Earnings Release • Aug 4, 2016
Earnings Release
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Maia - Portugal, August 4th, 2016
Sonae Sierra, the international property company dedicated to serving the needs of retail real estate investors, recorded a Net Profit of €59.0 million 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 €26.8 million, 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 €32.2 million, €20 million 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 1st, 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 €180 million investment with over 200 shops on 70,000 m2 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 €1.2 billion. 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 following chart illustrates Sonae Sierra's debt structure and maturity as of June 30, 2016:
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 €260 million 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.
| Ratios | 30 Jun 16 | 31 Dec 15 |
|---|---|---|
| Loan-to-value | 30.4% | 39.5% |
| Interest cover | 3.0 | 3.0 |
| Development ratio | 17.1% | 15.6% |
(unaudited accounts)
| Consolidated Profit and Loss Account (€ million) |
6M16 | 6M15 | % 16/15 |
|---|---|---|---|
| Direct income from investments | 99.8 | 108.1 | -8% |
| Direct costs from investments | 52.6 | 58.0 | -9% |
| EBIT | 47.1 | 50.0 | -6% |
| Net financial costs Other non-recurrent income/cost |
13.6 0.0 |
16.8 0.0 |
-19% |
| Direct profit before taxes | 33.5 | 33.2 | - 1% |
| Current tax | 6.7 | 6.4 | 4% |
| Direct net profit | 26.8 | 26.7 | 0% |
| Gains realized on sale of investments Impairment |
11.7 9.4 |
0.0 0.0 |
- - |
| Value created on investments | 22.4 | 68.2 | -67% |
| Indirect income | 43.6 | 68.3 | -36% |
| Deferred tax | 11.4 | 15.8 | -28% |
| Indirect net profit | 32.2 | 52.5 | - |
| Net profit | 59.0 | 79.2 | -26% |
| Consolidated Balance Sheet | 30 Jun 16 | 31 Dec 15 | Var. |
|---|---|---|---|
| (€ million) | (16 - 15) | ||
| Investment properties | 1,778 | 2,008 | -230 |
| Properties under development and others | 141 | 120 | 21 |
| Other assets | 101 | 101 | 0 |
| Cash & Equivalents | 156 | 71 | 85 |
| Total assets | 2,176 | 2,300 | -124 |
| Net worth | 1,019 | 938 | 81 |
| Bank loans | 736 | 905 | -168 |
| Deferred taxes | 278 | 286 | -8 |
| Other liabilities | 142 | 171 | -29 |
| Total liabilities | 1,156 | 1,361 | -205 |
| Net worth and liabilities | 2,176 | 2,300 | -124 |
Sonae Sierra, www.sonaesierra.com, is the international property company dedicated to serving the needs of retail real estate investors. Sonae Sierra operates from corporate offices in 13 countries providing services to clients in geographies as diverse as Portugal, Algeria, Azerbaijan, Brazil, Colombia, Germany, Greece, Italy, Morocco, Romania, Russia, Slovakia, Spain, Tunisia and Turkey. Sonae Sierra owns 44 shopping centres with a market value of €6 billion euros, and manages and/or lets 79 Shopping Centres with a Gross Lettable Area of 2.3 million m2 and about 9,000 tenants. In 2015, the Company welcomed more than 430 million visits to the shopping centres it manages. Currently, Sonae Sierra has 11 projects under development, including 4 for clients, and 7 new projects in pipeline.
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