NEPI Rockcastle’s turnover in H1 2021 was 28.1% higher than in H1 2020 and 23.1% lower than in H1 2019 (on a property like-for-like basis, excluding hypermarkets and entertainment). The company published its interim financial report for H1 2021.
Operational highlights
- Footfall in H1 2021 was 106 million, 5.3% higher than in H1 2020 and 31.6% lower than in H1 2019 (considering like-for-like properties comparable in all three periods, footfall in H1 2021 was 77.6 million, 2.2% higher than in H1 2020 and 34.3% lower than in H1 2019). Since the reopening of cinemas and food courts, footfall recovered significantly and reached 90% of 2019 levels in the second half of June.
- Tenant sales recovered even faster than footfall, indicating an increase in the average basket size. Turnover in H1 2021 was 28.1% higher than in H1 2020 and 23.1% lower than in H1 2019 (on a property like-for-like basis, excluding hypermarkets and entertainment). In May and June, when there were no trading restrictions, tenant sales were only 0.4% lower than in the corresponding period of 2019.
- By the end of July, the Group signed 2,400 addenda to lease agreements, representing 71% of rent concessions for H1 2021. The general approach was to commence negotiations on rent concessions after reopening, based on tenants’ performance data.
- Collection rate of over 99% for FY 2020 income and 88% for H1 2021 reported revenues (net of concessions granted) as of 30 June 2021. The collection rate for H1 2021 improved to 94% at mid-August. EPRA occupancy rate was 95.6% on 30 June 2021.
Financial highlights
- The Group had a strong liquidity position of €950 million on 30 June 2021, including cash and cash equivalents of €380 million and undrawn available credit facilities of €570 million. During H1 2021, the Group repaid five of its secured bank loans from Slovakia and Poland, totalling €242 million. Total liquidity increased to €1.1 billion at 31 July
- A green unsecured financing agreement of €73.5 million was signed with the International Finance Corporation (‘IFC’), for a seven-year maturity. The loan was drawn in July 2021.
- As of 30 June 2021, the property portfolio was independently valued by external appraisers, resulting in a fair value gain in relation to the investment property portfolio (including Serbian properties held for sale) of €25.5 million (+0.4% relative to property portfolio value at 31 December 2020). This appreciation was driven by increasing NOI and stable yields, signalling a potential shift towards a positive valuation cycle.
- The loan-to-value ratio (‘LTV’) was 31.8% at 30 June 2021, below the 35% strategic threshold.
- In July 2021, the Group disposed of two Serbian retail properties for a transaction value of €60.8 million (cash proceeds of €60.4 million).
“After a difficult first quarter, Q2 saw our business fully reopening, driven by good progress in vaccinations and a decline in COVID-19 cases in all CEE countries. Most trading restrictions have been lifted and all GLA is operational. The risk of new restrictions remains, as the spread of new virus variants elsewhere in the world and the slowdown in vaccinations in some CEE countries create the possibility of a new surge in COVID-19 cases during the second half of the year.
Recent trading data is very encouraging and points to a quick recovery. Tenant sales since reopening came very close to 2019 levels and rebounded faster than after the summer reopening of 2020. Retailers and customers adapted to the new circumstances which made the impact of restrictions in 2021 less severe than in 2020. There were no material tenant bankruptcies; occupancy reached 95.6% on 30 June 2021, and a positive trend is expected to continue as retailers are expanding to take advantage of the economic rebound.
More than 99% of reported revenues for FY 2020 have been collected, while significant progress is being made with tenant negotiations for 2021, leading to a collection rate for H1 2021 reported revenues of 94% at mid-August. After repaying secured bank loans of €242 million in H1 2021, available liquidity is close to €1 billion. NEPI Rockcastle will pay 100% of its H1 2021 earnings as dividends, in cash, confirming the strength of the Company’s balance sheet.
The Group recently announced several changes to the Board of Directors and executive management team. These are being implemented in an orderly fashion while maintaining the continuity of the Group’s strategy and operations. I have full confidence that the future leadership team will build on the Company’s established strengths and consolidate its position as one of CEE’s premier real estate operators.” says Alex Morar, CEO.
