(Boursier.com) — The property company Argan saw its recurring net income group share increase by 8% to €62.8 million as of June 30, 2023, representing 69% of rental income. Rental income had increased by 11% to 90.9 ME in the first half of 2023.
Including the effect of the change in the fair value of the portfolio for -€332.6 million, the net income, group share, however, stands at -€267 million for the first six months of 2023. The valuation of the portfolio delivered (excluding real estate assets under development) stands at €3.64 billion excluding duties (€3.85 billion including duties). Argan explains the fall in valuation recorded compared to December 31, 2022 by the decompression of capitalization rates recorded over the period: from 4.45% to 5.0% excluding duties, i.e. 4.75% including duties for a Prime rate of 4.5% (Source: CBRE).
The average debt rate as of June 30, 2023 remains quite low at 2.1%, compared to 1.5% as of December 31, 2022, for a maturity of 5.9 years. The use of long-term financing at fixed rates or benefiting from hedging instruments enables the Group to contain the impact of changes in interest rates on the cost of its debt. Indeed, the latter is made up of 58% fixed-rate debt, 30% hedged variable-rate debt (with hedging instruments that are activated for the most part as soon as the 3-month Euribor reaches 1.5%) and 12% variable-rate debt.
Thus, despite the current context of sharply rising rates since the first half of 2022, the Group does not expect a significant increase in the cost of its debt. The latter should thus settle at around 2.4% for 2023 on the basis of a 3-month Euribor rate of 3.5% over the whole year.
The NRV (the reconstitution ANR) stood at 89.3 euros per share at June 30, 2023 (-15% over six months). The significant decrease of 14.8 euros in the EPRA NTA NAV per share compared to December 31, 2022 is mainly due to the change in the value of the portfolio (-14.3 euros).
In an economic cycle where the use of debt is very expensive, Argan has decided to close the borrowing tap to finance its development, while repaying its depreciable loans up to 100 ME/year.
Argan confirms its rental income target for 2023 at €183 million and anticipates average annual growth in its rental income of close to +10% over the 2023-2024 period based on the current scope. The 2023 net recurring income target remains at 124 ME for an expected dividend of 3.15 euros compared to 3 euros in 2022.