Earnings call transcript: IGD sees 2024 net result turnaround, strong FFO growth

In its full-year 2024 earnings call, Immobiliare Grande Distribuzione (IGD) reported a significant turnaround in its financial results, with a group net result swinging from a loss of €81.7 million in the previous year to a profit of €30 million. The company, currently valued at $438.11 million, has demonstrated strong market performance with its stock trading near its 52-week high of $5.70. According to InvestingPro data, IGD maintains an attractive P/E ratio of 6.92, suggesting potential value for investors. The company also reported a full-year funds from operations (FFO) of €35.6 million, surpassing guidance by 5%, and projected a further increase to €38 million in 2025. The announcement highlighted IGD’s strategic focus on digital innovation and sustainability, alongside strong operational performance.

Key Takeaways

• IGD achieved a 5% FFO increase above guidance, reaching €35.6 million.
• The company swung to a net profit of €30 million from a previous loss.
• 31 new brands were added to IGD’s shopping centers, enhancing its retail portfolio.
• IGD’s sustainability efforts included reduced energy consumption and waste optimization.
• The company anticipates asset disposals in Romania worth €10-12 million in 2025.

Company Performance

IGD’s overall performance in 2024 marked a positive shift, with the company recovering from a net loss to a healthy profit. This improvement was driven by higher net rental income, which increased by 4.6% on a like-for-like basis, and a 4.1% rise in core business EBITDA. The company’s strategic initiatives, such as the addition of new brands and digital innovations, have strengthened its market position in the retail sector.

Financial Highlights

• Full Year FFO: €35.6 million, 5% above guidance
• Net Rental Income (Like-for-Like): Up 4.6%
• Core Business EBITDA: Up 4.1%
• Group Net Result: Improved from €-81.7 million to €30 million
• Loan-to-Value (LTV): 44.4%

Outlook & Guidance

Looking ahead, IGD has set a 2025 FFO guidance of €38 million, reflecting a 6.7% growth from 2024. With a beta of 0.69, IGD shows lower volatility compared to the market, potentially offering stability-focused investors an attractive opportunity. For deeper insights into IGD’s valuation and growth potential, including exclusive financial health scores and detailed analysis, explore the comprehensive Pro Research Report available on InvestingPro. The company plans to dispose of assets in Romania valued at €10-12 million, which is expected to contribute to the projected growth. IGD is also exploring potential growth opportunities through a newly established REIT vehicle, aiming to capitalize on favorable market conditions.

Executive Commentary

CEO Robert Zoya emphasized the company’s commitment to growth and innovation: "We really took down the wall of 2027," he stated, indicating a long-term vision for expansion. He added, "There’s a will by IGD to go back to growing," underscoring the company’s proactive approach to enhancing its retail offerings and tenant relationships.

Risks and Challenges

• Market Saturation: The retail sector’s growth could be hampered by increased competition and market saturation.
• Macroeconomic Pressures: Economic fluctuations in Italy and Romania may impact consumer spending and retail performance.
• Capital Expenditures: A cautious approach to capital expenditures could limit IGD’s ability to rapidly expand or upgrade its portfolio.

Q&A

During the earnings call, analysts inquired about IGD’s 2025 guidance, which includes the expected asset disposals in Romania. The company confirmed that its performance in January and February 2025 has been consistent with 2024 levels, and it is engaged in positive tenant negotiations, reflecting a stable operational outlook.

Full transcript - Voya Global Equity Divid Premium Op (IGD) Q4 2024:

Robert Zoya, CEO, IGD: Good afternoon. This is the protocol operator. Welcome to IGB’s Conference Call Presenting Full Year twenty twenty four Results. Let me remind you that all participants are in listen only mode. After the presentation, a Q and A session will be held.

To be assisted by an operator during the conference call, press and 0 on your call. Now turn the conference over to Mr. Robert Zoya, CEO of IGGD. Zoya, you have the floor. Welcome to all of you.

Good afternoon. Despite the weather not being very, very nice, let me still share my optimism with you because the results we will be disclosing to you, I hope and I’m sure they are in line with what the progress in 2024. And even though we still have a long way to go, let me say that the results we achieved, I must say I’m proud to present those results to you. Let’s follow the presentation. And as you can see on Page three, we have all numbers that are a positive sign.

It was signed before them, both tenant sales and malls and hypermarkets, they are all growing and all footfalls are also growing. And shopping malls and retailers are doing well so far, also provided as a figure by the collection rate in 2024, ’90 ’8 point ’4 percent for Italy and 97% for Romania, so it’s definitely a positive one. If we move to Page four, we see our results. We see our financial highlights. We have upsides from either rules or remarketing up 4%, the upside is up 4% and Romania is up 3.8%, occupancy went up too and our world went up too and its weighted average lease break.

Ever since the first call I had with you, I had already announced that it’s one of the indicators we were going to work on. And here again, looking at single quarters, both upside occupancy and the extension of our contract duration and of WALT weighted average lease break. They’re all growing, so we are fully in line with what the guidance we have provided to you when we disclosed our business plan in November. So core business, both on tenant side and concrete side in Germany, definitely positive net rental income on a life for like basis is up to 4.6. And also core business EBITDA is up 4.1%.

And here we have the first novelty compared to what we normally disclosed in the past. And this is the result of the work we made on our core business because you’ll see that on the finance side of the business, there are also some weaknesses to be recorded. With giving you a 34,000,000 guidance, we are closing with FFOs landing at 35,600,000.0, which is almost 5% more than the guidance we have given the market. And that, of course, is thanks to the results we achieved in our core business. If we look at the market from a general perspective, we are on Page six of the presentation, about beyond fluctuations when it comes to PTPs or Govis, retail versus other asset classes, retail and retail is still the one with the best or highest yield.

And we’ve proven over the years that the Italian market has been stable, has been consistent. Also, consistency wise, it’s been consistent. And this year, we’re starting to see very interesting growth coming up. And retail, a lot of transactions for retail were about billion. It was the number one asset class, so more than AFFTIES and Logistics, and we haven’t had that kind of figure for many years now.

And the results that you see, meaning our portfolio, our core portfolio, so hypermarket and supermarket in Italy, but also valuation wise, is flat. And why is that? And because there were, until the end of last year, 2024, there were no yield compurchments. And so it’s flat because it’s standing its ground, thanks to the way we managed our assets and thanks to the, of course, the increase in net rental income and fees. Page eight, we reconfirm our guidance, 44.4% LTV.

A year ago, it was one of our attention points. After the disposal, we completed April 2024. We had a benefit of three seventy basis points versus 2023. And then eventually, last but not least, as promised, I remember the first call we have together the first quarterly report in May 2024. It was my I have said that it was my personal mission and the mission that I was entrusted with by the Board of Directors, The Board of Directors had appointed me.

The mission was to go back to pay out dividends. And for us, as being a REIT at CQ, this is something we have to try and pay out. It’s a limited dividend payout. And I believe that and I am confident that our shareholders should see dividend visibility in the medium and long term. But I’m talking about sustainable dividend distribution and in line with the share price as well.

So I am very pleased to be able to say that the Board of Directors resolved upon submitting to the AGM a point, well, a dividend per share payout. As we went through a year of major changes, the result is what I’ve just announced. So in April, we had a new governance put in place. We disposed of our food portfolio, and it was a preliminary transaction to refinance our debt that we just completed, the presentation of our guidelines and of our business plan. And I’ll tell you more about it in a minute.

And the growth in revenues, footfalls and in the side coming from renewals are the offsprings, are the outcome of a very strong, very hard work leasing activity. In this company, we try and capture anchor tenants that can help and support the performance of all of our shopping malls and shopping centers. Here are some examples. 31 new brands were added, and that means a very, very intense scouting work that we have performed. And we really captured brands and tenants that are of major importance, of paramount importance to support controls and revenues.

We worked a lot and we were very committed to digital and innovation. And now I believe there’s no clear cut separation between physical trade and digital trade. Everything is omnichannel. We’ve invested a lot in digital solutions. We have seven apps that have remained available in our shopping malls.

Week after week, they are contributing and helping us to profile our customers and therefore being able to provide them with the best and best suited propositions. And it was a very, very interesting activity appreciated by retailers, and they are increasing the potential of these apps. They give us exclusive products that can only that will only be given exclusively be given to the clients of our shopping centers. And we have, of course, worked on tenant platforms providing digital solutions for them too. There’s a proprietary application for the shopping mall antennas to really exchange data, data about turnover and other types of data so that data can be easily tracked on our side, ensuring us a much better visibility than we had in the past.

And then small media, this is very much appreciated by our tenants. We have digital total terms and we enable them to propose product promotions and this becomes a revenue source, just like the physical kiosks that you have in shopping malls such as specialty leasings. And therefore, they can enhance income through Media Retail. Let’s now move on to Page 14. It’s very interesting to see the work we did on our like for like portfolio where we actually started in 2023 with 119,600,000.0 net rental income, and we lost about 10,200,000 over time.

But at year end, we lost less than 6%. So like for like data, four point change in the delta of 4.1%, thanks also to the great work we did with Romania cost wise, led to results that we lost 10,000,000, but we recouped a good amount. And the same applies, I’m not going to bore you with EBITDA figures, but it’s the same dynamic that we have with net rental income. It was CHF 108,000,000, then it went down to CHF 102,000,000, but we got to CHF 110,000,000 thanks to the well, we lost some of it through the disposal. So on Page 16, we have financial management.

So transactions we embarked in in 2023, especially the bond we had, we issued for 2023, really made our financial position a bit heavier somehow. And that led to a, has an impact on FFO Despite growth in our guidance, it’s still affected by what I just mentioned by and we’ll get back to the financials. If we look at the FS1, Page 17, it’s very interesting to see that most of the advantage comes from the core business EBITDA delta. And then, of course, we are penalized a EUR13.2 million of financial debt versus 2023. The GroupNet result, we’d already looked at it in June.

And of course, the one shot impairment we had was had a strong impact that was carried out after the disposal. There was a 40% stake in the fund, we have a 40% stake in the fund that holds all the assets as it was a one shot impairment. It cannot be replicated in 2025. And then we have the weight of financial charges. But as I said before, we also have a big benefit first in terms of lower write downs, lower impairments.

So we start from a group net result of 81,700,000.0. Despite the big impact of our financial position, we closed at 30,000,000, we landed 30,000,000 knowing that there was an impact of coming from the million impairment, the impairment or write down on the stake. That was a one off and it will not be replicated in 2025. But the difference, the delta between a loss of 81 and instead a positive and profitable net result, well, that pathway, I think, has been laid out pretty well. Let’s have a look at our net financial position.

Of course, we had our NSP net financial position improved 100,000,000 to $8.00 6,000,000, thanks to the proceeds from the disposals. And after the refinancing, well, I’ll tell you about the duration in a minute. Let me I’ll try and advance one of the questions that may be asked. After we issued the press release on a refinancing project, the idea of refinancing was to extend duration and to eliminate the cliff we have in 2027 and be confident again. So it was a monthly transaction, million with all banks to, that had to find an agreement.

So it was a bit of a headache, but we managed. We do not yet feel or have the benefit of it all because we still have to work on it. But as you can see, we have reduced our average cost of debt by 34 basis points. So for post refinancing, we’ve both focused on duration and we’ve started to cut the cost of debt. In order to be clearer about figures, portfolio figures, I put this slide, I put in the slide on Page 20, so you see the organizational structure of our companies.

The two funds, Juice and Food funds, who have a stake of about 100,000,000 that can be added to the freehold portfolio. And we have a small company. It’s living and sports facilities here in Bologna, El Parco Campus. And we have IGT service SRL, which right now is focusing both on services on both freehold and leasehold assets. And then it has we have the two main states in Romania.

And what is left of the Livorno project, apart from Editsche, we still have eight final notary dates for the selling of a parcel apartment and then three areas that will be disposed of. And then also to not a single as to the will we have to grow, we have set up in December, we have established a company called Alliance and we asked to be established as a STIMC is a non listed REIT practically. Now it’s an empty box, but we have eighteen months to fill that box. And that will enable us, as starting from 2024, we have we already established an SPV that is denominated as a non listed retailer or CPU. It will be able to exploit growth opportunities.

We do not have anything yet, but just to be sure, we set it up to be ready to grasp opportunities. That’s why I also put it in this organizational charge. The portfolio value includes stakes and it’s 811,000,000,000. And I gave you this organizational chart because in the next slide where you see the portfolio market value is 1,537,000,000.000. And you will see again in Slide 31, it’s the core portfolio of shopping malls and hypermarkets.

And then we have Romania. A few small assets in addition to the Livorno areas. And then we have two holdings or two stakes, the two stakes. Unfortunately, in 2025, and it will expire in 2026, the first master lease will expire in 2026 and the other master lease will expire in 2027. The international principles will expire and we will evaluate those two master leases.

The value of those two master leases will have to be brought to zero. So every six months, we have an impairment. We have a write down, and that has an impact on our lease portfolio of 6,700,000.0 because of these two master leases ending between 2026 and 2027. And you will see in the Annex details about these two master leases. And the Aprilaire indicators, we have an increase of FFO and a lower total value of assets because of write downs or impairments.

So NRV lands at 8.9 score for full year 2024, but still hyper discounted versus the actual value. And the Board of Directors approved, this morning approved our profitability report, and it’s one of the levers that we really want to rely on in our day to day business. Because going forward, it will be very useful for us not just to be sustainable and to respect the Earth, but it will also lead to profitability. So the main effort is to focus on reducing energy consumption. As you see, we have a sizable we have achieved sizable savings in energy consumption.

We’re working a lot with our consolidated collection, waste collection. That can become another lever we can use from an economic perspective as well. And the new governance is really we have a special committee, it’s a strategy committee that will be part of the new government, providing strategy in compliance with the CSR so that the market will become aware of how we deem sustainability very important. And I’ve talked about the new brands. I’ve talked about the fact that our shopping malls are very much tied to the geography where they are based.

And of course, they would generate economies of scale provided by the shopping malls to have a social impact in the geography where they are located, impact on jobs, to have an impact on the environment. And we think that shopping malls are of talent importance, are really providing the best possible social impact in the local area. Being a friend of the local area means having more loyal customers means having customers who come and see us more often. And I’m on Page 25. I think twenty twenty five started in the best possible way because it was very important to have good funding for based on the setup we have.

November, we signed the green ticket facility agreement. On February 14, we sold the first assets of our Romanian portfolio. And as we are a listed company, the news were, of course, reported by Romanian media as well. So right now, on Romania, there’s a lot it’s a very buoyant market, if you wish. And if you remember, when we presented the business plan, we said 20,000,000 worth of disposals for Romania during this year, during 2025.

And I think that with all the negotiations we have started, we really will be able to hit that target, the million target. We’ve already cashed in the first transaction and it went very well. And then March 4, we repaid existing law with the banks, which had agreed a differentiated drawing. On February 11, we had withdrawn the first drawing of B tranche. Tranche A was drawn on the first to be able not have a negative carry.

And on the fourth, we really repaid the two bonds that were for November 2023 bonds that had costs and constraints that were very strong for us. And on Page 25 now, I think we I already said that the first time I talked to you. I think that 2026 and 2027, well, the 2027 was worrying everyone and the refinancing put us in a confident and comfortable place. That means we’re not anxious to have to deal with maturities that are too close. And at the same time, however, I have to say that we’re not going to stop there.

And the part, the cost part, the cost of debt part has to be addressed with other tools as well. And we retain two ratings. As you said, the two ratings were confirmed. And this is very important for our debt capital market purposes because we will be able to address the market. It’s not useful to be in the market too often, but we have to be very careful and monitor what is happening in the debt capital market.

The target of a possible transaction or deal could be aimed at cutting the cost of debt if we had to somehow reshuffle our refinancing to have just a few basis points of advantage versus the issuance. In that case, that would be quite small versus that vis a vis that Transcati wealthy. If we have a strong reduction in the cost of debt, it will be very favorable. We have an issuance at a lower cost. We free up assets with the refinancing of $6.50.

You’re well aware of what happened with that. And we have restored a balance between debt towards bank and debt towards the market. So this is an objective, a goal we have. Plus, of course, we need to have the right conditions, market conditions about to happen. And I’m very happy to be able to say that I really put down or broke the wall of 2027.

We really took it down, and I’m really happy about that. We can go to the market with a different sense. If your maturities are too close, of course, you undergo difficulties. And well, the 2027 wall came down. Having said that, we want to carry on focusing on occupancy, on appetite, on wall, on retaining assets assets and cutting costs.

The guidance we feel confident to provide for 2025 is 38,000,000 FFO, up 6.7% versus full year 2024.

Unidentified Speakers, Various (Analysts), Various (Intesa Sanpaolo, Mediobanca, Banca, BNP Paribas): We and therefore, I’m always available twenty four hours a day anytime, also outside official institutional locations. And therefore, feel free to ask and you will receive our answers. And now I leave the floor to you for any questions. Thank you. Thank you very much.

So now we will start to the Q and A session. The first question comes from Aranya Odeyakse from Intesa Sanpaolo. You have the floor. Good afternoon, Roberto, and thank you very much for your presentation. I have a question concerning the guidance for 2025.

If you can elaborate more on the increased debt cost? And can you confirm the perimeter? Because as far as I understand, you are confident with your target as to the disposals in Romania. And I would like to know whether the guidance is on a like for like basis or not. So please, can you confirm your payment there as well?

Well, no, Ariana. This thank you for your question. This is consistent with our business plan assumptions. So on the one side, we have the disposal of some 10,000,000, 12 million in Romania. And in that case, we would lose some net rental income, but then with growth and with less repayments as we because we would deduct the debt as we go along.

And therefore, we will reach million. So it’s based on the business plan, including also the disposals. In any case, the guidance today, I give this guidance today and I’ve already lost about 700 of net rental with the disposal of crude. So this is the strongest assumption. And then as to the cost of debt, we made some forecasts in terms of revenue sorry, of rate curves.

As you know, until recently a couple of weeks ago, the sentiment was that it would be already 50 basis points, but actually now we know it’s just 25. And I think that, well, I watched the press release and I didn’t see significant answers on the part of the ECB. But we expect a decline resulting from the two components, the decline of rates on the one side. Actually, we put the little star, that is, floating rate. And then we will see if we can do something better.

But it’s the like for like growth that we intend to have with our assets. We have some new initiatives in progress, and we certainly hope to achieve some more upside. Thank you. La Prosima, next question is from Simonetta Quirogui from Mediobanca. Good morning, everyone, and good afternoon, everyone.

I have a question on asset disposal. In the second half compared with the first half, did you have any changes? Do you have any major changes? Because if we look at Supermarket for full year, it seems the value is worse than what was expected in the first six months in the first half. And also, so what are expectations for 2025?

Yes. Thank you for your question. Well, in the second half, we had no yield declines because actually the discount rate was flat, the net exit rate was flat too. And actually, you noticed for hypermarkets, in particularly the one in Naples, we had a reduction. We had a decline, but this was because of a perimeter reduction because we opened it on Saturday, and we didn’t make a clear distinction between the situation, like for like situation because actually this hypermarket lost value, but this was soft offset by the increase in value of the mall.

As far as rates are concerned, the assessment of the experts wasn’t particularly aggressive. And actually, our average discount rate went down by less than five points considering the full portfolio and also the net exit went up two points. And what I expect, and I have to say that also in the with the auditors in the calls we had with the auditors because they wanted to have visibility about everything, we had finally, there was some optimistic sign that these yields could go down? It depends on the estimate. The next one is in June.

And so the assessment, the appraisal will be done in May. Perhaps, let me say it once again. The fact we had billion of transactions is the first message. I remember 2014, ’20 ’10 and also previous years when first we have the volumes with some opportunistic transactions and then, and this is followed by the yields. And so it’s important that we had some transactions that were also of core tenants like I feel Tugmillan and Palermo.

So I think that and then I hear that every day. I think that there is quite a lot of serious appetite in the retail sector for the retail sector because we have to be honest. Over the last four years, we’ve had all sorts of things. We had COVID, we had hyperinflation and so on and so forth. And so we hold pretty well.

The true element to be monitored is consumptions, consumption trends. So as far as consumption is concerned, the situation is still unclear. But if we look at some commodities or some products, especially personal care products and also jewelry, fragrances, well, they have very interesting results. As far as restaurants, that’s also interesting too. And the clothing is holding well.

Therefore, I hope that the first six months of 2025 will bring some good signs. I don’t expect great results, but about BRL1.800 billion for us. Also twenty five and thirty points of decompression of one of the two rates. So that could be definitely a benefit.

Robert Zoya, CEO, IGD: If I may ask a question in the small liquid market. This company that you set up, this vehicle you set up, when do you think it will start really operating? Will it start soon? Or could you elaborate on this project? And how it could be used, how this vehicle could be used?

Thank you, Simoneta. Let’s spend a minute to tell you what we mean by C and K’s non listed REIT practically. And it’s and of course, in compliance with the law. The law was amended three years ago. In the past, you could have a retail you could have this sink company if it was held by 90 well, 95% was held by a SIC.

And now it’s a different amount. So it has to be controlled by a SIC by 51%, but the 49% partner can benefit from the same zinc regime, FII and Q, and there too there are dividend payout duties, but the taxation is levied on dividend and not on the company. Why did I set up this CINC vehicle? Because as I said, it could be an aggregative box somehow. What do we mean if we have, imagine, portfolios, if we see portfolios that are out there in SRLs or in funds that are about to be closed, if you contribute the portfolio to a company in a sink, the contributor could have benefits.

And it’s an accretive type of deal because IGD, in addition to its own assets, will have assets contributed by a third party. So they think will increase NAV and provided the portfolio, the contributed portfolio will go to the benefit of the contributor. And as I said at the beginning, we told you about this SYINC vehicle, SIIN2. And according to the law, there’s eighteen months, You have eighteen months to actually fill that box with content. Should we not do anything within eighteen months, it will stay a box as it is, a vehicle as it is.

But I’m very fast. I’m a fast mover. So maybe in eighteen months, over these eighteen months, we will get a nice opportunity to grasp. There’s a will, and it was reinforced by the board this morning, there’s a will by GD to go back growing to growing. And as I said and let me reiterate it, this morning, the Board really stressed the fact that we want to grow.

And so this, I think, is an opportunity. There’s nothing in it now. But today, I’d like to really stress the fact that we are looking forward, looking ahead. We set up a company. We defined a regime for it.

And it’s a good opportunity. In other European countries, it’s a tool that’s used very often because it enables those who have regimes with a different tax regime to contribute them into the SPV and benefit from this tax regime that I’ve just mentioned that is advantageous for the contributor, beneficial for the contributor. Thank you very much. The next question comes from the line of Francesco Sala with Banca I have two, three questions. First one is on the performance for the first two, three weeks of the year.

What have you seen for shopping malls? How are tenant sales fairing for the first few months of 2025? CapEx plan for 2025, Ever since the year started, can you reconfirm the guidance you gave in your business plan? And one more thing about tenants. What is the response you’ve had to, in terms of renegotiating rent?

What do you see when you interact with tenants? Thank you. Thank you very much for your questions. Let me try and answer them in the right order. Both January and February showed basically the same performance we had last year, same trend we had last year.

If I want to be really precise, twenty twenty four Q1, we did not perform really well, all too well. We are slightly better than Q1 twenty twenty four, so we’re still seeing this improving trend. Last year, if you remember, both footfalls and revenues, we started seeing results starting from Q2. But given what we saw in January and February, we’re in line with that performance. Finally, we no longer have the weight of installation.

What we have to do, we have done. And when faced with new openings or maturities that are very close, Sometimes with the tenants, we say let’s extend the contract by three years but without break option and then maybe we have the first proposal with a 10% discount that I then recover over time. From a product category viewpoint, you also mentioned what kind of product categories. Personal Care was good. Very interesting is that we have some leasing and renting on maybe non valuable areas.

Low cost teams are being introduced everywhere. That’s good. And then there are some categories, product categories that we call fruitful oriented business action, the brand action. In the past, they used to go to small isolated retail parts. There was a discount maybe, such as Acquesta phone and selling personal care products.

Today, they want to enter shopping malls as well. And when they open, the amount or the footfall they generate is really incredible. So from this perspective, on Tuesday morning, I met with OBS and we have a lot of stores with them. And I told them, well, finally, we meet at a time of peace. And it was a very pleasant meeting.

We didn’t have to have a bargaining or a strong negotiation with them. They are a strong customer, but they I was very happy the way the meeting went with them. It’s clear that we have to work hard. They liked the digital ideas, the ideas of co marketing we can do together. What we told them and what we told other big change is not so much saving on cost but spending better from a marketing perspective.

It’s useless to have marketing for one marketing for a shopping mall and another marketing strategy for the 100 different stores I have in the shopping mall. But if we join forces and work in a more structured way, maybe we can do well. And today, we opened some very good channels as far as common activities are concerned of the S, TEDI, Kiko. It’s hard work indeed, and our teams are working with their teams, and they meet very often. And what I’m seeing is that we are building a new landlord tenant relationship, and that will indeed lead to results, meaning lower costs but also improved performance.

So today, now retail is faring well. As I mentioned, these chains have come from Eastern European countries, the Sanpei, Petco, for instance. And they are really helping us improving our occupancy levels because they are very aggressive in their policies and they maybe address the market. And now, for instance, for restaurants and catering, today, you know that funds are acquiring a lot of stakes in the restoration and restructuring investments in capturing chains. So this is very helpful for us.

And then we’ll see. We have to wait and see. A selection will have to be made eventually. But if you want to spend some media, ARC, CGR, yesterday, we heard the news. They will do a lot of development in that respect.

And for our clients, for our tenants, it’s very good to have that kind of deployment in the shopping malls. And retailers are also finding, trying to find investors who are willing to strengthen the supply chain and really enhance it. But that is really helpful to develop food falls in our malls. Next question comes from Giuseppe Grimaldi, Vidente Paribas. Good afternoon to all of you.

Thank you very much for your presentation. I have a very quick question from an operating viewpoint. This year, are you going to replicate the same net rental income you generated last year, maybe a single digit growth, mid single digit growth as you did in 02/2004? And to what extent is that driven by occupancy or driven by just discount and maybe an indexation trend, inflation indexation trend. Yes, you were right.

Those are the two factors. On like for like, we expect to be up 4% and then we want to fill in basis. We want to increase occupancy because, of course, that generates a double benefit. You get rent on the one hand and you have less expenses for unrented spaces. And in the 38,000,000 guidance, FFO guidance we provided, I think it’s a good mix.

We have occupancy upside and reduction, cost of debt reduction And maybe, of course, sorry, not maybe, we will, if we could lose revenues through disposals, but disposing of assets to improve our debt, our NFP is also important. And also with out of respect for all the funding banks, for all the banks in the pool, what we get it’s also used to repay. Oh, in the previous question, I forgot about CapEx plans. Last year, we had slowed down on the CapEx side. Right now, we are only investing for sales purposes, for commercial purposes and to, for instance, improve efficiency.

It could be either equipment or photovoltaic systems. On the remodeling side, we are trying to be cautious because every morning when we get up, there’s a novelty to address. So we try and be conservative. I cannot give you the exact impact. But generally speaking, we should be below the 23,000,000 we included in our business plan.

Thank you very much. One more clarification on the guidance regarding 38,000,000 FFO. Today, include the negative component you expect to have from the disposals you will be completing this year? Yes, exactly. It does include that.

More than this, I don’t know what to do to make you happy. But I look at the share price that it’s not really going up. But Giuseppe, yes, you are right. The $38,000,000 FFO also embedded in addition to the $700,000 we lost in ’20 since the 2014, we also embedded $10,000,000 12 million dollars worth of disposals, which means also a decline in reference net rental income. Thank you very much, Roberto.

Yours was very clear. And also bear in mind that for 2025, the first quarter still included are we still have the disposed portfolio. So when we come up with the first quarter, Linn, for Q1, you still see a minus sign because it’s not 10,000,000, roughly 10,000,000 over three quarters of Q1 twenty twenty five, we will still have a comparison with 2024 with food portfolio. Thank you very much. Thank you, Roberto.

Very kind of you. For further questions, Mr. Zoya, for the time being, there are no more questions in the queue. Very well. Thank you very much to all of you and see you next time.

Thank you.

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