Hello and welcome to the Vastned Annual Results 2023 call. My name is Karen and I'll be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point please press star zero and you'll be connected to an operator. I will now hand you over to your host Reinier Walta to begin today's conference. Thank you. Thank you. Dear attendees of this analyst meeting and webcast. My name is Reinier Walta and I am the CEO of Vastned and have the pleasure of hosting this meeting and talk you through our annual results for the year 2023. In addition to presenting the results, I will also dedicate time in this call to provide you with an update of our strategic actions and our refinancing process. I will do this by going through the slides which are now also made available on our website in the section Investor Relations Publications and Reports. After my presentation the line will be open for the analysts that follow Vastned to ask questions in the Q&A session. The year 2023 has yet again been a strong year for Vastned operationally. We are satisfied with the achieved results. The increase in the occupancy rate to 99% at the year-end and the collection rate of 99.1% reflect the quality of the tenant base as well as of our organization. During the year 2023 the letting market has been strong. We have seen a high level of 79 new leases and lease renewals which on average have been concluded nearly 15% above market rents. The like-for-like rental growth increased by 8.6% driven by indexation and a higher occupancy rate. Consumer confidence was impacted by high inflation number especially in the early stages of 2023 yet the impact on footfall for the high street has not been noticeable. Restaurants in historical inner cities continue to be well booked showing the attractiveness of the full leisure experience in historical inner cities. Despite the footfall there are groups of retailers that are suffering with the increased energy prices and the repayment of government support packages that were provided during the COVID lockdowns. This means that Vastned needs to keep an eye on possible bankruptcies. Over the past year we have seen a number of retail chains filing for solvency protection. The impact on the Vastned portfolio was limited as we have been able to replace the tenants relatively fast as a result of the good locations of our properties. The strong operational performance translates into a stable financial performance as the like-for-like rental growth is offset by the increase in the interest rates that we need to pay on our debt. This results in a direct result of EUR 2.01 per share which is in the middle of our indicated range of EUR 1.95-EUR 2.05. This allows for a dividend proposal of EUR 1.85 to our shareholders equal to last year. With an interim dividend of EUR 0.57 per share already paid, the final dividend to be paid will be EUR 1.28. This is a payout ratio of 92% of our direct result which is well above the minimum of 75% of the direct result set by our dividend policy. With this Vastned continues to provide stable returns to shareholders. As you all know Vastned is currently working to execute the actions from a strategic reorientation. This means that the coming year will be one of transition. Therefore Vastned does not provide guidance on the direct results for 2024 at this stage. I now would like to update you on the actions that we are taking following the outcome of the strategic reorientation. As a short reminder, we concluded that divesting specific parts of the portfolio will generate most value for Vastned and its stakeholders and that Vastned continues to explore a new structure that fits the size and nature of Vastned. The investment market is a challenging market at the moment. Last year we have divested our properties in Almelo, Mons, and Haaksbergen. Properties in Hardenberg, Harderwijk, Namur, and Aalst were sold in the early stages of 2024 bringing the total divestments to EUR 8.2 million with sales on average more than 22% above book value. Vastned will continue the process of further divestments in 2024. We are currently working on various transactions which we expect to close throughout 2024. Also, good to note and probably not surprising no investments were made in 2023. As the abolishment of the FBI regime has been passed into law, there is clarity that this government measure will be effective as from January 2025. We currently expect the impact to be close to 10% of the direct result on the current portfolio from 2025 onwards. We aim to address the abolishment of the FBI regime and the dual listing in the Netherlands and Belgium. Two listings lead to higher costs, and there are limited benefits to have both listings. We therefore investigate the options to come to a preferred single listing and to optimize the structure of Vastned without having an FBI regime in the Netherlands. As already indicated, the like-for-like rental growth is the strongest contributor to the direct result per share. The growth is however offset by higher financing costs and slightly higher expenses resulting in a slightly lower direct result per share in 2023 compared to 2022. The higher financial expense mainly results from the floating part of our debt portfolio. The divestments from the strategic reorientation will not only reduce our leverage and improve our financial ratios but they will also firstly be directed to repay the floating part of the loan portfolio. Vastned continue to operate with a very lean organization. Currently we have 31 full-time employees which is in line with previous years. Higher consultancy costs among other matters related to the strategic reorientation price indexations and the consequences of the abolishment of the FBI regime resulted in slightly higher general expenses. With a slight increase in income tax and an increase in the result attributable to non-controlling interest, the direct result over 2023 was 2.01 EUR per share in line with the guidance of 1.95-2.05 EUR that we had provided. The occupancy rate increased most notably in France and Belgium in 2023 and remained steady at a high level in the Netherlands. The portfolio in Spain remains fully let. This shows the quality of the Vastned portfolio in all four markets. In 2023 the leasing activity increased significantly. Contracts signed impacted more than one-fifth of our total rental income. We have previously mentioned new lettings to New Balance in Madrid, Zadig & Voltaire in Nice, and amongst others the lease renewals of Jimmy Choo in Madrid, H&M in Bruges, Burberry, and Schaap en Citroen in Amsterdam, and both Pull & Bear and Uniqlo located in our property between the Kalverstraat and Rokin in Amsterdam. In the fourth quarter, an additional 12 new leases and new lease renewals were signed. These include amongst others a new lease to HEMA in Brussels and to a new tenant Mr. Marvis on the Bakkerstraat in Arnhem. Lease renewals in the last quarter have been signed amongst others with Basic-Fit in Montigny that's in Belgium and Hunkemöller in Amsterdam. The impact of the rental change versus prior rent is mainly impacted by two contracts. The largest one was the lease renewal with H&M on the Steenstraat in Bruges. The rents were at a lower level than the previous rent but still concluded significantly above market rent. The like-for-like rental growth is positively impacted by indexation. The effect of indexation had a very significant impact in the first half of the year. Indexation of rents is linked in various ways to the level of inflation and depends on the anniversary dates of our rental contracts. In Spain the rental growth was impacted by a one-off early termination fee received for a property where the tenant left in the beginning of 2024. The letting process for this property is currently ongoing. We have confidence that we will be able to relet this property quickly. We believe that diversification is key. Our portfolio reflects a large diversification in terms of tenants locations and categories. The healthy diversification reduces sector-specific or tenant-specific risks. Over the past years a slight reduction has been visible in the share of fashion in our portfolio. Another trend that's becoming visible is a trend for traditional e-commerce retailers to open physical shops to find the right balance between online and physical shopping. An example of this in our portfolio is the upcoming opening of the store of Mr Marvis in the Bakkerstraat in Arnhem. Online retailer My Jewellery is now also a tenant in our portfolio for a number of years and is further expanding their physical presence. It shows the value of having your shop in the right location. Let me now go over the value development of the Vastned portfolio. Valuations of Vastned properties have decreased by 3.2% most notably in France where there has been some pressure on the investment market and a relatively low number of transactions for similar properties resulting in a downward adjustment of the value of our properties in the second half of the year. As our French portfolio is generally a lower yielding portfolio, the impact of higher yields had a larger impact on the valuation of our French portfolio. In the Netherlands and Spain, the valuations notably decreased in the first half year when the inflation rates were high. With lower inflationary pressure and continuing improvements in our consumer confidence, the valuations for the second half year remained flat, which is a positive sign. In Belgium, the valuations for our properties remained flat over the year, confirmed by each quarterly valuation of the entire portfolio. The mixed portfolio of historical inner city retail locations and retail park locations has proven to be a very strong and balanced portfolio. In order to finance the operations Vastned operates with a diversified debt portfolio. There are a number of financial covenants which may address insolvency above 45% as well as an interest coverage ratio above 2.0. The interest coverage ratio ended lower in 2023 as a result of the higher interest rates. Nonetheless Vastned operates well within the financing components. The average interest rate increased from an average of 1.9% in 2022 to an average of 2.7% in 2023 mainly as a result of the floating part of our debt portfolio. During the second half of the year also the short-term interest stabilized and came slightly down. Mainly as a result of the lower valuation of our properties, the loan-to-value ratio increases. With a strategic reaction to divest properties, Vastned aims to be in line with its long-term target of 40% or lower. The amount of unused credit facilities decreased as we have opted to repay an outstanding revolving credit line of EUR 40 million with two relationship banks and a EUR 50 million term loan in Belgium during the year. We now have EUR 76 million of unused credit facilities available, which is sufficient liquidity to cover our operational needs. Our loan portfolio has loans maturing in 2024 and 2025. We have addressed the nearest maturities with a full refinancing in Belgium and a bridge financing arranged at holding level. In Belgium, all facilities previously in place to a value of EUR 125 million have been extended. We now have financing in place with new 3- and 5-year maturities to cover the Belgian portfolio. In order to execute a strategic action following the strategic reorientation it is important for Vastned to maintain a certain level of flexibility. Therefore we have come to an arrangement at holding level to obtain a bridge loan. The purpose of the bridge loan is to cover the repayment of the EUR 240 million loan maturities by September 2024. The facility will only be drawn upon in September at the earliest and the magnitude also depends on the divestment made over the course of 2024. The backup provided by the bridge loan allows for Vastned to shape the future portfolio while keeping the existing financing at attractive rates in place. When the strategic actions following the strategic reorientation are concluded, this allows for Vastned to establish a balanced longer-term loan portfolio that suits the company. Given the strong operational results that Vastned has achieved, sufficient liquidity available to finance our operations and projected divestments to reduce our external debt, Vastned proposes a stable dividend payout of EUR 1.85 per share equal to the dividend paid out over 2022. This implies a payout ratio of 92%. The final dividend payout is subject to approval by the annual general meeting which is scheduled on the 25th of April. As a result of the strategic actions being executed following the strategic reorientation, the coming year will be one of transition for Vastned. Therefore, we do not provide guidance on the direct results for 2024 at this stage. Then to conclude, Vastned achieved strong operational results for the year 2023, reflected by the high occupancy rate of 99% and the 8.6% growth of like-for-like growth rental income. Given the good financial results, we will propose a stable dividend of 1.84 EUR per share. In 2023, the quality of our portfolio and organization remained robust. We also secured the financing of our business. First of all, we realized the refinancing of our Belgian portfolio and secondly we arranged a bridge loan to facilitate Vastned's transition to its future portfolio. We are confident that we can take the necessary steps in executing the various strategic actions following the strategic reorientation. This includes further divesting parts of our portfolio and a review of opportunities to adapt the structure of Vastned to a preferred single listing and to be ready for the abolishment of the FBI regime in the Netherlands. Thank you for listening. We now opening the floor to questions. Operator, I hand it over back to you. As a reminder, ladies and gentlemen, if you would like to ask a question on today's call, please press star one on your telephone keypad. We'll take our first question from Steven Boumans from ABN AMRO – ODDO BHF. Your line is open. Please go ahead. Hi, good morning, and thank you, of course, for taking my questions. I have several, maybe to start with the refinancing. You mentioned the big difference between variable loans versus the rest. Could you provide some color on the difference on the average cost of debt for the variable loans? The variable loans, then we have, of course, our margins, which are the same as the fixed loans. The only thing is we pay the Euribor, the three-month Euribor, and we know that three-month Euribor is around 4% a little bit lower, and our loans are locked in at way lower rates than that, our long-term loans. Oh okay. Clear. Maybe on the bridge loan can we assume because you don't provide numbers there but can we assume between 6% and 7% interest rates? The bridge loan is. We have concluded that against market conditions, of course, and why it's difficult to now give you numbers on that is it's all going to depend on divestments. At the end, what's going to happen is, in September, we have a backup. We look how much we have sold to repay the loans then, and if we don't have sold enough, we could use the bridge loan as a backup at that stage, and then we can calculate what the average cost of debt would be on that loan. Okay. Then maybe let's say you are successful in all the plans that you have in the sponsors everything. What is then the expected cost of debt that you will have after September? Yeah, that's difficult to say because we also need to then look at refinancing for the next year. So of course we will, the only thing I can say at this stage, Steven, is that we will have of course a higher cost of debt, but if we are successful in selling our assets then we have almost no short-term debt anymore. So on the short term that will help us in keeping the cost of debt under control. Okay. It's sort of clear. I think that's good enough for the refinancing. Then I have one question on the dividend and I'll leave it to the others. You decided to propose a 92% payout ratio given with everything that's going on earnings are likely to fall. That makes sense right? So you need to cut dividends anyways. Why didn't you decide to cut it today? I think that we are confident in our sales program that we will be able to sell enough to repay our debt and to get the financial ratios we want and get the flexibility we're looking for. And as we had a great operational year, we still took the decision to pay out the dividends on that. So it's at the end a reward for our year 2023 and we are confident that in 2024 we will be able to sell enough to get the balance sheet we want. Okay. But let's say you do the disposal 2024. You also have high tax rates so earnings will likely drop so likely dividend will also drop for next year 2024. That's what we're going to see next year, Steven. We have not given a forecast at this moment, so let's also not then discuss now the dividend forecast for that year, of course. But we have also mentioned that we're going to have a higher cost of debt and we will have an impact for the tax. Yeah. Okay. It's still not really clear to me why you don't only pay out the 80% payout for example this year but okay fine. I'll leave the questions for others as well. Thanks. Thanks Stephen. Our next question comes from Ventsi Iliev from Van Lanschot Kempen. Your line is open. Please go ahead. Yes, good morning, and thank you for taking my questions. First one on the bridge financing. I mean you mentioned attractive rates but then should we assume that the bridge financing is drawn on fixed rates and not floating rates? And then second one could you perhaps indicate what the duration would be as in 1 year 18 months or? The idea, Ventsi, is that we have the bridge loan in place as a backup so we try to use it as less as possible. Then what we have to do during 2024 is already look of course also at our financing maturing in 2025. In combination with looking at our structure we will work already in 2024 to see what financing needs to be in place also 2025. So you can assume that the bridge loan is a short-term loan as a backup which needs to be taken out also when we refinance in 2025. Okay, thank you. And then you also mentioned the preferred single listing. Could you provide more color on that if I'm not mistaken? The listing of the Belgian subsidiary has been unsuccessful in the past. And then is it just the listing or also are you exploring other opportunities as well? At the moment, what we are doing we are exploring multiple alternatives in which we try to combine the fact that we have the optimal structure after we don't have the REIT regime in the Netherlands anymore and then in combination to see whether we also can get to one listing and how that will look like. If there is more around that, then we will come back to the markets and inform the markets about that. Okay, thank you. But as a small company, oh, sorry, no. No, go ahead. As a small company, for us, we think it's we have to be as efficient as possible, and two listings is just not that efficient. Yeah, clear. And then on the FBI regime, you expect the impact to be 10%. Then, if we compare this to one of your peers that is fully exposed to the Netherlands, they expect more 5-7. Your Dutch exposure is only 45%, let's say. So, can you perhaps elaborate a bit more on the divergence? Yeah, for us the 10% is based on how the structure looks like now if we do nothing. And of course we will also look into a new structure as I mentioned before that we will look both at the dual listing and the FBI regime how to see how we could come to an optimized structure. And then we will also have to see if we have chosen an alternative what the impact would be. And this is of course also one of the drivers for to look at the alternatives. So that's the way we look at it now. Okay then and then just last one. So you report the like-for-like rental growth at 8.6%. I didn't quite understand. Does this already include the termination fee? And perhaps could you indicate yeah could you indicate what the like-for-like would be excluding this and perhaps also what the direct result per share would be excluding this? I think it will have some impact but it will not have a massive impact because it's about total amounts. So I don't know what it would be without that. And don't forget the only thing I can say we're not talking about termination fee of millions so it should not have that impact. Okay, but then could you indicate the total amount of the termination fee? So I guess clearly less than EUR 1 million. I don't have that off the top of my head. And don't forget it's also a Spanish company so it's also a taxable company so there's more to that. So I don't know off the top of my head now, Ventsi. Okay, thank you. That's it from my side. And then next we have again Steven Boumans from ABN AMRO – ODDO BHF. Your line is open. Please go ahead. Hi, thanks for having some follow-up questions on the devaluations. Maybe to start with France, they obviously stand out. You mentioned it's due to the lower starting yields, but also Spain, for example's lower yielding. So I guess there are also some other reasons why France is more impacted. Is there more market evidence in France or I don't know, have there been discussions with potential buyers providing some price discovery or I don't know, specific issues in the country? I think Steven, it's more about there's less transactions so there's not a lot of evidence for valuators. If I also look at peers I see a little bit of the same line. I think in France valuators have taken the view that there are things going on and then there's not a lot of evidence so then it's always a little bit in the dark for them. And they have been quite conservative I think at this moment and that's why you see France stand out at the moment. And in Spain you already saw that a little bit at the beginning of the year because if you look at the valuation in Spain they were a little bit lower in the beginning of the year than whether it was still stable in France. Okay, clear. Then Belgium stands out positively at the other side. If I read the press release from Vastned Belgium, it says there's still much discrepancy between buyers and sellers and what they want to pay or receive in yields. It will have an impact on valuation on the portfolio and could lead to interesting investment opportunities. Can I read that book values are expected to drop and you expect to do acquisitions in Belgium after? No, I think the way we look at it is that if you look at the valuations, how it has gone at the end, Belgium is quite stable over the last year. Same thing for the Netherlands. Towards the end of the year, is that what's going to happen to valuations? I think is a crystal ball. But we can of course see that the interest rates have been stabilized, although the investment market, which is at the end where it all happens, is quite challenging. So, and that's also, I think, what we have said in our Belgium press release is that it's a challenging market. We have independent valuators that give a view on that. Are we going to do acquisitions? We're now in a strategic reorientation in which we have mentioned that this year is a transitional year. After we have done this, there is a new Vastned which can look ahead, and then we will also come with how the strategy will look to that company at that stage. So at this stage, I cannot say what we're going to do next year because we're now focusing on 2024. Okay, clear. Then my final question. I try to still get some more color, obviously, on the disposals. I know you're quite restricted there for obvious reasons. But can we, what do you like to prefer to keep? Is that the higher quality low-yielding assets or the other way around? So, probably want to keep, yeah, the maybe higher-yielding assets. Is there a preference between higher low-yielding assets? What we have done, we have looked at the whole portfolio. We have looked at yield expectations on rental expectations. What are units over-rented, under-rented? So it's a way bigger picture than only saying we want to sell lower or higher-yielding assets. Does the asset still fit the portfolio and what do we think that the asset will bring us in the future? That's the main driver of the assets we selected we would like to sell. Okay, so it's really a bottom-up approach for the disposals. Yeah. Okay. Okay, clear. Thank you so much for answering the questions. Our next question comes again from Ventsi Iliev from Van Lanschot Kempen. Your line is open. Please go ahead. Yes, follow-up question. Apologies. On Dutch valuations. No, no problem. Yeah, on Dutch valuations. If I compare the full-year result to the half-year result, then that would imply that the Dutch portfolio was written up. Is that a function of increases in ERVs or yield expansion stabilizing? I think if we look, it's that the Dutch portfolio was quite stable in the last half a year. So it's not yield and not ERV because it was quite stable. I think if you look at the whole valuations then it's more a yield thing at the moment than an ERV thing because you can also see that we're able to charge higher rents. So I think if you look at valuations in total it's more a yield thing at the moment. Okay very clear. Thank you. Our next question comes from Amal Aboulkhouatem from Degroof Petercam. Your line is open. Please go ahead. Good morning. Thank you for your presentation. I have a few questions on the operational side. As you mentioned you witnessed a strong year in 2023. Given the strong figures what's the outlook for 2024 in terms of indexation perhaps also occupancy you've reached let's say a high level overall. In terms of bankruptcies also you mentioned that there are some let's say weaker retailers still struggling. Do you have any view on that? If we look at our portfolio I think we have quite a unique portfolio and good locations. So we will strive to ensure that we keep the occupancy as high as possible. And that's of course the goal every year what we work for. Of course we see some retailers go bankrupt and we haven't seen in the past and we have been able to release those units quite quickly and also at good rents. So that's what we keep continuing to do. And for us it's always about getting the best tenants in our units and make sure that we have the best units. Like-for-like is of course a different question because like-for-like has been influenced also by indexation sorry by inflation. Inflation has come down so there will be of course less indexation. I think that's a fact. How it will play out, that's what we will see during the year. Okay, okay. Perhaps just to come back on disposal. I understand at this stage it's difficult for you to give a lot of color, but on the other side we see and hear that markets are investment markets are very quiet overall. Is it fair to say that basically the disposal will be mostly driven by market liquidity more than real, let's say strategically and voluntarily decided assets? Meaning that, do you have any really the choice to pick the assets you want to sell or the market will actually tell you what and where to sell assets? First we have made an analysis of our portfolio and we have decided what we would like to sell. That's what we bring to the market. That's the way we go ahead. That's also why we're not rushing this and we take time because for us the most important is that which selling assets we show that what the value of our portfolio is and we make sure that we get a healthy balance sheet and the financial ratios we want. It's a process driven by us and not by the markets. Then that's also the way why we do it pragmatically and rationally. Okay then, if I understand you correctly, the priority is really to stick to the targeted assets and then meaning that you might perhaps not reach the disposal amounts targeted to refinance the debt maturing in September. Is that correct? That's also why we have, of course, chosen to have a backup facility and to then, from that moment, see how we would go ahead. What we don't have an objective how much it should be because for us it's been done pragmatically and rationally. The main goal is to unlock value for Vastned and all its stakeholders and get those ratios the way we want them. Okay okay. Very clear. Thank you very much. There are no further questions in the queue. As a final reminder, if you would like to ask a question, please press star one. There are no further questions, so I will hand you back over to your host to conclude today's conference. I would like to thank everybody for their participation. I think if you have any other questions, don't hesitate to call us, and we will of course always be able to answer those questions. Thank you. Thank you for joining today's call. You may now disconnect.