NEPI ROCKCASTLE N.V - NEPI Rockcastle Q1 2023 Business Update

NEPI Rockcastle Q1 2023 Business Update

NEPI ROCKCASTLE N.V.
(formerly NEPI Rockcastle S.A)
Incorporated in the Netherlands
Registration number: 87488329
Share code: NRP
ISIN: NL0015000RT3
("NEPI Rockcastle" or "the Company" or "the Group")


NEPI ROCKCASTLE Q1 2023 BUSINESS UPDATE


STRONG OPERATIONAL PERFORMANCE CONTINUES

NEPI Rockcastle generated a 27% rise in net operating income (NOI) in the first quarter (Q1) of 2023
versus Q1 2022, to €120 million. The sharp uptick in performance extends the trend that was accelerating
through 2022 and was driven by higher base rents, tight management of operating costs and an €8.8
million contribution from the three acquisitions - Forum Gdansk Shopping Center, Copernicus Shopping
Centre, 50% of Ploiesti Shopping City - made by the Group in the second half (H2) of 2022. The increase
in NOI was 17% on a like-for-like (LFL) basis.

Tenant sales were 25% higher in Q1 2023 versus the same period a year ago, underpinned by a 14%
increase in LFL footfall and an 8% rise in spend per visit.

Rudiger Dany, NEPI Rockcastle’s CEO, said "The exceptional performance NEPI Rockcastle
achieved in the first quarter, reflects the continued momentum in the very positive retail market trends
coming out of the pandemic. These have been more powerful in CEE than equivalent Western European
markets because our consumers have proved to be more resilient and shopping centres play a much
greater economic and societal role in regional cities. International retailers have duly taken note of the
higher growth prospects on offer in CEE and are signing up for leases in our properties in increasing
numbers as a result."

Key retail metrics improved with retail vacancy falling to 2.4%, on the back of strong interest from
international retailers looking to expand their presence in the region. As of Q1 2023, the Group has a
recovery rate of over 92% for operating costs, despite property expenses rising by 34%, driven by higher
energy costs and overall inflation. Rent collection for Q1 2023 was 94% and 99% for the 2022 full year as
of end of April 2023.

ROBUST BALANCE SHEET, WITH SOLID LIQUIDITY

NEPI Rockcastle secured a €200 million green loan in March, demonstrating the Group’s ability to
continue to access new debt financing, despite the current challenging environment. The loan proceeds
were used to repay the revolving credit facilities utilised for the acquisition of Forum Gdansk Shopping
Center and Copernicus Shopping Centre, restoring the revolving facility capacity to €620 million.
The Group has no significant debt due in 2023 and liquidity remains very strong with €926 million in
cash and available committed credit facilities.

Shareholders were offered an option to receive scrip dividends for the H2 2022 dividend distribution
which saw an almost 85% take-up rate. This was the equivalent of raising €145 million of equity and
contributed to reducing the loan-to-value ratio (LTV) to 34.7%, below the Company’s 35% strategic
threshold.

The property portfolio’s value of €6.6 billion is marginally higher (+0.4%) compared to December 2022
due to investments in developments made during Q1 2023. In line with Company policy, no property
valuations were undertaken during Q1 2023. Independent valuations are included in half-yearly and year-
end financial reports.

OPERATING PERFORMANCE

Trading update

Total visits were 22% higher in Q1 2023 compared to Q1 2022 (14% LFL).

Tenant sales (LFL, excluding hypermarkets) in Q1 2023 were 25% higher than in Q1 2022. All product
categories recorded increased sales in Q1 2023 compared to Q1 2022. The best performing categories
were Entertainment (+47%) and Services (+43%). In the largest segment, Fashion, tenant sales increased
by 22%.

The overperformance of sales compared to footfall was driven by an 8% increase in average basket size
between Q1 2023 and Q1 2022.

Leasing activity

In Q1 2023, the Group signed 219 new leases and lease renewals, for more than 47,200 m2 (2.2% of total
GLA), of which 61% by gross lettable area (GLA) are new leases. International tenants accounted for 66%
of newly leased GLA.

Significant new leases signed in Q1 2023 include Lefties (Promenada Craiova), Peek & Cloppenburg
(Paradise Center), Reserved (Promenada Craiova, Ozas Shopping and Entertainment Centre), Sports
Direct (Forum Gdansk Shopping Center), Sinsay (Promenada Craiova), Half Price (Platan Shopping
Centre).

New units opened in Q1 2023 include Reserved (Ploiesti Shopping City), Sinsay (Ozas Shopping and
Entertainment Centre), Xtreme Fitness (Karolinka Shopping Centre), dm (Paradise Center), Takko
(Shopping City Sibiu).

DEVELOPMENT UPDATE

Works at development projects under construction are on schedule and within budget. Promenada
Craiova (including the retail park component) is scheduled to open in Q3 2023. The pre-lease rate for the
mall section is 97% of GLA (91% signed); and, for the retail park it is 76% of GLA. Lease terms were
agreed for 46% of the additional GLA in Promenada Mall Bucharest, whose extension is scheduled for
completion in Q4 2025. Vulcan Residence, the Group’s first residential project, will be completed in Q2
2023. Of the 30 photovoltaic plants envisaged to be installed by Q4 2023, 10 are already functional and
construction agreements were signed for all the other 20.

NEPI Rockcastle’s development pipeline under construction or under permitting amounts to €677
million, of which a total of €271 million has been spent by 31 March 2023.

CASH MANAGEMENT AND DEBT

The revolving facility capacity was restored to its previous level of €620 million, by using the proceeds
from a €200 million, 5-year term secured green loan, concluded in March, to repay the amounts used for
the acquisitions of Forum Gdansk Shopping Center and Copernicus Shopping Centre in December 2022.
As of 31 March 2023, NEPI Rockcastle has a very strong liquidity profile, with €926 million in cash and
undrawn committed credit facilities. The Group’s gearing ratio* (interest bearing debt less cash, divided
by investment property) was reduced to 34.7%, below the 35% strategic threshold.

As of 31 March 2023, ratios for unsecured loans and bonds showed ample headroom compared to
covenants:

    - Solvency Ratio: 41% actual versus maximum 60% requirement.
    - Consolidated Coverage Ratio: 6.4 actual versus minimum 2 requirement.
    - Unsecured consolidated total assets/unsecured consolidated total debt: 246% actual versus
      minimum 150% requirement.

The Q1 2023 average interest rate, including hedging, was 2.47%. As of April 2023, exposure to variable
interest rates is 100% hedged.

* As of 31 March 2023, the reported gearing ratio (LTV) excludes the €36.3 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.

OUTLOOK

The Company reaffirms its guidance released in February 2023 that distributable earnings per share for
the year will be approximately 11% higher than recurring 2022 distributable earnings per share (and 4%
higher than nominal distributable earnings per share in 2022).

This guidance does not consider the impact of higher political 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)

17 May 2023

For further information please contact:

NEPI Rockcastle N.V.
Rudiger Dany/Eliza Predoiu                +31 202 38 40 30

JSE sponsor
Java Capital                              +27 11 722 3050

Euronext Listing Agent
ING Bank                                  +31 20 563 6685

Media Relations                           mediarelations@nepirockcastle.com

Date: 17-05-2023 09:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.