JSE-listed Nepi Rockcastle, the largest mall owner in Eastern Europe with more than 50 shopping centres in nine countries, says the vast majority of its tenants are trading as the region gears up for Christmas and New Year.
The real estate investment trust (Reit), which is the largest listed property company on the JSE with a market capitalisation of R58bn, says that 85% of gross lettable area (GLA) of its €6.1bn (R110bn) portfolio was operational by December 17.
Nepi acts as a currency hedge for rand investors, paying dividends in euro.
In Romania, temporary closure of food courts, restaurants and entertainment tenants including cinemas due to Covid-19 would still be in effect for another two weeks in regions where the number of infections has exceeded three cases per 1,000 inhabitants in the previous 14 days.
Indoor restaurants in these areas operated only for takeaway orders and deliveries. These restrictions now applied to several cities in Romania, including the capital city, Bucharest, and affected 4% of the group’s GLA across its entire central and eastern European portfolio.
The geographical extent of restrictions may change, depending on the prevailing medical situation at local levels, Nepi Rockcastle said.
In Bulgaria, pandemic-related restrictions providing for the closure of non-essential stores, initially announced for the period November 28 to December 21, have been extended up to the end of January 2021. These restrictions affected 5% of the group’s GLA.
In Lithuania, the government imposed new restrictions effective from December 16 until January 31, which include a trading ban for non-essential stores. A tenant support scheme similar to that introduced in spring may be adopted in January 2021, whereby if landlords grant a rent discount of 30% for the closed period and the government subsidises 50% of the rent. These restrictions affect about 3% of the group’s GLA.
In Poland, Hungary and Slovakia, restrictions limiting or restricting the operations of indoor restaurants, which are usually allowed to operate takeaway and delivery services, and entertainment facilities including leisure, fitness, swimming pools and cinemas are continuing, affecting about 3% of the group’s GLA, or 1% of the group’s GLA for each of the three countries.
The restrictions regarding general trading of non-essential stores in Poland ended on November 28 and in Czech Republic, non-essential stores resumed trading on December 3.
Some restrictions on the operations of restaurants and entertainment facilities may be introduced in the next period, with very limited effect on the Nepi Rockcastle’s operational GLA.
In Croatia, the government imposed additional restrictions to contain the spread of Covid-19 infections, among which are the closure of indoor cafes, restaurants and some entertainment facilities, such as children's playground and gyms. Cinemas operate without selling food or beverages.
These restrictions affect only 0.1% of the group’s GLA.
In Serbia, the restrictions and social distancing measures in place relate to reduced capacity for cinemas and restaurants and reduced working hours for all stores, and do not prohibit the activity of the retail sector.
In addition to the above, other restrictions, such as reducing trading time, apply in some regions, with a limited impact on the group’s operations.
The Slovakian government is expected to reintroduce the temporary closure of non-essential stores, except for food stores, pharmacies, pet shops, banks, insurance offices and payment services providers, on or before December 21.
Restaurants may be allowed to operate only for takeaway orders and deliveries.
Nepi Rockcastle's CEO Alex Morar said most central Eastern Europe governments are continuing to balance their attempts to mitigate the growing pressure on medical services against the negative economic impact of restrictions.
Depending on infection rates, existing restrictions can be lifted or new ones introduced on short notice. Additional fiscal support measures are expected to offset the effects of existing and possible new restrictions.
Significant progress has been made in achieving agreements with tenants, the collection rate for the 11-month period ended November 30 reached 90% of the rental and service charge income, adjusted for concessions, and was expected to improve further in the coming months.
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