JSE-listed property investor Nepi Rockcastle reported an uptick in operating income for the first quarter after bolstering its portfolio with two Polish retail properties last year.
The acquisition of Magnolia Park in Wroclaw and Silesia City Centre in Katowice drove a 12.6% increase in net operating income (NOI) for the three months ended-March, the company said on Friday.
Nepi CEO Rudiger Dany said the strong results validated the two major investments in Poland and, more broadly, the group’s growth strategy.
“Driving growth in NOI through earnings accretive acquisitions has been a highlight of our strategy in recent years,” said Dany.
“At the same time, we continue to proactively manage our portfolio, regularly refreshing the tenant mix and improving the layout of our properties, to meet consumers’ evolving preferences,” he said.
Despite footfall being marginally lower than the previous comparable period, tenant sales were up 3.7% year on year in the first quarter, with higher sales across all store categories, except for electronics and sporting goods.
Sales growth during the period was led by the fashion sector, with sales of health and beauty products up 10.9%, while sales of fashion complements rose by 10.8% year on year.
The group’s financial health also remained in good standing, with nearly €1.2bn (R24.24bn) in cash and available credit facilities at end-March and a loan-to-value ratio of 31.2%, which is below the firm’s 35% strategic threshold.
Part of its growth strategy is to capitalise on the growing demand for renewable energy infrastructure in Europe, with 16 solar power facilities under construction across Poland, Bulgaria, Hungary and Croatia.
Another seven facilities are fully permitted and in the procurement process in Slovakia and Czech Republic, it said.
“Alternative revenue sources, such as energy, parking and media sales revenue, are growing faster than rents, which were indexed by a lower percentage compared to previous years due to a decline in inflation,” said Dany.
“The strength of our markets, and our dominant position as the largest owner, developer and operator of retail real estate in Central and Eastern Europe, is evidenced by consistently high occupancy and continued demand for space across the portfolio from international retailers.”
Nepi, Europe’s third-largest publicly listed retail property company by portfolio value, recorded an investment portfolio value of €7.9bn at end-March, roughly the same as at end-December.
The company reaffirmed its guidance for full-year distributable earnings per share, expecting them to rise 1.5% compared to last year, with no change to its current 90% dividend payout ratio.
However, it warned that that guidance did not take into account the threat of greater political instability in Europe or major macroeconomic disruption and assumed that current trading trends would continue.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.