Rodamco Europe increases profit forecast for 2006

Rodamco Europe, the largest publicly-listed retail property investment and management company in Europe, has revised its outlook upwards for the full year 2006 from 7% to at least 8%. Highlighting that growth of like for like net rental income was 4.8%, Maarten Hulshoff, ceo of the Dutch-based company, told PropertyEU ‘this is a pretty good number for today’s market’.

Direct result after tax was up 10% to EUR 281.1 mln for the first nine months of 2006. Property assets increased 10.1% to EUR 10 bn, driven by a 11.9% increase in gross rental income. Direct result per share was up 10% to EUR 3.14.

Rodamco said that the 10% reported growth over the first nine months of 2006 is not representative for the whole year because a portion of the forecasted growth is attributable to acquisitions and projects which came into operation in the first half year of 2005, as well as some positive one off events in the fourth quarter of 2005.

Explaining the strong numbers, Hulshoff pointed to the strong occupancy rate for a portfolio of which 93.5% is invested in the retail sector. Overall occupancy increased slightly to 98.2% (end 2005: 97.9%) and retail a fraction higher at 98.7% (2005: 98.6%). ‘We have a portfolio of A-1 urban shopping centres dominant in their catchment areas and we are sitting in a scarce market,’ said Hulshoff.

This was reflected, he said, in the strong sales growth in the countries in which Rodamco operates: the Netherlands up 6.3 %, the Czech Republic 9.8%; Poland up 5%; the Nordic region up 4.5%; Spain up 5.6% and France up 1.4%. Rodamco also has a small presence in Belgium.

ZLOTE TARASY

Hulshoff spoke very enthusiastically about the growth potential in Spain and Central Europe, but he was more reserved when asked about the company’s stance on the delay-ridden Zlote Tarasy development in Poland. In its statement issued earlier in the morning, Rodamco Europe said it was ‘studying its position and the possible consequences of further delay’. Hulshoff would not be drawn on whether this was a threat of a possible pull-out from the 205,000 m² multifunctional project, saying only ‘we will be looking at the timing and conditions laid down in the agreement’. He noted, however, that Rodamco Europe’s financial commitment was limited to paying on delivery.

Rodamco Europe is to buy 50% of Zlote Tarasy, exclusive of the hotel, on a turnkey basis from ING real Estate, which has blamed building contractor Skanska for the repeated postponements to the original completion date in 2005.

DUTCH REIT

Noting that tax-efficient real estate investment trusts (REITs) are likely to be introduced in the UK and Germany next year, Hulshoff welcomed draft legislation in the Netherlands to remove the ban on development work under the FBI (Dutch REIT) structure. ‘The Netherlands is currently operating under the FBI structure which was created in the 1960s to cover all investments. The changes will bring the FBI more in line with REIT legalization which is tailored to the real estate sector,’ he said.

Hulshoff acknowledged the draft is still under discussion in the Dutch parliament and that restrictions remain on the type of development allowed. But he expressed the hope the measure would be enacted in the first quarter of 2007.

Earlier Rodamco Europe said in its statement that once approved, ‘over time we will therefore evolve as an ‘Investor-Manager-Developer’, covering the whole spectrum in the European shopping centre sector’.