Horace Mann(HMN) - 2025 H1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Gross rental income increased by 11% and net rental income rose by 10% [2][3] - Portfolio valuation grew by 11%, marking the first valuation gain since H1 2017 [3][21] - Earnings per share remained flat at 9.9p, with EPRA earnings reported at £48 million [3][21] - The interim dividend was increased by 5%, reflecting the Board's confidence in future earnings growth [4][29] Business Line Data and Key Metrics Changes - Like-for-like gross rental income increased by 54%, with like-for-like net rental income up 54% as well [4] - Like-for-like leasing volume rose by 13%, with leasing value up by 3% [5][37] - Strong leasing performance in Ireland was noted, with expectations for further growth in the second half [37] Market Data and Key Metrics Changes - The company welcomed 79 million visitors in the first half, an increase of 1 million from the previous year [6] - Group like-for-like sales were up 1%, with Q2 showing a 2% increase [7][11] - Footfall in Birmingham increased by 5% in H1, strengthening to 8% in Q2 [11] Company Strategy and Development Direction - The company is focused on active asset management and repositioning, with a strategy termed "lease up to rent up" [5][36] - Recent acquisitions, including Bullring and Grand Central, are expected to enhance income streams and support growth [8][17] - The company has a clear capital allocation strategy aimed at maximizing opportunities to unlock value [8][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong earnings growth, supported by high demand for retail space [4][19] - The outlook for 2026 and 2027 remains positive, with expected GRI growth of around 15% in 2026 [17][30] - The company is leveraging AI analytics to enhance customer and occupier understanding, which is expected to drive future growth [35] Other Important Information - The company reported a net debt to EBITDA ratio of 7.8 times, with a loan-to-value ratio of 35% [22][28] - The acquisition of Bullring and Grand Central is expected to be immediately 4% earnings accretive [14] - The company has significant potential for future developments, with a GDV potential of around £5.2 billion from various projects [43] Q&A Session Summary Question: What is the impact of the recent acquisitions on earnings? - The acquisition of Bullring and Grand Central is expected to be immediately 4% earnings accretive, with a minimal dilution effect [14] Question: How does the company plan to manage its capital allocation? - The company has a disciplined approach to capital allocation, focusing on high-yielding assets and strategic land monetization [8][40] Question: What are the expectations for future growth in GRI and NRI? - The company has raised its guidance for GRI growth to around 17% for the year, up from a previous estimate of 10% [30]