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Rüdiger Dany, CEO of NEPI Rockcastle /// credit: NEPI Rockcastle
Rüdiger Dany, CEO of NEPI Rockcastle /// credit: NEPI Rockcastle


Europe’s third largest listed retail real estate company by portfolio size, NEPI Rockcastle, delivered a 23 percent uplift in Net Operating Income (‘NOI’) for the first six months of 2023 (‘H1 2023’) to 241 million Euro. Distributable earnings per share increased by 24.9 percent to 28.52 eurocents for H1 2023 compared to H1 2022.

Strong rental growth and leasing activity, alongside improved cost recovery, were achieved through highly calibrated operational management, while steadily improving consumer spending and higher footfall resulted in a 17 percent jump in H1 2023 retail sales across NEPI Rockcastle’s shopping centers in the CEE region compared with the same period of 2022. The Group also recorded a 2% valuation increase on its investment assets. On a like-for-like (‘LFL’) basis, excluding the very positive contribution of the assets acquired in the second-half of 2022, NOI rose 15 percent in the first half of this year.

Rüdiger Dany, CEO, NEPI Rockcastle said: “NEPI Rockcastle delivered operational excellence against a backdrop of resilient growth in CEE economies underpinned by higher consumer spending and retail sales in our markets. We have achieved a very strong increase in net operating income driven by solid rental growth, lower vacancy rates and disciplined cost control, together with the positive contribution of the acquisitions completed in the second half of 2022. Economic growth is predicted for the majority of the markets that we operate in, and inflationary pressures seem to be receding, although the macroeconomic environment remains challenging. We continue to see growing interest from international retailers seeking to establish or expand their presence across the CEE in our shopping centers attracted by the solid underlying market fundamentals. We continue to maintain high levels of liquidity and a conservative loan to value ratio, while also rewarding our shareholders. The scrip dividend for the H2 2022 distribution, which had an 85 percent take up rate, contributed to bringing down the loan to value ratio to below our 35 percent threshold. An upward revaluation of the Group’s property portfolio reflected the increasing operational performance of our shopping centers and further reduced the LTV. Distributable earnings per share increased by 25 percent in H1 2023 year-on-year and we are on track to deliver the estimated growth for the entire year.”


Distributable earnings per share increased by 24.9 percent in first half-year

  • Distributable earnings per share (‘DEPS’) were 28.52 eurocents for the six months to 30 June 2023, 24.9 percent higher than in H1 2022.
  • The Board has declared a dividend of 25.67 eurocents per share for H1 2023, corresponding to a 90 percent dividend pay-out ratio, to be settled as capital repayment (default option). Shareholders may also elect for the settlement of the same dividend amount as ordinary cash distribution out of distributable profits or alternatively to receive an amount of 27.10 eurocents, corresponding to a 95 percent pay-out ratio, as a return of capital by way of an issue of new shares (‘scrip issue’).

Higher rental and better cost recovery drive up NOI by 15 percent (LFL), 23 percent (including acquisitions)

  • Net operating income (‘NOI’) increased 23 percent to 241 million Euro in H1 2023 (H1 2022: 196 million Euro). On a like for like (‘LFL’) basis NOI was 15 percent higher in H1 2023 compared to H1 2022, excluding the contribution of the acquisitions completed in 2022 (Forum Gdansk Shopping Centre, Copernicus Shopping Centre in December and 50 percent of Shopping City Ploiesti in September).
  • The operational costs recovery increased by 2 percent between H1 2022 and H1 2023, from 91 percent to 93 percent, despite a 30.5 percent increase in property operating expenses.
  • Administrative expenses were 11 percent lower in H1 2023 than in H1 2022 in the absence of one-off fees that impacted the prior period and due to the implementation of tighter controls over costs.

Traffic and tenant sales continue their post-pandemic growth

  • Footfall in H1 2023 was 9.8 percent higher than H1 2022, in LFL properties.
  • Tenant sales in H1 2023 increased by 16.3 percent compared to H1 2022 (LFL, excluding hypermarkets). The average basket size was 8 percent higher over the same period.
  • The collection rate for H1 2023 reported revenues reached 97 percent by mid-August.
  • European Public Real Estate Association (‘EPRA’) occupancy rate was 97.2 percent on 30 June 2023 (97.5 percent for retail only).

Loan to Value ratio (‘LTV’) down to 33.4 percent due to scrip issue and upward property valuation

  • The Group had a strong liquidity position of 967 million Euro on 30 June 2023, consisting of cash and cash equivalents of 347 million Euro and undrawn available credit facilities of 620 million Euro.
  • There are no debt maturities in 2023.
  • On 30 June 2023, the property portfolio was independently valued by external appraisers, resulting in a fair value gain in relation to investment property of 103.7 million Euro (+1.6 percent compared to 31 December 2022). The valuation result is once again confirmation of portfolio quality and improving operational performance of our shopping centers.
  • LTV was 33.4 percent on 30 June 2023, below the 35 percent strategic threshold.
  • The Group has an investment grade credit rating from Fitch (BBB+) and S&P reaffirmed The Group’s rating at BBB, stable outlook, in July 2023
  • EPRA Net Reinstatement Value (‘NRV’) per share was 6.92 Euro, a 1.2 percent increase compared to 6.84 Euro on 31 December 2022, which was mostly due to the property portfolio’s positive revaluation, offset by the increase in the number of shares as a result of the scrip issue.


Trading update

The number of visitors attracted by NEPI Rockcastle’s portfolio continued to grow, increasing each month of H1 2023 compared to the corresponding month in the previous year. Footfall was 9.8 percent higher in H1 2023 than H1 2022, in LFL properties. The largest increases were in Bulgaria (14.6 percent) and Slovakia (13.1 percent). In Romania and Poland, NEPI Rockcastle’s largest markets, footfall increased by 9.7 percent and 9.9 percent respectively LFL, in line with the portfolio average.

Tenant sales in H1 2023 were 16.3 percent higher than H1 2022, in LFL properties. The pace of growth remained strong in Q2 2023, although slightly lower as compared to Q1 2023. Tenant sales across all retail categories were higher in H1 2023 compared to H1 2022. A shift in consumer preferences resulted in strong growth for Entertainment (29 percent) and Services (27 percent), while the categories that performed best during lockdowns (such as Electronics, Furnishings & DIY or Sporting Goods) increased by less than the overall average.

The robust increase in tenant sales helped to reduce occupancy cost ratios (‘OCR’), even as rents and tenants’ contributions to operating expenses increased. In H1 2023, OCR was 12.9 percent (excluding hypermarkets), down from 13.2 percent in H1 2022.

The military conflict in Ukraine continued throughout the first half of 2023 and there are few signs it will be resolved soon. The Group’s operations remain unaffected by the war in any significant way. All the markets where NEPI Rockcastle operates are outside the conflict area and continue to function normally. The indirect macroeconomic effects that the conflict had in the CEE region, such as the increase in energy and other commodities costs, had a lower impact in the period compared to the previous year, as the local economies adapted to the new context.

Leasing activity

The Group signed 534 new leases and lease extensions for a total area of 123,600 sq m in H1 2023. There were 228 new leases, accounting for 55,000 sq m (2.6 percent  of total gross lettable area (‘GLA’)), which helped reduce overall vacancies. International retailers, some of them entering our markets for the first time, accounted for 62 percent of the leasing activity. This demonstrates the appeal of NEPI Rockcastle’s portfolio to retailers wishing to invest and expand into the CEE.

The average rental uplift in H1 2023 was 7.5 percent on top of indexation, supported by asset management initiatives (e.g. re-sizing, merging of units etc.). The base rental uplift on renewals and reletting on a LFL basis was 7.3 percent.

Significant new leases signed in H1 2023 include Half Price (Shopping City Sibiu), Sinsay (Aura Centrum), CCC (Shopping City Sibiu and Aura Centrum), Martes (Galeria Wolomin), Sportisimo (Promenada Craiova), Pepco (Promenada Craiova), Cropp (Mammut Shopping Centre).

New units opened in H1 2023 include Reserved (Forum Liberec Shopping Centre), Sinsay (Paradise Center and Alfa Centrum Bialystok), Sports Direct (Forum Gdansk Shopping Center), CCC (Forum Liberec Shopping Centre and Shopping City Sibiu), Xtreme Kids (Karolinka Shopping Centre), Bershka (Paradise Center), dm (Karolinka Shopping Centre), Rossmann (Mammut Shopping Centre), House (Ozas Shopping and Entertainment Centre), Zoo City (Arena Centar and Retail Park).

Development Update

During H1 2023, NEPI Rockcastle invested approximately 70 million Euro in development costs and capital expenditure (‘capex’).

Promenada Craiova, our largest development to complete this year, is scheduled for opening in October 2023. Leases have been agreed and signed for 99 percent of the shopping centre’s 53,700 sq m GLA and 85 percent of the retail park’s 10,000 sq m GLA.

Construction is ongoing at the extension to Promenada Mall Bucharest, where works are on schedule and on budget. Opening is estimated for Q4 2025.

The Group’s first residential project Vulcan Residential was completed, with approximately 60 percent of the 254 units already sold.

The installation of photovoltaic panels across our Romanian shopping centres is progressing well, with 12 units completed and functional. The project is expected to be completed by year-end 2023.

The total costs of projects under construction, or permitting, is approximately 722 million Euro (of which 287 million Euro has already been invested). The total planned development and capex for H2 2023 is approximately 150 million Euro.


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