Biggest mall owner in Romania sees 42% drop in profit in the first half

Commercial property investor and developer NEPI, the biggest mall owner in Romania, posted a net profit attributable to equity shareholders of EUR 66.9 million in the first half of 2016. The result is 42% lower than the one registered in the same period in 2015, of EUR 115.6 million. The net rental income amounted to 64.4 million in this period, up 37.3% year-on-year, according to a company report. In the first six months of 2015, NEPI registered a net rental income of EUR 46.9 million. NEPI acquired Shopping City Sibiu in the first half of 2016, thus consolidating its position as the biggest mall owner in Romania. The company plans to refurbish the center in 2017, improving its retail mix with cinema, entertainment, and fashion extensions. Moreover, the fund completed the second phase of Shopping City Timisoara in western Romania, which consists of an additional 41,400 sqm of fashion and entertainment GLA. This complements the first phase, a 16,300 sqm GLA hypermarket and gallery, which opened at the end of 2015. NEPI also reached an agreement with Austrian group Real4You to buy its 30% interest in Mega Mall, its biggest property in Romania. Following this purchase, the fund is now the sole owner of Mega Mall, which opened in May 2015 after an EUR 165 million investment. “Consistent with its strategy, the Group continues to invest in developments that significantly contribute to the growth in distributable earnings per share. NEPI is pursuing a development pipeline that exceeds EUR 750 million (including redevelopments and extensions, estimated at cost), of which EUR 190 million was spent by June 30, 2016. This represents an increase of approximately EUR 150 million compared with December 31, 2015,” reads NEPI’s report. Thus, the group is in the process of obtaining new zoning and construction permits for a retail extension and integrated office building to its Promenada Mall in Bucharest. The extensions should be completed in 2018. Moreover, NEPI started the phased opening of City Park’s fashion extension, located in Constanta, and began construction of the 27,900-sqm GLA regional mall in Piatra Neamt. On the office segment, the fund is currently working on the third phase of The Office, Cluj–Napoca, comprising 18,500-sqm GLA. The work is to be completed next year. Moreover, in Bucharest, NEPI is developing an 8,400-sqm GLA landmark office, including a refurbished historical building, located next to the Romanian Government building. Irina Popescu, irina.popescu@romania-insider.com