Our opinion on the current state of NEPIROCK(NRP)Nepi-Rockcastle (NRP) is a R124 billion real estate investment trust (REIT) that operates over 56 shopping malls across nine central and eastern European countries. The company's portfolio is concentrated mostly in Poland (24%), Romania (35%), Slovakia (9%), Bulgaria (8%), Croatia (5%), and Hungary (11%). Nepi-Rockcastle has a total portfolio valued at €6.3 billion (R124 billion), making it the largest property share on the JSE.
The share price has experienced significant volatility in recent years. It fell sharply following the release of the 360ne report in January 2018, which affected the entire Resilient group. The share dropped from its high of R217 in December 2017 to as low as R99 in November 2018. The COVID-19 pandemic further impacted the stock, driving it down to under R55 in March 2020. However, since then, the share has recovered, trading around R103.06 recently.
On 1st February 2022, Nepi-Rockcastle announced it was ordered to pay €30 million following a civil judgment by the Arbitral Tribunal in Poland. Despite this, the company has continued to perform well. In its results for the six months ending 30th June 2024, it reported a 13.5% increase in net income and a 3.56% rise in headline earnings per share (HEPS). The vacancy rate remained low at 2.7%, and the loan-to-value (LTV) ratio was 32.2%. Property operating expenses decreased by 3.3%, thanks to lower energy costs and operational efficiencies, while the recovery rate improved from 93% to 94%. The company also reported a strong liquidity position of almost €1.3 billion, including €672 million in cash and cash equivalents and €620 million in undrawn credit facilities.
Technically, the share has been in a strong upward trend since 1st November 2023 and is viewed as good value at current levels. The upward trend is expected to continue.
On 18th October 2024, the company raised €300 million by selling 41.7 million ordinary shares, representing 6.2% of its issued share capital, at €7.191 (R137.85) per share. This represented a discount of 4.36% to the previous closing price of R144.13 on 17th October 2024. Despite the discount, the capital raise is seen as a positive move to strengthen its liquidity and support future growth.
Overall, Nepi-Rockcastle remains a solid investment, particularly for those seeking exposure to European property markets, and continues to recover from past volatility.
