REAL ESTATE - Euro Commercial Properties will focus on increasing its present exposure of 19% in Sweden, it announced.

The property investor and developer has budgeted €220m for upgrading and developing its existing retail centres within its core markets of France, Italy and Sweden, after spending €80m for the same purpose last year, it said in its second half report.

ECP’s net asset value per depository receipt rose by 6.7% to €35.19, or €31.33 under IFRS, it said. Its direct investment result increased by 6.5% to €28.8m, or €0.82 per receipt. The net property income after overheads and expenditure went up by 10% to €46.1m.

ECP said it expects the annual cash dividend – to be paid in November 2007 – to be at least the 2006 rate of €1.60 per depository receipt.

During the second half, ECP’s property book value went up by 5.8% to €1.95bn, after allowing for capital expenditure, in particular the €44m extension of a retail centre in Imola, it stated.

According to ECP, the value of its properties in France rose by 9.2%, followed by increases of 3.8% in Italy and 5.5% in Sweden. The value of its office and warehouses in the Netherlands rose by a mere 0.6%. The occupancy levels remained at 99% during the whole year.

In October, ECP acquired a 2,800m2 retail centre near Lille, in ‘the dominant retail zone for the Pas de Calais region’. The €5.2m transaction resulted in a net yield of 6.2%, it said.

ECP is upbeat, despite the 20% yield drop in the institutional retail and office sectors since June. "Because of the underlying occupancy market remains sound, especially in the retail sector, yields at current levels are likely to persist for a while," it explained.

"History tells us that yields for prime properties will change the least in softening markets. Therefore, if we have to pay high prices, we prefer to pay for the best properties in well-established markets, rather than for secondary ones."

ECP has 27 retail properties, six warehouses and one office building. Besides its 19% exposure in Sweden, ECP’s exposure in France and Italy is 35% and 41% respectively.