Nepi Rockcastle N.v · JSE:NRP
Nepi Rockcastle — H1 2021 Earnings Presentation
41 slides from Nepi Rockcastle's earnings presentation, August 2021
Slide 1: Results Presentation June 2021
RESULTS PRESENTATION June 2021
Slide 2: Excellence. Innovation. Experience.
EXCELLENCE. INNOVATION. EXPERIENCE. 1 Overview 2 Operations 3 Finance 4 Corporate Governance 5 Way forward page 3 page 12 page 19 page 29 page 31 NEPI ROCKCASTLE 2 RESULTS PRESENTATION JUNE 2021
Slide 3: Overview
1 Overview NEPI ROCKCASTLE 3 RESULTS PRESENTATION JUNE 2021
Slide 4: H1 2021 overview
H1 2021 overview Restrictions have been lifted Turnovers and NOI improved Consumer confidence restored Strong tenant base Valuations stabilised NEPI ROCKCASTLE 4 RESULTS PRESENTATION JUNE 2021
Slide 5: Key business figures: operational performance recovery despite regional lockdowns
Key business figures: operational performance recovery despite regional lockdowns H1 2020 H1 2021 vs H1 2020 H1 2021 H1 2021 vs H1 2019 H1 2019 19.66 € cents -10.3% 17.64 € cents -39.2% 29.02€ cents Distributable earnings per share Distributable earnings per share Distributable earnings per share €1
Slide 6: Key business figures: balance sheet and liquidity remain strong
Key business figures: balance sheet and liquidity remain strong Dec 2020 Jun 2021 vs Dec 2020 Jun 2021 Jun 2021 vs Dec 2019 Dec 2019 €5.8bn Investment property value* - €5.8bn Investment property value* -7.9% (like-for-like -3.2%)** €6.3bn Investment property value* €6.45 EPRA NRV per share +0.8% €6
Slide 7: Distributable earnings per share impacted by high liquidity and disposal of Romanian office portfolio
Distributable earnings per share impacted by maintaining a high liquidity and disposal of the Romanian office portfolio amounts in euro cents (+3.1%) +0.62 19.66 (+1.0%) (+0.6%) (+0.5%) +0.20 +0.11 +0.1 17.64 -1.85 (-9.4%) -1.20 (-6.1%) H1 2020 NOI growth Disposal of Increase in net Savings in Forei
Slide 8: Continuous focus on growth strategy
Continuous focus on growth strategy Green light to restart developments and new initiatives Retailers eco-system - focus on growth Liquidity and stability of balance sheet NEPI ROCKCASTLE 8 RESULTS PRESENTATION JUNE 2021
Slide 9: Developments and extensions and new initiatives
Developments and extensions and new initiatives Promenada Mall - extension Promenada Craiova - greenfield development • approx. 58,000m2 GLA of mixed use retail and office • 56,500m2 GLA of retail extension bringing the total GLA close to 100,000m2 • estimated opening in 2023 NEPI ROCKCASTLE 9 RESUL
Slide 10: Developments and extensions and new initiatives » continued
Developments and extensions and new initiatives » continued Asset rotation initiative Residential projects • aim to focus on core dominant properties and increase presence • several projects under various stages, totalling €85m in investment grade rating countries • first stages of apartments to be
Slide 11: Strong liquidity position
Strong liquidity position 31.8% Prudent LTV €950m Liquidity BBB Investment grade rating with 35% long term strategic threshold including cash (€380m) and available assigned by Standard & Poor’s (negative revolving facilities (€570m) outlook) and Fitch (stable outlook) NEPI ROCKCASTLE 11 RESULTS PRES
Slide 12: Operations
2 Operations NEPI ROCKCASTLE 12 RESULTS PRESENTATION JUNE 2021
Slide 13: Strong bounce back in performance once restrictions have been lifted
Strong bounce back in performance once restrictions have been lifted Footfall and turnovers bounce back rapidly after restrictions are lifted (consumer behaviour shows that confidence is up) • As retail environment had a strong recovery in H1 2021, need for further retail support is limited. Retail
Slide 14: Strong bounce back in performance » continued
Strong bounce back in performance once restrictions have been lifted» continued Since May 2021, sales are back to 2019 level, customers enjoying offline shopping experience Sales and footfall as % of similar period in 2019* % 2019 100% 100 100.6% 92% 96.9% 85% 80 85.0% 84.5% 75% 76.7% 65% 66% 60 66.
Slide 15: Sustainable retail environment
Sustainable retail environment • Retailers confidence in Group's assets led to increased leasing activity in H1 2021 • Out of the leases expiring in 2021, 81% are already agreed and 72% are already signed Sustainable long-term lease duration post-Covid-19 Expiry profile as at 30 June 2021* % of expi
Slide 16: Active management
Active management New and strengthened partnership with tenants Bonarka City Center Enlargement New lease New lease New lease agreement agreement agreement New lease New lease New lease New lease agreement agreement agreement agreement Focus Mall Paradise Center City Park Piotrków Trybunalski Flagsh
Slide 17: Active management » continued
Active management » continued New and strengthened partnership with tenants Forum Liberec Shopping Centre New lease New lease New lease New lease New lease New lease agreement agreement agreement agreement agreement agreement Alfa Centrum Bialystok New lease New lease Enlargement Enlargement agreeme
Slide 18: Strong Cinema recovery since reopening
Strong Cinema recovery since reopening where restrictions were lifted All entertainment was opened during June 2021 across all markets • Where cinemas opened without restrictions, they show very good signs of recovery (Romania +24%, June 2021 vs June 2019; Bulgaria +4%, June 2021 vs June 2019). In c
Slide 19: Finance
3 Finance NEPI ROCKCASTLE 19 RESULTS PRESENTATION JUNE 2021
Slide 20: Prudent financial strategy
Prudent financial strategy • Investment grade credit ratings: » BBB, negative outlook - Standard & Poor’s Prudent LTV (%) » BBB, stable outlook - Fitch 50 40 • LTV: 31.8% (threshold: 35%) 35% 36.1% 30 33.0% 32.5% 32.0% 31.5% 31.8% 28.0% • 91% of the investment property unencumbered 20 10 • Weighted
Slide 21: Intense funding activity in H1 2021
Intense funding activity in H1 2021 • Extension of €220m revolving credit facilities ('RCF'), with added sustainability-linked clauses • Increased available principal in a club RCF by €25m Debt maturity profile • All RCFs are now sustainability-linked and have two-year €m 700,000 extension options 6
Slide 22: Significant headroom on unsecured debt covenants
Significant headroom on unsecured debt covenants Solvency ratio could be breached only by a 700bps deterioration of valuation yields, which is unlikely % Solvency ratio (%) 60 50 40 40% 38% 30 36% 37% Solvency ratio is computed on a gross basis, not adjusted 31% 20 for cash balances 10 0 2017 2018 2
Slide 23: Balance sheet: impact of concessions in NOI
Impact of concessions in NOI • Prior to signing lease addendum: receivable accrued as per the agreements in place written off as partial forgiveness of receivables, fully reflected in NOI • After the signing of lease addendums: concessions agreed straight-lined over the lease term • Tenant reliefs g
Slide 24: Strong collection during the year
Strong collection during the year amounts include VAT and exclude straight-lining impact 88% Group collection rate at 30 June 2021 94% Group collection rate at mid August 2021 +€323m -€42m -€0.1m -€247m €43m €34m* -€25m Net tenant Contractual rental Rental concessions Net expected Cash collected Cas
Slide 25: Valuation uplift driven by portfolio performance
Valuation uplift driven by portfolio performance External appraisers covering NEPI Rockcastle's portfolio Share of total Countries covered portfolio (%) Colliers International Romania 35% Bulgaria, Croatia, Czech Republic, Jones Lang LaSalle 33% Hungary, Serbia and Slovakia Cushman and Wakefield Pol
Slide 26: EPRA NRV: from December 2020 to June 2021
EPRA NRV: from December 2020 to June 2021 amounts in € 6.45 +0.04 +0.16 +0.02 6.50 -0.17 December 2020 Fair value gain from Dividend payment Profit for the period, Other June 2021 investment property excluding fair value gain from investment property NEPI ROCKCASTLE 26 RESULTS PRESENTATION JUNE 2021
Slide 27: From distributable earnings to cash flow from operating activities
From distributable earnings to cash flow from operating activities amounts in € thousand 107,409 +1,925 +908 107,924 +14,879 -17,197 Distributable Working capital Accrued net finance Accrued income tax Other Cash flow from operating earnings adjustments result less cash basis net expense less tax pa
Slide 28: Declaration of H1 2021 dividend
Declaration of H1 2021 dividend • H1 2021 dividend declared for 100% of the distributable earnings, to be settled in cash • Distribution policy unchanged: 90% or more of distributable earnings • LTV estimated to remain below 33% after H1 2021 dividend payment, still prudent • Dividend settlement to
Slide 29: Corporate Governance
4 Corporate Governance NEPI ROCKCASTLE 29 RESULTS PRESENTATION JUNE 2021
Slide 30: Corporate governance
Corporate governance Changes to the Board of Directors tba • George Aase replaced Robert Emslie as Chairman of the Board • Two Independent non-Executive Directors appointed: Ana Maria Mihaescu and Jonathan Lurie Appointment of Chief Operations Officer • Rudiger Dany appointed as Chief Operations Off
Slide 31: Way forward
5 Way forward NEPI ROCKCASTLE 31 RESULTS PRESENTATION JUNE 2021
Slide 32: Post Covid-19 economic recovery faster in CEE compared to Western Europe
Post Covid-19 economic recovery faster in CEE compared to Western Europe Real GDP growth (%) Private Consumption Growth Index** NEPI Rockcastle’s portfolio countries experiencing a more muted recession than the Private consumption growth in CEE, above the EU average, to drive the growth in EU/Euro a
Slide 33: In CEE, lower conversion of internet users into online shoppers
In CEE, lower conversion of internet users into online shoppers • Online purchases in 2020 bellow EU average and Western Europe • Online acceleration slowed down, in favor of live socialising experience Internet use and online purchases, 2020 % of individuals aged 16 to 74 % 100 80 60 40 20 0 Czech
Slide 34: Covid-19 vaccination progressing in CEE countries
Covid-19 vaccination progressing in CEE countries • With vaccination progressing, future Covid-19 waves are expected to have less significant impact • Governments' approach towards restrictions differ by country • Social distancing and health and safety measures being favoured vs stricter lockdowns
Slide 35: Opportunities for long-term growth
Opportunities for long-term growth Focus on sustainable long-term growth through development of retail and mixed-use projects and reinforcing dominance through extensions and redevelopment projects €1 bn development pipeline • Approx. €1 billion of development pipeline • Diversification of the portf
Slide 36: Development Projects
Development Projects Developments committed Bonarka City Center Poland Mall Refurbishment Refurbishment and Focus Mall Zielona Gora Poland Mall extension Poland Vulcan Residential Romania Residential Development Developments under permitting and pre-leasing Promenada Mall Romania Mall/Office Extensi
Slide 37: Outlook and strategy
Outlook and strategy 2021 Focus • Maximise sustainable NOI • Further improve the asset base through asset recycling strategy • Digital acceleration • Committed development pipeline • Maintain balance sheet safety • Leverage on the Group's strengths to benefit from arising opportunities NEPI ROCKCAST
Slide 38: Appendix
Appendix NEPI ROCKCASTLE 38 RESULTS PRESENTATION JUNE 2021
Slide 39: Reconciliation of profit for the period to EPRA Earnings and distributable earnings
Reconciliation of profit for the period to EPRA Earnings and distributable earnings amounts in €'000 EPRA Earnings Jun 2021 Jun 2020 Earnings in IFRS Consolidated Statement of Comprehensive Income 121 569 (206 554) Fair value adjustments of investment property for controlled subsidiaries (25 453) 23
Slide 40: Disclaimer
Disclaimer NEPI Rockcastle plc is a commercial property investor and developer, listed on the Main Board of the Johannesburg Stock Exchange Limited (JSE), Euronext Amsterdam and A2X. The information in this presentation has been included in good faith but is for general informational purposes only.
Slide 41: NEPI Rockcastle Results Presentation June 2021
NEPI ROCKCASTLE 41 RESULTS PRESENTATION JUNE 2021