by Property Forum | Investment

NEPI Rockcastle published its results for 2017. The total value of direct property portfolio owned and managed by NEPI Rockcastle exceeded €5 billion (including joint-ventures). Acquisitions and developments finalised during 2017 totalled €947 million, with 339,800 sqm GLA added.


Operational highlights
  • The market entry into Bulgaria and Hungary, with the acquisition of prime assets in Sofia and Budapest, took NEPI Rockcastle’s presence to a total of eight CEE markets. NEPI Rockcastle now controls the two leading shopping centres in the Bulgarian capital (Serdika Center and Paradise Center).
  • The consolidation of the group’s significant position on the Polish retail market, through the acquisition of Alfa Bialystok and the secured acquisition of Serenada and Krokus Shopping Centres, which is expected to be finalised in Q3 2018;
  • The completion of five developments or extensions, primarily in Romania, with lettings to leading international retailers including Carrefour, Cinema City, Douglas, Hervis, New Yorker, Orsay, Sephora, Starbucks, and multiple Inditex brands.
  • Five developments and eleven extensions or redevelopment projects ongoing in CEE, totalling 294,600 sqm, across five different markets.
 
Acquisitions in 2017
 
The group completed the acquisition and development of a number of properties during 2017, discussed below. The country and effective or opening date are included in brackets. Populations are estimates.
 
NEPI Rockcastle completed acquisitions of €827 million during 2017, adding a total of over 265,000 sqm GLA to its direct property portfolio. The group entered the Bulgarian market through the acquisition of Serdika Center, and a few months later consolidated its dominant position in Bulgaria by acquiring Paradise Center, Sofia. The group also entered its eighth CEE market, Hungary, through the acquisition of Arena Plaza in Budapest. Furthermore, NEPI Rockcastle also acquired Alfa Bialystok (Bialystok, Poland), Paradise Center (Sofia, Bulgaria), Serenada and Krokus Shopping Centres (Krakow, Poland).

Developments and extensions
 
The group invests strategically in developments that contribute significantly to growth in distributable earnings per share. NEPI Rockcastle is pursuing a development pipeline which exceeds €1,200 million (including redevelopments and extensions, estimated at cost), of which €190 million were spent during 2017. Undertaking redevelopments and extensions to existing properties is a driver for future growth, ensuring that the group maintains its pre-eminent position in the market and its superior retail relationships thus de-risking the business and delivering higher quality earnings.
 
In 2017 NEPI Rockcastle completed the third phase of The Office (Cluj-Napoca, Romania), Victoriei Office (Bucharest, Romania), Galeria Wolomin (Wolomin, Poland), the extension of Shopping City Galati (Galati, Romania) and Shopping City Ramnicu Valcea (Ramnicu Valcea, Romania).
 
Development and extension pipeline
 
Shopping City Satu Mare (Satu Mare, Romania)
NEPI Rockcastle has received the required permits for the development of a 28,700 sqm shopping mall in Satu Mare. The city has a population of 123,000 residents and 288,000 inhabitants live within a 45-minute drive thereof. Tenants include: Carrefour, with a 10,000 sqm hypermarket, and key fashion retailers. Construction will start in the next month, and management targets opening by the end of 2018.
 
Promenada Novi Sad (Novi Sad, Serbia)
Construction has started on the first phase of a shopping mall of approximately 49,400 sqm GLA. The city has a population of 319,000 residents and 607,000 inhabitants live within a 45-minute drive of the site. Tenant demand is strong and various international brands are planning to join the scheme. Numerous retailers such as: Adidas, Calvin Klein, Cineplexx, Converse, Diesel, Guess, Lacoste, Levi’s, Nike, Replay, Sport Vision, Superdry, Timberland, Under Armor and Univerexport (with a 3,300 sqm supermarket) have already been signed. The project has a unique central location and will include a large food-court and dining area (1,400 sqm), a fitness operator and a cinema. The group plans to open the centre in the fourth quarter of 2018.
 
Platan Shopping Centre (Zabrze, Poland)
Extension and refurbishment works, including the construction of a multi-level car park, food court and entertainment level, started in June 2017.The extension is scheduled to open in November 2018 and will increase the shopping centre’s GLA to over 39,700 sqm.
 
Solaris Shopping Centre (Opole, Poland)
The building permit has been received and construction has started to extend the shopping centre by approximately 9,000 sqm. The project includes the development of multi-level basement parking and a new town square in front of the centre’s main entrance. Tenant demand is strong and the extension area is scheduled to be completed in the first quarter of 2019.
 
Promenada Mall extension (Bucharest, Romania)
There has been limited traction in obtaining the required approvals and permits for the retail extension and integrated office building of Promenada Mall, a shopping centre located in Bucharest’s central business district. Progress has been made, however at a significantly slower rate than expected due to reasons outside of the group’s control. The retail extension will include new fashion brands, a 14-screen Cinema City, additional leisure and entertainment facilities and 1,600 new parking spaces.
 
Shopping City Sibiu reconfiguration and extension (Sibiu, Romania)
The group received zoning for refurbishing, reconfiguring and extending Shopping City Sibiu, a 78,200 sqm mall. The centre serves a catchment area of 286,000 inhabitants within a 45-minute drive. The extension will add approximately 9,700 sqm GLA and will improve the centre’s fashion offering and will further strengthen its market positioning. Nepi Rockcastle expects to finalise the extension in December 2019.
 
Shopping City Targu Mures (Targu Mures, Romania)
The group is pursuing zoning approvals and permitting to develop a 32,900 sqm (in phase I) mall in Targu Mures, a city with a population of 150,000 residents. The centre will serve a catchment area of 306,000 inhabitants within a 45-minute drive. A large number of tenants have already expressed their interest regarding the development which will represent the first new generation shopping centre in the city. The hypermarket (Carrefour) has signed a lease agreement for 10,000 sqm GLA.
 
Aurora Shopping Mall extension (Buzau, Romania)
The group intends to start the refurbishment, reconfiguration and extension of Aurora Shopping Mall, a mall that currently has 18,000 sqm GLA and will be extend with an additional 5,900 sqm GLA. The centre is located in Buzau, a city with a population of 136,000 residents and services a catchment area of 430,000 inhabitants within a 45-minute drive. The following tenants are already present: Altex, Animax, Benvenuti, Carrefour, CCC, Deichmann, Intersport, Kendra, KFC, New Yorker, Noriel, Orsay, Pepco, Sensiblu and Top Shop. Cinema City (a 6-screen multiplex), has been signed and will enter the centre following the extension. Subject to permitting and receipt of required approvals, the group will start the development in H1 2018 and targets opening the extended centre by the end of 2018.
 
Korzo Shopping Center extension (Prievidza, Slovakia)
The group is planning a 9,300 sqm GLA extension of Korzo Prievidza (Slovakia) including a refurbishment of the existing part. The city of Prievidza has a population of 48,000 residents and the centre services a catchment area of 308,000 inhabitants within a 45-minute drive. The extension is aimed at improving the retail mix with new fashion brands, extend the leisure offering (larger food-court, additional cinema halls) and improving the overall shopping experience with a 50% larger parking, improved amenities and easier client access. Currently the project is in the design and permitting stage. The extension is planned to be opened in Q3 2019.
 
Festival Sibiu development (Sibiu, Romania)
In February 2018, the group acquired Festival project, a 3.4ha land in the centre of Sibiu which is permitted for the development of a 43,000 sqm GLA shopping centre. Sibiu has a population of 170,000 residents and Festival is expected to service a catchment of 162,000 inhabitants within a 15-min drive. Key international tenants are secured: Kaufland (with its first leased hypermarket in Romania), Inditex (with several brands including Zara), H&M and a cinema operator. Management believes that this development will complement its other retail property in the city (Shopping City Sibiu). The centre is expected to open by the end of 2019.