Nepi Rockcastle N.v · JSE:NRP
Nepi Rockcastle — FY2019 Earnings Presentation
49 slides from Nepi Rockcastle's earnings presentation, 2020
Slide 1: Results Presentation December 2019
RESULTS December PRESENTATION 2019
Slide 2: Contents
2019 Highlights page 3 2019 unboxed CEE as an page 14 opportunity page 32 Way forward page 35 Appendix page 44 Aupark Zilina, Slovakia 2 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 3: 2019 Highlights
Promenada Novi Sad, Serbia 3 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019 2019 Highlights 1
Slide 4: Strong portfolio driving robust growth
Strong portfolio driving robust growth 6.6% growth in €6.3bn Investment property value* distribution per share €56.33 euro cents 6.5% growth compared to Dec 2018 2.1 million m2 GLA* 325m visits in 2019 5.9% growth compared to Dec 2018 Promenada Mall, Romania * Includes Romanian office portfolio held
Slide 5: Strong portfolio driving robust growth continued
Strong portfolio driving robust growth» continued €334m distributable earnings 32% Prudent loan-to-value* 9.3% growth compared to 2018 €284m Invested in land and 83% Unencumbered assets** developments 99.9% Collection rate 2.4% Cost of debt Mammut Shopping Centre, Hungary * Including investment prop
Slide 6: Main performance pillars
Main performance pillars Asset management Developments 6 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 7: Robust net rental income growth
Robust net rental income growth LIKE-FOR-LIKE NET OPERATING INCOME ('NOI') GROWTH (BY COUNTRY) Romania +6.3% 6.2% Poland +5.2% Bulgaria +8.2% Slovakia +2.5% like-for-like NOI growth Hungary +9.9% Czech Republic +5.5% Serbia +9.7% TOTAL +6.2% 16% 11.9% 4.9% stable and sustainable total growth in NOI
Slide 8: Solid retail sales growth
Solid retail sales growth^ 6.8% Lithuania* tenant sales increase (like-for-like) in 2019 Poland 2.7%~ Performance driven by 14 asset management initiatives carried out in 2018/2019 totaling 243,000m2 GLA (13% of total portfolio): Czech Republic • Update tenant mix and commercial layout 8.4% Slovakia
Slide 9: Strong leasing activity
Strong leasing activity 715 new leases signed in 2019* • Completed development projects opened with over 93% letting. • Over 5,400 retail tenants across the portfolio • Large brands with multiple international locations account for 67% of tenants Promenada Sibiu, Romania * Excluding renewals of exis
Slide 10: Successful delivery of developments
Successful delivery of developments 83,700 m2 GLA in 2019 Promenada Sibiu, Romania Solaris Shopping Centre, Poland 10 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 11: Office disposals
Office disposals 5 Romanian office assets disposed or held for sale Floreasca Business Park The Office Cluj-Napoca Victoriei Office Timisoara Business Centre The Lakeview 11 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 12: Intense capital markets activity
Intense capital markets activity €1 bn unsecured bond issues • Over €750 million active liability management • €175 million new ESG linked revolving facility • €575 million available unsecured revolving facilities • Low cost of debt • €161 million equity issue resulting from scrip dividend Aura Cent
Slide 13: Consistent sound business fundamentals
Consistent sound business fundamentals BEST IN CLASS KEY INDICATORS FAIR VALUE OF INVESTMENT PROPERTY (€bn) NET OPERATING INCOME (€m) 7 500 6 400 5 4 300 3 200 2 100 1 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 * Including Roman
Slide 14: 2019 unboxed
Mega Mall, Romania 14 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019 2019 unboxed 2
Slide 15: Strategic positioning
Strategic positioning DOMINANT, HIGH-QUALITY PORTFOLIO OPERATIONAL EXCELLENCE LONG-TERM GROWTH PRUDENT FINANCIAL STRATEGY City Park, Romania 15 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 16: Dominant high-quality portfolio by scale and geographical diversification
Dominant high-quality portfolio by scale and geographical diversification NEPI Rockcastle is the largest CEE retail real estate company and top five in Continental Europe by GAV CEE Retail Real Estate landscape by GAV (€bn) 8 6.3 6 5.4 5.2 4.8 4 3.1 2.3 2 1.4 0 NEPI Rockcastle^ URW** Immofinanz CA I
Slide 17: Dominant high-quality portfolio: CEE countries where the Group operates
Dominant high-quality portfolio by scale and geographical diversification » continued 97% of the properties are located in EU investment-grade countries CEE countries where the Group operates Lithuania Population (m inhabitants) 104.2 Population (m inhabitants) 2.8 Visits to Group's properties (m) 3
Slide 18: Portfolio at 31 December 2019
Dominant high-quality portfolio by scale and geographical diversification » continued PORTFOLIO AT 31 DECEMBER 2019^ Annualised EPRA Number GLA Valuation Passing rent/ERV Occupancy of properties '000m2 €m €m % TOTAL PROPERTIES 70 2 394 6 307 431 INCOME PRODUCING 61 2 103 6 077 414 97.9% Retail 53 1
Slide 19: Long-term partnering with differentiating retailers
Long-term partnering with differentiating retailers SUSTAINABLE ANCHOR TENANT BASE^ by rent * 3.8% 3.5% ** 3.1% 2.7% 1.9% 1.6% 1.4% 1.3% 1.1% 1.1% * Cropp Town, House, Mohito, Reserved, Sinsay ** Bershka, Massimo Dutti, Oysho, Pull and Bear, Stradivarius and Zara ^ For turnover only tenants, the per
Slide 20: Delivering sustainable value
Delivering sustainable value OPERATIONAL PERFORMANCE INDICATORS Net Rental and Related Income (NOI) €401m NOI growth (like-for-like) 6.2% Weighted average remaining lease term 4 years Collection rate 99.9% EPRA vacancy ratio 2.1% Turnover/m increase (like-for-like)* 2 6.4% Tenants turnover growth (l
Slide 21: Prudent financial strategy
Prudent financial strategy ROBUST BALANCE SHEET 32% Prudent LTV €861m liquidity BBB stable Investment grade rating Remaining weighted average debt term: €575 million available committed Assigned by Standard & Poor’s and Fitch. 4.1 years unsecured revolving facilities at year end, plus cash and net l
Slide 22: Key initiatives across the business
Key initiatives across the business ACTIVE MANAGEMENT OF TENANT MIX AND RIGHT-SIZING NEW RETAIL (RE)DEVELOPMENTS SUSTAINABILITY FOCUS Promenada Mall, Romania 22 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 23: Active management of tenant mix and right-sizing
Active management of tenant mix and right-sizing Market entries Bonarka City Arena Iris Titan Shopping Centre, Arena Mall, Centar, Center, Bucharest and Shopping City Satu Krakow Budapest Zagreb Mare, Satu Mare Arena Arena Arena Mega Centar, Centar, Mall, Mall, Zagreb Zagreb Budapest Bucharest Mega
Slide 24: Extending and refreshing the tenant mix
Active management of tenant mix and right-sizing » continued Extending and refreshing the tenant mix 57%mix updated 29%mix updated 23%mix updated 13% mix updated Solaris Shopping Center, Shopping City Buzau, Romania Shopping City Sibiu, Romania Alfa Centrum Bialystok, Poland Poland Shopping City Sib
Slide 25: Adapting to new retail
Adapting to new retail Extending the partnership with Digital Native Brands • 7 new openings Click and Collect initiatives • Pick-up points in 29% of the assets such as Promenada Mall Bucharest, Paradise Center Sofia, Serdika Center Sofia, Ozas Shopping and Entertainment Centre Vilnius. Focus on lei
Slide 26: (Re)developments
(Re)developments * Catchment area presented for 30-min drive Solaris Shopping Centre extension Shopping City Sibiu extension Solaris Shopping Centre Opole, Poland New Brands: 4f, Bajkowy, Population: 128 000 inhabitants New Brands: Chefs, Cropp, De Deichmann, Hebe, House, Just Catchment*: 275 000 Fa
Slide 27: (Re)developments continued
(Re)developments » continued before after Focus Mall Zielona Gora – redevelopment and extension (ongoing) • Old wool factory rebuilt – with new parking, restaurants and cafes located at the ground floor Ozas Shopping and Entertainment Centre - redevelopment and extension (ongoing) • Conversion of un
Slide 28: Enriching retail experience
Enriching retail experience food and dinning concept brands Retail experience entertainment services 28 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 29: Environmental, Social and Governance focus
Environmental, Social and Governance focus waste recycling energy EPRA consumption water Sustainalytics consumption gas FTSE4Good consumption H1 Social MSCI 2020 green framework to be implemented 80 partnerships and sponsorships Environmental over Governance with local NGOs 200 sustainability events
Slide 30: Environmental, Social and Governance Awards
Environmental, Social and Governance Awards ESG Risk rated as Low AA ESG rating Silver Prize awarded "leader" after the first year of among 86 companies EPRA membership in the real estate management & services industry 30 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
Slide 31: In-house expertise in key functions
In-house expertise in key functions 63+16+129 63 Management split by area of competence Property, retail and asset 63% management • Teams structured by core business competencies Developments and expansion 16% • Strong property knowledge across the business • Adequate allocation of resources in line
Slide 32: CEE as an opportunity
Galeria Warminska, Poland 32 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019 CEE as an opportunity 3
Slide 33: Macroeconomic fundamentals and prospects
Macroeconomic fundamentals and prospects CEE private consumption growth well above WE average 100% 100% Serbia 80% Latvia 80% 10-year cumulative forecasted growth Hungary Estonia Romania Lithuania Poland 60% Bulgaria 60% Slovenia Croatia Slovakia Greece Ireland Czech UK 40% Republic Belgium 40% Port
Slide 34: Macroeconomic fundamentals and prospects continued
Macroeconomic fundamentals and prospects » continued Continued strong market outlook Expectation of increased disposable income across CEE compared to Western Europe – coupled with substantial FDI investment and GDP projections. 2020E - 2024E Real Personal Disposable Income (%CAGR) 2019 - 2024E Aver
Slide 35: Way forward
Promenada Mall, Romania 35 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019 Way forward 4
Slide 36: Focus on value creation
Focus on value creation Purpose Create modern communities and shape people’s lifestyle Vision Be the leading property investment and development Group in CEE, with dominant position in key geographies and a strong brand standing for excellence, sustainability and innovation. Values Excellence, Teamw
Slide 37: Earnings guidance
Earnings guidance Strategy Maintain dominant CEE position Diversify the business through enhanced 6.0% pipeline expected growth in Generate value from existing properties distribution per share in 2020 Prudent financial profile Increased ESG Focus 37 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 201
Slide 38: Development pipeline: opportunity for long-term growth
Development pipeline: opportunity for long-term growth Focus on sustainable long-term growth through development of retail and/or mixed-use properties €1.1 bn Leasing commitment • Main anchors secured early in the process for all developments. Reinforcing dominance development pipeline • Extensions
Slide 39: Development pipeline: opportunity for long-term growth continued
Development pipeline: opportunity for long-term growth » continued 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 174 000 59 000 65 218 Extension and Focus Mall Zielona G
Slide 40: Developments under construction continued
Developments under construction » continued Focus Mall Zielona Gora, Poland 29 300m 15 600m Q4 2020 CATCHMENT 2 2 AREA 151 000 15-minute drive Lettable area Estimated lettable area Target opening for property in use for extension 284 000 30-minute drive 490 000 extension and refurbishment 45-minute
Slide 41: Developments under construction
Developments under construction Shopping City Buzau, Romania 23 700m Q2 2020 CATCHMENT 2 AREA 118 000 15-minute drive Lettable area Target opening for property in use 249 000 30-minute drive 462 000 refurbishment 45-minute drive Forum Liberec Shopping Centre, Czech Republic 519 000 46 600m Q2 2020 C
Slide 42: Developments under permitting and pre-leasing
Developments under permitting and pre-leasing Promenada Mall, Bucharest, Romania Promenada Mall, Craiova, Romania Type extension Lettable area 39 400m2 property in use Type development Estimated new lettable area 31 600m2 Estimated 56 500m2 (retail) lettable area Estimated new Target opening Q3 2021
Slide 43: Conclusions
Conclusions • Achievements: » Earnings growth above guidance » Solid NOI and Turnover growth, with low Occupancy Cost Ratios and high collection rate » Successful expansion, re-designing and re-tenanting » Strong balance sheet and investment grade rating • Focus on: » Asset management » Selective de
Slide 44: Appendix
Timisoara Business Center, Romania 44 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019 Appendix 5
Slide 45: 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 Dec 2019 Dec 2018 amounts in €'000 Earnings in IFRS Consolidated Statement of Comprehensive Income 416 235 221 855 Fair value adjustments of investment property for controlled subsidiar
Slide 46: From distributable earnings to cash flow from operating activities
From distributable earnings to cash flow from operating activities 333,811 +2,249 +1,533 +4,617 +1,697 321,618 -4,062 -12,349* -5,411 -467 Distributable Antecedent Non-cash Amortisation Accrued Transaction Accrued net Non-cash Working Cash flow from earnings dividend items relating of financial inco
Slide 47: Glossary
Glossary EPRA Earnings: Profit after tax attributable to the equity holders of the Group, 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 of
Slide 48: 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 49: 49 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019
49 NEPI ROCKCASTLE RESULTS PRESENTATION DECEMBER 2019