY 2016: € 3.45). The full year indirect result stood at € -65.8m (2016: € -30.2m).

Gross rental income for 2017 amounted to € 223.4m, a decrease of 3% compared to 2016, due to lower rental income in France and disposals in the Netherlands. Overall occupancy of the shopping centres at the end of 2017 was stable at 95.5% (2016: 95.5%).

In France, occupancy dropped during the year from 94.4% to 91.9% at the third quarter, but rebounded by 130 bps during the last quarter to close the year at 93.2%. Several key anchors were secured, albeit at lower rents. This led to a decrease of rental income for the second half of the year. The full year impact will continue in H1 2018. New leases added to the overall quality of our tenant portfolio, not only commercially but also financially. As announced earlier, our target clearly remains to stabilise net rental income in France during 2018.

In the Netherlands, the rental market has improved. Pressure on rents has decreased significantly compared to 2016, but the lagged effects of pressure in the fashion, household goods and electronics segments is still visible in our markets, particularly at restarts after financial restructuring.

In Finland, leasing was strong and the rental market is stable, resulting in an improved occupancy. The retail market was also stable in Belgium, where occupancy rose during the year, but dropped during the last quarter. This was due to friction vacancy in Nivelles.  

Leasing activity was high during the year, with 444 leases, rotations and renewals signed. Like-for-like rental growth was strong in Finland and solid in the Netherlands. In Belgium, like-for-like rental income decreased by 1.1%. This can be attributed to the strategic decision to implement free parking in Genk, which resulted in a loss in parking income (-1.6%). In France, like-for-like rental income decreased by 7.0% overall, due to the decrease in occupancy, lower rents and more bad debts.

 

Overall, there was a negative revaluation of € 65.0m. In the Netherlands, the value of the portfolio decreased slightly by 1.7% (€ -25.2m), which was caused by a negative revaluation of three properties in less sought-after locations. The value of the other properties in the Netherlands on average remained stable. This shows the ongoing polarisation in retail, where the other 13 of our 16 shopping centres clearly are attractive to retailers and consumers. In Finland, a negative revaluation of 1.5% (€ -8.9m) was caused by non-yielding maintenance capex and fit-out contributions, partly related to the complex inclusion of the Finnkino and its adjacent relocations. In France, the value of the portfolio went down by 4.9% (€ -45.5m), mainly caused by pressure on rents. In Belgium, the value of the portfolio increased by 1.7% (€ 14.6m) due to yield compression from recent market transactions (Woluwe and Charleroi) and an upward revaluation of the Tournai development project. At December 31, 2017, the loan-to-value ratio amounted to 40.7% (December 31, 2016: 39.0%).

In respect of the year 2017, a final dividend will be proposed of € 0.77 per share. This implies a full year 2017 dividend of € 3.08. The ex-dividend date is April 24, 2018. The dividend will be payable as from April 30, 2018.

For the year 2018, we anticipate a slight decrease of the direct result. The direct result per share for 2018 is expected to be between € 3.30 and € 3.40 per share, assuming a stable portfolio. The decrease is caused by our continued asset rotation to improve the overall quality of the portfolio, the full-year impact of stabilising rents in France and one-offs in 2017. 

Wereldhave announces a one-off reset of the dividend level from 2018 to ensure a sustainable dividend going forward. We see that the rapidly changing retail landscape is causing a structural higher need for capex. It requires continuous efforts and investments to keep shopping centres up-to-date and catering to the needs of visitors and retailers.

With a dividend level that is covered by free cash-flow from operations, Wereldhave will be able to continue to raise the overall quality of its portfolio through ongoing asset rotation, focused refurbishments and extensions, high quality tenants and an improved customer journey. This will improve our risk profile. Over the past twelve months we have carefully analysed our centres against the background of the ongoing trends in the retail landscape. This has resulted in an identified capital expenditure programme that will improve the customer journey of our visitors and the overall quality of our centres, now and in the future. The plan will be executed in an efficient way by taking advantage of the benefits of scale of a well-defined overall scheme.

To allow for these measures, the dividend pay-out range for 2018 and onwards will be lowered to 75% - 85% of the direct result (currently 85%-95%). For the year 2018, a dividend will be proposed of € 2.52 per share. The quarterly dividend will be set at € 0.63 per share.

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