Wrap Text
Business update
NEPI ROCKCASTLE N.V.
Incorporated and registered in the Netherlands
Registration number: 87488329
Share code: NRP
ISIN: NL0015000RT3
("NEPI Rockcastle" or "the Company" or "the Group")
BUSINESS UPDATE
STRONG GROWTH IN NOI AND TENANT SALES CONTINUES ON ROBUST RESILIENCE OF CEE CONSUMER, DRIVES DOWN VACANCY
NEPI Rockcastle achieved a 12.3% growth in net operating income ("NOI") to €411 million in the first
nine months ("9M") of 2024 versus the same period of 2023. On a like-for-like ("LFL") basis, NOI
increased by 8.4%. The continuing momentum in the Company's growth was driven by higher rents and
short-term income as well as the disciplined management of operating costs.
Tenant sales increased by 9.0% in 9M 2024 versus the same period a year ago (LFL excluding
hypermarkets), in line with the trend at half year. Footfall was up by 1.4% (LFL), while the average basket
size increased by 8.3% despite inflation de-accelerating significantly since 2023.
The European Public Real Estate Association ("EPRA") vacancy rate dropped to 2.3% at the end of the
third quarter, down from 2.7% as at June 2024, on the back of strong tenant performance supporting
leasing activity. Rent collection for the period was 99%, as at the end-October 2024.
Rudiger Dany, NEPI Rockcastle's CEO, said "We continue to see solid growth across our markets,
driven by strong tenant performance and the impact of active asset management. The average basket
size continued to grow through the third quarter at roughly the same pace as in the first half of the year.
Our team continues to excel in making our properties more attractive for consumers and retailers and
in leveraging the Group's leading position in CEE's commercial retail environment. Our strong leasing
activity contributed to reducing the vacancy rate to 2.3%, which, combined with rental uplifts and
improved cost recovery, ensured that NOI continues to grow at very healthy rates.
NEPI Rockcastle's management has embarked on a major strategic plan to take advantage of current
market opportunities and position the Group for long-run sustainable growth. Over a period of a few
weeks spanning September and October, the Company successfully completed a €300 million equity
raise (the first since 2017); a €500 million green bond issue; the largest single asset acquisition of a
retail property in CEE in recent years and the disposal of its last remaining property in Serbia. More is
yet to come, as we are looking at a very promising acquisition and development pipeline - including
green energy production - while capital markets are growing ever more supportive of our strategy."
NEW FUNDS RAISED ON DEBT AND EQUITY CAPITAL MARKETS FUEL AMBITIOUS INVESTMENT PLANS
On 26 September 2024, NEPI Rockcastle issued €500 million of green unsecured bonds maturing in
January 2032. The issue, which was six times oversubscribed, attracted considerable interest from
investors, resulting in favourable financial terms for the Group (a fixed coupon of 4.25% and an issue
price of 99.124%). Also in September, one of the existing revolving credit facilities ("RCF") was increased
by €50 million, leading to an overall €670 million in available committed RCF. The loan-to-value ratio(1)
("LTV") was 30.7% as at 30 September 2024, compared to the Company's 35% strategic threshold.
NEPI Rockcastle recently announced several major events that occurred after 30 September 2024 that
will impact its position at year-end:
- On 1 October, the Group completed the acquisition of Magnolia Park, a 100,000m2 gross lettable area
("GLA") shopping centre in Wroclaw, Poland, for a total cash consideration paid of €353 million.
- On 7 October, the disposal of the Company's last remaining property in Serbia, Promenada Novi Sad,
was concluded, for cash proceeds amounting to €177 million.
- Shareholders were offered an option to receive scrip for the first half ("H1") 2024 dividend
distribution, which saw a 39% take-up rate, with no discount being offered for this option. The scrip
issue was the equivalent of raising €70 million in equity.
- On 17 October, NEPI Rockcastle successfully raised €300 million through an issue of new shares, for
a price per share of ZAR 137.85 (€7.19), representing a discount of less than 1% compared to the last
reported Net Reinstatement Value per share.
The net additional funds raised from the combined effect of these actions, together with the existing cash
as at 30 September, led to a LTV of 29.2% as at the end of October. The funds will be used to repay a €500
million bond maturing in November 2024 and finance the Group's significant and highly promising
acquisitions and development pipeline.
The value of the investment portfolio was €7.1 billion as at 30 September 2024 (with Promenada Novi Sad
still on the Group's balance sheet, as the effective disposal date was in October, and without Magnolia
Park effectively under Group's ownership from 1 October), marginally higher compared to June 2024. No
property valuations were performed during the third quarter ("Q3") 2024. In line with the Company's
policy, independent valuations are carried out twice a year and included in the half-year and year-end
financial reports.
Following the events in October described above, the value of the investment portfolio including
acquisitions, disposals and developments is €7.4 billion.
(1) As at 30 September 2024, the reported LTV ratio excludes the €55.8 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 average basket size continued to grow at roughly the same pace as in the
first half year, averaging an increase of 8.3% between 9M 2024 and 9M 2023. The post-pandemic trend of higher
spend per visit has proven remarkably resilient so far, enduring periods of both high inflation and slowing
economic activity.
OPERATING PERFORMANCE
Trading update
Footfall was 1.4% higher in 9M 2024 compared to 9M 2023 (LFL). The pace of year-on-year growth
accelerated slightly in Q3 2024 (+1.6%) compared to the second quarter ("Q2") (+0.3%).
LFL tenant sales (excluding hypermarkets) in 9M 2024 increased by 9% compared to 9M 2023. The year-
on-year growth in Q3 was 9.2%, above that in Q2 (+7.3%) and significantly above inflation, which has
decreased towards the European Central Bank's target of 2%. All retail segments recorded higher sales in
9M 2024 than in the corresponding period of 2023. The best performing categories were Health & Beauty
(+16%) and Services (+12%), while in Fashion, the largest segment, tenant sales increased by 8%.
In 9M 2024, the occupancy cost ratio ("OCR") was at a sustainable level of 12.5%. Higher tenant sales
more than offset the increase in rents and tenants' contributions to operating expenses.
Leasing activity
In Q3 2024, the Group signed 345 new leases and lease renewals, for more than 71,200m2, of which 34%
by GLA are new leases (1% of total GLA). International tenants accounted for 61% of newly leased GLA.
The average rental uplift in 9M 2024 was 3.6% above indexation, underpinned by continued strong
demand for space in the Group's shopping centres. EPRA retail vacancy reached a low 2% as at 30
September 2024.
Significant new leases signed in Q3 2024 include Reserved (Aupark Shopping Center Piestany, Slovakia),
Pull & Bear and Zara Home (Arena Mall, Hungary), Stay Fit Gym (Shopping City Targu Jiu, Romania),
Mohito (Shopping City Timisoara, Romania), Mr. DIY (Platan Shopping Centre, Poland), Bershka (Arena
Centar, Croatia), McDonald's (Vulcan Value Centre, Romania), JD (Forum Liberec Shopping Centre,
Czech Republic), and eobuwie (Forum Gdansk Shopping Center, Poland).
New units opened in Q3 2024 include Lefties (Ploiesti Shopping City, Romania), Gym+ (Ozas Shopping
and Entertainment Centre, Lithuania), New Yorker and Fikolki (Alfa Centrum Bialystok, Poland),
Reserved (Paradise Center, Bulgaria), Sinsay (Aupark Shopping Center Piestany, Slovakia), and JD
(Serdika Center, Bulgaria and Aupark Kosice Mall, Slovakia).
DEVELOPMENT UPDATE
The 5,900m2 extension of Ploiesti Shopping City opened on 25 September 2024, with an occupancy of
97% (and lease terms agreed for 100%). Construction started in November 2023.
Development projects under construction (the extension of Promenada Bucharest, the redevelopment of
Bonarka City Center and the refurbishment of Arena Mall Budapest) are on schedule and within budget.
Permitting is ongoing for the 60,500m2 GLA retail project Promenada Plovdiv. The building permit is
currently expected to be obtained in the first quarter ("Q1") 2025. The project is estimated to be
completed in the fourth quarter ("Q4") 2026. The permitting process started for the development of
Galati Retail Park, a mixed-use scheme in Galati, Romania, which includes 40,900m2 of retail and
21,500m2 of residential units. The expected date for obtaining the building permit is in Q3 2025, and the
anticipated opening date is in Q4 2026.
The first phase of the Company's green energy project, the installation of photovoltaic panels across 27
locations in Romania with a total installed power capacity of 38 MW, for an investment value of €34
million, was completed in H1 2024 and generated income of €7.3 million in 9M 2024. The second stage of
this project, involving a roll out of the programme in the Group's shopping centres outside Romania, is
well underway. The concept design was completed for 24 locations identified as suitable for development,
adding up to a total installed capacity of 15 MW. The 24 locations are in various stages of permitting or
construction.
Under the third phase of the green energy project, consisting of investments in greenfield, ready-to-build
photovoltaic projects in Romania, a location has already been secured for the development of a 50 MW
project in the west of the country. Construction is expected to start in Q1 2025. A second location has been
identified with a capacity potential of more than 100 MW and is currently under due diligence. The
Company has earmarked almost €100 million for these projects.
NEPI Rockcastle's development pipeline under construction or permitting totals €788 million, of which
€226 million had been spent by 30 September 2024.
CASH MANAGEMENT AND DEBT
As at 30 September 2024, NEPI Rockcastle had €815 million in cash and €670 million in undrawn
committed credit facilities. The Group's gearing ratio (interest bearing debt less cash, divided by
investment property) was 30.7%, comfortably below the 35% strategic threshold.
As at 30 September 2024, ratios for unsecured loans and bonds showed ample headroom compared to
covenants, as follows:
- Solvency Ratio: 0.4 actual compared to maximum 0.6 requirement;
- Consolidated Coverage Ratio: 5.5 actual compared to minimum 2 requirement; and
- Unencumbered consolidated total assets/unsecured consolidated total debt: 250% actual
compared to minimum 150% requirement.
The 9M 2024 average cost of debt was approximately 3.0% (corresponding to 2.6%, adjusted for the
finance income resulting from the placement of the excess liquidity). As at 30 September 2024, the
balance exposed to variable interest rates represents 14% of the total outstanding debt.
SUSTAINABILITY FOCUS
NEPI Rockcastle continued to advance its sustainability and reporting practices throughout 2024. The
Group received an EPRA Gold Award for compliance with its Sustainability Best Practices
Recommendations ("sBPR"), surpassing its Silver award in 2023, and maintained its Gold award for
compliance with the Financial Best Practices Recommendations ("BPR"). The Group's ESG risk was rated
Negligible by Sustainalytics, while the Company achieved a 5-star GRESB rating for its standing portfolio,
recognizing significant progress from the 2023 3-star level. These distinctions reflect the Group's constant
commitment to enhancing environmental, social and governance performance and its continued focus on
transparency and disclosure.
OUTLOOK
The Board reaffirms its guidance updated in August 2024 that distributable earnings per share for the
year will be approximately 5.5% higher than 2023 distributable earnings per share, with no change in the
Company's current 90% dividend payout ratio.
This guidance does not consider the impact of greater geopolitical instability or major macroeconomic
disruption and assumes current trading trends continue. In particular, it does not factor in an escalation
of the military conflict currently going on in Ukraine that might affect the CEE markets. 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.
FINANCIAL REPORTING SCHEDULE FOR 2025
25 February 2025 Publication of the reviewed condensed consolidated financial statements for
the year ended 31 December 2024
19 March 2025 Publication of the audited consolidated financial statements and annual
report for the year ended 31 December 2024
16 May 2025 Business update - Q1 2025
19 August 2025 Publication of the reviewed interim condensed consolidated financial
statements for the six months ended 30 June 2025
19 November 2025 Business update - Q3 2025
By order of the Board of Directors
Rudiger Dany
Chief Executive Officer (CEO)
Eliza Predoiu
Chief Financial Officer (CFO)
20 November 2024
For further information please contact:
NEPI Rockcastle N.V.
Rudiger Dany/Eliza Predoiu +31 202 37 47 70
JSE sponsor
Java Capital +27 0 (78) 456 9999
Euronext Listing Agent
ING Bank +31 20 563 6685
Media Relations mediarelations@nepirockcastle.com
Date: 20-11-2024 09:00:00
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