The Hague, the Netherlands, 2012-08-02 08:00 CEST (GLOBE NEWSWIRE) --
operations
- Decrease of net rental income due to disposals and Eilan (United States)
- Disappointing results UK shopping centres
- Negative effect on results from project Eilan (US)
- Like-for-like +1.6%; core portfolio +3.1%
- Successful opening MediaMarkt in Planetocio shopping centre (Spain)
- Redevelopment Itis shopping centre in Finland: expected YoC +100 bps
- Heads of agreement in letting Joinville office development (Paris)
Like-for-like rental income H1 2012
Compared to the previous year, like-for-like rental income for the first six months of 2012 has increased in all countries, with the exception of the United Kingdom and United States.
In the United Kingdom the decrease of rental income can be fully attributed to the Poole shopping centre. This shopping centre faces a relatively large number of tenants in administration. The branch mix and lay out of the centre need adjustment. The occupancy level amounts to 96.5% (2011: 98%). Pending the revitalisation of the centre, 5.3% is let with short term leases with a limited charge of service costs, with lower rental income as a result. In addition, the marketing- and leasing expenses of the centre are higher than in 2011. The shopping centre Ealing Broadway which was acquired in 2011 is not included in the like-for-like rental income, since it was not in portfolio in 2011.
The decrease in rental income in the United States is primarily caused by the renewal of a lease of a large tenant in Broadway 655 office building in San Diego.
In Belgium, rental income rose due to positive lease renewals in the Nivelles and Tournai shopping centres.
Also in the Netherlands lease renewals and re-lettings lead to higher like-for-like rental income from the shopping centres.
Due to the redevelopment of the Itis shopping centre in Finland (formerly known as Itäkeskus), Wereldhave was able to (re-)negotiate higher leases. Furthermore, the first tenant rotations were executed to improve both the branch mix and the rental income of the centre.
The EPRA occupancy rate as at June 30, 2012 amounted to 88.3%, a 2.8% decrease compared to March 31, 2012. The decrease primarily relates to the apartments of the Eilan development project which were transferred to the investment portfolio. Broken down by sector, the EPRA occupancy rate on June 30, 2012 (March 31, 2012) amounted to: retail 96.1% (96.2%), offices 82.3% (83.8%) and other 70.5% (94.9%).
Movements in portfolio and impact on direct result
Of the decrease of the direct result of € 8.4 mln during the first half year, € 4.8 mln is caused by net disposals. The positive effect of acquisitions and the transfer of developments to the investment portfolio amounted to € 2.1 mln compared to last year. Disposals caused a decrease of the direct result of € 6.9 mln. The largest effect can be attributed to transactions in the United Kingdom, Finland and the United States. The direct result of the apartments and the hotel of the Eilan project amounted to € -2.3 mln. During the second quarter of 2012 Wereldhave sold properties in the Netherlands (Aviodrome, Lelystad) for € 0.8 mln and in the United Kingdom for € 26.2 mln (Eastcheap, London), generating a result on disposals of € 3.0 mln.
Development pipeline
The largest part of the current development portfolio will start to contribute to the direct result as of 2014.
The Richmond development will be completed in October 2012. The supermarket of 1,860 m² is let to Wholefoods and negotiations are ongoing for the 2,600 m² office space on the first floor with a prospective tenant.
In France, Heads of Agreement have been reached for the letting of the Joinville Development, with an option for the tenant to acquire the property in the first and third year of the lease. Wereldhave expects to finalise the transaction in the third quarter of 2012.
The construction of the Noda office development started during the second quarter of 2012; completion is scheduled for the second quarter of 2014.
The redevelopment of the Itis shopping centre in Finland is in full swing and will be completed in 2014. The estimated costs have been revised downwards from € 90 mln to € 80 mln, whilst the projected income has risen slightly, leading to an increase of the net yield on cost from 6.0%-6.5% to 7.5%.
The Planetocio shopping centre in Spain reopened its doors on June 28, 2012. With a MediaMarkt it has a strong anchor tenant, causing the footfall of the centre to show a sound increase. The current market conditions for letting are harsh and some prospects have postponed their decision, waiting for the success of MediaMarkt. Lease negotiations are ongoing for several shops.
The expansion of the Nivelles shopping centre in Belgium was taken into operation at the end of March 2012. The occupancy level amounts to 99%. Since reopening, the footfall of the centre has risen by more than 30% compared to 2011.
results
- Direct result -14.6%: € 49.0 mln (H1 2011: € 57.4 mln)
- Indirect result € -172.8 mln (H1 2011: € -4.8 mln)
- Direct result per share -17.5%: € 2.07 (H1 2011: € 2.51)
- Indirect result per share € -8.00 (H1 2011: € -0.25)
- Total result per share € -5.93 (H1 2011: € -2.26)
- Loan to Value increased to 47% due to negative revaluations and dividend
Total result
Compared to the previous year, the result for the first six months of 2012 decreased by € 176.4 mln to € - 123.8 mln, of which € -8,4 mln due to a lower direct result and
€ -168.0 mln due to a lower indirect result. The total result per share amounts to
€ -5.93 (2011: € 2.26).
Direct result
The direct result for the first half of 2012 decreased by € 8.4 mln compared to 2011. Acquisitions and the transfer of development projects to the investment portfolio contributed € 2.1 mln to the direct result, but this was significantly exceeded by the
€ 6.9 mln negative effect from property disposals. Currency movements had a € 1.5 mln positive effect on the direct result due to the lower Euro against Sterling and the US dollar.
The result of the standing portfolio decreased by € 5.1 mln. The like-for-like rental income rose by € 1.1 mln. Rent termination fees in 2011 which were not repeated in 2012 and vacancy in connection with the redevelopment of shopping centres (particularly Itis) had a negative effect of € 3.2 mln. In addition, general costs rose by € 1.8 mln due to higher personnel costs, the hiring of temporary staff and higher advisory costs, interest charges rose by € 1.1 mln and other costs by € 0.2 mln.
Indirect result
The valuation results of € -173.8 mln consist primarily of € -173.1 mln lower property valuations during the first half of 2012. The largest part of this item relates to the property revaluation as at June 30, 2012. In the United States, the slower than expected letting pace of the apartments during the second quarter and the delay in completion and the continuing start-up costs of the hotel have caused a negative revaluation of the Eilan development project. In addition, Wereldhave has recently received offers for individual properties of its US-portfolio which are below the book value. The US property portfolio was re-valued negatively by € 130.8 mln, of which € 128 mln during the second quarter. Of this negative revaluation, € 35 mln relates to the San Diego office buildings, € 45 mln to Eilan and the remaining € 50.8 mln can be attributed to lower market rents and an increase in yields for the other 15 properties of the American portfolio.
In the United Kingdom the portfolio was re-valued negatively by € 37.1 mln, primarily due to disappointing operational performance of the shopping centres which were acquired in 2010 and 2011. An amount of € -30 mln relates to the Poole shopping centre and the remainder to the Ealing Broadway shopping centre. The value of Ealing Broadway is now back at its acquisition value. Agreement has been reached with the well-known Wagamama restaurant chain for Ealing Broadway. The occupancy level of Ealing Broadway including Wagamama amounts to 99%.
Equity
On June 30, 2012, shareholders' equity including minority interest amounts to
€ 1,517 mln (31 December 31, 2011: € 1,714 mln). The decrease of € 197 mln is attributable to the dividend payment (€ 102 mln), the direct result of current financial year (€ 44.9 mln), a negative indirect result (€ 173.5 mln) and positive currency movements of € 15 mln. With the acquisition of the Genk shopping centre in Belgium, the minority interest increased by € 19 mln. The net asset value per share including current profit stood at € 63.45 at June 30, 2012 (December 31, 2011: € 73.44). The Loan to Value on June 30, 2012 amounted to 47% (December 31, 2011: 41%). On June 30, 2012, there were 21,679,608 ordinary shares in issue.
measures
- Dirk Anbeek appointed as new CEO
- Exit of country directors United States and United Kingdom
- Adjustment exit strategy United States
- Action plan for UK shopping centres
- Reduction of development portfolio to ca € 100 - 150 mln from 2014
- Plan to reduce general costs in Q3 2012
- Reducing Loan to Value to 40% (range 35%-45%)
- For the time being no new property acquisitions
Following the departure of Hans Pars as CEO of Wereldhave, the Board of Management consists of Dirk Anbeek and Herman van Everdingen, who as a Supervisory Board member will temporarily take the position of board member. The Supervisory Board hopes to be able to make further announcements on the future composition of the Board of Management as soon as possible. The new Board will be chaired by Dirk Anbeek, who has been appointed CEO as per August 1, 2012.
During the third quarter, the Board of Management of Wereldhave will compose a plan to optimise the organisation and to structurally reduce general costs.
At the end of July 2012, in the United States the employment of country director Carmen Cruz was terminated and a management team has been installed, under the direct management of Dirk Anbeek. The US exit strategy has been changed. Until now, the portfolio was sold on a asset by asset basis. Wereldhave now has a preference for a divestment of the total portfolio in one transaction or a disposal in larger packages. Recently the leasing strategy of Eilan and a number of other properties has been adjusted to quickly improve the occupancy rate.
In the UK, the employment contract of the country director Andrew Turton was recently also terminated and John Laker of Laker Developments has been appointed interim country manager. The UK non-core portfolio will be reduced further and there will be no new acquisitions of shopping centres before year end 2013. During this period the focus will be fully placed on the rental growth of the Poole shopping centre and for the further enhancement of the tenant mix of the Ealing Broadway shopping centre. With the presentation of the results of the third quarter, a plan will be ready for the turnaround of the Poole shopping centre and to optimise the Ealing Broadway shopping centre. At the end of 2013, Wereldhave will evaluate its presence in the United Kingdom.
Also in the other countries no acquisitions will be made by Wereldhave for the time being. The proceeds from disposals will be used to reduce the Loan to Value to approx. 40% and for the funding of the current development portfolio. This portfolio will be gradually reduced to a volume of € 100 – 150 mln, thus improving Wereldhave’s risk profile.
forecast
For the year 2012 Wereldhave anticipates a direct result of at least € 3.80 per share, bearing unforeseen circumstances. For the year 2012 a dividend will be proposed in the range of € 3,20 - € 3.40 per share.
The Hague, August 2, 2012
Board of Management Wereldhave N.V.
press conference / analyst meeting / audiocast
An explanation on the results will be given today, at 10.30 CET in the Hilton hotel, Apollolaan Amsterdam, during a press conference and at 13.30 CET an analyst meeting and conference call, which can be followed live by audio cast on our website www.wereldhave.com.
Press:
Richard Beentjes
+31 60 346 93 25
Analysts:
Charles Bloema
+31 70 307 45 45
