Nepi Rockcastle N.v · JSE:NRP
Nepi Rockcastle — H2 2020 Earnings Presentation
53 slides from Nepi Rockcastle's earnings presentation, February 2021
Slide 1: Results Presentation
NEPI ) ROCKCASTLE RESULTS PRESENTATION
Slide 2: Excellence. Innovation. Experience.
EXCELLENCE. INNOVATION. EXPERIENCE. 1 2 3 4 Asset Overview Finance Way forward management page 3 page 14 page 30 page 44 NEPI ROCKCASTLE 2 RESULTS PRESENTATION DECEMBER 2020
Slide 3: Overview
1 Overview NEPI ROCKCASTLE 3 RESULTS PRESENTATION DECEMBER 2020
Slide 4: 2020 context
2020 context • Non-essential stores closed in 2020 for an average period of 73 days (20% of calendar days in the year) • COVID-19 started in spring 2020 with strict lockdown in all countries of operation and continued with partial or full restrictions throughout the remainder of the year First wave
Slide 5: Key business figures
Key business figures 2020 2019 Variance 38.42€ cents 56.33€ cents -31.8% Distributable earnings per share Distributable earnings per share €323m NOI €401m NOI -19.4% -18.5% retail only 95.7% EPRA Occupancy 97.9% EPRA Occupancy -2.2pp 95% Collection rate 99.9% Collection rate -4.9pp 221m Footfall 325
Slide 6: Key business figures continued
Key business figures» continued Dec 2020 Dec 2019 Variance €5.8bn Investment property value* €6.3bn Investment property value* -5.2%** €6.45 EPRA NRV per share €7.32 EPRA NRV per share -11.9% 31.5% Loan-to-value* 32% Loan-to-value* -0.5pp 83% Unencumbered assets^ 83% Unencumbered assets^ - 4.1 years
Slide 7: Strategy during 2020
Strategy during 2020 Ensure stability of retail eco-system Deliver on committed projects Focus on liquidity Customer safety and maintaining asset quality NEPI ROCKCASTLE 7 RESULTS PRESENTATION DECEMBER 2020
Slide 8: Stable retail eco-system
Stable retail eco-system Approach to retailers • Fair and balanced criteria 95.7% Solid EPRA Occupancy rate • Impact of restrictions on the tenant's business 14.5%* Sustainable Occupancy Cost Ratio • Authorities support measures • Maintain a vibrant and relevant tenant mix 97% Negotiations finalised
Slide 9: Stable retail eco-system continued
Stable retail eco-system » continued 38+62 Anchor and national chains retailers continued their expansion • 310 new leases signed (43% of 2019 new leases) 55% of which represented either new tenants to the Group or New leases breakdown tenants expanding in new assets their stores network Internation
Slide 10: Deliver on committed projects
Deliver on committed projects Shopping City Targu Mures (greenfield development) Shopping City Buzau redevelopment and extension NEPI ROCKCASTLE 10 RESULTS PRESENTATION DECEMBER 2020
Slide 11: Deliver on committed projects continued
Deliver on committed projects » continued Focus Mall Zielona Gora refurbishment and extension ongoing Forum Liberec Shopping Centre refurbishment NEPI ROCKCASTLE 11 RESULTS PRESENTATION DECEMBER 2020
Slide 12: Deliver on committed projects continued
Deliver on committed projects » continued Bonarka City Center refurbishment ongoing Ozas Shopping and Entertainment Centre refurbishment NEPI ROCKCASTLE 12 RESULTS PRESENTATION DECEMBER 2020
Slide 13: Milestones achieved
Milestones achieved Issue of inaugural €500 million green bond Disposal of the Romanian office portfolio NEPI ROCKCASTLE 13 RESULTS PRESENTATION DECEMBER 2020
Slide 14: Asset management
2 Asset management NEPI ROCKCASTLE 14 RESULTS PRESENTATION DECEMBER 2020
Slide 15: Adapted asset management
Adapted asset management Fast adaptation to COVID-19 challenges: • Immediate creation of international team to liaise with the tenants on group level • Intense coordination - no tenant discussion outside of Group framework • Discussions based on data • Systems in place to allow dealing with multiple
Slide 16: Tenant sales recovered faster than footfall
Tenant sales recovered faster than footfall Footfall decreases by 32.9%* vs 2019, but higher spending is noted (tenant sales decrease only by 31.5%*) Fast rebound of footfall gives an optimistic signal regarding the customers’ appetite to return to shopping centers Increased basket size: +8.50% Sept
Slide 17: Active management
Active management • Tenants dependent on daily traffic (impulse shopping) performed weaker • Customers adapting to 'Work From Home' spent more on home deco/electronics • Leisure/dining/entertainment are expected to bounce back as customers are eager to return to their lifestyle pre-COVID-19 Sales pe
Slide 18: Active management continued
Active management » continued 2021 asset management approach • Health and safety remains the highest priority • Close monitoring of local legislation • Cooperation with local authorities regarding opening protocols and healthy measures • Close liaison with the tenants • Intensive works aimed at cros
Slide 19: Active management continued
Active management » continued New and strengthened partnership with tenants Bonarka City Center 900m2 Relocation to Relocation Refurbishment Refurbishment Refurbishment extension a three times and larger unit enlargement Solaris Shopping Centre Galeria Tomaszow Alfa Centrum Bialystok Lease Lease New
Slide 20: Active management continued
Active management » continued New and strengthened partnership with tenants Shopping City Buzau 1st 1st 1st 1st in the city in the city in the city in the city 1st 1st 1st in the city in the city in the city Mega Mall Refurbishment Relocation Reopening and Forum Usti enlargement nad Labem Louis Juna
Slide 21: Active management continued
Active management » continued New and strengthened partnership with tenants Ozas Shopping and Entertainment Centre New lease New lease Lease New lease Lease agreement agreement extension agreement extension Forum Liberec Shopping Centre New lease New lease New lease New lease New lease agreement agr
Slide 22: New face of entertainment
New face of entertainment Creating leisure destinations in the shopping centers and strengthening the experience, offering an alternative to the home entertainment In Ozas Shopping and Entertainment Centre - creation of a 6,000m2 complex and fluid entertainment space, that encompasses: • Adventica,
Slide 23: Adaptive retail - Physical Retail and E-commerce
Adaptive retail - Physical Retail and E-commerce • Online share of total retail sales in CEE countries still expected to remain below Western European countries and US • Total retail sales forecasted to grow at higher pace then Western European countries and US % Online share of total retail sales %
Slide 24: Adaptive retail - Physical Retail and E-commerce continued
Adaptive retail - Physical Retail and E-commerce » continued Conversion of internet users in online shoppers in CEE countries significantly below the EU-27 Limitations faced by E-commerce support the expectation that the 2020 E-commerce growth will partially reverse in 2021: • Missing social element
Slide 25: Adaptive retail - Digital acceleration strategy
Adaptive retail - Digital acceleration strategy Create a customer-centric ecosystem that drives incremental footfall and turnover by offering surprising experience, personalisation and convenience to our loyal shoppers Digitally augmented experience Unified Loyalty Program Surprising rewards Relevan
Slide 26: New initiatives focused on increasing footfall
New initiatives focused on increasing footfall Increased digital communication and activities • SEZAM loyalty app – the largest shopping center loyalty program in Poland, now expanding to other countries (41,646 application downloads; registered receipts of €7.3 million) • Click & Collect campaign –
Slide 27: Continuous commitment to sustainability
Continuous commitment to sustainability NEPI Rockcastle continues to be committed to sustainability strategy • Focus on minimising waste to landfill – feasibility study finalised, waiting for submission and approval. Aiming at zero waste to landfill from 2025 • 100% of the energy used for common are
Slide 28: Developments completed and ongoing
Developments completed and ongoing Lithuania Developments completed Shopping City Targu Mures Romania Mall Development Shopping City Buzau Romania Mall Refurbishment Forum Liberec Shopping Centre Czech Republic Mall Refurbishment Poland Ozas Shopping and Entertainment Lithuania Mall Refurbishment Ce
Slide 29: Safety in our properties
Safety in our properties "COVID-19 Compliant" certification in all countries of operations 32 shopping centres certified Safe Retail Destinations by SAFE Shopping Centers Continous dialog with authorities on the safe re-opening measures The Group adehered to the highest health and safety standards:
Slide 30: Finance
3 Finance NEPI ROCKCASTLE 30 RESULTS PRESENTATION DECEMBER 2020
Slide 31: Prudent financial strategy
Prudent financial strategy Focus on liquidity and optimisation of capital allocation • Reduced variable non-critical operating expenses during lockdown • Deferred non-committed development projects • Supplementary cash capacity through partial drawdown of revolving credit facilities during H1 2020 •
Slide 32: Prudent financial strategy continued
Prudent financial strategy» continued • Investment grade credit ratings: » BBB, negative outlook - Standard & Poor’s Prudent LTV (%) » BBB, stable outlook - Fitch 50 40 • LTV: 31.5% (LTV target: 35%) 35% 36.1% 30 33.0% 32.5% 32.0% 31.5% 28.0% • 83% of the investment property unencumbered 20 10 • Wei
Slide 33: Significant headroom on unsecured debt covenants
Significant headroom on unsecured debt covenants Solvency ratio could be breached only by a 800bps deterioration of valuation yields, which is unlikely % Solvency ratio (%) 60 50 40 40% 30 36% 37% Solvency ratio is computed on a gross basis, not adjusted 31% 20 for cash balances 10 0 2017 2018 2019
Slide 34: Overview of government measures
Overview of government measures Overview of the local legislation's impact on lease agreements in 2020 Slovakia, Czech Republic, Romania, Bulgaria, Hungary, Poland Lithuania Croatia, Serbia 24% by market value 15% by market value 61% by market value Tenant payments to landlords partially covered by
Slide 35: Balance sheet
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 36: Strong collection during the year
Strong collection during the year amounts include VAT 95% Group collection rate at 31 December 2020 (97% at mid-February 2021) €672m (€86m) (€6m) €45m €34m (€591m) Net tenant receivable Contractual rental and Rental concessions (on Net expected Cash collected Net tenant receivable as at 31 December
Slide 37: Fair value losses on property valuation driven by COVID-19 context
Fair value losses on property valuation driven by COVID-19 context 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
Slide 38: Fair value losses on property valuation continued
Fair value losses on property valuation driven by COVID-19 context » continued Fair value loss on property portfolio of €345m generated by COVID-19 context Exit rate Discount rate Prime yield Countries* 2020 2019 2020 2019 2020 2019 Romania 7.28% 7.25% 9.18% 8.85% 6.75% 6.50% Poland 6.23% 6.00% 7.83
Slide 39: Disposal of URW shares and repurchase of NEPI Rockcastle shares
Disposal of URW shares and repurchase of NEPI Rockcastle shares In Q4 2020, the URW share price showed a significant improvement The Board noted that a divestment of the remaining URW holding coupled with a buyback of NEPI Rockcastle shares would be accretive, also taking into account the comparativ
Slide 40: EPRA NRV: from December 2019 to December 2020
EPRA NRV: from December 2019 to December 2020 amounts in € 7.32 +0.22 6.45 -0.15 -0.57 -0.12 -0.25 December 2019 Fair value loss from Fair value loss from Dividend payment Profit for the period Other December 2020 listed securities investment property and other items NEPI ROCKCASTLE 40 RESULTS PRESE
Slide 41: 2020 distributable earnings
2020 distributable earnings amounts in euro cents 56.33 (0.3%) +0.19 (+1.6%) (0.2%) +0.93 +0.10 38.42 -14.22 (-25.2%) -2.08 -0.97 (-3.7%) -0.27 -1.12 -0.47 (-1.7%) (-0.5%) (-2.0%) (-0.8%) 2019 NOI effect Savings in Lack of Net finance Foreign Savings in Antecedent Share of Depreciation 2020 distribu
Slide 42: From distributable earnings to cash flow from operating activities
From distributable earnings to cash flow from operating activities amounts in € thousand +7,641 232,415 +2,659 +759 +1,665 236,415 -1,267 -1,835 -5,622 Distributable Adjustment Non-cash items Amortisation of Accrued net Accrued income Working capital Unrealised Cash flow earnings earnings relating t
Slide 43: Declaration of H2 2020 dividend
Declaration of H2 2020 dividend • H2 2020 dividend declared for 90% of the distributable earnings, to be settled in cash • Distribution policy unchanged: 90% or more of distributable earnings • The Board decided to retain 10% as reserve • LTV estimated to remain below 33% after H2 2020 dividend paym
Slide 44: Way forward
4 Way forward NEPI ROCKCASTLE 44 RESULTS PRESENTATION DECEMBER 2020
Slide 45: CEE growth prospects expected to continue post COVID-19
CEE growth prospects expected to continue post COVID-19 Real GDP growth (%) Private Consumption Growth Index** NEPI Rockcastle’s portfolio countries are expected to experience a more muted Private consumption growth in CEE, above the EU average, to drive the growth in retail recession than the EU /
Slide 46: COVID-19 evolution and start of vaccination process in CEE
COVID-19 evolution and start of vaccination process in CEE Vaccination rate in NEPI Rockcastle countries progressing above EU average. According to European Commission, by summer 2021, Member States should have vaccinated 70% of the entire adult population. 14 days moving average of COVID-19 cases p
Slide 47: 85% of the Group's GLA operational as at mid-February 2021
85% of the Group’s GLA operational as at mid-February 2021 Weight in Operational GLA Operational GLA portfolio by prop. value as at 31 December 2020 as at mid-February 2021 Romania 35% 94% 98% Poland 24% 31% 91% 91% Hungary 10% 83% 100% 82% Slovakia 9% 21% 98% 21% Bulgaria 8% 30% 91% Croatia 5% 97%
Slide 48: 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 mixed-use properties and reinforcing dominance through extensions and redevelopments projects €1 bn development pipeline Further opportunities • cca. €1 billion of controll
Slide 49: Outlook and strategy
Outlook and strategy 2021 Focus • Maximise sustainable NOI • Digital acceleration • Committed development pipeline • Maintain balance sheet safety • Leverage on the Group's strenghts to benefit from arising opportunities 2021 Guidance • Distributable earnings per share for 2021 are expected to be ap
Slide 50: Appendix
5 Appendix NEPI ROCKCASTLE 50 RESULTS PRESENTATION DECEMBER 2020
Slide 51: Reconciliation of (loss)/profit for the period to EPRA Earnings and distributable earnings
Reconciliation of (loss)/profit for the period to EPRA Earnings and distributable earnings amounts in €'000 EPRA Earnings Dec 2020 Dec 2019 (Loss)/earnings in IFRS Consolidated Statement of comprehensive income (174 921) 416 235 Fair value adjustments of investment property for controlled subsidiari
Slide 52: 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 53: NEPI Rockcastle Results Presentation December 2020
NEPI ROCKCASTLE 53 RESULTS PRESENTATION DECEMBER 2020