Our opinion on the current state of NRP

Nepi Rockcastle (NRP), a significant Real Estate Investment Trust (REIT) with a valuation of R124 billion, specializes in managing over 56 shopping malls across nine Central and Eastern European countries. The company's portfolio is particularly concentrated in Poland, Romania, Slovakia, Bulgaria, Croatia, and Hungary. Nepi Rockcastle's share price experienced significant volatility, initially impacted by the fallout from the 360ne report in January 2018, which saw its value drop from a high of R217 in December 2017 to R99 in November 2018. The COVID-19 pandemic further exacerbated its decline, taking the share price down to under R55 in March 2020. However, a recovery phase has since seen the share price rise to around R103,06.

As of 31st December 2023, the company's portfolio was valued at 6.3 billion euros (approximately R124 billion), establishing it as the largest property share on the Johannesburg Stock Exchange (JSE). A notable development in 2022 was a 30 million euro civil judgment by the Arbitral Tribunal in Poland, which the company was required to pay.

In its annual results for the year ending 31st December 2023, Nepi Rockcastle reported a 21% increase in net rental income and a 2.3% rise in headline earnings per share (HEPS). The company highlighted a collection rate of 98% of the reported revenues for 2023 as of 31st December 2023, which increased to over 99% by mid-February 2024. The investment property was valued at 6.8 billion euros as of the end of 2023, an increase from 6.6 billion euros at the end of 2022. The Group's liquidity position was reported at 909 million euros, including 339 million euros in cash and 570 million euros in undrawn committed credit facilities, maintaining a loan-to-value (LTV) ratio of 32.2%, comfortably below the strategic upper threshold of 35%.

Technically, Nepi Rockcastle's share has shown a strong recovery from the pandemic's impacts, with a notable upward trend since 1st November 2023. This performance suggests that the company is well-positioned for further growth, supported by its robust portfolio, strategic geographic presence, and sound financial management. The current valuation and upward trajectory in the share price indicate that Nepi Rockcastle remains an attractive investment proposition, particularly for investors seeking exposure to the European retail property market.