LAMDA Development S.A. (LAMDA.AT) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Mina, your Chorus Call operator. Welcome, and thank you for joining the LAMDA Development Conference Call and Live Webcast to present and discuss the first half 2025 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Apostolos Zafolias, Chief Strategy and IR. Mr. Zafolias, you may now proceed.

Thank you. Good evening, and thank you all for joining us to discuss our results for the first half of 2025. During the period, we delivered strong results across all segments with record results for the malls accompanied by significant and long overdue revaluation gains, record results for the marinas, albeit the fact that vessels are being moved out in preparation of the renovation works. And over EUR 53 million of EBITDA for the Ellinikon, 7x higher year-over-year on the back of strong residential and property sales as well as accelerated construction progress. I note that these record results were also followed by the following events that are past the June 30 date. First, the repayment of our EUR 230 million green bond in July. And second, the beginning of a transformational EUR 450 million transaction with the ION Group to develop a global R&D and innovation campus, a transaction that we expect to have a great benefit not only to the Ellinikon development, but also Athens and Greece as a whole. For us, it launches the business district, the final component of the master plan with a significant way. It establishes a true innovation hub, which we expect will draw more high-caliber companies in the future. It anchors the Ellinikon as a world-class destination, attracting global partnerships and international demand. And finally, it reaffirms the value of our residential land plots. If you consider that the valuation for the AU5 area, which is the exclusively residential part of the transaction, was at EUR 2,250 per square meter. Further to this data point, we note that during the second quarter, we also signed SPAs for the sale of an additional residential land plot at EUR 2,700 per square meter, further improvement on the EUR 2,250. And also, I note that on the EUR 2,250, that is a considerable size transaction. I remind you that the ION transaction was EUR 450 million for 250,000 square meters GFA in total. So at the Group level, consolidated EBITDA reached EUR 237 million, over 4x higher on a year-over-year basis, reflecting the strong momentum across all of the businesses in our portfolio. The Group's net result reached EUR 128 million as compared to losses in the first half of 2024. All of this led to a substantial increase of our NAV to EUR 9.22 per share. And that I noted before the contribution from the ION transaction and before the significant upside in the market value of our residential land plots as compared to their book value. I also note that trading volumes on the stock have moved significantly up over the past couple of months to exceed about 500,000 shares on average traded daily. Now I'll go into a few words for each of the segment, which Harris will analyze in more detail. Specifically, our Malls delivered their strongest first half on record. Retail EBITDA from our operating malls reached EUR 45.5 million, extending 3 consecutive years of steady growth and setting new highs across nearly all of the KPIs. The Malls bottom line results were also positively impacted by EUR 130 million increase in the valuation of the 4 operating malls, primarily due to a compression in yields. Also strong commercial progress of the malls under development was further established. 78% of the heads of terms have been signed for the Riviera Galleria, which is the first mall to be completed and 64% of heads of terms were signed for the Ellinikon Mall, the second moll to be completed. The success of this strategy to create unique destination also carries over to the Marinas. Those registered another record operating EBITDA of EUR 10 million or 5% higher. This is especially impressive considering that vessels were being moved already out of the Agios Kosmas Marinas for the renovations. The Ellinikon's EBITDA was EUR 53 million, over 7x higher on a year-over-year basis, and that was driven by both a significant increase in revenues of sales from residential developments and land plot sales as well as the construction progress. While the construction market does remain difficult, as we have highlighted in previous calls, our internal construction business unit continues to expand its capabilities while delivering solid progress on time and on budget. I will now hand over to Harris Goritsas, our Group CFO of the call, who will walk you through the key highlights of the financial results.

Thank you, Apostolos and good evening to all from my side as well. I will begin with an overview of the key financial highlights across the Group's 3 main business segments that are Malls, Marinas and Ellinikon, followed by the most important highlights at the consolidated Group level. So let's start with LAMDA Malls. Our 4 operating malls delivered another record performance in H1 2025 with a retail EBITDA reaching EUR 45.5 million, up by 4% year-on-year. This was driven by a 6% year-on-year increase in base rents, a 9% rise in parking revenues and very important, a solid operational momentum, mainly higher footfall by 3% and tenant sales hitting an all-time high of almost EUR 390 million. Construction is underway on both new destinations with concrete works in progress across all Riviera Galleria buildings, while excavation for the Ellinikon Mall is complete. The structural works contract for the Ellinikon Mall has been awarded to Terna very recently, and it's set to begin before the end of this year. As of June 2025, the total gross asset value of the LAMDA Malls Group exceeded EUR 1.7 billion with the value of our 4 malls in operation currently reaching a new record high of EUR 1.3 billion. For a detailed analysis of LAMDA Mall's financial results, please refer to Slides 15 to 19 of the results presentation. Now turning to the Marinas segment. It continued its strong growth trajectory, achieving record results in H1 2025. Total revenue reached EUR 16.6 million, marking an 8% increase compared to the same period in 2024, while EBITDA grew by 2% year-on-year to EUR 10 million now. This strong performance is driven by sustained demand at our 2 Marinas, supported by higher revenue from yacht transits and an annual contractual fee uplifts. At Agios Kosmas Marina, best capacity, as Apostolos mentioned, is being gradually reduced to enabling major upgrades and reconfiguration to host larger yachts. These enhancements, while will have a negative short-term impact in our financials, but on the other hand, are expected to further boost annual revenues once completed. Details on Marina's performance are available on Slide 20. Let me now turn to our landmark Ellinikon project and highlight its key achievements to date. As of 25th of August 2025, 522 out of the 559 units launched in the Little Athens neighborhood have been already sold or reserved. This represents astonishing 93% sale rate. Revenue recognition from residential developments in H1 2025 reached EUR 126 million, a 51% increase versus the respective period in 2024, starting to showcase the significant contribution of residential developments in our results as construction progress continues. Moreover, during H1 2025, EUR 104 million worth of revenues from property sales have been recognized, up 49% versus same period a year ago. As a result of this commercial success, total cash proceeds from sales and leases since the project's launch have reached EUR 1.4 billion as of 25th of August 2025 with cash collections of almost EUR 290 million in 2025. Details on Ellinikon cash collections are available on Slide 22. Reflecting now to the commercial strength of the Ellinikon, the project's total cash balance stood at EUR 355 million as of June 2025 versus EUR 290 million same period in Q1 and no bank loans have been drawn down yet for another period. In H1 2025, total CapEx reached EUR 181 million, bringing the total CapEx for buildings and infrastructure works from the start of the project and until end of June 2025 to EUR 744 million. Further details are shown on Slides 25 and 26. Now turning at the group level. The key highlights are as follows: Group consolidated EBITDA after valuations reached EUR 237 million in H1 2025, 4.4x higher than H1 2024, impacted by the positive operating results in all our business segments as we analyzed and by the surge of asset valuation from LAMDA malls, mainly due to yield compression of circa 55 basis points from operating malls at the back of European Central Bank rate reductions and Greece's macroeconomic indicators improvements. It is important to note that the European Central Bank has reduced its rate by 175 basis points during the period June '24 to June '25. So in the 12 months prior to our results, while yields for our operating malls have been reduced by our independent valuers only by circa 80 basis points during the same period. This implies further room of yield compression with positive, of course, impact into our financials. As a result, the group reported a net profit of EUR 128 million in H1 2025 compared to a loss of EUR 19 million in H1 2024. Details on EBITDA and net profit loss breakdown are shown on Slides 8, 9 and 10 in the presentation. Net asset value increased over 10% from 31st of December 2024 to EUR 9.22 per share, excluding the contribution from the ION strategic transaction and the hidden value for Ellinikon, as Apostolos mentioned and especially from the remaining residential land plots. Group total investment portfolio reached EUR 3.7 billion from EUR 3.5 billion in December 2024, supported by the yield compression in our Malls business as we elaborated. Finally, cash remains at healthy levels with EUR 700 million reported at the end of June 2025, and I have to say EUR 400 million as of now following the repayment of the EUR 230 million green bond in July 2025. With that, I want to thank you for your attention, and we will now open the floor for questions.

[Operator Instructions] The first question is from the line of Svyriadi Natalia with Eurobank Equities.

I would like to ask. Well, I have a couple of questions on the Ellinikon, but I will try to make them short. I would like to ask, first of all, about the residential developments on Little Athens. How many units are we thinking to put into the market going ahead based on the very good results we have until now. I would like to get an idea of what we are waiting for on this part. I also have a question regarding the operating expenses we saw in H1, which were lower by, I think, around EUR 10 million versus last year. And I would like to understand where this came from? And what should we expect going ahead in operating costs for the Ellinikon? And also congratulations on the ION agreement. I would like -- if you could give us a view of what this could trigger for the business district around it that you said that this could be a basis for other business district development? And how many square meters does this mean that we have and whether this could go ahead? So I would like around these 3 on the Ellinikon, if you could give me your answers, please.

Of course. Thank you, Natalia. I'll take 2 of them, and I will leave one for Harry. The first that you mentioned, the first was residential developments on Little Athens. So look, just to recap on what we have done to date. To date, we have launched about 560 units. Of these 522 or 92%, 93% have already been sold or reserved. What is left for Little Athens, we expect probably another 100 to 120 units through the end of the year. And then about 300 to 350 units starting to gradually be rolled out starting the first quarter of 2026. And that essentially rounds out, if you wish, the Phase 1. Important to note that just looking at the numbers, you're way past the mid mark, if you wish. You've sold or reserved more than 800 -- let's say, close to 840 units, and you have something like 350, 400 units left.

Which is more than we were expecting initially?

Well, the pace is accelerating in terms of what we have closed to date, if that's what you're asking.

Yes. Yes, exactly. Great.

Further on your question about the ION transaction. So look, I think the Ion transaction essentially establishes a great start to the business district. The business district is obviously the one that is to the left of the Ellinikon Mall. So the sort of simultaneous development of both districts is very beneficial. The square meters, I suppose, allocated to the ION transaction is about 180,000 square meters. So that leaves over 100,000 of square meters remaining unutilized because there's other square meters that are utilized by education and other developments, but a little bit over 100,000 square meters unutilized in that district that could draw attention from other companies, either for the development and sale of office buildings or leasing of office buildings. And we've already seen some interest to date.

And Natalia, let me take your question about the operating expenses, which is indeed lower this period versus last period for Ellinikon. Actually, this comes with 2 reasons. The first has to do with almost 50% of that is due to the higher base we had in last year because we had a significant amount of relocation expenses related to the sports facilities. We had to move them in order to start the works of the sports park. So it was a higher base by pretty much 50% of the base of the EUR 7 million improvement. And the other 50% comes from better payroll. And this has to do with the fact that as projects mature, it allows us for capitalization of payroll instead of expensing. And of course, we do also -- we are very cautious on continuing that path. And we aim for further rationalization and streamlining of expenses going forward.

Okay. That's great. I will leave others make some questions also and follow up if I need.

The next question is from the line of Caithaml Jakub with Wood & Company.

This is Jakub Caithaml. Congrats, especially to the land sale, which is very material. Also a couple of questions from my side. First, on CapEx, I was glad to see the ramp-up in the second quarter. Could you give us some idea about how it could go in the second half of the year? And maybe more broadly, how do you see the availability of labor? And could you give us some broad update on where we are with regards to time line of the key projects and budgets?

Sure. So in terms of CapEx, we had guided for EUR 500 million worth of CapEx for all of 2025. We have already achieved EUR 200 million, as you very well point out, on an accelerated basis on a year-over-year basis or even quarter-over-quarter, whatever you want to look at it. And we expect to meet our target of EUR 500 million through the end of the year. So that implies another EUR 200 million to EUR 300 million of CapEx for the remaining of 2025. As far as labor goes, look, I think that the labor market remains tight. I think that the construction market remains difficult. And I think that one of the big mitigants that we have done to date is to start the construction business unit, which as I mentioned before, is doing very well in the project that it has already taken on and delivering on budget and on time.

That's helpful. On the 2 Ellinikon Malls, the Ellinikon Mall and the Riviera Galleria, if you know this number, could you remind us the heads of terms that have been closed so far for each of the 2 malls? What is the rental income that the places which were sort of leased through the heads of terms or pre-agreed so far? What does it translate into? And another question related to this, can you update us when do you plan to start converting the heads of terms into leasing contracts?

Sure. So let's start with the Riviera Galleria, which is the first one coming online. For that, we are up to 78% of heads of terms signed to date at an average rate, which has also improved since the last time that we spoke to over EUR 85 per GLA. So that implies that the latest contracts are obviously done at higher levels in order to pull up the average. And contract signings have already started. And they're going to be happening fairly quickly for the Riviera Galleria because we're talking about completion of works next year. And then for the Ellinikon Mall, we are at 64% in terms of heads of terms. And those, again, at an improved rate of, let's call it, EUR 55 per GLA.

That's super clear. Also, I was meaning to ask a similar question on the resi. If you have this number either altogether or maybe excluding Riviera Tower, what is the average price per apartment in the residential first phase for the apartments that you have sold to date?

So we usually group it on the sort of coastal front and Little Athens. As far as Little Athens goes, the last reported number we gave was EUR 8,600 per square meters for all of those developments. And I will tell you that we haven't updated that yet, but it is improving still higher than the EUR 8,600 per square meter.

Understood. And a final question from my side. Could you share your thinking between the sort of balance of developing the rest of the Ellinikon yourself? Or are you seeing sort of opportunity? Or would you be even willing to sell another material plot or plots to third parties?

Look, I think the intention has always been to develop the Ellinikon ourselves and opportunistically look at land plot sales. Going forward I think that we have, as you mentioned, have done quite a significant transaction. So going forward, I think it will be looked at very specifically on a case-by-case basis, if anything. There is a small -- a very small number of residential land plots, if you wish, that we have thought of potentially selling in the short term. But generally speaking, we're talking about development, not sales.

Got it. And sorry, just a quick follow-up on the sale that you have closed recently. Can you remind us when do you expect to receive the cash? And when we will see the effect going through the P&L affecting the equity and the NAV?

Sorry, for the ION transaction, you mean?

Yes.

So look, we are in the process of completing due diligence. We've seen a very fast-moving pace on that. So we expect that to take a couple of months. Then we will be signing binding agreements. At that stage, we expect to get about 10% of it, so EUR 45 million. And the remainder would come essentially with the issuance of building permits.

I see, I see. And the building permits, is there -- so what is the pre requirements? I mean, does the buyer need to first design what they want to build?

Yes.

I see, I see. So this part could be more and more distant.

Sorry, say that again.

So it could take some time before the second tranche is paid out.

Well, look, we expect that -- first of all, just keep in mind that the experience that the team over here has built in terms of permitting and the process with the dedicated Ellinikon office has been very efficient to date. In terms of sort of expectations of time, we expect something between 12 and 15 months to have it all issued, if you wish.

The next question is from the line of Murphy Andy with Edison Investment Research.

It's Andy Murphy rather than Murphy Andy, but anyway, one question, just thinking about the revaluation on the malls. I think the revaluation was perhaps overdue. So I was just wondering why the valuers have moved now you've got a situation where short-term rates have been moving down, long term have been moving up. So I suppose the question is why now?

Why now? Thanks, Andy. That's a very, very good question. And actually, we were also on your thinking so far. The blunt answer is that our valuators, independent third-party valuators, which we have a long-term relationship and we value a lot are quite conservative. So they wanted to see the ECB progress and stabilizing the ECB progress. Now we know that it's around 2%, the ECB rate from 375. So this is 175 bps. And now it seems that it has been stabilized on that level. And then the other thing that our valuators were waiting was to see the progress of the Greek macroeconomics and economy in general. We have now the rating improving as Greek state. So this triggered a gradual, let's say, release of this variance between what we have in valuation versus what the true divergence will be through time. So as I said to my opening speech, we have received almost 80 bps. So half of this gap into our results. And we personally as a management team, although we cannot influence the third party valuator, but we strongly believe that there is further room for improvements.

[Operator Instructions] The next question is a follow-up question from the line of Svyriadi Natalia with Eurobank Equities.

Yes. I was wondering if you could give us an indication after the bond repayment, which came in July where we stand in the fixed amount, floating amount of debt and maybe in the rate? And what we are -- you're thinking of as we're going ahead in terms of your structure?

Thank you, Natalia. First of all, our thinking remains the same. We are always open to, let's say, actively balance our debt structure and tap on any opportunity in the market scene to improve the cost of our debt. Now in terms of the structure, currently, the fixed rate, the remaining bond is EUR 320 million with a coupon cost of 3.4%. And the remaining -- and we have roughly around EUR 600 million worth of debt attached to the malls. Overall, the total cost of debt after the repayment for the group is 3.8%.

So it looks like it's a bit lower than what it used to be.

It was -- in the results that we have announced in June, it was 4% with the repayment of the bond -- of the green bond. This has reduced to 3.8%. Just to remind you that the bond that we have repaid had a coupon of 4.7%.

Ladies and gentlemen, that was the last question. The conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.