Tenant sales increased by 9.0% in 9M 2024 versus the same period a year ago (LFL excluding
hypermarkets), in line with the trend at half year. Footfall was up by 1.4% (LFL), while the average basket
size increased by 8.3% despite inflation de-accelerating significantly since 2023.
The European Public Real Estate Association (“EPRA”) vacancy rate dropped to 2.3% at the end of the
third quarter, down from 2.7% as at June 2024, on the back of strong tenant performance supporting
leasing activity. Rent collection for the period was 99%, as at the end-October 2024.
“We continue to see solid growth across our markets, driven by strong tenant performance and the impact of active asset management,” says Rüdiger Dany, NEPI Rockcastle’s CEO. “The average basket size continued to grow through the third quarter at roughly the same pace as in the first half of the year. Our team continues to excel in making our properties more attractive for consumers and retailers and in leveraging the Group’s leading position in CEE’s commercial retail environment. Our strong leasing activity contributed to reducing the vacancy rate to 2.3%, which, combined with rental uplifts and improved cost recovery, ensured that NOI continues to grow at very healthy rates.”
NEPI Rockcastle’s management has embarked on a major strategic plan to take advantage of current market opportunities and position the Group for long-run sustainable growth. Over a period of a few weeks spanning September and October, the Company successfully completed a €300 million equity raise (the first since 2017); a €500 million green bond issue; the largest single asset acquisition of a retail property in CEE in recent years and the disposal of its last remaining property in Serbia. More is yet to come, as we are looking at a very promising acquisition and development pipeline – including green energy production – while capital markets are growing ever more supportive of our strategy.”
NEW FUNDS RAISED ON DEBT AND EQUITY CAPITAL MARKETS FUEL AMBITIOUS INVESTMENT PLANS
On 26 September 2024, NEPI Rockcastle issued €500 million of green unsecured bonds maturing in January 2032. The issue, which was six times oversubscribed, attracted considerable interest from investors, resulting in favorable financial terms for the Group (a fixed coupon of 4.25% and an issue price of 99.124%). Also in September, one of the existing revolving credit facilities (“RCF”) was increased by €50 million, leading to an overall €670 million in available committed RCF. The loan-to-value ratio (“LTV”) was 30.7% as at 30 September 2024, compared to the Company’s 35% strategic threshold.
OPERATING PERFORMANCE
Footfall was 1.4% higher in 9M 2024 compared to 9M 2023 (LFL). The pace of year-on-year growth accelerated slightly in Q3 2024 (+1.6%) compared to the second quarter (“Q2”) (+0.3%).
LFL tenant sales (excluding hypermarkets) in 9M 2024 increased by 9% compared to 9M 2023. The year on-year growth in Q3 was 9.2%, above that in Q2 (+7.3%) and significantly above inflation, which has decreased towards the European Central Bank’s target of 2%. All retail segments recorded higher sales in 9M 2024 than in the corresponding period of 2023. The best performing categories were Health & Beauty (+16%) and Services (+12%), while in Fashion, the largest segment, tenant sales increased by 8%.
LEASING ACTIVITY
In Q3 2024, the Group signed 345 new leases and lease renewals, for more than 71,200m2, of which 34% by GLA are new leases (1% of total GLA). International tenants accounted for 61% of newly leased GLA. The average rental uplift in 9M 2024 was 3.6% above indexation, underpinned by continued strong demand for space in the Group’s shopping centres. EPRA retail vacancy reached a low 2% as at 30 September 2024.
Significant new leases signed in Q3 2024 include Reserved (Aupark Shopping Center Piestany, Slovakia), Pull & Bear and Zara Home (Arena Mall, Hungary), Stay Fit Gym (Shopping City Targu Jiu, Romania), Mohito (Shopping City Timisoara, Romania), Mr. DIY (Platan Shopping Centre, Poland), Bershka (Arena Centar, Croatia), McDonald’s (Vulcan Value Centre, Romania), JD (Forum Liberec Shopping Centre, Czech Republic), and eobuwie (Forum Gdansk Shopping Center, Poland).
