Nepi Rockcastle, the owner of premier shopping centres in Central and Eastern Europe (CEE), on Thursday reported a 23% increase in nine-month net operating income to €365m, driven by retail sales and acquisitions completed in 2022.
Like-for-like retail sales excluding hypermarkets were 14% higher due to increased footfall and average spend per visit of over 6%, the group said, adding that demand from international and regional retailers remains strong, with vacancies of 2.2%.
“We see robust growth continuing across our region as household income and consumer spend are holding up well, despite macro-economic challenges,” said CEO Rüdiger Dany.
JSE-listed Nepi Rockcastle, which acts as a rand hedge for SA investors seeking exposure to European commercial real estate, is the biggest listed property owner, developer and manager of shopping centres in countries including Romania, Poland, Slovakia, Bulgaria, Hungary, Croatia, the Czech Republic, Serbia, and Lithuania.
Dany said that over the period, turnover increased across all retail segments by an average of 13.6%. Entertainment (27%) health and beauty (26%) and services (26%) were the best performers. Fashion, the largest segment, retail sales rose by 9%.
The occupancy cost ratio was 12.4%, and high retail sales more than offset the increase in rents and tenants’ contributions to operating expenses.
During the third quarter of 2023, Nepi signed 348 new leases and lease renewals, with international tenants accounting for 49% of newly leased gross lettable area (GLA).
Tenants include Adidas, Flanco and Altex at Promenada Craiova in Romania; McDonald's at Severin Shopping Centre, in Romania; Reserved at Galeria Wolomin in Poland; Gym+ at Ozas Shopping and Entertainment Centre in Lithuania; Terranova at Galeria Mlyny in Slovakia, Ochnik at Alfa Centrum Bialystok in Poland; and Nike at Bonarka City Centre in Poland.
Dany said the acquisition of Forum Gdansk and Copernicus shopping centres in Poland and the 50% share of the Ploiesti Shopping City in Romania in 2022 contributed €28m to the net operating income.
The group also opened Promenada Craiova in southern Romania on October 5 with 99% occupancy (57,000m²) and 85% occupancy for the retail park (10,000m²). On its first day of trading, about 55,000 people visited the precinct with more than 100,000 visitors over the first weekend. Promenada Craiova is the largest retail precinct launched in the Central and Eastern Europe region in 2023.
Dany said a new range of international brands opened in Promenada Craiova, including the first store in Romania (and the CEE) for Inditex’s value fashion brand Lefties and other newcomers to the city, including Calvin Klein, Carrefour, Massimo Dutti, Mohito, Peek & Cloppenburg, Tommy Hilfiger and Under Armour.
At the end of September, Nepi had €981m in cash and undrawn committed credit facilities.
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