Nepi Rockcastle expects a double-digit dividend growth
The largest real estate group listed on the JSE releases its first set of results as a merged entity
Nepi Rockcastle, which was formed out of the merger of New Europe Property Investments (Nepi) and Rockcastle Global Real Estate, is expecting high double-digit dividend growth in the year to December.
The largest real estate group listed on the JSE, with a market capitalisation of R100.5bn, released its first set of results as a merged entity on Tuesday.
The company said distributable earnings per share for the year 2017 were expected to be about 17% higher than the 2016 pro-forma distribution of €0.41 per share published in the Nepi Rockcastle prospectus.
Nepi achieved €0.23 in distributable earnings per share for the six months to June and Rockcastle achieved $0.058 in distributable earnings per share for the same period. The resulting combined distribution declared by Nepi Rockcastle was €0.235 per share.
Nepi Rockcastle focuses on investments in dominant retail real estate assets in high-growth central and eastern European markets. It owns several assets in Romania, Poland and Slovakia and has recently begun to grow a presence in Croatia, Czech Republic and Serbia.
The group owns, and manages, 50 income-producing assets mainly in the countries mentioned with a total value of about €3.8bn. It has six additional assets under development. It has just entered its seventh central and eastern European market, Bulgaria, through the acquisition of Serdika Centre and Office in Sofia.
Fayyaz Mottiar, head of listed property at Absa Asset Management, said the set of financial results was impressive. "These results are great. Nepi Rock-castle can achieve 15% growth in 2018 and 2019. Their pipeline is very strong and they have earmarked some acquisitions.
"With conservative gearing at 24% and such a sizeable business, they could do a deal worth €1bn soon, quite easily," he said.
Co-CEO Alex Morar said Nepi Rockcastle also held a portfolio of liquid listed securities of large companies that dominated its markets and consistently outperformed its competitors, operating primarily in the US, UK and continental Europe. However, the company wanted to migrate towards owning more property directly.
"Going forward, in line with company strategy of migrating from listed investments to direct property, this portfolio is envisaged to be converted into new strategic direct property acquisitions," said Mottiar.
"The listed security portfolio was valued at $1.33bn [€1.16bn] at June 30, representing 23% of the combined group’s investment assets. [This] is expected to reduce as the strategy is implemented," he said.