Amsterdam-listed retail specialist Vastned reported 1.1% like-for-like rental growth in the first six months of this year, thanks to 3.8% growth at its prime European high street stores.
Stores in secondary locations generated a decline in rental income, the company said.
CEO Taco de Groot said he was pleased with the stable earnings result. 'This year, we are reaping the rewards of the focus on core city assets and the strategic rotation in the portfolio that we started with the introduction of the high street strategy. The positive results of the core city assets are increasing their impact on the total portfolio.'
Total earnings (rental income and capital gains) surged to €64.2 mln from €12.6 mln in the year-earlier period, thanks largely to higher valuations of the core city portfolio which totalled €44 mln compared to a negative €10.4 mln in the first half of 2016.
Rental income fell to €20.2 mln from €23 mln following the sale of the Turkish portfolio earlier this year for €30.1 mln and the sale of assets from the mixed retail locations.
Occupancy rate
The occupancy rate of the portfolio at end-June stood at 97.3%, thanks to an increase of the high street portfolio to 99.5%. The figure for the mixed retail locations came to 93.5%. The increase occurred in
all countries where Vastned is active, except for Spain, where the portfolio is already fully let.
Over the past six months, Vastned concluded 51 leases for €4.7 mln in total. The 10.1% rent increase that Vastned realised on concluded leases for the core city assets was largely offset by the 9.4% decline on the leases concluded for mixed retail locations.
In the first quarter Vastned concluded new rental contracts for core city assets at a 15% premium to previous rental prices, but De Groot said that was due to one-off effects. For example, in Paris, the company concluded a new rental agreement at a 50% higher level.
'Consumer confidence and spending are rising, but there are limits to that growth. Consumers are spending their money these days more on entertainment and communication than in the past. But retailers need to pay their rents from their turnover.'
Vastned is continuing with its strategy to sell off its assets in mixed retail locations, which are located primarily in the Netherlands. Since January, the company has sold off 10% of the €100 mln worth of assets that are up for sale, De Groot said. 'We're on track. We are trying to conclude new rental contracts for the buildings that are for sale and then there are always investors that are interested.'
