Our opinion on the current state of 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 and then the COVID-19 pandemic took it down 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) and it ranks 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 2023 the company reported rental income up 23% and headline earnings per share (HEPS) up 40,79%. The company said, "On a like for like ('LFL') basis NOI was 15% higher in H1 2023 compared to H1 2022, excluding the contribution of the acquisitions completed in 2022 (Forum Gdansk Shopping Centre, Copernicus Shopping Centre in December and 50% of Shopping City Ploiesti in September)". In an update on the 9 months to 30th September 2023 the company reported net operating income up 23%. The company said, "The three acquisitions made in 2022 - Forum Gdansk and Copernicus shopping centres in Poland and the 50% share of the Ploiesti Shopping City in Romania – contributed €28 million to the NOI for 9M 2023". In a pre-close update on the final quarter of 2023 the company estimated that net operating income would increase by more than 20% and footfall after 11 months up 6% on the previous year. The company said, "By the end of October, year-to-date (YTD) cumulative tenant sales were 13% higher than in the prior year like-for-like (LFL). A strong rebound in the performance of cinemas made Entertainment one of the top performing categories, with a 23% rise". Technically, the share has 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.