Nepi Rockcastle N.v · JSE:NRP
Nepi Rockcastle — H1 2019 Earnings Presentation
51 slides from Nepi Rockcastle's earnings presentation, August 2019
Slide 1: Results Presentation June 2019
RESULTS PRESENTATION JUNE 2019
Slide 2: Agenda
H1 2019 Highlights 3 Company overview 9 CEE market prospects 16 Retail transformation 19 Value creation: Developments and disposals 28 Pipeline 34 Outlook 44 Appendix 46 Aupark Zilina, Slovakia 2 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 3: H1 2019 Highlights
1 H1 2019 Highlights Promenada Novi Sad, Serbia 3 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 4: Strong portfolio driving robust growth
Strong portfolio driving robust growth 29.02 €cents €170m distributable earnings distribution per share *9.6% GROWTH COMPARED TO H1 2018 11.1% GROWTH COMPARED TO H1 2018 Mega Mall, Romania €6.1bn Investment property value** 2.6% EPRA vacancy rate Paradise Center, Bulgaria 3.4% GROWTH COMPARED TO DEC
Slide 5: Strong portfolio driving robust growth » continued
Strong portfolio driving robust growth » continued Promenada Mall, Romania €133m Invested in land and 2 million m2 GLA* developments 73% Unencumbered assets 32.5% Prudent loan-to-value * Includes Romanian office portfolio held for sale 5 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 6: Continued sound business fundamentals
Continued sound business fundamentals BEST IN CLASS KEY INDICATORS FAIR VALUE OF INVESTMENT PROPERTY (€bn) NET OPERATING INCOME (€m) 7 400 6 5 300 4 200 3 2 100 1 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019* 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 * Including investm
Slide 7: Retailer sales growth
Retailer sales growth Lithuania* Tenant sales increased by 8.2%^ (like-for-like) in H1 2019 Poland +3.7% Performance driven by: 14.2% Electronics 11.4% Fashion complements Czech Republic 11.1% Food +10.4% 6.9% Services Slovakia +3.8% Hungary Sales benefited from asset management initiatives: +4.9% •
Slide 8: Positive developments and market response
Positive developments and market response Investigations conducted by Financial Services Conduct Authority in South Africa (the “FSCA”) have been closed with no adverse findings. Successful issue of scrip dividend. €500 million of unsecured, 4 year Eurobond, was issued in May 2019. • The book consis
Slide 9: Company overview
2 Company overview Shopping City Timisoara, Romania 9 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 10: Strategic positioning oriented towards long-term growth
Strategic positioning oriented towards long-term growth Paradise Center, Bulgaria Bonarka City Center, Poland Aupark Kosice Mall, Slovakia OPERATIONAL EXCELLENCE DOMINANT, HIGH-QUALITY PORTFOLIO PRUDENT FINANCIAL STRATEGY • Strong corporate culture focused on • Sizeable, geographically diverse and h
Slide 11: Dominant portfolio by scale and geographical diversification
Dominant portfolio by scale and geographical diversification 97% of the properties are located in EU investment-grade countries CEE countries where the Group operates Lithuania Property value (€bn) 5.9 Property value (€m) 131 Rentable space (m2) 2 million Rentable space (m2) 61 800 EPRA Occupancy ra
Slide 12: Dominant portfolio by scale and geographical diversification » continued
Dominant portfolio by scale and geographical diversification » continued DIRECT PORTFOLIO AT 30 JUNE 2019^ Number Annualised EPRA of properties GLA Valuation Passing rent/ERV Occupancy* '000m2 €m €m % TOTAL PROPERTIES 73 2 382 6 136 416 INCOME PRODUCING 59 2 047 5 854 393 97.4% Retail 51 1 860 5 455
Slide 13: Long-term partnering with sustainable anchor base
Long-term partnering with sustainable anchor base SUSTAINABLE ANCHOR TENANT BASE by rent 3.7% ** 3.5% * 3.0% 2.9% 2.2% 1.7% 1.6% 1.3% 1.2% 1.1% * Bershka, Massimo Dutti, Oysho, Pull and Bear, Stradivarius and Zara ** Cropp Town, House, Mohito, Reserved, Sinsay LONG-TERM LEASE DURATION EXPIRY PROFILE
Slide 14: Strong performance indicators
Strong performance indicators City Park, Romania Operational performance indicators Financial performance indicators Net Rental and Related Income (NOI) €200m Loan-to-value (LTV)* 32.5% Unencumbered assets (% of investment NOI growth (like-for-like) 6.2% 73% property) Weighted average remaining leas
Slide 15: Robust balance sheet
Robust balance sheet Prudent financial strategy DEBT MATURITY PROFILE AS AT 30 JUNE 2019 (€m) 1000 €m • Versatile funding profile via a combination of equity and debt 800 • 73% of the portfolio is unencumbered 600 • Reaffirmed investment grade credit ratings: - BBB, stable outlook - Standard & Poor’
Slide 16: CEE market prospects
3 CEE market prospects Mega Mall, Romania 16 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 17: Solid macroeconomic fundamentals and growth prospects in CEE
Solid macroeconomic fundamentals and growth prospects in CEE % Real GDP growth % General gov. debt (% of GDP) 7 100 6 80 5 4 60 3 40 2 20 1 0 0 Czech Czech Romania Slovakia Serbia Croatia Poland Bulgaria Hungary Lithuania EU28 Romania Slovakia Serbia Croatia Poland Bulgaria Hungary Lithuania EU28 Re
Slide 18: Solid macroeconomic fundamentals and growth prospects in CEE » continued
Solid macroeconomic fundamentals and growth prospects in CEE » continued CEE private consumption growth well above the EU average 120% 120% 100% 100% 10-year cumulative forecasted growth Serbia €30bn Romania €126bn Lithuania 80% Poland Latvia €28bn 80% €289bn €17bn Estonia €13bn Hungary Slovakia 60%
Slide 19: Retail transformation
4 Retail transformation Mega Mall, Romania 19 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 20: Physical Retail and E-commerce, a CEE perspective
Physical Retail and E-commerce, a CEE perspective Online and offline growth (CAGR %) Online and offline sales % and growth contribution by region (US$bn), 2017-2022 by region (US$bn), 2017-2022 50 2017 2022 40 Asia-Pacific 6 436 424 9 849 1 149 30 Americas 4 592 462 5 304 766 22.5% 20 17.4% 17.5% 16
Slide 21: Strategic approach
Strategic approach • Drive performance by combining offline strengths with key success elements of e-commerce; • Operate a custom retail model by adapting to local consumer trends and blending technology with proven tactics and tools; • Create urban destinations by keeping the physical location rele
Slide 22: Bricks and clicks: the physical - digital collaboration
Bricks and clicks: the physical - digital collaboration Consumers move back and forth between bricks and clicks throughout the shopping journey and expect the same experience across all channels. Success stories: The online beauty retailer Notino opened its first physical stores in 2017. Currently i
Slide 23: Staying in touch with consumer trends
Staying in touch with consumer trends 23 shopping centres and office buildings have charging stations for electric cars and additional 28 will be equipped by 2020. First Tesla chargers in shopping centers in Poland, Slovakia, Hungary and Czech Republic. Installed e-scooters Upgraded and extended the
Slide 24: Strengthening the portfolio positioning
Strengthening the portfolio positioning Retailers extending their surface and updating to the latest concepts Shopping City Sibiu, Romania full refurbishment Solaris Shopping Centre, Poland Extended from 680m2 to 2,180m2 Solaris Shopping Center, Poland full refurbishment Alfa Centrum Bialystok, Pola
Slide 25: Strengthening the portfolio positioning » continued
Strengthening the portfolio positioning » continued Arena Centar, Croatia Improving the leisure Shopping City Sibiu (signed new lease) Iris Titan Shopping Center (replacement of previous cinema operator) Shopping City Satu Mare (signed new lease) Market entries Arena Arena Arena Centar, Centar, Cent
Slide 26: Create social destinations: focus on food & dining and green terraces
Create social destinations: focus on food & dining and green terraces before after Mega Mall – refurbishment of the food-court • Contemporary design brings a combination of wood, stone and interior landscaping with a focus on lighting; • The ceiling of the food-court was raised in order to improve t
Slide 27: Create social destinations: engaging customer experience
Create social destinations: engaging customer experience Marketing campaigns • HBO partnership with sculpture exhibitions for the launch of the final season of Game of Thrones in Mega Mall, Shopping City Timisoara and City Park from Romania. CSR campaign • Save the bees. Together! - children’s day e
Slide 28: Value creation: Developments and disposals
5 Value creation: Developments and disposals Shopping City Sibiu, Romania 28 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 29: Successful delivery of development pipeline
Successful delivery of development pipeline Solaris Shopping Centre extension Shopping City Sibiu extension Current GLA - 26 300m2 New Brands: 4f, Bajkowy, Deichmann, Hebe, House, Just Gym, Klooski, Labirynt, McDonald’s, Mohito, Papa Diego, Pasibus, Pepco, Solaris Shopping Centre Pizza Hut Express,
Slide 30: Solaris Shopping Centre
Solaris Shopping Centre Solaris Shopping Centre, located in the city centre of Opole, is the city’s main fashion and lifestyle destination, boasting the latest trends in entertainment facilities and hosting the only cinema in the city. It appeals to a broad range of customers and is a popular meetin
Slide 31: Arena Centar and Arena Park
Arena Centar and Arena Park The Company opened an over 8,000m2 fully-occupied retail park in Zagreb, an European capital city with a population of 802,000 residents, in May 2019. Tenants include CCC, Intersport, Jysk, LC Waikiki (first Croatian store) and Pepco. When compared to the same period of 2
Slide 32: Shopping City Sibiu
Shopping City Sibiu Shopping City Sibiu is the largest shopping centre in its region, with 81,600m2 GLA post-reconfiguration and extension, catering to diverse demand via its extensive fashion offering, two hypermarkets and DIY store. The Group finalised a 3,700m2 GLA extension and 34,600m2 refurbis
Slide 33: Mixed-use strategy and disposal of office portfolio
Mixed-use strategy and disposal of office portfolio • Completed the sale of 50% stake in the Office Cluj-Napoca; • Envisage the disposal of the Romanian office portfolio; • Focus on sustainable long-term growth through acquisition and development of retail and/or mixed-use properties; • Pursuing res
Slide 34: Pipeline
6 Pipeline Promenada Sibiu render, Romania 34 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 35: Strong pipeline: sustainable growth with limited risk
Strong pipeline: sustainable growth with limited risk Commitment to developments in a phased manner to limit risk, with high pre-leasing percentages for retail. LEASING COMMITTMENT • Main anchors secured early in the process for all developments. REINFORCING DOMINANCE • Extensions projects underway
Slide 36: Diversified developments to create value
Diversified developments to create value CASH BASIS GLA of Target existing GLA of Cost Total Country Type Category opening date Ownership property development to date cost % m2 m2 €m €m Developments under construction 92 900 112 700 112 295 Promenada Sibiu Romania Mall Development Q4 2019 100 - 42 2
Slide 37: Promenada Sibiu
Promenada Sibiu UNDER CONSTRUCTION The Group is developing a second project in Sibiu, one of Romania’s most developed and affluent cities, a major tourist destination and home to over 169,000 residents. The two projects will service the 267,000 residents living within 45 minutes, and complement each
Slide 38: Shopping City Buzau extension and refurbishment
Shopping City Buzau extension and refurbishment UNDER CONSTRUCTION Already a top performer due to its location and access, this mall is under reconfiguration and extension (work started in October 2018) to include a Cinema City, food court and several new fashion brand. Buzau, a city with 133,000 re
Slide 39: Focus Mall Zielona Gora extension and refurbishment
Focus Mall Zielona Gora extension and refurbishment UNDER CONSTRUCTION The Company has started the 15,900m2 GLA extension of Focus Mall Zielona Gora, the largest municipality and the seat of Lubuskie Voivodeship. 100% Once completed, the 44,800m2 GLA mall will be the main retail destination for 284,
Slide 40: Shopping City Targu Mures
Shopping City Targu Mures UNDER CONSTRUCTION The Company obtained building permit for a 40,000m2 GLA mall in south-eastern Targu Mures, the capital of Mures. Vibrant and multicultural, with 149,000 inhabitants, Targu Mures is home to Romania’s largest, urban Hungarian community. The project will be
Slide 41: Forum Liberec Shopping Centre refurbishment
Forum Liberec Shopping Centre refurbishment UNDER CONSTRUCTION In April 2019, the refurbishment of Forum Liberec, a 46,100m2 GLA, centrally located mall, began. Liberec is Bohemia’s third- largest city, and the fifth-largest in the Czech Republic, and, including suburbs, has 150,000 inhabitants. The
Slide 42: Krusevac retail park
Krusevac retail park UNDER CONSTRUCTION Development for an 8,600m2 GLA retail park in Krusevac, a central Serbian city and capital of Rasina, hosting one of the country’s fourteen free economic zones, is ongoing. The city’s has 58,000 residents, with 128,000 inhabitants in the greater metropolitan a
Slide 43: Developments under permitting and pre-leasing
Developments under permitting and pre-leasing Promenada Mall Bucharest, Romania Promenada Plovdiv Plovdiv, Bulgaria RENDER 100% The Group owns over 6.5ha in Plovdiv, the second largest city in 100% The centre is located in the new central business district, near Ownership Ownership Bulgaria, and is
Slide 44: Outlook
7 Outlook Shopping City Satu Mare, Romania 44 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 45: Conclusions
Conclusions • Achievements: »» Earnings growth above peers »» Solid NOI and Turnover growth, with low Occupancy Cost Ratios and high collection rate »» Additional growth through acquisitions and development »» Strong balance sheet and investment grade rating • Focus on: »» Asset management »» Select
Slide 46: Appendix
8 Appendix City Business Centre, Romania 46 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
Slide 47: 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 2019 Jun 2018 Earnings in IFRS Consolidated Statement of Comprehensive Income 224 729 149 042 Fair value adjustments of investment property (90 104) (86 143) Fair value and net resu
Slide 48: From distributable earnings to cash flow from operating activities
From distributable earnings to cash flow from operating activities +1,063 +708 170,030 +886 -6,534* -1,603 -2,152 149,314 -11,582 Distributable Non-cash items Amortisation of Accrued Acquisition fee Accrued net Non-cash Working capital Cash flow from earnings relating to JVs financial assets dividen
Slide 49: Glossary
Glossary EPRA Earnings: Profit after tax attributable to the equity holders of the Company, excluding non-controlling interest, fair value adjustments of investment property, profits or losses on investment property disposals and related tax adjustment for losses on disposals, gains on acquisition o
Slide 50: 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 51: 51 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019
51 NEPI ROCKCASTLE RESULTS PRESENTATION JUNE 2019