NEPI ROCKCASTLE NV – Actualizare afaceri – Sens

                            
Business Update
NEPI ROCKCASTLE N.V.
Incorporated in the Netherlands
Registration number: 87488329
Share code: NRP
ISIN: NL0015000RT3
(‘NEPI Rockcastle’ or ‘the Company’ or ‘the Group’)
BUSINESS UPDATE
TENANT SALES PERFORMANCE AND ACQUISITIONS DRIVE 23% GROWTH IN NET OPERATING INCOME
FOR THE FIRST NINE MONTHS OF 2023
NEPI Rockcastle’s net operating income (‘NOI’) rose 23% in the first nine months of 2023 (‘9M 2023’) to
€365 million, versus the same period of 2022, continuing the robust pace of growth since the end of the
Covid pandemic. The main drivers of the strong performance were a combination of tenant sales and the
contribution of the acquisitions completed in 2022.
The three acquisitions made in 2022 – Forum Gdansk and Copernicus shopping centres in Poland and the
50% share of the Ploiesti Shopping City in Romania – contributed €28 million to the NOI for 9M 2023.
On a like-for-like (‘LFL’) basis, NOI increased by 14% in 9M 2023, driven by higher base rents, turnover
rents and short-term income, as well as a better recovery of operating costs (93% in 9M 2023 versus 91%
in the same period of 2022).
Tenant sales (LFL, excluding hypermarkets) were 14% higher in 9M 2023 versus the same period a year
ago, fuelled almost equally by an increase in footfall (+6%, LFL) and a rise in average spend per visit
(+6%).
Demand from both international and regional retailers for the Group’s properties remained very strong
resulting in retail vacancy falling to 2.2%. Rent collection rate for the period reached 97% by mid-
November.
Rudiger Dany, NEPI Rockcastle’s CEO, said ‘This was another quarter of very solid results for
NEPI Rockcastle, building on the exceptional performance we achieved in the first half of this year. We
see robust growth continuing across our region as household income and consumer spend are holding
up well, despite macroeconomic challenges. The acquisitions made in 2022 are showing their worth in
delivering strong value, while organic growth is supported by an increased number of visitors and very
strong tenant sales. Developments are also starting to deliver value. We opened Promenada Craiova in
southern Romania in October, the largest retail scheme launched in the entire CEE region in 2023.
Promenada Craiova was the first development of the Group where renewable energy production was
integrated over the parking areas, supplying 70% of the energy needed by the shopping centre and its
tenants. This project, together with the overall photovoltaic projects installed on the Romanian property
portfolio, will ensure a 25-30% green energy consumption across these properties.’
WELL CAPITALISED BALANCE SHEET, STRENGTHENED BY SCRIP TAKE-UP
The Group has no debt maturing in 2023 and liquidity remains very strong with €361 million in cash and
€620 million in available committed credit facilities as of 30 September 2023.
Shareholders were offered an option to receive scrip for the first half (‘H1’) 2023 dividend distribution,
which saw a 74% take-up rate. This was the equivalent of raising €121 million of equity and, together with
the scrip take up equivalent of €145 million in April 2023, contributed to reducing the loan-to-value ratio
(‘LTV’) to 32.9%, comfortably below the Company’s 35% strategic threshold.
The property portfolio’s value of €6.84 billion is 0.9% higher compared to June 2023 due to investments
in developments made during third quarter (‘Q3’) 2023. In line with Company policy, no property
valuations were undertaken during Q3 2023. Independent valuations are included in half-yearly and year-
end financial reports.
In October 2023, NEPI Rockcastle established a robust Sustainability-Linked Financing Framework to
guide its future funding initiatives. This framework incorporates Key Performance Indicators (‘KPIs’) and
Sustainability Performance Targets (‘SPTs’) that are intricately linked to the Group’s commitment to
reduce greenhouse gas emissions and enhance energy efficiency across all its operations. Together with
the Green Financing Framework (‘GFF’) revised during the first six months of the year, the two
frameworks are showing the Group’s strong commitment to sustainability.
OPERATING PERFORMANCE
Trading update
Total footfall in the third quarter of 2023 has stabilised at slightly below the levels of 2019, after a surge in
the first half of this year, almost fully recovering since the end of the pandemic. The LFL increase in
footfall was 6.2% in the first nine months of 2023, relative to the comparative period of 2022.
The pace of growth in tenant sales (LFL, excluding hypermarkets) was solid in the third quarter of the
year at 8.2% higher relative to Q3 2022. Over 9M 2023, turnover increased across all retail segments, by
an average of 13.6%. The best performing categories were Entertainment (+27%), Health & Beauty
(+26%) and Services (+26%). In the largest segment, Fashion, tenant sales increased by 9%.
In 9M 2023, the occupancy cost ratio (‘OCR’) was at a sustainable level of 12.4%. Higher tenant sales
more than offset the increase in rents and tenants’ contributions to operating expenses.
Leasing activity







In Q3 2023, the Group signed 348 new leases and lease renewals, for more than 64,600 m2, of which 37%
by gross lettable area (‘GLA’) are new leases (1.1% of total GLA). International tenants accounted for 49%
of newly leased GLA.
Significant new leases signed in Q3 2023 include Adidas, Flanco and Altex (Promenada Craiova,
Romania), McDonalds (Severin Shopping Center, Romania), Reserved (Galeria Wolomin, Poland), Gym+
(Ozas Shopping and Entertainment Centre, Lithuania), Terranova (Galeria Mlyny, Slovakia), Ochnik (Alfa
Centrum Bialystok, Poland), Nike (Bonarka City Center, Poland).
New units opened in Q3 2023 include Half Price (Karolinka Shopping Centre, Poland), Sport Vision,
Mango and Hugo (Paradise Center, Bulgaria), Martes (Galeria Wolomin, Poland), CCC (Aura Centrum,
Poland), Deichmann and Kiko (Serdika Center, Bulgaria).
DEVELOPMENT UPDATE
Promenada Craiova opened on 5 October 2023, with 99% occupancy for the shopping centre (GLA:
53,700 m2) and 85% occupancy rate for the retail park (GLA: 10,000 m2). On its first day of trading,
approximately 55,000 people visited the scheme, with more than 100,000 visitors over the first weekend.
The strength of demand from international retailers to open or expand their presence in the CEE was
validated by the range of brands opened in Promenada Craiova, including the first store in Romania (and
the CEE) for Inditex’s value fashion brand Lefties and other newcomers to the city, including Calvin Klein,
Carrefour, Massimo Dutti, Mohito, Peek & Cloppenburg, Tommy Hilfiger and Under Armour.
The extension of Promenada Mall Bucharest is on time and on budget and opening is projected for Q4
2025.
The installation of photovoltaic panels across the Group’s Romanian assets continues, with 20 units
already completed and functional.
NEPI Rockcastle’s development pipeline under construction, or under permitting, amounts to
approximately €600 million (excluding the completed Promenada Craiova development), of which €196
million was already spent by 30 September 2023.
CASH MANAGEMENT AND DEBT
NEPI Rockcastle has a very strong liquidity profile, with €981 million in cash and undrawn committed
credit facilities, on 30 September 2023. The Group’s LTV* (interest bearing debt less cash, divided by
investment property) was 32.9%, while the Net Debt/ annualised EBIT^ was at a very low 4.9x.
Ratios for unsecured loans and bonds showed ample headroom compared to covenants as of 30
September 2023, as follows:
     –    Solvency Ratio: 39% actual compared to 60% maximum.
     –    Consolidated Coverage Ratio: 6.3 actual compared to minimum of 2.
     –    Unencumbered consolidated total assets/unsecured consolidated total debt: 266% actual
compared to 150% minimum.
The 9M 2023 average interest rate, including hedging, was 2.5%. Current exposure to variable interest
rates is 100% hedged.
Fitch reaffirmed the Group’s BBB+ investment grade credit rating (stable outlook). The Group also has an
investment grade credit rating from S&P (BBB, stable outlook), which was reaffirmed this year.
* As of 30 September 2023, the reported loan-to-value ratio (LTV) excludes the €36.7 million right-of-use assets and equal amount
of lease liabilities, related to long-term land concessions associated to part of the Group’s properties located in Poland.
^ The Group includes Depreciation and Amortisation in its Administrative expenses. Earnings Before Interest and Taxes is a good
proxy for EBITDA and represents the Group’s Operating profit, defined as Net rental and related income less Administrative
expenses.
OUTLOOK
The Company reaffirms its earnings guidance that distributable earnings per share (‘DEPS’) for the year
will be approximately 12% higher than recurring 2022 DEPS (and 5% higher than nominal DEPS in
2022).
This guidance does not consider the impact of higher geopolitical instability in the region or major
macroeconomic disruptions and assumes current trading trends continue. This guidance can be modified
or withdrawn in the future if material changes unfold. This guidance has not been reviewed or reported on
by NEPI Rockcastle’s auditors and is the responsibility of the Board of Directors.
By order of the Board of Directors
Rudiger Dany
Chief Executive Officer (CEO)
Eliza Predoiu
Chief Financial Officer (CFO)
16 November 2023
For further information please contact
NEPI Rockcastle N.V.
Rudiger Dany/Eliza Predoiu                                        +31 20 237 4770
JSE sponsor
Java Capital                                                      +27 11 722 3050
Euronext Listing Agent
ING Bank                                                          +31 20 563 6685
Media relations                                                   [email protected]
Date: 16-11-2023 09:00:00
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