Wereldhave N.V. (WHA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Wereldhave webcast for the first half 2026 results. I'm here today with our CFO, Remco Langewouters; and myself, Matthijs Storm, the CEO of Wereldhave. I think most of you know me. We'll take you, as usual, through the slide deck of the first half results. If you can already start typing them in the box at the bottom of your screen. Towards the end of the presentation, we will deal with all the questions as usual, and we will go into the details. So with that, I'd like to start with the key messages of the first half results. First of all, the valuations. Some of you might remember that in the second half of 2025, we had slightly negative revaluations of the portfolio. And I think, in particular, the Dutch investment market, if you talk about retail in our press release, we also make reference to a pretty large recent transaction at, in my view, a pretty tight yield is improving significantly. That was one of the drivers why the revaluations in the first half of the year were positive, but also driven by higher passing rents. And that you can see in the next bullet, like-for-like gross rental income increased by plus 4.3%. We'll get back to that in a second. I think as Wereldhave, we regard ourselves as pretty defensive. We're well protected in the current macroeconomic environment against higher interest rates because we have pretty low committed CapEx, Remco will go into more detail later. But in addition to that, we completed the refinancings for the year. We'll give you more detail later. And last but not least, we have about 2/3 exposure in our rent roll to the more resilient daily life or convenience retail, if you wish. Also with regards to our transformations, we achieved some major steps in the mixed use. Please recall that mixed-use is an important element of the full service center transformations in Knauf Shopping Schmiede in Luxembourg that we acquired last year and also Cityplaza in Nieuwegein. In the USPP market, we completed a refinancing with MetLife of EUR 60 million. And Fitch, the credit rating agency reaffirmed our BBB credit rating. In May, I'm not sure if all of you have followed our recent AGM because it's in Dutch, but all the resolutions were passed. So I think that's very positive. And mostly with regards to potential new equity, we now have the approval from our shareholders to issue up to 20% of new equity without prior consent of the shareholders because we already received it. As you might recall, in the past, this was only 10%. If we then look at the forecast of the year -- for the year, we are looking at a direct result per share of EUR 1.85 to EUR 1.95. That is unchanged versus the forecast that we provided in the first quarter and with the full year 2025 results. And lastly, we are in pretty advanced stages of capital rotation of a Dutch asset to be put into a joint venture, an existing Wereldhave asset with the proceeds being reinvested into a Belgian asset that could be quite compelling. We'll get back to that after the summer, but also with regards to the potential disposal of a Belgian noncore asset, which will help the loan-to-value, which indeed increased a bit in the first half of the year, as I saw in some of your notes. But please bear in mind that, that is always the case because we paid the dividend in Q2. Remco will also elaborate on that further in the presentation. With that, I'd like to go to the numbers itself. I'm not going to read it all out as usual. What you can see is that the direct result per share is unchanged versus last year. But because of the seasonality, we do expect to land somewhere in the middle of the EUR 1.85, EUR 1.95 as we already forecasted in the previous quarters. So it's mathematically not correct to multiply that EUR 0.91 figure by 2. If you have any questions about that, then Remco is very happy to answer them. Loan-to-value, I already mentioned, it actually decreased versus the first half of 2025 by 80 basis points. And if you look at the mixed-use percentage, we had a nice improvement of about 1 percentage point, amongst others, driven by the leases in the full service center transformations. If we then look at the like-for-like rental growth, important metric for us, increase of plus 4.3% on a gross basis, particularly the Netherlands here stands out, as you can see. What you can see in the call-out box on the top right is that, of course, indexation is a major driver of that, but also other income as we elaborated intensively during the full year 2025 results back in February. Leasing slightly positive; however, particularly in Belgium, there were some items in the property expenditures. We'll get back to that later. That's why the net like-for-like rental growth is quite a bit below the gross figure in this first half of the year. Going further into the results, the operational business, occupancy rate, 98% almost for the core portfolio, but also the total portfolio. Actually, usually in the first half of the year because of the seasonality, the occupancy declines a little bit from the 98% because you have less temporary leases, which are always gaining traction in the fourth quarter. But actually, we managed to maintain an occupancy rate of 98%, which I think is a good performance. Leasing spread versus ERV, significantly positive at plus 12% for the core portfolio. That's quite an improvement versus the previous quarters. The only negative figure you can see here is the minus 1.9% in the Netherlands. That's driven by 2 major leases which were caused by law. We call that Article 303 in the Netherlands. I think during some of the roadshows, we also discussed it with you. Yes, that's unfortunately one of the negatives in the Dutch market that you sometimes have cases where you are forced by law to go into a new lease agreement. Those 2 leases caused a negative figure. If you would take them out, you can see we had a lot more activity than that. We did EUR 4.5 million of leases, then the spread would have been roughly neutral. If we then focus on the LifeCentral strategy from a footfall, also tenant sales, but also total return perspective, you can see that the full service centers continue to outperform the traditional shopping centers in the portfolio. Footfall, particularly in the Dutch market, we have some quite nice outperformance. I think in Belgium, we're more or less in line with the market. Footfall continues to grow at a pace of around plus 2%, plus 2.5%, which I think is quite good, particularly given the fact that in March, the Iran situation, of course, occurred and some other global political tensions remain. But despite that, we don't see a change in the footfall pattern. In Luxembourg, you can see there's no figures for the market because there is no market reference, but we're also positive year-to-date. If we then focus on the tenant sales, in Belgium, plus 1% growth and in the Netherlands, plus 2%. I think here, you can see a little bit of the effect of the macroeconomic situation, not in the total figure, but if you zoom in, in Belgium, Homeware & Household and Shoes are more cyclical categories, of course, than the convenience retail. If you look at the Netherlands, you see Health & Beauty also a little bit more cyclical than some other categories. And for example, you see that the Supermarkets in the Netherlands are plus 8%, that is, of course, a very resilient category, which is still performing very well. If we then look at the rental as a total, we always focus on the percentage exposure we have to daily life retail and the convenience retail, the resilient retail, which is still around 65%, 64%, 65%. Of course, when we do an acquisition or a disposal, that can have some impact as well. We still believe with all the transformations that we are working on, we will be at 70%, 75% in the future. Then a short update on the leasing. In Belgium, we signed about a little bit shy than EUR 5 million of new rents, significantly above ERV and old rents. One to mention is a new lease with only from the Bestseller Group in Tournai, Les Bastions. That's a former JBC store where we achieved a significant rental uplift, which is helping and contributing to the overall result, but also some new leases in the Ville2 shopping center in Charleroi that we acquired last year. You can read it here yourself, but I think it's encouraging to see that the leasing has a lot of traction in that center. And that is also the case for Luxembourg, the 2 assets that we acquired last year. I think the lease that is most remarkable to mention is the Basic-Fit lease in Knauf Schmiede adding mixed-use to the center, 1,400 square meters. We're in advanced stage also with a new F&B operator to expand the F&B area there as well. So we're taking significant steps in the transformation of Knauf Schmiede to a full service center. Also in the Netherlands, a very active quarter. We signed a lease with Lager 157. You can see that 2,670 square meters in Tilburg, also the TK Maxx opened in Tilburg. So our leasing team has done a fantastic effort to improve, particularly the area of the Pieter Vreedeplein. Also new leases with the Cotton Club in Zoetermeer, that's the asset we hold in joint venture with Sofidy and also Van Uffelen in Middenwaard. Decathlon in Hoofddorp is also a very important addition. We had in the full service center development, only one unit left, a pretty large unit to be leased. Initially, we thought it would be a gym. But now we've leased it to Decathlon, which I think is an improvement versus the initial business case. So we're very happy with that. And yes, if you look at the leasing market and all the deals we are negotiating, if we dive into the sales force system, if you look at the pipeline, you don't see the impact actually of the Iran situation. There's a lot of larger deals under negotiation. None of them have been put on hold. And I think also in the third quarter, we're actually working on that already. We agreed a new package deal with a major discounter of 3 new leases actually last week, which is not in the set of results, but will be in, in Q3, so we don't see any changes there. If we then focus on the occupancy cost ratio, as you noticed in the second quarter, the rents increased slightly more than the retail sales. So for that reason, there is a slight, but only a slight uptick in the OCRs. We still believe that the OCR of 13% in the Netherlands is perfectly suited for our retailers. And also in Belgium, a little bit higher, as you can see in the call out, that's driven by the fact that the sales productivity of the Belgium portfolio is higher than our Dutch portfolio. And with that, I'd like to hand over to Remco.

Thank you, Matthijs, and also a warm welcome on my behalf. So here, we show the evolution of our cost basis. As you all know, we have been working on reducing our cost over the past years, and we are monitoring that through our EPRA cost ratio and our direct general cost. For the latter, we expect to come a little bit below the general cost from last year at year-end. On the direct result, we've shown an improvement of 3% for the year. If we exclude from that, the impact from the acquisitions and the disposals had the NRIs growing by EUR 1.3 million, mainly driven by the Netherlands, where on the back of the indexations, other income as well as the parking income. On the other hand, we saw an increased interest expenditure, which was mainly due to the matured interest rate swaps and caps in Belgium as well some additional tax charges, which are essentially split into 2 parts. One is related to the acquisition we did last year for Ville2, which we acquired in a taxable entity and converted to a fiscal transparent entity mid-Q1. So that's sort of a nonrecurring tax expenditure. And on the other side, you see the impact of the higher income in the Netherlands on the tax charge. Our outlook, as Matthijs already mentioned, we reconfirmed at EUR 1.85, EUR 1.95. If we translate that into the dividend expectations for the AGM next year, that equates to EUR 1.35, which is essentially a 71% payout. The payout is a bit below our policy for 75%, 85%, and that's mainly because our LTV is still at 44%, which is above the guidance of -- or the target of 40%, and we think it's prudent to keep it at these levels. Then on the transactions, despite the uncertainty in the market during the first half year, we have been able to add 2 additions to our portfolio. One is the supermarket in Ville2, which now provides us with 100% control of the shopping center there. So that's a plus for us. In addition, we also acquired the Hema unit in Overvecht. Both of these acquisitions were financed through a contribution in kind. So we used the equity to fund the transactions. On a positive note in that regard, also on our last AGM, the shareholders approved the resolutions that now allows us to issue up to 20% of new shares, which provides us with the flexibility to do further equity-backed acquisitions. And as Matthijs already mentioned earlier, we are working on a project, which is a capital rotation project, which is currently in the LOA stage in the Benelux. On the next slide, there are 2, well, overviews of the transaction that we did in the first half year, but I'll hand it back to Matthijs for the full service LifeCentral update.

Thank you, Remco. Yes, on the strategy, as you can see on this slide, the mixed-use percentage is an important KPI for us to monitor, increased to 17%. I already mentioned that earlier as well. Also important to mention in the second bullet on the top right, Cityplaza, a new health care cluster opened. That's part of the larger transformation. We'll get that back to that in a second. If we look at other income, as we elaborated during the full year 2025 results back in February, that's an area where we see significant growth in revenues and in income. And what you can see here on the slide is that we're still nicely on track to meet the EUR 8.6 million target for 2026. And we're working hard at the moment on the tender of the Belgium and the Luxembourg screens, which will certainly cause an increase, which will be visible in the 2027 direct results. Lastly, the EV chargers in Belgium, there, we have a lot of traction. I think during the last roadshow, we also elaborated on that, and that is helping our numbers as well. Then on Cityplaza in the Netherlands, one of our largest centers in the middle of the country, just south of Utrecht. You can see the map on the top right. And what I like here is that a lot of elements of the strategy are actually included in the center. The Health & Fit on the top of the center, this has always been a difficult passage, a difficult corridor from a footfall perspective. Now we have health care as a new tenant. On the left side, you can see that we rightsized some of our ownership. We sold it to a residential developer. We also introduced our every.deli, our fresh food gallery, so to speak, opposite the Albert Heijn supermarket. You can see the eat and meat. This is performing very well in the past, the F&B in the center was very fragmented across the center and basically closed at 6:00 p.m. Now we have a couple of F&B retailers which stay open until 10:00, 11:00 in the evening, which, of course, is helping their turnovers. And we've created a very lively square in the heart of Nieuwegein basically, which is helping the performance of the center. And lastly, the Basic-Fit on the first floor on the right side of the picture. We're still working on a number of items, as you can see on the bottom left of the slide, the realization and the finalization of that Health & Fit cluster, but also the look and feel upgrade of the galleries is still in the design phase. So there's a little bit more CapEx to come in Cityplaza. Remco will talk about that. Then Luxembourg, this is actually a project that I'm very excited about because last year, we acquired Knauf Schmiede and Knauf Pommerloch in Luxembourg. As you might recall, we bought Knauf Pommerloch at a 7.3% net initial yield, but Schmiede above 9%. Of course, a very nice acquisition price, but also admittedly, Knauf Schmiede was a center where some work on the first floor had to be done. We thought that was a perfect case for a full service center transformation, give the consumers in that area of Luxembourg and Belgium because half of the consumers come from the Belgian market, give them more reasons to come to the center and spend more time in the center. And from that perspective, it's very nice, as mentioned already, that we signed the Basic-Fit. We're in advanced stage with a large F&B operator, as you can see on the bottom of the slide. We've also worked on the routing of the center. That is on the top right. We've created 2 additional retail units, so additional space to be leased. And the good news is it's leased already. And also the point, our service desk, our concept that many of you know, will be implemented here in the center. So it's actually going quite fast and faster than we expected. So that's the good news, which is also why the temporary income is a little bit lower, as Remco explained in the waterfall of the direct result, but you'll see towards the completion of the project, there will be a nice uplift in the rent in 2027. And with that, I'd like to hand over back to Remco, who will tell you a little bit more about the CapEx.

Thank you, Matthijs. So the CapEx pipeline is EUR 61 million. As you all know, we added last year EUR 36 million to the pipeline for the newly acquired assets. And we forecast that for the remainder of the year, we will be spending EUR 8 million basically on the transformations that Matthijs just mentioned, the health care cluster in Cityplaza, but also the transformation in Schmiede. And I think it's also good to mention here that given the current market uncertainties, we have limited commitments, which provides us with flexibility here. On the capital allocation and our IRR framework, we remain monitoring the Green Street Continental European average IRR, which came out at 7.4%. We set the internal threshold at 8%. And at this moment in time, we have one asset in the whole bucket and one asset in the sell bucket. For the asset in the whole bucket, we are assessing the opportunities to bring the IRR above the 8%. Essentially, this is similar to what we saw at year-end 2025. Then on the yield shifts of our completed FSC transformation. It's good to mention here that we outperformed the market in that regard for all these FSCs. On the residential profits, this is also one item that has been mentioned already before. We see this as the icing on the cake. I think essentially, at this moment in time, we are adding and looking at the residential development in our joint venture, Zoetermeer, so together with our joint venture partner there. Then going through financing and valuations, where we kick it off with the valuations for the half year. So overall, positive results on our core portfolio, EUR 17.3 million or 0.8%. That's essentially driven by the increased passing rent, both in the Netherlands and in the Belgium for the Belgium assets. On the other hand, we see almost EUR 4 million negative revaluation in France, which was driven by a yield increase and a decrease in ERVs. For the offices in Belgium, they remain relatively flat compared to last year. The debt to EBITDA, as mentioned already before, our LTV went up to 44.1%, primarily due to the dividend that was paid in the first half year. So if you compare it to the half year at 2025, we are down 80 basis points. And also our debt versus EBITDA, which is monitored by Green Street, we are still remain one of the lowest of the peer group in that regard. Our target for the LTV remains at below 40%. And essentially, we see the options of disposing noncore assets in France or in Belgium, joint venture, existing assets or other partnerships similar to that and as well with the optionality that we have been provided with at the AGM, we can do equity-backed acquisitions to also reduce our LTV. On the debt profile compared to year-end, we see a slight decrease in the interest-bearing debt, which is essentially a net effect of the cash that was on our balance sheet at year-end from the disposals, combined with the dividend payments that we did in the first half year. Our average cost of debt is at 3.55%, which is remaining stable, but will likely increase a bit towards the end of the year. I think it's good to mention here that from a covenant perspective, we are well within our covenants at this moment in time. And also what you see here is on the debt maturity, the refinancing, we already communicated that earlier, the refinancing of the EUR 250 million RCF, but also a EUR 30 million facility in Belgium helped increase the debt maturity. If we look on the next slide and we look at the bottom graph, what you see there is also mentioned in the key messages, we refinanced the EUR 40 million that is maturing in July with a EUR 60 million USPP with a 10-year tenor. So if we include that on a pro forma basis in our results, the weighted average debt maturity increases from 3.8 to 4.3 years, which is a positive evolution. On our debt mix essentially remained relatively stable. We repaid a bond at the end of March, which was financed through the bank loans. Also good to mention here that for next year, we have about EUR 150 million of debt maturities coming up, of which 70% is situated in the second half of the year. So yes, we are starting the project there to refinance those. On the next slide, you see also the evolution of the debt maturity. As you can see here with the USPP, we end up at the 4.3 pro-forma. Then on ESG, so essentially 3 items to highlight here. So we have identified additional potential to add charging points to our shopping centers, of which 14 were already realized in the first half of the year. We are recertifying all our Dutch assets with BREEAM on -- including all the tenant spaces, which is due to be completed in the fourth quarter. And also, I think good to mention here is that in the Vier Meren asset, we are placing gas boilers by hybrid system that will help us reduce the carbon emissions and yes, brings us a step forward towards Paris Proof. With that, I hand it back over to Matthijs for the management agenda.

Thank you, Remco. Yes, the management agenda to close it off, and please type your questions whilst we're speaking and also towards the end because some questions already came in, but very happy to answer them. Management agenda. You can see here the targets for '25-'27. Scale, as already mentioned, I think 2 things that you will see after the summer break. We're actively working on capital rotation, which is a Dutch asset in a joint venture with the capital being allocated in the Belgian market, I think, with a very nice spread on yields. So that could be pretty enhancing for the direct results. And in addition to that, we're working, as you might have seen in the press release on the disposal of a Belgian noncore asset. Remco already elaborated a little bit on that with regards to the loan to value. So that will also help in that perspective, again, after the summer, we will have more news. Total return, we're at 7.7% annualized. So we need to make a small step-up in the second half of the year to reach the 10%. Capital reallocation, I already mentioned the projects we have concretely under discussion. Full Service Center transformations, we will complete one asset this year and one asset next year. ESG, for GRESB perspective, we're currently at a 4-star rating. We just submitted our data for the new season. France, there's no news to mention. We're discussing the Mériadeck Center in Bordeaux with 2 potential investors. We don't have any news at this stage, potentially after the summer, we'll see. The Paris asset, there's no active discussions at the moment. As we already mentioned last time, we are also considering to keep that asset in our portfolio once we've disposed the center in Bordeaux and have it managed by the Belgian team. The last phase of the balance sheet derisking, the loan-to-value, I think, in particular, the disposal of the Belgian noncore asset plus the retained earnings in the second half of the year. As Remco already mentioned, the CapEx is quite low in the second half of the year. So that will certainly help the loan-to-value towards year-end. And lastly, the other income, I think we're nicely on track to meet the targets as we have published. With that, we go to the questions one more time. If you have any questions, please type them into the screen.

Let's go to the first question, which is from Francesca Ferragina from ING. Thank you Francesca. Hello Matthijs, 2 questions from my side. The first one is on the MGR. This is negative in the Netherlands. Could you make a comment on that and give more ground? And secondly, could you provide an update about the CFO appointment? Thank you, Francesca, for that. The MGR in the Netherlands, indeed, there was a negative leasing spread of minus 1.9%. As you might have seen, the occupancy rate has been stable, which I think is for the first half of the year, particularly good. We're working on a lot of new leasing deals as well. Indeed, the spread was negative. As I mentioned, that's caused by 2 leases with a more negative spread caused by the Dutch law, the Article 303. We have talked about that, I think, in the past. If you would take them out, we would be roughly flat. We also think that for the second half of the year, the spread will improve if I look at the leasing activity for the third quarter. In addition to that, your question on the CFO, Remco is standing next to me. As you know, Remco is the Interim CFO of Wereldhave. That is still the situation. The Supervisory Board will reconsider after the summer what would be the next step. So you'll certainly hear about that. But as you can see in these results and also in this presentation, I think Remco is doing a very good job. Then we have a question from Tom Berry. Both H1 acquisitions were funded via share issuance to the seller, not cash. Is that the template going forward for acquisitions and which markets or cities look most attractive? Thanks for the question, Tom. Indeed, we funded those acquisitions with new equity, albeit at a quite higher share price than today. I think we're now trading around EUR 19. I think back in those days, about 6 months ago, we were more like EUR 22, EUR 23. I think we've underperformed the market a little bit. It's good to say at the current share price, we're not considering to issue new equity. I think the share price should stabilize a bit and provide us with a lower cost of equity. Hence, we are working on the disposal of a noncore asset. Hence, we are working on capital rotation with no new equity involved. So I think it's important to mention. But indeed, if the share price recovers to the levels that we've seen in the first quarter of the year, yes, of course, we would reconsider to use new equity to fund acquisitions with one difference. We now have the approval of the AGM to also do an ABB, an accelerated book build, which means that we can also buy an asset and do the equity issuance ourselves, sell the shares to potential investors and use the cash to pay for the acquisition, and that's different than versus the past where we acquired the assets through a so-called contribution in kind, whereby we paid the vendor of the asset in shares. So that is a good difference to mention. Then we have another question from Tom. How are valuers treating the other income line? Is any other income capitalized into the property values? And if so, at what multiple is it wider or tighter than the real estate? Maybe Remco, you can explain a little bit, for example, how the digital screens are taken into account.

Sure. So the income and the other income is included in the appraisals, but the valuers, they take a different view on the other income because from a -- yes, the nature of the income is different in comparison to regular leases. So the multiple that will be applied to it differs from our regular leasing contracts.

Thank you, Remco. We go to the next question from Alex Kolsteren from Kempen & Co. Thank you Alex. Two questions, which are cost related. When looking at the EPRA costs, your OpEx and SG&A cost base is up EUR 3.5 million compared to the first half last year. Some of that comes from Luxembourg Ville2 impact, I assume. But can you talk about the other main drivers? So I think Alex is combining here the operational expenses and the general expenses. So what are the drivers of the higher cost base? Maybe Remco, you can elaborate a bit on the higher indirect GENEX.