NEPI Rockcastle reports strong NOI growth and tenant sales, driven by resilient CEE consumers

NEPI Rockcastle has announced a 12.3% increase in net operating income (NOI) to €411 million for the first nine months of 2024 (9M 2024) compared to the same period in 2023. On a like-for-like basis, NOI rose 8.4%, fueled by higher rents, short-term income, and disciplined cost management. The company’s momentum reflects the resilience of Central and Eastern European (CEE) consumers and strong tenant performance, which also contributed to a drop in the EPRA vacancy rate to 2.3%, down from 2.7% in June 2024.

“We continue to see solid growth across our markets, driven by strong tenant performance and active asset management,” said Rüdiger Dany, CEO of NEPI Rockcastle. “Our properties are becoming increasingly attractive to consumers and retailers, which has helped reduce vacancy rates and deliver healthy NOI growth.”

Key Operational Highlights

• Tenant Sales and Footfall: Tenant sales increased by 9% (like-for-like, excluding hypermarkets), with Q3 2024 recording a 9.2% year-on-year increase. Footfall rose by 1.4% over 9M 2024, while the average basket size grew by 8.3%.
• Vacancy and Rent Collection: The EPRA vacancy rate fell to 2.3%, and rent collection for 9M 2024 was 99%.
• Leasing Activity: In Q3 2024, NEPI Rockcastle signed 345 new leases and renewals, covering over 71,200 sqm. International tenants accounted for 61% of newly leased space.

Strategic Investments and Major Deals

NEPI Rockcastle made significant strides in its investment strategy during Q3 2024:
• Green Bond Issuance: In September 2024, the company issued €500 million in green bonds maturing in 2032. The issue was six times oversubscribed, offering a fixed coupon of 4.25%.
• Acquisitions and Disposals: On 1 October, NEPI Rockcastle acquired the 100,000 sqm Magnolia Park shopping center in Wroclaw, Poland, for €353 million. Days later, it sold its last remaining Serbian asset, Promenada Novi Sad, for €177 million.
• Equity Raise: The company successfully raised €300 million through a new share issue in October.

With these moves, NEPI Rockcastle lowered its loan-to-value (LTV) ratio to 29.2% at the end of October 2024 and positioned itself for further acquisitions and developments.

Development Pipeline

NEPI Rockcastle’s development pipeline, valued at €788 million, includes major projects such as:
• Promenada Plovdiv: A 60,500 sqm retail development in Bulgaria, set for completion in late 2026.
• Galati Retail Park: A mixed-use scheme in Romania with 40,900 sqm of retail and 21,500 sqm of residential space, expected to open in Q4 2026.
• Green Energy Expansion: Phase two of its photovoltaic energy project, including 24 new locations outside Romania, is underway.

Sustainability Milestones

NEPI Rockcastle has made significant progress in ESG performance:
• Received a 5-star GRESB rating, up from 3 stars in 2023.
• Awarded EPRA Gold for Sustainability Best Practices Recommendations (sBPR).
• Completed phase one of its green energy project, generating €7.3 million in income during 9M 2024.

Positive Outlook for 2024

The company expects distributable earnings per share for 2024 to grow by approximately 5.5% compared to 2023, maintaining a 90% dividend payout ratio. Despite potential geopolitical and macroeconomic risks, NEPI Rockcastle remains confident in its ability to leverage market opportunities and deliver long-term sustainable growth.

With a robust portfolio valued at €7.4 billion and continued investments in sustainability and new developments, NEPI Rockcastle is well-positioned to capitalize on the growing resilience of the CEE consumer market.