Vastned Retail N : Half year 2020 results Presentation

Half year 2020 results

Taco de Groot - CEO Reinier Walta - CFO

30 July 2020

Highlights H1 2020

Impacted by COVID-19, but strong performer in retail real estate peer group

Portfolio occupancy increased to 97.4% due to tailor made approach with tenants

Reduction of general costs by 14% YoY, whilst being cost effective

LTV of 42.6% within bandwidth of 35%-45% with an average cost of debt of 2.0%

Like-for-like rental growth of 0.3% (-6.3% incl. COVID-19)

Strong financial position with refinancing covered until 2024

Direct result 2020 expected to be € 1.70 - € 1.85 per share

78% collection rate in H1 2020

(84% at 24 July 2020) due to tailor made approach with tenants

-2.5% revaluation reflecting portfolio quality and liquidity

Start of strategic update, reviewing all options to unlock value dislocation

2

Vastned to unlock shareholder value

Start of strategic update, reviewing all options to unlock value dislocation

43,8

19,0

Share price 30 June	Adjusted
	EPRA NNNAV

• Unique €1.5 billion high street retail portfolio (6% resi and office) in selective large historic cities (83%) in the Netherlands, France, Belgium and Spain
• Highly concentrated portfolio with 75% in Top 10 cities (Amsterdam (22%), Paris (15%), Utrecht (7%), Bordeaux (6%), Antwerp (6%) and Madrid (6%))
• High 97.4% occupancy rate and limited capex vs resi, offices and shopping centres
• Relatively high 84% collection rate as per 24 July 2020 and limited -2.5% revaluation reflecting quality and high liquidity of the portfolio
• Further reduction of costs to remain cost effective (21% of costs (in)directly related to listing)
• Implied net yield of 6.7%* which is well above market yields
• Flexible debt structure and no expected break costs in case of a change of control

* Annualized rental income €73.6m vs. €1,532m investment properties adjusted for discount to NAV of €432m at 30 June 2020

3

Half year 2020 financial key figures

Direct result:	Collection rate:	EPRA NNNAV:
€ 0.85 per share	78%	€43.76 per share
	H1 2020 /	H2 2019 /	H1 2019 /
	30 June 2020	31 December 2019	30 June 2019
Direct result per share	€0.85	€1.07	€0.96
Indirect result per share	€(2.09)	€(0.25)	€(0.48)
Like-for-like gross rental income | ex COVID-19	(6.3)% | 0.3%	(1.3)%	(2.3)%
Value movements*	(2.5)%	(0.4)%	(0.4)%
Loan-to-value ratio	42.6%	41.6%	41.9%
Average interest rate (spot)	2.0%	2.2%	2.3%
NAV	€44.21	€46.28	€46.05
EPRA NNNAV**	€43.76	€46.20	€45.84

* Excluding acquisitions and divestments; ** As per 30-6-2020 NAV amounts to €758.4m, EPRA NNNAV to €750.5m

4

Operational performance

Rental income		General costs		Financing

Occupancy increased in Q2, portfolio nearly fully let at 97.4%

• Q2 2020 occupancy rate increased 0.4% compared to Q1 2020 and 4.3% compared to Q2 2019
• The portfolio in Spain and France completely let
• Occupancy in Belgium increased as a result of new leases following a decline due to bankruptcies in Q1

Occupancy rates remain high showing the quality of the locations
Occupancy rate	Q2 2020		Q1 2020	Year-end 2019	Q2 2019	Year-end 2018
%	% of GRI	Occupancy	Occupancy	Occupancy	Occupancy	Occupancy
The Netherlands	46		96.0	96.0	96.6	96.2	98.5
France	22		99.8	99.9	99.8	81.9	99.2
Belgium	27		97.5	95.8	98.8	95.7	98.0
Spain	5		100.0	100.0	100.0	100.0	100.0
Total	100		97.4	97.0	98.0	93.1	98.6

6

Rental income		General costs		Financing

Leasing activity continued in H1 2020

• Signed new contracts with H&M, Rituals, Vkusvill, Lidl, Holland & Barrett and Spar in the Netherlands and with Dunkin Donuts and Keukens De Abdij in Belgium
• A new Paris office contract was signed with Streamroot at the first floor of Rue de Rivoli 102
• Rental change of (3.6%) mainly driven by the new lease to H&M on the Steenweg in Utrecht

Leasing activity	H1 2020	FY 2019

Number of leases	38	76
Rental income (€ million)	5.1	12.4
% Of total theoretical annual rent	6.8%	16.7%
Rental change (€ million)	(0.2)	(1.6)
Rental change	(3.6%)	(11.7%)

Ferdinand Bolstraat 85 in Amsterdam

7

Rental income		General costs		Financing

All stores are open again since end of June

• Significant number of international retail chains in the Netherlands were closed without regulatory obligation to do so
• Footfall in "open air" high street retail remained relatively strong apart from tourist destinations in certain cities
• Conversion ratios increased significantly partly offsetting lower footfall

Lockdown

Jan

Feb

Mar

Apr

May

Jun

Jul

Netherlands

46%

France

22%

Belgium

27%

Spain

5%

Country not in lockdown

Voluntary closing international retail chains

Country in (partial) lockdown

Gross rental income H1 2020

5%

27%

46%

22%

8

Rental income		General costs		Financing

Tailor-made solutions for almost all tenants resulting in high collection rates and continuity of rental income

• Almost all rental contracts have been negotiated by our 9 portfolio managers benefitting from new property management system installed in 2019
• Tailor-madesolutions have been created, resulting in temporarily lower rents, but longer leases and higher rental increases
• Total H1 2020 collection rate per 30 June was 78% and for the period up to 24 July 84%

COVID-19 measures

Country

The Netherlands

France

Belgium

Spain

Comment

• Waivers and deferrals for mainly fashion and food & beverages tenants. Waivers are in some cases combined with contract extensions
• Waivers and deferrals for mainly fashion and food & beverages tenants
• Majority of tenants received 1 month waiver
• Waiver is required for small retailers to apply for government support
• Waivers mostly combined with contract modifications such as extensions and increased rent for remaining part of contract duration

Waiver

€1.4m

€0.7m

€1.0m

<€0.1m

9

Rental income		General costs		Financing
Vastned	is very well on track with rent collection for
H1 2020

• H1 2020 collection rate increased from 78% to 84% since balance sheet date

Collection rate	24 July 2020		H1 2020
	€ million	€ million	€ million
Total invoiced*	40.0	0.0	40.0
Waivers**	3.1	0.6	2.5
Deferrals		0.0
0.9	0.9
Outstanding	2.4	(3.0)	5.4
Payments received	33.5	2.4	31.1
Collection rate
83.7%		77.8%
Waivers	7.8%		6.4%
Deferrals
2.3%		2.2%
Outstanding	6.1%		13.6%
Total	100.0%		100.0%

• Total of €3.1m of waivers were granted, of which €0.6m was signed post reporting date
• €0.9m deferrals will be paid in H2 2020 and 2021
• €2.4m of non-collected H1 invoices, have been paid since 30 June
• Collection rate increased from 78% to 84% in the last four weeks

• Including service charges, VAT, etc.; ** Including VAT

Receivables	24 July 2020		H1 2020
	€ million	€ million	€ million
Receivables period till 30 June 2020	5.6	(2.4)	8.0
Waivers	(0.6)	(0.6)	0.0
Receivables post waivers	5.0	(3.0)	8.0
Provision	(2.5)	0.0	(2.5)
Net receivables	2.5	(3.0)	5.5
Receivables Q3 2020 pre-invoicing	3.5	(4.8)	8.3
Gross receivables	8.5	(7.8)	16.3
Net receivables	6.0	(7.8)	13.9

• €8.0m of receivables on 30 June 2020 include:
• • €5.4m outstanding payment
  • €0.9m deferrals from H1 2020
• €2.4m of non-collected H1 invoices, have been paid since 30 June
• €4.8m of the €8.3m invoices over Q3 2020 have already been paid
• Net receivables are €6.0m which is significantly below received guarantees and deposits

10

Rental income		General costs		Financing

Like-for-like rental growth

• Like-for-likerental growth adjusted for waivers for the total portfolio was 0.3% in H1 2020. Including waivers, the like for like rental growth was (6.3%) for the total portfolio
• The increase in France is driven by the new lease with JD Sports at Rue de Rivoli 118-120

Rental growth	H1	2020	H1 2020 adjusted for	H1	2019
waivers
	€ million	%	€ million	%	€ million	%
The Netherlands	(1.3)	(7.6)	(0.2)	(1.1)	0.2	1.2
France
(0.1)	(0.8)	0.5	7.4	(1.1)	(14.4)
Belgium
(0.9)	(8.8)	(0.2)	(2.5)	0.1	0.5
Spain
0.0	(1.1)	0.1	0.6	0.0	1.9
Total	(2.2)	(6.3)	0.1	0.3	(0.8)	(2.3)

11

Rental income		General costs		Financing

Certain tenants have performed stronger during COVID-19

• Majority (83%) of the portfolio is located in strong cities with an historic city centre
• Income from residential and offices is currently at 6% and expected to grow following extensions
• Supermarkets & personal care, sports and home & garden are performing better than pre COVID-19

c.35% of rent generated in

Portfolio value per H1 2020

Gross rental income H1 2020

strong performing sectors

Supermarkets & Personal care

17%

Amsterdam

Lille

5%

15%

Home & Garden

22%

Paris

Brussels

Residential

5%

Utrecht

Ghent

Office

11%

100% =

Bordeaux

Other historic cities

100% =

4%

Sports

2%

€1,532m

Madrid

Other

€32.5m

Other non-food

3%

15%

50%

10%

Antwerp

Fashion

4%

4%

9%

Food & Beverage

6% 6% 6%

7%

12

Rental income		General costs		Financing

Vastned will continue to focus on cost efficiency

• Since the implementation of Vastned's updated strategy, Vastned dramatically reduced its costs

2,2002,069

2,000

1,800

1,600					1,579				1,533
1,400						32% reduction in costs
1,200
	11,532
1,000											9,219
800					8,330
	7.079					1,404
600		3.850		-14%		3.975
400
200		4.453	4.480				3.840
			H1 2012		H1 2019			H1 2020
Total costs as %		Operational costs (€m)		General expenses (€m)**			Fair value portfolio (€m)		COVID-19 related one-off*
	56bps		53bps				51bps
of GAV

*COVID-19 related one-off: allocation to provision for expected credit losses; ** Listing related costs are c.21% of general expenses

24,00

22,00

20,00

18,00

16,00

14,00

12,00

10,00

8,000

6,000

4,000

2,000

13

Rental income		General costs		Financing

Vastned has a very solid financing structure in place

Loan to value vs. Average cost of debt

2,7%	2,5%
	2,2%
		2,0%
38,8%	39,0%	41,6%	42,6%

FY 17		FY 18	FY 19	H1 2020
		LTV (%)		Average cost of debt (%)

	30 June	31 December
	2020	2019
Total used credit facilities	€651 million	€651 million
Unused credit facilities	€95 million	€119 million
Loan-to-value ratio	42.6%	41.6%
Average interest rate (spot)	2.0%	2.2%
Average maturity contract	4.4 year	4.9 year
revision (LTD)
Interest coverage ratio	4.1	4.2

Debt structure

	2%
	8%
	€651m	51%
39%

Revolving credit facilities

Private placements

Term Loans

Roll-over facilities

Share of non-bank financing of	38.8%	42.6%
interest-bearing loans
Share of fixed interest rate	74.1%	77.9%
loans

• Fully unsecured capital structure
• Vastned has no credit rating (costs) since it has no public bonds
• No make-whole costs if private placement holders put their notes resulting from a change of control

14

Occupancy		General costs		Financing

All debt maturities covered until 2024 with average cost of debt coming down further

• Average maturity of the loan portfolio (LTD) is 4.4 years

(€ million)

																Maturities (€m)
											286					o/w drawn (€m)
																Interest revisions
																(€m)
																o/w floating (€m)
			Covered by unused credit facilities	86
										Avg. floating rate
									115					Avg. fixed rate
			37										50	50
							15
	12
Roll-over	2020	2021	2022	2023	2024	2025	2026+
					Roll-over		Private placements		Bank loans		RCF

Roll-over	2020	2023	2024	2025	2026+	Total

56.6	37.5	15.0	536.4	49.8	49.9	745.3
12.1	37.5	15.0	486.4	49.8	49.9	650.8
12.1	193.8	15.0	180.1	199.8	49.9	650.8
12.1	156.3	-	-	-	-	168.4
1.25%	1.40%	-	-	-	-	1.39%
-	5.57%	1.85%	1.95%	1.84%	2.78%	2.27%

15

Other developments in H1 2020

• Funding highlights:
• • Initiated the refinancing process of the €37.5m private placement maturing in October 2020
• During H1 2020 management and supervisory board have started a strategic update in order to evaluate all available options in times of a changing retail landscape and the potential aftermath of the COVID-19 pandemic
• • Results of the strategic update will be presented during the publication of the FY20 results in February 2021
• Currently Vastned is finalizing a residential study comprising of 100+ units above its asset on the Orionstraat in Eindhoven (Albert Heijn)

Facts:

− Land plot already owned

− Size of land plot c.4.6k sqm

Geographical location

Artist impression of residential study

Shopping centre Eckart	Eindhoven
	234k inhabitants
	(5th largest city in NL)

16

Financial Results

Half year 2020 results - Profit & loss statement

Profit & loss statement

(€ '000)

Gross rental income

Operating expenses

Net rental income

Value movements

Net proceeds of divestments

Total net income from property

Financial expenses

Value movements in derivatives

Net financial expenses

General expenses

Result before taxes

Total income taxes

Result after taxes

Attributable to Vastned Retail shareholders

Attributable to non-controlling interests

H1 2020 /	H2 2019 /	H1 2019 /
30 June 2020	31 Dec. 2019	30 June 2019
32,497	34,358	34,930
(5,309)	(2,425)	(3,836)
27,188	31,933	31,094
(40,831)	(6,364)	(6,746)
50	629	(297)
(13,593)	26,198	24,051
(6,687)	(7,211)	(7,627)
(2,061)	1,045	(3,790)
(8,748)	(6,166)	(11,417)
(3,840)	(3,657)	(4,480)
(26,181)	16,375	8,154
1,967	(333)	(271)
(24,214)	16,042	7,883
(21,138)	14,013	8,422
(3,076)	2,029	(539)

Key observations:

• Gross rental income: Gross rental income decreased by c. €2.5m to €32.5m as a result of waivers being given to selected tenants on the back of the impact of the COVID-19 pandemic
• Operating expenses increased mainly as a result of €1.4m related to the COVID-19credit-loss provision (H1 2019 was nihil)
• Financial expenses declined by €1.0m as a result of lower interest rates following refinancing and will likely come down further in H2 2020
• Value movements of derivatives turned negative as a result of lower market rates
• General expenses declined €0.6m as a result of mainly lower remuneration of senior staff

18

Direct result per share H1 2020 impacted by COVID-19

• Direct result per share decreased to €0.85
• Excluding the effect of COVID-19, underlying rents have remained stable YoY

€/share								1,07
			0.01	0,05	0.02	0.01	0.01	0.04
0,96		0.04
0.01					0,22
								0,85

Direct result	LFL rental	Lower	Increased debt Decreased	Net	Increased	Sharebuy back Lower income	Direct result	COVID-19	Direct result
H1 2019	growth	overhead costs	cost of debt	divestments	tax expense	to minorities	pre-COVID-19	rental effect	H1 2020

19

Half year 2020 results - Balance sheet

Balance sheet	H1 2020	H2 2019	H1 2019
(€ '000)
Property in operation	1,530,361	1,568,461	1,571,355
Accrued assets in respect of lease incentives	5,492	4,721	5,003
Total property	1,535,853	1,573,182	1,576,358
Other fixed assets	2,012	2,145	1,878
Assets held for sale	-	1,575	6,047
Receivables	19,952	9,204	9,935
Income tax	-	37	111
Cash and cash equivalents	1,574	961	1,253
Total assets	1,559,391	1,587,104	1,595,582
Equity Vastned Retail shareholders	758,346	793,734	789,906
Equity non-controlling interests	80,974	89,132	87,103
Total equity	839,320	882,866	877,009
Long term interest bearing loans	601,170	580,427	623,345
Employee benefits	5,826	6,092	6,059
Other long-term liabilities	25,528	25,564	26,566
Total long-term liabilities	632,524	612,083	655,970
Payable to banks	12,143	8,283	14,715
Redemption of long-terminterest-bearing debt	37,489	62,470	25,000
Other short-term liabilities	37,915	21,402	22,888
Total short-term liabilities	87,547	92,155	62,603
Total equity and liabilities	1,559,391	1,587,104	1,595,582

Key observations:

• Property in operation declined as a result of revaluation (€38.9m) in H1 2020
• Receivables increased by €10.0m mainly as a result of c.€5.0m of outstanding COVID-19 related H1 2020 receivables as well as an increase in the amount of pre-invoiced Q3 rents that would have been paid under normal market circumstances. Since the balance sheet date we have received €2.4m of H1 2020 rents and €4.8m in relation to the Q3 rents
• Long term debt increased by €21m following extension of shorter term maturities that declined by €25m

20

High quality and liquidity of the portfolio resulted in limited negative revaluation

Value movements*	H1 2020	H1 2019	FY 2019	FY 2018
			€m	Δ%	€m	Δ%	€m	%	€m	Δ%
The Netherlands	665	-3.0%	687	-0.3%	685	-0.6%	685	2.9%
France	414	-0.4%	418	0.5%	416	0.0%	415	-1.7%
Belgium	356	-4.0%	374	-2.2%	370	-2.8%	383	-1.8%
Spain	98	-2.0%	100	2.3%	100	2.4%	97	0.9%
Total	1,533	-2.5%	1,579	-0.4%	1,571	-0.8%	1,580	0.4%
Value movements over time*
80						71

60 Value movements (€m)

40			25
20						6
5
0
			-5
-20						-13
-40								-39
	2014	2015	2016	2017	2018	2019	H1 2020

* Excluding acquisitions and divestments

• In H1 2020 we have seen a marginal -2.5% decrease in the value of our properties on the back of minor changes throughout the portfolio
• During H1 2020 the 3-yearly rotation of the independent appraisers was due, CBRE and Cushman & Wakefield have critically reviewed each others work
• In the Netherlands the independent appraisers are actively applying "303 rents", adjusting rents to surrounding market rates and reflecting these in our valuations

21

Outlook 2020

Outlook for 2020

• In its Q1 2020 trading update Vastned withdrew its forecast of its direct result due to the impact of COVID-19
• Lockdowns in Vastned's countries have been lifted, tenants are back in business and tailor-made solutions have been agreed with virtually all tenants, we can afford to look ahead once more
• Footfall in our high street locations has strongly increased, although visits from tourists are still lagging behind. A full recovery is expected to take quite some time
• For our 2020 outlook, we expect a lower COVID-19 impact and no nation wide lockdowns, but potential local lockdowns to control local outbreaks
• We will continue our focus on high occupancy rate, high collection rates and cost efficiency
• The number of bankruptcies in the portfolio is limited, but in our 2020 outlook we do take into account that the number of tenants who are facing bankruptcy will increase
• Based on this, Vastned forecasts a direct result for 2020 between €1.70 - €1.85 per share

23

Appendix

Total return and analyst coverage

YTD total return performance vs selected peers (indexed)

Analyst recommendations and price targets

110
105					Analyst	Date	Price	Recommendation
					target
100
95						24 July	23	Buy
90						2020
85						7 May
80					76.7	19	Hold
				2020
75					73.4
70					8 May	24	Hold
					2020
65
60						16 Jan.	26	Hold
						2020
55
				53.3
50
					6 July	18	Hold
						2020
0
Jan 20	Feb 20	Mar 20	Apr 20	May 20	Jun 20	7 May
						21	Hold
	Vastned	Peer group*	EPRA Developed Europe Index	2020

Source: Bloomberg, as per 30 June 2020

*Equally weighted peer group, including Atrium, Capital and Counties, Citycon, Deutsche Euroshop, Hammerson, Immobiliaria Grande Distribuzione, Klépierre, Mercialys, Shaftesbury, Unibail-Rodamco-Westfield, Wereldhave, Eurocommercial Properties

25

Shareholders overview of holders with a >3% voting share

Investor	% Outstanding shares	AFM register date
Van Herk Investments	24.98%	21/08/2018
BlackRock	4.54%	21/06/2020
Tikehau Capital Advisors SAS	3.05%	24/07/2020
Société Fédérale de Participations et d'Investissement (SFPI)	3.02%	21/01/2020
Welgelegen Beheer B.V. (Perridon M.J.C.W.)	3.00%	16/03/2020
Treasury shares	9.90%
Other shares	51.51%
Total shares	100.00%
	19,036,646 shares

Note: AFM reporting thresholds: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%

Source: AFM

26

Vastned has been very actively rotating its portfolio from spread high yield/high risk to a core high street retail portfolio

Sale of high risk / high yield Turkish high street and Spanish shopping centres ahead of significant value decline

Disposals (€m)

271 261

		146
							123
					87	95
							71
8	15								12
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019

Disposal proceeds reinvested in core regions and 10% share buyback

Acquisitions (€m)

		164
111	104	103
81		76
47		38	49

14

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

27

91% of the Dutch portfolio is located in top 12 cities

Overview of Vastned's portfolio in the Netherlands

			€665m 51%
			17%
		Zwolle
Amsterdam		Amsterdam	Arnhem
Den Haag Utrecht	Arnhem	Utrecht	's-Hertogenbosch
Den Haag	Zwolle
Rotterdam		Nijmegen
's-Hertogenbosch	Maastricht	Nijmegen
Tilburg
Breda			Eindhoven	Rotterdam
	Eindhoven
			Tilburg	Other

Breda

Maastricht

* Defined as annualized contracted rent divided by market value

	City	% of	Gross initial
		portfolio	yield*
1	Amsterdam	51%	3.9%
2	Utrecht	17%	4.7%
3	Den Haag
4	Maastricht
5	Eindhoven
	Top 5 cities	80%	4.3%
6	Tilburg
7	Breda
8	Arnhem
9	's-Hertogenbosch
10	Zwolle
11	Nijmegen
12	Rotterdam
	Top 12 cities	91%	4.6%
	Other cities	9%	9.1%
	Total Netherlands	100%	5.0%

28

94% of the French portfolio is located in Paris, Bordeaux and Lille

Overview of Vastned's portfolio in France

Lille

Paris

Bordeaux

Lyon

Saint-Étienne

Nice

Cannes

15%

€414m 56%

23%

Paris

Bordeaux

Lille

Cannes

Nice

Lyon

Saint-Étienne

	City	% of	Gross initial
		portfolio	yield*
1	Paris	56%	3.8%
2	Bordeaux	23%	4.1%
3	Lille	15%	5.0%
4	Cannes
5	Nice
6	Lyon
7	Saint-Étienne
	Total France	100%	4.0%

* Defined as annualized contracted rent divided by market value

29

89% of the Belgian portfolio is located in top 12 cities

Overview of Vastned's portfolio in Belgium

Antwerpen

BruggeWilrijk

Mechelen

23%

€356m

17%

	City	% of	Gross initial
		portfolio	yield*
1	Antwerpen	23%	4.7%
2	Brussel	17%	4.8%
3	Tielt-Winge
4	Gent	11%	5.8%

Gent Schaarbeek

Tielt-Winge

5 Brugge

Kampenhout

Brussel Leuven

Namur

Philippeville

* Defined as annualized contracted rent divided by market value

11%
Antwerpen		Wilrijk
Brussel		Leuven
Tielt-Winge		Schaarbeek
Gent		Philippeville
Brugge		Kampenhout
Mechelen		Other
Namur

	Top 5 cities	71%	5.2%
6	Mechelen
7	Namur
8	Wilrijk
9	Leuven
10	Schaarbeek
11	Philippeville
12	Kampenhout
	Top 12 cities	89%	5.4%
	Other cities	11%	7.7%
	Total Belgium	100%	5.6%

30

89% of the Spanish portfolio is located in Madrid

Overview of Vastned's portfolio in Spain

León

ADD

MadridDOTS

Málaga

* Defined as annualized contracted rent divided by market value

€98m

89%

Madrid Málaga

León

	City	% of	Gross initial
		portfolio	yield*
1	Madrid	89%	3.5%
2	Málaga
3	León
	Total Spain	100%	3.7%

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Contact Investor Relations

Remco Vergeer

Vastned Retail N.V. [e-mail] [phone]

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