Sonae Sierra, the international company dedicated to develop and service vibrant retail-centred properties, recorded a Net Profit of €181m in 2016, a 28% increase compared to the €142m reached in 2015.
Direct Net Profit stood at €57m, slightly lower than last year’s €61m, due to the company’s capital recycling programme which achieved €13.3m of gains on sales of properties. On a like-for-like portfolio basis, and excluding the impact of FX changes, Direct Net Profit increased by 8% because of the improved shopping centre operational results, the growth of their professional services and the lower interest rates.
This capital recycling programme aims to further expose the company to new development opportunities by reducing its ownership stakes in mature shopping centres. However, the company maintains relevant minority capital positions in those centres, guaranteeing full interest alignment with the majority investors. This is a very attractive value proposition to investors in that Sonae Sierra plays the operating partner role by deploying its proven value adding and management capabilities to the benefit of all partners in the property.
Indirect Net Profit rose to €125m, a 54% growth compared to the €81m in 2015. The positive variation was mainly due to the higher value created in investment properties deriving from a strong yield compression in Europe, the value created from the opening of ParkLake in Romania.
In operational terms, tenant sales in the European portfolio recorded a 3.4% like-for-like increase in 2016, compared to the same period of 2015, with a 15.7% growth in Romania, 8% in Spain and 4% in Portugal. This performance reflected the market recovery in general and the resilience and quality of the company’s shopping centres as compelling retail destinations. Brazil maintained a stable performance with a 0.9% (BRL) rise in tenant sales, also compared to the same period of 2015, despite the challenging macro-economic environment.
The Global Occupancy Rate of the portfolio rose to 96.6%, an increase on 95.2% recorded last year, reaching 97.1% in the European portfolio while also improving in Brazil. This reflect the company’s superior management capabilities.
According to Fernando Guedes Oliveira, CEO of Sonae Sierra, “strong operational results in 2016 have emphasised the quality and reputation of our shopping centres, with positive uplifts in global tenant sales and occupancy rates. ParkLake successfully opened in Romania and we have two more co-owned shopping centres under development in Morocco and Colombia, as well as several expansions in Portugal and Spain. The successful execution of our capital recycling strategy and further professional service provision places us in an excellent position at the start of 2017.”
Developments, service provision and a new Socimi
On the one hand, Sonae Sierra continues to pursue new developments and value adding opportunities to its assets and, on the other hand, to sign new contracts to render professional services.
September 2016 saw the successful opening of ParkLake in Bucharest, Romania. Encompassing a €180m investment in partnership with Caelum Development, the project was completed on time and on budget, with over 97% of its approximately 70.000m² of GLA leased upon opening. Moreover, ParkLake offers a reference for high quality modern retail.
It boasts exceptional architecture, innovative features and an integrated theme based on “park, nature and family”, emphasising its function as a meeting place where people can eat, shop, relax, be entertained and participate in a variety of leisure activities within a stimulating and comfortable living space.
Work continues apace on Jardín Plaza, in Cúcuta (Colombia), Zenata Shopping Centre (Morocco) and McArthurGlen Designer Outlet Málaga (Spain) and, also, in several expansions, namely of NorteShopping (Portugal).
Sonae Sierra’s debut investment in Colombia will see a brand-new shopping centre delivered in Cúcuta with 43,000m² of GLA, in a €47m investment scheduled for inauguration in 2018.
In Morocco, Zenata Shopping Centre will provide the city of Casablanca with more than 250 shops over 85,000 m² of GLA.
Sonae Sierra’s joint venture with McArthurGlen, for the development of the McArthurGlen Designer Outlet Málaga (Spain), is a €115m investment creating 30,000 m² of new retail space when completed. It will offer consumers a strong mix of over 170 brands – spanning some of the most sought-after luxury and designer trademarks, international chains and local shops. Scheduled to open in two phases, the first phase expected for 2018 will launch 100 stores.
In the professional services area, Sonae Sierra signed a total of 150 new contracts in 2016: 136 of development services contracts, in 10 geographies and 14 of property management and leasing contracts, in 4 geographies.
In addition, Sonae Sierra launched in Spain a new listed property investment vehicle (Socimi), called ORES, with Spanish financial services company Bankinter, which will invest around €400m in commercial assets in good locations in Spain and Portugal. The main investment focus will be on hypermarkets, supermarkets, retail parks and retail high street assets.
