August 19 2026 10:40
JOHANNESBURG, SOUTH AFRICA
NEPI Rockcastle, Europe’s third largest listed retail real estate company by portfolio value and the largest property group listed on the JSE may be too big for central and eastern Europe as it pursues opportunities in Spain for the first time. The group released financial for six months to end-June on Wednesday, wherein it delivered an operational performance that saw its net operating income, including energy activity, rise 3.8% year-on-year to €318m.
“This was driven by rental indexation, active leasing optimisation and tighter cost control with a recovery rate of 96%,” it said.
Nepi was formed in 2007 by South African investors and partners in Romania. It was mired in the Resilient stable of companies inter share deal and dividend boosting scandal but was cleared of wrongdoing.
Demand was buoyant in Central and Eastern Europe as consumers spent more on average during each visit to the fund’s shopping centres with average basket spend up 3.3%. This supported like-for-like tenant sales which were 2.7% higher than a year ago. Occupancy remained close to full at 98.2%. The operating performance led to a €126m valuation uplift, taking the total portfolio value to €8.4bn.
Distributable earnings per share (DEPS) increased by 3.5% in the first half of the 2026 financial year relative to the first half of the 2025 financial year and, on the strength of NEPI Rockcastle’s results, its board raised its guidance for the full year. The company now expects DEPS for 2026 to be 3.5% to 4% higher than the DEPS of 62.03 cents per share in 2025.
“The strong results in the first half of 2026 demonstrate the quality and the resilience of NEPI Rockcastle’s portfolio and are a testament to our active asset management. We continue to invest in the future of the business across the portfolio, ranging from the extension of Promenada Bucharest, the largest retail development in CEE, to a renewable energy programme where our first greenfield plant in Romania is now producing power for our tenants,” Marek Noetzel, Chief Executive Officer said.
“The strength of our balance sheet was also acknowledged by S&P Global Ratings, which upgraded the Company to BBB+ in July 2026. This enables us to keep placing capital into value-enhancing opportunities, including our first investment outside Central and Eastern European markets – in Bilbao, Spain, that we have just announced,” he said.
The property related like-for-like net operating income (NOI) increased 3.3% to €312m in H1 2026, underpinned by the indexation of base rents, higher short-term income and better costs recovery. The net result from renewable energy production was €5.7m in H1 2026, 38% above the comparative period, as newly commissioned photovoltaic capacity came on stream.
The group’s liquidity position stood at €1.2bn on 30 June 2026, consisting of cash and cash equivalents of €461m and undrawn committed credit facilities of €740m.
The group signed a €250m green facility loan with the European Bank for Reconstruction and Development (EBRD) after the period end. Its loan-to-value (LTV) was 33.1% on 30 June 2026 (31 December 2025: 32.8%) and below the company’s 35% long-term strategic threshold.
Nepi Rockcastle is rotating its capital towards higher-growth assets. In May 2026, it entered into a non-binding agreement to dispose of Ozas Shopping and Entertainment Centre in Vilnius, Lithuania, which is classified as held, with completion planned by the end of 2026. In August 2026, the Group entered into an agreement to buy MegaPark Barakaldo in the northern Spanish city of Bilbao for a consideration of €252m, its first investment in Spain and the Western European market, with closing expected by the end of September 2026.
Footfall in H1 2026 was broadly flat (-0.4%) compared with H1 2025. Overall, the number of visitors has been remarkably stable over the past three years, despite ongoing economic uncertainties in the region, the group said. The average basket size continued to expand (+3.3% in H1 2026 vs H1 2025) following the trend of increasing spend per visit and demonstrating the resilience of consumers in CEE.
LFL tenant sales in H1 2026 were 2.7% higher than H1 2025, improving in most retail categories. Health & Beauty (+8.4%), Services (+8.3%) and Fashion Complements (+6.9%) posted the strongest growth. Sales in the largest segment, Fashion, were 1.6% higher.
Nepi Rockcastle signed 613 new leases and lease extensions for a total of 162,900m2 GLA (equivalent of 6.8%) in H1 2026. New leases accounted for 39% of the total by gross lettable area (GLA), of which 18% were signed with international retailers and 21% with national and local tenants – 61% of the signings were renewals of existing leases.
The 250 new leases signed in H1 2026 equated to 63,900m2 of retail space, equivalent to 2.75% of the Group’s GLA, and 46% of this space was let to international retailers. Leading brands continued to choose the Group’s centres for flagship and concept stores, with significant signings in Promenada Bucharest, Bonarka City Center, Silesia City Center, Shopping City Timisoara, Solaris Shopping Centre and Ozas Shopping and Entertainment Centre.
Mango the clothing retailer opened its largest store in Krakow and Medicine and Massimo Dutti debuted new stores in the Silesia City Centre and City Park Constanta respectively. Primark opened at Shopping City Sibiu in July this year, its fifth store across the group’s orotfolio, shortly after the end of the financiasl period.
The total cost of developments, extensions, refurbishments and redevelopments under construction or in permitting was over €820m, of which €354m had already been invested by 30 June 2026.
Works at development projects under construction are on schedule and within budget. The extension of Promenada Bucharest is expected to open in April 2027. Lease terms have been agreed or signed for 95% of the retail GLA, while negotiations for the office component are well advanced. The redevelopment of Bonarka City Center is due for completion in Q1 2027, with lease terms agreed for 97% of the GLA. Refurbishment works on Arena Mall in Budapest are 60% complete and will be finalised in Q2 2028. The extension of Pogoria Shopping Centre (Dąbrowa Gornicza, Poland) opened in Q1 2026, adding 5,100m2 GLA. The building permit for the 8,800m2 GLA extension of Karolinka Opole was issued in May 2026; construction is due to start in September 2026 and to be completed in Q2 2028, with lease terms signed or under advanced negotiation for the entire new space.
Progress was achieved with greenfield energy projects, which involve developing two off-site photovoltaic plants in Romania. The first plant, in Chisineu-Cris, with an installed power capacity of 54 MW, is complete and in commercial operation, having generated €1.8m by the end of June 2026, in line with expectations. The second plant in Aricestii Rahtivani, with a power capacity of 60 MW, is fully permitted, with physical completion and testing expected by the end of 2026. These projects significantly expand the group’s green energy generating capacity, increase the coverage of the electricity consumption needs of its tenants and make a positive contribution to net rental and related income (NOI).
Nepi Rockcastle owns malls in Romania, Poland, Bulgaria, Hungary, Slovakia, Croatia, the Czech Republic and Lithuania. It will soon own a mall in Bilbao, Spain.
247@propertyflash.co.za
