Corio maintains full-year forecast as ‘challenging’ conditions continue

Listed Dutch property company Corio reported a difficult first nine months of 2013 as it implemented measures to lift its performance. But the retail specialist confirmed its outlook for the full year.

In a trading update issued on Thursday, Corio said net rental income from its shopping centre portfolio fell to €316.3 mln over the first nine months from €318.8 mln in the year-earlier period.

However, net rental income from its core shopping centres - Favourite Meeting Places (FMP), which account for around 80% of the portfolio - increased to €263.1 mln from €255.8 mln in the first nine months of 2012.

The rental growth at the FMPs was driven by extensions and (re)developments like Vredenburg and Singelborch in flagship Dutch shopping centre Hoog Catharijne as well as the acquisition of Boulevard Berlin.

Corio said like-for-like gross rental income (GRI) fell slightly as discounts were required to temporarily support a selective number of tenants. The lower GRI in Italy largely reflected refurbishments and re-tenanting in Le Gru shopping centre in Turin and Campania near Naples that caused temporary vacancy in the first nine months. In Turkey the decline was the result of expiring rental guarantees in Bursa’s Anatolium.

‘Since the implementation of our new strategic model at the start of the year, our complete focus has been on realising operational improvements in order to respond to the ongoing macroeconomic challenges across Europe,’ Corio’s CEO Gerard Groener said. ‘We are still confronted with the impact of the economic headwinds on our results, especially in Spain and the Netherlands.‘

Corio said it changed and improved the tenant mix of Le Gru in Turin and Centro Commerciale in Naples which are back into full operation again since Q3. Before the end of the year, two other major projects, Marseille Grand Littoral and Porta di Roma, will be completed and show improve occupancy rates and performance.

‘While we expect the remainder of the year to be challenging, especially for our TRC-portfolio, we confirm our outlook for 2013,’ Groener said.

Groener announced in October that he was stepping down as chairman of the European Public Real Estate Association (EPRA) prematurely to devote his time to rolling out Corio’s strategy of improving the operational performance of its FMPs en shedding non-core shopping centres.