9M 2022 Trading Update
Vastned expects direct result towards upper end of outlook range for 2022
Highlights 9M 2022
‒ Vastned continues to deliver a strong operational performance
‒ Outlook: expected direct result for 2022 towards upper end of the earlier-provided € 1.95 - € 2.05 range per share
‒ Occupancy rate of the portfolio remains high at 97.8%
‒ Collection rate increased to 98.3% (97.6% in H1 2022)
‒ 32 New leases signed, representing annual rental income of € 4.4 million (approximately 6% of total)
‒ Vastned sold non-strategic assets for € 2.2 million, with a book value of € 1.6 million
‒ € 200 million in credit lines extended by 12 months to September 2025 with same attractive conditions
‒ Expected higher 2022 dividend of € 1.85 per share in total (€ 1.73 in 2021)
‒ Proposed changes by the Dutch government to the fiscal regime for Dutch REITs, from 1 January 2024, to potentially impact Vastned’s direct result by between 5% and 10%.
Hoofddorp, 26 October 2022 – Vastned, the listed European retail property company, has again delivered a strong operational performance, with a high occupancy rate and further improved collection rate. Vastned expects its direct result per share for 2022 to be towards the upper end of the earlier provided outlook range of between € 1.95 and € 2.05. The expected proposal for the 2022 dividend is € 1.85 per share in total, which is higher than the € 1.73 in total dividend per share over 2021. The company’s continued strong performance, its high-quality portfolio with a stable and attractive tenant base, and its proactive approach to existing and new tenants, provide Vastned with the flexibility to manage potential marketplace developments and further economic headwinds.
Vastned also successfully completed an extension of its credit facilities, thereby increasing the duration of € 200 million in existing facilities by a further 12 months to September 2025. The conditions of these facilities remain unchanged during the agreed extension period, allowing Vastned to continue to benefit from a cost of debt that has been locked in at attractive rates.
The proposed abolishment of the current fiscal regime (FBI regime) for Dutch REITs in the Netherlands by the Dutch government as of 1 January 2024 will potentially impact Vastned’s direct result by between 5% to 10% from 2024 onwards. This depends on the outcome of a political process in the Dutch parliament in 2023, as well as a debate on potential flanking measures, which are still to be announced. The impact also depends on possible restructuring measures that Vastned may take in response to this proposed development.
Encouraged by the strong operational performance in the first nine months and given that we are approaching the final two months of the year, we can provide guidance that the expected direct result per share for 2022 is likely to be towards the upper end of the outlook range of between € 1.95 and € 2.05. In addition, we expect that the proposal for the total 2022 dividend will be at € 1.85 per share. At the same time, our eyes remain open to potential economic headwinds, and we are actively reducing risks where we can. So far, the economic uncertainty in Europe has had a very limited impact on our high street retail real estate business. The continued good traction with existing and new retail tenants demonstrates the strength of Vastned and our high-quality portfolio. We also believe that our organisation is ready to deal with potential changes in the marketplace, as proven in recent years.
The announced intention by the Dutch government to abolish the FBI regime for all direct real estate investments in the Netherlands came as a surprise to the sector, including Vastned. Together with most of our other listed peers, we believe there are strong arguments for an exemption for listed Dutch real estate companies before the finalisation of the government’s 2024 tax plans next year.
We believe the intended abolishment of the FBI regime will hurt the competitive position of many REITs in the Netherlands in an indiscriminate way, putting the listed Dutch real estate sector on the back foot. This does not do justice to the overall contribution and accountability of listed real estate companies since the Dutch government first introduced this successful tax transparent regime in 1969.
Today, we have provided an estimation of the potential negative impact this change will have on the direct result of Vastned, estimating this to be between 5% and 10%. However, the negative impact cannot be fully assessed at this stage, and will depend on the outcome of a political process in Dutch parliament and possible flanking measures. It will also depend on the restructuring measures that Vastned may take in response to the proposed development.
In our view, this move by the Dutch Government will have consequences that reach far beyond the direct financial impact on Vastned, given that it puts the current level playing field for REITs in Europe at risk. Plans like this result in fiscal regimes that vary significantly in the way income from real estate investments is taxed, instead of enabling the widely desired and much-needed convergence of investment income tax treatment within the European community. Together with the announced increase of the property transfer tax from 8% to 10.4% in the Netherlands in 2023, the government budget plans send a negative message to investors regarding the attractiveness of the Dutch real estate market, at a time when significant investment is needed to support real estate transformations and the addition of new housing stock, and to improve the sustainability performance of property portfolios.