Good day and thank you for standing by. Welcome to the Neinor Homes 9-month 2022 results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone, and you will then hear an automated message advising your hand is raised. If you wish to ask a question via the webcast, please type it in the Ask a Question tab available on the webcast link any time during the conference. Please be advised that today's conference is being recorded. Now I'd like to hand the conference over to your speaker today, José Cravo. Please go ahead.
Thank you. Hi, good morning, everyone. My name is José Cravo, and I'm the Head of Investor Relations at Neinor Homes. Today, we are going to go through our 9-month results of the fiscal year 2022. As usual, we are here with Borja García-Egotxeaga, our CEO, and Jordi Argemí, our deputy CEO and CFO. We will start the presentation with the key highlights of the 9 months, then we will review the operational and financial performance of the businesses, and we shall finish with the main takeaways. After the presentation, as usual, there will be a Q&A session to answer any questions you may have. Now I hand over the presentation to our CEO, Borja García-Egotxeaga.
Thank you, José. Welcome all to this Q3 results presentation. My first message is regarding 9 months' results. We have delivered 1,548 units and recorded total revenues of EUR 506 million, an EBITDA of EUR 81 million and adjusted net income of EUR 53 million. As of today, we have delivered more than 2,000 units, and therefore we are happy to reiterate our guidance of between 3,000 and 3,500 deliveries and an EBITDA of between EUR 140 million and EUR 160 million. The second message is that we keep executing our business plan, putting a big focus on the de-risking of cash flows.
By December 2022, between our two business lines, we should have 8,400 units active and 5,900 units under construction or finished product, which provide us a good visibility for the coming years. Our commercialization performance remains resilient, with a net absorption rate of 6.1%. This behavior is justified by the quality of our product, its location in the top six regions of Spain, where there is both population, a household growth, and a lack of new homes product. With the objective to protect margins, we have increased prices year-to-date, but we are also working on the cost side through our tight control of CapEx, OpEx and overheads. Furthermore, on corporate debt, we have no refinancing risks until 2026, and we have a fixed cost of 4%.
While as for development loans, where we are exposed to variable rates, we have recently acquired interest rate caps at 2% to the risk of the CapEx financing needed until 2026 and 2027. We have no refinancing or interest rate risk until the years 2026 and 2027. The third message is on Neinor's strong and unique cash flow generation profile. Year-to-date, we have distributed EUR 120 million to shareholders through dividends and buybacks, and still we expect to finish the year with more than EUR 250 million cash position. We move to slide 6. Here you have a summary of our main operational and financial KPIs, which we will review through the presentation. Now please follow me to the section 2, where we will analyze our operational business performance.
Slide number 8, as I said in the introduction, commercialization environment remains resilient. In spite of macro uncertainty and price increases, our net commercialization absorption rate remains above 6%, and that is significantly above our historical average of 4.8%. I would also like to highlight that cancellation rates are historical lows. With more than 2,000 units notarized year-to-date, our clients are not having problems in getting financing from Spanish banks. Moving to next slide on acquisitions. As we have always said, Neinor follows a very disciplined and opportunistic investment strategy, and we have a proven track record in reading the cycle. During the third quarter, we have decided to jump on some opportunistic deals and close the acquisition of 600 new units.
Still, today, our main focus has shifted to execute and de-risk our business plan and generate cash flow. Please follow me to slide number 10. Here we have a snapshot of our rental portfolio. As you can see, we continue to launch new rental projects, and we now have 3,861 units in different stages of development with potential rent of EUR 42 million and gross asset value of EUR 900 million. Neinor’s strategy is to create a portfolio of prime assets in a deeply undersupplied market where there is virtually no new housing product available. We will follow an opportunistic strategy with our portfolio and flexibility. In slide number 11, you can see operational performance of the rental portfolio, which reflects the strong demand for rental product in Spain, as well as the unique characteristics of our Build-to-Rent portfolio.
Occupancy is stabilizing between 96% and 97% as we see some tenant rotation. Year to date, we have renegotiated 121 contracts, of which 12 are renewals and 109 are new leases on which we increased rents by 15%. A very strong figure that demonstrates the fundamentals of the rental business. As we have said in the previous presentation, we are getting closer to the deliveries of the rental portfolio over the coming months. We have three new projects to be delivered, Sky Homes, Buenavista Homes, and Europa Homes, with more than 400 units. For these three assets, we have seen interest by a total of 1,659 potential tenants, which give us a lot of confidence on the leasing course of these assets and potential rents to be achieved.
Now I hand over the presentation to Jordi so that he can review the financial performance.
Thank you. As Borja said, as of today, we have more than 2,000 units notarized, and this means an EBITDA close to EUR 110 million, which means that we are well on track to deliver our guidance of 2,500 units minimum for this year with an EBITDA ranging EUR 140 million-EUR 150 million. With this, it will be the fourth year in a row accomplishing with our guidance despite COVID, our world, and the current market macro situation. With that said, in slide number 13, you have a summary of the key financial figures. First, on the top line, higher development revenues have fully offset the termination of the servicing contract.
If we look at margins, recall that the servicing contract had a significant contribution, and due to this, we see a slight decrease in margins. As you will see next page, the development business continues to operate with strong margins. If you look at the EBITDA of the first 9 months of this year, we reach EUR 81 million, and this means 3% below year-on-year. If you look at the bottom line, net profit, you can see 14% decrease year-on-year. It's mainly to the fact that in 2021, we recorded almost EUR 12 million of build to rent developer margin. In this year, 2022, we will see only this effect of the build to rent developer margin in the last quarter.
If we look at the net debt, we see an increase compared to the first semester, and this is mainly due to the EUR 50 million dividend paid in July and also EUR 20 million of additional deferred land payments. In any case, as you can see, we still remain at a comfortable Loan-to-Value of 25%. In this fourth quarter, the last one, we expect net debt to decrease thanks to the strong deliveries we will have. Here, also important to state that we don't have any refinancing risk on corporate maturities until 2026.
Also, as Borja said before, we decided to acquire in August, prior to the Euribor increase, interest rate caps at 2% to hedge all the CapEx to be invested in Build-to-Sell, but also in Build-to-Rent business until 2026. I would say we are well covered here. With that said, let's move to the next slide to see a zoom per business line. In the first 9 months, we notarized 1,500 almost 50 units, and this means 5% above last year with an ASP of EUR 310K per unit. Development revenues are up by 3%. Other revenues as you can see, are down by 48%, and this is due to the termination of the servicing contract I was commenting before.
As explained, basically this explains the decrease in the margins by 1.4% and also has a direct impact on the gross margin in absolute terms, obviously, no? If we jump to the rental business, the excellent performance operational performance is translating into financial results. Average occupancy, as you can see, 92% and monthly rents are increasing. This implies that the gross rental income stood at EUR 3.3 million, significantly above last year. This is a combination of the higher occupancy, but also the higher rents. The last data point is in the net rental income that you can see that we have a very strong growth. This is again also based on the occupancy rate, but also on the tight control of property expenses.
The result, as you can see, 68% margin, and we expect to keep increasing this percentage over the coming quarters. With that said, I hand back the presentation to Borja.
Thank you, Jordi. Okay, now we move to slide number 20. We can see the takeaways. I would like to conclude today's session with two main ideas. The first one is about the Spanish real estate sector. Today, we are seeing generalized increases in interest rates worldwide. These circumstances will provoke temporary recessions in some countries, affecting the speed of house sales and in some cases, even price corrections. Regarding Spain, all the forecast reflects that the GDP growth rate for coming years will be between 1%-2% and without employment destruction, that, as you know, is one of the main worries of the Spanish economy. For the last decade, the Spanish real estate sector has been producing half the new homes it needs.
Developers in Spain have already pre-sold most of the deliveries for coming years. As such, we don't expect price corrections. My second message is on Neinor's unique capacity to generate a lot of cash flows in a short period of time. First, on our Build-to-Sell business. As of the third quarter of 2022, we have 5,600 units, of which nearly 50% are already pre-sold. With this, we expect to generate an operating cash flow of more than EUR 700 million. Second, on the Build-to-Rent, as we explained, we are creating a portfolio of prime assets in a deeply undersupplied market. Today, we have almost 4,000 units, of which 2/3 are located in Madrid and Barcelona, and expecting to generate more than EUR 42 million in rents.
At an affordable value of EUR 260,000 per unit, this platform is worth more than EUR 900 million. I would like to finish by saying the following. Since the new management team took over, we have been delivering on our business plan targets for 4 years in a row. We don't see major changes in fundamentals of sales, costs, and financing. Still, we have been preparing to face these challenging times, as we re-reduced land acquisitions, we have plenty of cash in our balance and very good financing conditions. Finally, there is a huge disconnection between the real value of listed real estate companies in Spain and the current market capitalization. We will work hard to correct the situation in the coming months.
Thank you all very much. Now we can move into the Q&A session.
Thanks.
Thank you. Operator, you may start as usual by the phone line, then we'll go to the webcast platform. Thank you.
Thank you very much. As a reminder to ask a question over the telephone lines, you'll need to press star one one on your telephone and wait for your name to be announced. You can also type your questions via the webcast link. We'll start with questions via the phone lines. Please stand by. First question is from the line of Sofía Bayard from CaixaBank. Please go ahead.
Yes. Hi. Good morning, thank you for taking my question. On my side, my first question would be on the evolution of pre-sales in the quarter. We understand that the performance was partially due to having fewer build-to-sell deliveries in the short term and to the company's focus on protecting margin. Could you elaborate on the underlying trends you've seen in the quarter, particularly as pre-sales coverage seems somewhat low when compared to the level at which this was last year. We saw that at the 9th month of 2021, you had 70% pre-sales coverage on 2022 deliveries, and this year it would be around 55%.
Just to understand this and if you see any the deliveries in 2023 or 2024 in jeopardy. Also then on your cash flow generation and shareholder remuneration focus, if you could be more specific on what has changed in your strategy, and if this will involve a more conservative land acquisition and M&A acquisition policy or maybe other alternatives. Please, if you could elaborate on that. Maybe if this could imply that we could see, just to mention, because you mentioned the cash flow position by the end of the year, if we could see additional dividend payments on 2022 earnings, as we understood that the dividend was brought forward to July, but maybe there's you could have additional dividend payments.
That will be from my side. Thank you.
Okay. Thank you very much. We are here with Mario Lapiedra, our Chief Investment Officer, who will take the first question to give you more detail on sales and how we are working this year. I will take later the second one.
Yeah. Okay. Regarding the sales, there's two concepts, coverage first and then the general trend and how we see the market as of today. In terms of coverage, our target for 2023 was to end up the year in the 65%. Previous year, we had bigger than enough order book, but our target from the beginning has been the 65. As of September, we showed the 55. As we speak, we are already in the 60, so we feel comfortable to end up the year this year in that region of the 65%. Regarding the 2024, we have also most of the product in the market during the second half of the year, and the absorption has been very good.
We feel comfortable also in the next months to reach that 30%, that was the original target. Going to the second concept on the general trend, I think the best data and fact that we can comment is on the absorption, net absorption rate that we are showing. We are still above 6%, that's an extremely good absorption rate. In other times, we were talking about being more conservative and driving demand for the HPA. In any case, we are well above the 4% that would be the general norm for an absorption in 24 months.
Our feeling as of now for our product in our niche markets in the top cities in Spain, it's a good demand and in general terms, we do not expect in the next 2 months any change. Regarding the second question of shareholder remuneration, as we have said so far this year, we anticipated a EUR 50 million dividend that was to be paid in 2023, and we also bought or took a share buyback of EUR 20 million. No further decisions have been made so far, but we'll keep having good health in the company. Whatever decisions will be taken will come in the following months and will be taken by the board and communicated at that moment.
Thank you. We'll now take our next question on the phones. Please stand by. This is from the line of Fernando Abril-Martorell from Alantra Equities. Please go ahead.
Hello. Good morning. Thank you for taking my questions. I have two, both of them with regards to your BTS business. First is on the new WIP. You are still, let's say, below run rate targets with regards new WIP units, year to date. I don't know if you can elaborate a bit on this, on the reasons behind this and also on your expectations for Q4. The other question is with regards prices. Your order book is right now at EUR 270,000 average. Q3 pre-sales has come with an average of EUR 290,000, more or less.
I don't know what your overall expectations for your deliveries coming next year in terms of prices. Thank you.
Thank you very much, Fernando. I'll take the first and the third question, and I'll give back the word to Mario for the third one. Regarding the WIPs, the number of WIPs that we have currently on the company is similar to the WIPs level that we had in 2021 or 2020, and this is more or less 4,500 units under construction. Today, we have some hundreds of licenses to start soon new works. This is something that we program every year and as other years we have been putting. This is the calendar that we consider more accurate.
For this year, the calendar that we are following has been during the first part of the year, that as you know, there was a big cost increments in the construction sites. We have worked a little bit more in some of the projects, but it's nothing new. I would say normality there. We have been for 4 years delivering what we have said and work, we keep working in a normal climate for the Q4.
The third question, sorry.
Yes. No, it was regarding the take on pre-sales. No, as we have been commenting in other times, it depends a lot on the product mix, specific product mix of the quarters. In the last months, we have launched projects like Montesa or La Roca that will increase that average. In any case, in the product of EUR 250,000-270,000 per unit, we are seeing an extremely good performance. Actually one of our top performance in terms of geography is the Corredor del Henares, where we are selling more than 20, between 20 and 30 units per month, even this quarter.
In general terms, it would depend on the specific product mix of the quarter, but in any case, we are comfortable in both segments.
Hi, thank you. Just a follow-up on the first one, Borja. So you've mentioned that you had some issues in the first half as well as your peers with regards, you know, closing construction budgets due to the cost inflation. Q3 remained low. I don't know, is this because was just temporary and should pick up strongly in Q4?
Sorry, I didn't understand very well the question, José. Can I.
Sorry, Fernando. Yes. Since.
Last summer, we have started putting a little bit more on speed on the construction of new sites. As a matter of fact, in the last month, we already launched some or a lot of new houses. For the Q4 and the beginning of next year, January, February, we expect to launch a lot of new constructions.
Okay. Okay, thank you very much.
Thank you.
Thank you.
Thank you. We'll now take our next question. Please stand by. This is from the line of Florent Laroche-Joubert from Oddo BHF. Please go ahead.
Yes, hello. Thank you for the presentation. Some very interesting questions have been asked on the current recurring business. I would have maybe one single question on your rental platform. We can see in the Spanish press that there are some articles commenting on your discussions to crystallize the value in your rental platform. My question will be as follows. Why should we consider your option to crystallize the value in your rental platform as the highest option? Thank you very much.
Okay, I take this one. Well, regarding the what has been shown in the press, at this stage, we cannot do any further comment only that we keep working. Regarding the value of the rental product, as of now, we see two different impacts. One potentially negative and the other very positive. The negative obviously is the evolution of the interest rates. The positive is the rent increase that as Borja mentioned, we are experiencing 15% year-to-date rent increase well above the inflation. Depending on the type of investor, the leverage needs and the specific assets, the result on the values could be higher, the same or lower.
It could depend a lot on the specifics on an asset by asset basis.
Okay. In terms of momentum, of course, we have this increase of interest rate. We are in a macro environment that is maybe not very positive. Why should we consider that the momentum could be the right momentum for you to crystallize the value of this portfolio?
We cannot disclose a concrete timing at this moment.
No, of course, I can understand that.
Okay.
Thank you very much.
Thank you. There are no further questions on the phone lines at the moment, so I'll hand over to you to take the webcast questions.
Thank you, Sarah. I'm going through here the list of questions that we were sent on the webcast, and I think all of them has been already answered on the phone line. If there are any further questions, we will finish the session.
There's a final reminder, if you have any further questions on the phone, it's star one and one on your keypad. No further questions coming through at the moment.
Okay, thank you very much. I guess that concludes the 9-month results presentations of the year 2022. If you have any further question, we are happy to take it after the session. Thank you very much. Have a good day.
Thank you. That does conclude the conference for today. Thank you for participating, and you now may disconnect. Speakers, please stand by.