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Pre-closing update
NEPI Rockcastle N.V.
(formerly NEPI Rockcastle S.A.)
Incorporated and registered in the
Netherlands Registration number
87488329
Share code: NRP
ISIN: NL0015000RT3
("NEPI Rockcastle" or "the Group" or "the Company")
PRE-CLOSING UPDATE
"It has been another challenging yet successful year for NEPI Rockcastle. Our shopping centres’
operations made a complete recovery from the effects of Covid-19, as indicated by record NOI and tenant
sales, above 2019 pre-pandemic levels. High inflation and surging energy costs, partly fueled by the conflict
in Ukraine which started in February, had less of an impact than anticipated, due to our active asset
management and continuous cooperation with tenants. Changes at the corporate level, including the
appointment of a new executive management team and the relocation of the parent company to the
Netherlands, were implemented smoothly and without disruptions. The Company continued to invest in its
future by allocating capital to the development and acquisition of properties with great potential, and also
to sustainability projects (including the production of green energy). We are confident that NEPI Rockcastle
is well prepared for the future and has the ability to cope with the market challenges and seize the
opportunities that may come our way."- Rudiger Dany, CEO
Operational update
- The first quarter of 2022 was characterized by the lingering effects of Covid-19 with partial social
distancing restrictions still in place. After all restrictions were lifted, the recovery in customer visits
and tenant turnover were faster and stronger than initially expected. By year-end, retailer sales in
the Group’s shopping centres are expected to exceed 2019 levels by over 10%. Despite rising costs,
NEPI Rockcastle estimates an increase of NOI versus 2019 by 8% and versus 2021 by 18%.
- EPRA occupancy rate of the property portfolio was 97% as of 30 November 2022.
- At the end of November 2022, the collection rate for the first 11 months of the year was 97% and
this continues to improve during the current holiday season.
- As of 30 November, leases expiring in 2023 represent approximately 13% of rental income, with a
major proportion of renewals having already been agreed.
- By the end of October 2022, year-to-date cumulative tenant sales were 28.3% higher than in the
prior year (on a like-for-like basis (LFL) and 11.6% higher than in the same period of 2019, LFL.
Footfall for the same period was 17.8% higher than in 2021 and 12% lower than in 2019, in LFL
properties.
- During 2022, NEPI Rockcastle implemented an internal process aimed at better integrating and
streamlining roles, functions, and procedures across the nine countries where the Group operates.
As part of this process, the Group commenced the internalisation of the property management for
those assets where property management was outsourced to different external companies.
Investments
The execution of the Group’s development pipeline, with a total investment value of €665 million, is well
under way. Construction works in Bucharest for the extension of Promenada Mall started this year. The
new development in Craiova proved to be such a great success with retailers in the pre-leasing phase that
the Company decided to build a retail park with 10,000 sqm GLA adjacent to the shopping centre. Both
retail destinations will be opened in the autumn of next year. The apartments at NEPI Rockcastle’s first
residential development, Vulcan Residence in Bucharest, to be completed in 2023, are almost 50% sold.
All the above mentioned developments, together with the ones under permitting and pre-leasing phase, will
support the growth of NEPI Rockcastle over the coming years.
In September 2022, the Group acquired its joint-venture partner’s 50% stake in Ploiesti Shopping City,
opening the way for a future redevelopment. In Q4, it acquired two top class assets in Poland, for a total
value of €377 million. Copernicus Shopping Center in Torun is an excellent property that will contribute
to the Company’s growth from 2023, adding approximately €9.6 million to sustainable Group NOI in the
medium term. Forum Gdansk, acquired on 19 December 2022, is a real ‘trophy’ asset, that will significantly
improve the Company’s Polish portfolio. Located in the heart of Gdansk, one of the country’s largest cities
which attracts millions of visitors each year, Forum Gdansk is expected to generate approximately €16.5
million in NOI per year.
Financial policy and ESG
Total liquidity after the Polish acquisitions completed in December 2022, including cash and undrawn
revolving facilities, is estimated at approximately €600 million. The LTV ratio after these transactions is
estimated at 36.5%, assuming no change in the valuation of the property portfolio relative to June 2022.
Management envisages to reducing LTV below the strategic threshold of 35% in the upcoming 12 to 18
months.
In January 2022, the Group refinanced a €500 million green bond that was three times oversubscribed, for
a fixed coupon of 2%. The bond issue significantly increased the average maturity of the Company’s debt
and kept the cost of financing at comparatively low levels in a rising interest rate environment. This year
NEPI Rockcastle was upgraded by the rating agency Fitch from BBB to BBB+, which is a very positive
sign for the capital markets.
Also in 2022, NEPI Rockcastle completed the relocation of its holding company from the Isle of Man to
the Netherlands, a process supported by an absolute majority of shareholders.
This year, the Company created a new ESG department that reviewed its environmental, social and
governance goals until 2030 and will support all functions to execute the strategy designed to implement
these goals. The Group decided to invest €37 million in the production of green energy by installing
photovoltaic panels on its property portfolio in Romania. This will cover up to 30% of current energy
consumption in those assets. Besides improving the Company’s ESG scoring, these investments are highly
accretive to bottom-line profitability.
Outlook
As announced on 23 November 2022, the Company’s expected distributable earnings per share for 2022 is
48% higher than in 2021. The growth includes the strong operational performance and favourable impact
of the settlement agreement on the Serenada dispute.
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
Emma Villiers
Steve Hays emma.villiers@bellierfinancial.com
steve.hays@bellierfinancial.com
22 December 2022
Date: 22-12-2022 05:45:00
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