Eurocommercial sees stable year ahead

Dutch shopping centre group Eurocommercial Properties posted sound net rental income growth of 7.1% in the half year ended December 31, 2011 and said it expects 2012 to be a year of stability for the company.

'We have no need to underpin earnings with developments or new acquisitions, nor do we have any looming refinancing requirements. We will take advantage of attractive investment opportunities if they occur but will spend most of our time ensuring that our existing properties perform at their best in the face of challenging economic times,' CEO Jeremy Lewis said in a statement.

The Amsterdam-based firm, which invests in shopping centres in France, Northern Italy and Sweden, saw a 6.2% year-on-year rise in its direct investment result which amounted to EUR 39 mln in the six months to end-December 2011.

Adjusted net asset value rose by 3.5% since December 2010 to EUR 35.90 per depositary receipt after an overall 1.9% rise in the value of its property portfolio. Values rose by 2.8% in France and 4.3% in Sweden while the Italian shopping centre portfolio saw a decline in value of 0.3%, largely reflecting concerns over government debt rather than any changes in property fundamentals.

Like-for-like rental income increased by 3% in the six months to end-December 2011, driven by a 4.1% growth in Italy, 3% in France and 1.1% in Sweden.

Commenting on the Italian property market, Eurocommercial's management board said: 'We are keeping a careful watch on tenant arrears in view of the difficult economic and financial climate but so far the situation is similar to previous years. There are just two empty shops and no tenants in administration out of the 640 units in Italy. Whether this excellent situation continues for the rest of the year remains to be seen but the company does not expect significant vacancies.'