Eurocommercial Properties : 10/02/2017 - eurocommercial-properties-n.v.-half-year-report-31-december-2016

Eurocommercial is one of Europe's most experienced property investors, with a current retail property portfolio in France, Italy and Sweden valued at €3.6 billion with a programme of extensions and new projects.

Our focused strategy of acquiring retail properties in prime locations and continuously improving them, combined with our excellent tenant relationships, has resulted in a consistently high occupancy rate of 99%

• the highest in the industry - assisting a record of long term rising dividends. Eurocommercial has been listed on Euronext Amsterdam for over 25 years.

  All information provided on pages 1 to 9 of this report include joint ventures on a proportionally consolidated basis.

  Half year results at 31 December 2016

  • Solid increases in rental income and asset values

  • Property acquisitions totalling €179 million in France and Sweden

The direct investment result for the six months to 31 December 2016 rose 5.4% to €51.5 million from

€48.8 million for the same period in 2015. The direct investment result is defined as net property income less net interest expenses and company expenses after taxation and, in the view of the Board, more accurately represents the underlying profitability of the Company than IFRS "profit after tax" which must include unrealised capital gains and losses. The direct investment result per depositary receipt (DR) rose 3.9% to €1.07 at 31 December 2016 from €1.03 at 31 December 2015 in spite of the 1.3% increase in the average number of depositary receipts in issue over the 12 month period.

Rental income, including joint ventures (on the basis of proportional consolidation), for the six months to 31 December 2016, after deducting net service charges and direct and indirect property expenses (branch overheads), increased by 6.7% to €78.8 million compared with €73.9 million for the six months to 31 December 2015. The contribution from acquisitions helped to offset the impact of property sales and the temporary loss of income at Amiens, Carosello, I Gigli and Eurostop Halmstad due to the rebuilding and extensions taking place at these centres during the 2016/17 financial year.

Adjusted net asset value at 31 December 2016 increased by 6.2% to €43.00 per depositary receipt from

€40.49 at 31 December 2015 but was unchanged since 30 June 2016 after allowing for additional depositary receipts issued during the period.

During the six month period, Eurocommercial entered into an agreement for the acquisition of a 31,600m2shopping centre and adjoining hypermarket-anchored retail boxes under development in Kristianstad, Sweden, with a conditional commitment to purchase an additional 20,500m2retail park on the site. The project is expected to be completed by the end of 2018.

The Company also acquired the 15,500m2Géant hypermarket and surrounding parking at its Centr'Azur shopping centre in Hyères, France.

The IFRS net asset value, which, unlike the adjusted net asset value, includes the negative fair value of financial derivatives (interest rate swaps) and contingent capital gains tax liabilities, was €37.66 per depositary receipt at 31 December 2016 compared with €37.34 at 30 June 2016 and €35.64 at 31 December 2015.

The IFRS profit after taxation for the six months to 31 December 2016 decreased slightly to €115.2 million from €115.9 million for the same period in 2015, due largely to the lower investment revaluation and disposal of investment properties figure amounting to €55.6 million compared with €97.5 million for the previous corresponding period. The fair value movement in derivative financial instruments was positive at €30.7 million for the six months to 31 December 2016 compared with a negative figure of

€5.4 million for the previous period. Deferred tax increased to €23.1 million from €21.9 million due to higher property values. Interest expenses increased by 5.6% to €20.0 million in the six months to 31 December 2016 compared to the six months to 31 December 2015 due to a slightly higher level of borrowings and fixing interest rates for new longer terms.

222 leases were renewed or re-let in Eurocommercial's centres during the twelve month period, resulting in an average uplift in minimum guaranteed rent for those shops of 14%. The like for like (same floor area) rents of all Eurocommercial's galleries increased by 1.8% overall at 31 December 2016 compared with 31 December 2015 in spite of zero indexation. Rental indexation to be applied to rents in calendar year 2017 is slightly above zero in France and Italy and just above 1% in Sweden.

The rent figures compare tenancy schedules at the relevant dates and include indexation and turnover rents.

Like for like retail sales in Eurocommercial's shopping centres for the twelve months to

31 December 2016 compared with the previous corresponding period were essentially flat. Following a very strong performance in all three countries in calendar year 2015, turnover plateaued during 2016.

* Excluding hypermarkets, Systembolaget and extensions/redevelopments.

* Excluding extensions/redevelopments.