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

NEPI Rockcastle Strides into Q1 2023 as Net Operating Income up 27% to €120 million

NEPI Rockcastle generated a 27% rise in NOI in Q1 of 2023 versus Q1 2022, to €120 million.

The sharp uptick in performance extends the trend that was accelerating through 2022 and was driven by higher base rents, tight management of operating costs and an €8,8 million contribution from the three acquisitions – Forum Gdansk Shopping Center, Copernicus Shopping Centre, 50% of Ploiesti Shopping City – made by the Group in H2 of 2022.

The increase in NOI was 17% on a LFL basis. Tenant sales were 25% higher in Q1 2023 versus the same period a year ago, underpinned by a 14% increase in LFL footfall and an 8% rise in spend per visit.

“The exceptional performance NEPI Rockcastle achieved in the first quarter, reflects the continued momentum in the very positive retail market trends coming out of the pandemic. These have been more powerful in CEE than equivalent Western European markets because our consumers have proved to be more resilient and shopping centers play a much greater economic and societal role in regional cities. International retailers have duly taken note of the higher growth prospects on offer in CEE and are signing up for leases in our properties in increasing numbers as a result”, comments Rüdiger Dany, CEO of NEPI Rockcastle.

Highlights of Q1 2023

  • Key retail metrics improved with retail vacancy falling to 2.4%, on the back of strong interest from international retailers looking to expand their presence in the region.

  • As of Q1 2023, the Group has a recovery rate of over 92% for operating costs, despite property expenses rising by 34%, driven by higher energy costs and overall inflation.

  • The property portfolio’s value of €6,6 billion is marginally higher (+0.4%) compared to December 2022 due to investments in developments made during Q1 2023.

  • Total visits were 22% higher in Q1 2023 compared to Q1 2022 (14% LFL), while tenant sales (LFL, excluding hypermarkets) in Q1 2023 were 25% higher than in Q1 2022.

  • The best performing product categories were Entertainment with +47%, and Services with +43%. In the largest segment, Fashion, tenant sales increased by 22%.

  • The overperformance of sales compared to footfall was driven by an 8% increase in average basket size between Q1 2023 and Q1 2022.

  • In Q1 2023, the Group signed 219 new leases and lease renewals, for more than 47,200 sq m (2.2% of total GLA), of which 61% by gross lettable area (GLA) are new leases.

  • NEPI Rockcastle’s development pipeline under construction or under permitting amounts to €677 million, of which a total of €271 million has been spent by 31 March 2023.

  • As of March 31 2023, NEPI Rockcastle has a strong liquidity profile, with €926 million in cash and undrawn committed credit facilities, while gearing ratio was reduced to 34.7%, below the 35% strategic threshold.

  • Since the start of April, ratios for unsecured loans and bonds showed ample headroom compared to covenants, with a 41% actual Solvency Ratio versus the required 60%, a 6.4 actual Consolidated Coverage Ratio versus the minimum 2.

  • Unsecured consolidated total assets/unsecured consolidated total debt: 246% actual versus minimum 150% requirement.

  • The Q1 2023 average interest rate, including hedging, was 2.47%. As of April 2023, exposure to variable interest rates is 100% hedged.