Europe’s vaccination drive and economic rebound assists NEPI’s recovery

NEPI Rockcastle’s Chief Executive Officer, Alex Morar,.
NEPI Rockcastle’s Chief Executive Officer, Alex Morar

NEPI Rockcastle has released its reviewed interim condensed consolidated financial results for the six months ended on the 30th of June 2021, declaring a dividend of 17.64 Euro cents per share for the reporting period which corresponds to 100% of the distributable earnings per share for the period.

After a difficult first quarter, NEPI Rockcastle’s full reopening during the second quarter was driven by good progress in vaccinations and a decline in Covid-19 cases in all Central Eastern European (CEE) countries.

Most trading restrictions have been lifted and all gross lettable area (GLA) is operational. However, the risk of new restrictions remains, as the spread of new virus variants elsewhere in the world and the slowdown in vaccinations in some CEE countries creates the possibility of a new surge in Covid-19 cases during 2021’s second half.

NEPI’s recent trading data points to a quick recovery with its tenant sales (since reopening) coming close to 2019 levels with a rebound faster than after the summer reopening of 2020. Retailers and customers have adapted to the new circumstances which made the impact of restrictions in 2021 less severe than in 2020.

There were no material tenant bankruptcies; the company’s occupancy reached 95.6% on the 30th of June 2021 and this positive trend is expected to continue as retailers are expanding to take advantage of the economic rebound.

More than 99% of NEPI’s reported revenues for FY2020 have been collected, while progress is being made with tenant negotiations for 2021, leading to a rental collection rate for the H1 2021 of 94% at mid-August. After repaying secured bank loans of €242 million during the H1 2021, the company’s available liquidity is close to €1 billion. The company will pay 100% of its H1 2021 earnings as dividends in cash.

The group achieved 17.64 Euro cents in distributable earnings per share for the reporting period, 10.3% lower than the comparative period. This decrease is likely due to the impact of the disposal of its Romanian office portfolio which was completed in August 2020 and higher finance costs due to maintaining additional liquidity compares to H1 2020. Retail-only net operating income was 4.4% higher in H1 2021 compared to H1 2020.

The board’s decision to declare the dividend of 17.64 Euro cents per share is in line with the company’s policy of distributing at least 90% of its distributable earnings.