Sonae Sierra records Net Profit of €59m in first half of 2016

Sonae Sierra, the international property company dedicated to serving the needs of retail real estate investors, recorded a Net Profit of €59.0m in the first half of 2016, with increased tenant sales in Europe and an uplift in the global occupancy rate reinforcing the continued recovery trend.

Tenant sales in the European portfolio grew by 3.9% on a like-for-like basis, compared to the same period of 2015, with an 11.1% growth in Spain and 4.5% in Italy. The Portuguese market maintained a positive performance, with a 3.2% like-for-like increase in tenant sales, compared to the first semester of 2015. Tenant sales in Brazil remained stable (0.0% in Brazilian Real LfL).

The global occupancy rate of the portfolio reached 96.1%, a 0.3% increase compared to the same period of 2015. This reflects the good management of the company’s shopping centres, particularly in Europe, where occupancy was up to 97.1%.

According to Fernando Guedes de Oliveira, Sonae Sierra's CEO, "the first six months of 2016 have confirmed the recovery trend, particularly in Europe, where tenant sales rose 3.9% and occupancy rates reached 97.1%. We have continued to boost our third party service provision, launched a fund with CBRE GIP to maintain our business positions in Spain and Portugal, and confirmed the opening of ParkLake, in Romania, for September 1st.”

In the first semester of this year, the Direct Result was stable at €26.8m, the same as in the first half of 2015. This reflects the ongoing economic recovery and increased occupancy rates in Europe, in spite of the asset sales executed by the Company and the Brazilian Real devaluation during this period.

The Indirect Result was €32.2m, €20m below the previous year, as a result of a lower yield compression than the one experienced in the same period of last year.

Sonae Sierra and Caelum Development have announced that ParkLake (Bucharest, in Romania) will open on September 1^st, marking the debut of several new brands and retail concepts in Romania. More than 97% let as of end of June, the highly sustainable shopping centre represents a €180m investment with over 200 shops on 70,000m² of GLA.

In the first six months of the year, Sonae Sierra strengthened its third party service provision activity with ten new contracts with external clients signed in the second quarter alone, of which six are development service contracts and four leasing and property management. A new venture was established with CBRE Global Investment Partners to own and operate regional dominant shopping centres in the Iberian peninsula, initially comprising three shopping centres in Spain and Portugal which were previously owned by the Sierra Fund. Sonae Sierra now holds a minority share in the fund and acts as local operating partner and asset and property manager.

Sonae Sierra calculates its NAV according to the guidelines published in 2007 by the INREV (European Association for Investors in Non-Listed Real Estate Vehicles).

Based on this methodology, as of June 30, 2016, Sonae Sierra's NAV stood at €1.2bn. This value represents a 5.4% increase compared to the value in December 2015.

Sonae Sierra maintained its conservative long-term funding and hedging strategies. The Company's capital structure has an average debt maturity of 3.0 years, with 34.4% of the debt with fixed interest costs, showing the prudent hedging of interest rate risk and a balanced debt maturity profile.

The average cost of debt for Sonae Sierra is 0.2 p.p. above 2015 and currently stands at 4.3%. Excluding Brazil, the average cost of the debt is stable at 3.2%. Sonae Sierra continues to demonstrate good access to debt funding and capital markets, having refinanced €260m during this first semester with a diversified panel of national and international finance entities.

The Financial Ratios continue to show the cautious attitude and financial strength of the Company's balance.