On the surface, Wereldhave N.V.'s Full Year 2023 earnings call seems like a standard, if positive, affair. The company boasts a 6.5% direct result growth, a bump in proposed dividends, and a positive valuation result for the first time in a decade. But buried within the optimistic pronouncements and detailed financial figures lies a potentially explosive revelation, one that hints at a dramatic shift in Wereldhave's strategy and a potential surge in growth in 2024.

The subtle but crucial change lies in Wereldhave's discussion of their 'LifeCentral' strategy. For years, this strategy has focused on transforming oversized convenience shopping centers within the Benelux region into vibrant 'Full Service Centers' – essentially derisked, mixed-use hubs catering to daily life needs. While the strategy has proven successful, Wereldhave has now indicated a significant expansion of its ambitions, moving beyond the familiar Benelux borders to explore opportunities in new European markets.

This shift is driven by a confluence of factors. Firstly, Wereldhave acknowledges that they have reached a pivotal point in their LifeCentral strategy, having already invested nearly 70% of the planned CapEx. With limited room for further internal transformations, scaling the company through external growth becomes imperative. Secondly, the abolishment of the Dutch 'FBI' regime in 2025 adds a layer of urgency to diversify their portfolio and explore tax-efficient environments beyond the Netherlands.

While the move beyond the Benelux might seem like a bold gamble, Wereldhave is keenly aware of the potential pitfalls. CEO Matthijs Storm candidly acknowledges the company's 'mixed track record' with foreign expansion, referencing their previous foray into the French market, which ultimately led to significant divestitures. This time, however, Wereldhave emphasizes a measured approach, applying stringent investment criteria and emphasizing the importance of internal asset management expertise in any new market they enter.

Here's where the potential for explosive growth emerges. By carefully selecting markets that align with their LifeCentral acquisition criteria, Wereldhave can leverage their proven transformation expertise to unlock significant value in underperforming assets. They've already demonstrated their ability to achieve yield compression and rental growth through their Full Service Center transformations, exceeding their internal IRR threshold of 8%. By applying this formula to a wider pool of assets, Wereldhave could significantly accelerate their growth trajectory.

Key Factors for Wereldhave's Success

Several key factors suggest that Wereldhave is poised for success in this new phase. Their access to both equity and debt financing has demonstrably improved, highlighted by their recent share issuance for the Polderplein acquisition and the successful issuance of USPP paper – their first since 2017. This access to capital, combined with their disciplined LTV target of 35-40% and commitment to cost savings, provides a solid financial foundation for external growth.

Furthermore, the company's recent reorganization, leading to a 7% reduction in general costs in H2 2023 and an expected annualized impact in 2024, demonstrates their commitment to operational efficiency. This streamlining of their operations, coupled with their internal IRR framework and stringent investment criteria, suggests a calculated and disciplined approach to expansion.

Wereldhave's Expansion Strategy

While Wereldhave remains tight-lipped about specific markets they are exploring, they have outlined their unwavering commitment to their LifeCentral philosophy. Any new acquisition, whether a single asset or a portfolio, must meet their strict criteria, offering the potential for transformation into a Full Service Center and allowing for internal asset management. This focus on replicating their successful model suggests a strategic, rather than opportunistic, approach to growth.

Wereldhave's Financials: A Solid Foundation for Growth

Direct Result per Share Growth