Business highlights
? Sale agreed for Les Allées de Cormeilles, France, with an institutional investor at just above June 2018 valuation. Expected to complete before the end of 2018, bringing total disposals to €417 million.
? Lease signed with a major international retailer for 6,675m² store at Fiordaliso, Italy, opening before the end of 2019.
? Successful opening of the new 40,600m² C4 shopping centre in Kristianstad, Sweden, at the end of September 2018.
? Progress with Woluwe shopping centre extension plans, application to be submitted in early 2019.
? All resolutions passed at the AGM, including the proposed amendments to the Articles of Association to remove priority shares and abolish the Priority Foundation, which have now been enacted.
? Belgian national Emmanuèle Attout appointed to the Supervisory Board, further enhancing the Board’s strong existing professional experience in property, accounting, law and asset management.
? Peter Mills and Roberto Fraticelli appointed to the Management Board, which now comprises four members.
Performance highlights
? Vacancies remain less than 1% of rent (expected rental value, ERV).
? Uplift on relettings and renewals was 11.7% for the 12 months, based on 194 lease negotiations – 88% of which achieved a rental increase.
? Like-for-like rental growth was 1.1%, with stronger performance in Sweden.
? Retailer sales in Italy and Sweden outperformed national indices, while France was broadly in line.
? Earnings (direct investment result) in line with expectations and largely unchanged from September 2017, notwithstanding the initially low yield on the purchase of Woluwe and the sale of higher yielding, smaller properties as per Eurocommercial asset rotation strategy.

? Adjusted net asset value €45.73 per depositary receipt.
? Loan-to-value decreased to 43%, compared with 45% at 31 March 2018.
Eurocommercial’s CEO, Jeremy Lewis, said:
“Despite some concerns about the health of the retail sector, our vacancies remain less than 1% of rent, the lowest in our industry. This is largely due to our long-established practice of setting rents at realistic and sustainable levels which allows retailers to remain profitable.
“We continue to see good demand for space in our shopping centres - in total over the past twelve months we have renegotiated nearly 200 leases, generating an average uplift of 11.7%. Two thirds of these leases were renewals with existing tenants.

“The retail landscape is constantly evolving and we are working hard to ensure that our centres remain desirable locations for retailers and visitors alike. We scrutinise closely new retail trends and technologies to find ways in which we can help our retailers to be successful, working in partnership to help them showcase new concepts and ideas. We are constantly investing in our centres to ensure they are not just enjoyable places to shop and spend time, but that they are able to attract new visitors and provide them with a seamless retail experience, frequently blending online and physical retail.
“While some retailers have closed smaller stores in secondary locations in France and Sweden, overall we continue to see strong demand for space in prime centres. The agreement we have signed with a major international retailer in Italy, at Fiordaliso in Milan, is further proof that Europe’s leading fashion retailers are focussing on even larger spaces within the very best shopping centres. We have continued to receive similar requests from major retailers for larger units in other centres. H&M, for example, has recently opened its enlarged 2,300m² store in Cremona Po, with its old unit now relet to Bershka. H&M is also shortly opening an enlarged 3,000m² store in Bergvik, Karlstad.
“In September, we successfully opened the brand-new C4 shopping centre, the first external centre in Kristianstad, Sweden, on time and on budget with 97% of the 90 shops pre-let and the remaining stores currently in advanced negotiations. Initial signs from retailers are very positive with strong early trading.
“The agreement to sell Les Allées de Cormeilles at just above the June 2018 valuation is evidence of an investment market for high-quality retail assets in France, despite fears to the contrary. This sale is part of our
wider asset rotation programme and over the past 18 months we have secured disposals totalling €417 million, with further sales to come. In addition to reducing our borrowings, this programme ensures we are rebalancing our portfolio towards properties and markets which we think offer better security of income and prospects for future growth.
“Our ongoing programme of disposals, the acquisition of Woluwe and the completion of C4 is resulting in a carefully-constructed portfolio of the very best centres of their type in wealthy catchments. This has inevitably had some impact on earnings growth during the first quarter, as we had expected. However, based on the current outlook, we expect that the 2019 dividend will maintain our historic rate of dividend growth.”

No change to Dutch REIT regime
The Dutch government announced on 15 October 2018 that it has decided not to abolish the Dutch dividend withholding tax in 2020 and not to change the Dutch REIT (FBI) regime. Although there would have been no immediate impact for Eurocommercial, this is good news overall for the Dutch-listed real estate sector.

Direct Investment Result
The direct investment result (earnings) for the three-month period to 30 September 2018 was €29.7 million compared with €29.8 million for the three months to 30 September 2017. The direct investment result per depositary receipt at 30 September 2018 was €0.60 compared with €0.61 at 30 September 2017.
The direct investment result is defined as net property income less net interest expenses and company expenses after taxation. In the view of the Board, this more accurately represents the underlying profitability of
the Company than the IFRS “profit after tax”, which includes unrealised capital gains and losses.

Net Property Income
Net property income, including joint ventures (on the basis of proportional consolidation), for the three months to 30 September 2018, increased marginally to €43.8 million compared with €43.4 million for the previous
corresponding period. This was achieved notwithstanding the initially low yield on the purchase of Woluwe and the sale of higher yielding, smaller properties in line with Eurocommercial’s strategy to refocus its portfolio
towards properties with strong medium-to-long-term growth prospects.

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tijd 10.05
EuroComm. EUR 30,92 +22ct vol. 15.583