Our opinion on the current state of NEPIROCK(NRP)Nepi-Rockcastle (NRP) is a R124bn real estate investment trust (REIT) which operates more than 56 shopping malls in 9 central and eastern European countries, mostly in Poland (24%), Romania (35%), Slovakia (9%), Bulgaria (8%), Croatia (5%), and Hungary (11%).
The share fell with the rest of the Resilient group (as a result of the 360ne report in January 2018) from its high of R217 in December 2017 to as low as R99 in November 2018. Then the COVID-19 pandemic took it down further to under R55 in March 2020. Since then, it has staged a recovery to around R103,06. The company's total portfolio is worth 6,3bn euros (R124bn), ranking it as the largest property share on the JSE.
On 1st February 2022, the company announced that it had to pay 30m euros in a civil judgement by the Arbitral Tribunal in Poland.
In its results for the six months to 30th June 2024, the company reported net income up 13,5% and headline earnings per share (HEPS) up 3,56%. The vacancy rate was 2,7%, and the loan-to-value (LTV) was 32,2%. The company said, "Property operating expenses decreased by 3.3% between H1 2023 and H1 2024, driven by lower energy costs and operational efficiencies. The recovery rate increased from 93% to 94%. - The Group had a strong liquidity position of almost €1.3 billion on 30 June 2024, consisting of cash and cash equivalents of €672 million and undrawn available credit facilities of €620 million."
In an update on the first 9 months to 30th September 2024, the company reported net operating income up 12,3% and tenant sales up 9%. Footfall increased 1,4%, and the average basket size increased 8,3%. The company said, "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."
Technically, the share recovered convincingly from the pandemic and has been in a strong upward trend since 1st November 2023. We still regard it as good value at current levels and expect the upward trend to continue.
On 18th October 2024, the company announced that it had raised 300m euros through the sale of 41,7m ordinary shares (6,2% of its issued share capital) at 7,191 euros (R137,85) per share, a discount of 4,36% to the closing price on 17-10-24 (R144,13).
In a pre-close update on 19th December 2024, the company estimated that operating income would rise by 13% in 2024 and reported occupancy of 97,9% at 30th November 2024. The company said, "At mid-December 2024, the collection rate for the first 11 months of the year was 98% (and 99% for the period January-September 2024). By the end of October 2024, year-to-date (YTD) cumulative tenant sales were 9% higher than for the comparable period in the prior year, on a like-for-like (LFL) basis."
Technically, the share remains in an upward trend.
