Rodamco Europe, the largest publicly listed property investment and management company in the retail sector in Europe, achieved sound financial results for the first six months of 2003. Rodamco Europe reported a 9.9% year-over-year (YoY) rise in net profit to â⬠155 million in the first six months of 2003. This has been achieved primarily through a 5.1% YoY growth in net rental income and 12.2% YoY decline in net interest expenses.
Fully diluted EPS remains at â⬠1.73 for the 1H 2003, mainly due to the effects of dilution resulting from the conversion of 12.2 million new shares on 30 September 2002. Prior to the conversion, the EPS was â⬠1.82 in the first six months of 2002. Net Asset Value (NAV) per share increased by 3.8% compared to NAV at year-end 2002. Property investments amounted to â⬠6,464 million, a slight increase of 0.5% compared to year-end 2002, which is the net result of investments in retail and the divestment of mainly an office portfolio in the Netherlands.
The total occupancy rate improved to 96.7% from 96.2%, primarily through higher occupancies in offices and logistics. Rodamco Europe has set the 2003 interim dividend at â⬠1.10, which is equal to last yearââ¬â¢s interim dividend.
CEO Maarten Hulshoff: ââ¬ËThe first half of 2003 has been an exciting time for Rodamco Europe. We have firmly and successfully pursued our strategy against a backdrop of economic and geopolitical uncertainty. Our focus on the retail property sector, - 83% of our total â⬠6.5 billion portfolio- and specifically on high quality shopping centres and highââ¬"street shops with dominant locations in key European cities, is proving a sound strategy. Retail properties offer more stable long-term returns, as underscored by our performance in the first half of 2003. We have continued our retail strategy with the acquisition of two shopping centres, Cote Seine in France and Tyresö in Sweden (July 2003) and have divested a further â⬠140 million, predominantly in offices and logistics. .
We have obtained a single A rating by S&P, which was followed by a successful debut Eurobond issue of â⬠500 million. Despite the current economic slowdown and ensuing reduced consumer confidence, we are cautiously confident about the future, and will continue to focus on high quality retail properties where we can add value through retail managementââ¬â¢.
Focus on retail
Even before the downward trend in the office cycle emerged, Rodamco Europe started on timely divestment of properties in this sector. Today, retail represents 83% of the total property portfolio from 76% at year-end 2000. The current and future focus remains on high-quality shopping centres in dominant locations. The majority of our shopping centres are ââ¬Ëfood-anchoredââ¬â¢, implying that they are less vulnerable to economic downturn, which protect us against the downwards trend in consumer confidence, putting pressure on retailers, especially retailers of durable consumer goods.Sales and traffic at the shopping centres show positive numbers. For these reasons retail occupancy remains stable at 97.7%.
Outlook
The management board maintains its objective to increase net profit in 2003 by around 5 %, which due to the conversion of the exchangeable last year, results into a 6% dilution in EPS.
The conversion took place to meet the expected funding needs of â⬠1.4 billion for our development pipeline of predominantly shopping centres.
For 2003, Rodamco Europe expects limited positive revaluations in the retail sector (due to indexation), partly offset by negative revaluations in the office sector.
Source: Rodamco Europe
