Dutch listed retail property company Vastned wrote down €4.7 mln on its total real estate portfolio last year, including €33 mln on its holdings in Istanbul, the company announced during the presentation of its annual figures on Wednesday.
The Turkish writedowns were triggered by the ‘uncertain geopolitical and economic situation’, Vastned said.
‘We see that consumer spending has been declining for quite some time now and tourists - a major source of income for the Turkish economy – are avoiding the country,’ said CEO Taco de Groot. ‘Additionally the negative impact of the fall of the Turkish lira, increases the rental costs for retailers relatively strongly. All this combined makes it less attractive for retailers to be present in Istanbul, putting market rents under pressure in the coming years,’ he added.
Vastned has €133 mln worth of assets in Istanbul’s prime shopping district, including the 2,500 m2 H&M store at 85 Istiklal Caddesi and the 2,000 m² asset housing fashion brand Koton at Istasyon Caddesi.
De Groot is more optimistic about conditions in the retail market elsewhere in Europe, where consumer confidence is growing and expenditure is rising.
‘We expect retailers with shops in the best locations in particular to profit from this. Furthermore, the results for 2016 once again confirm that premium city high street shops generate steady and predictable results,’ he said.
In the Netherlands, which still constitutes the bulk of Vastned’s high street portfolio despite disposals in recent years, the company wrote down €15.9 mln on this segment and €7.4 mln on non-high street stores. By contrast, premium city high street shops rose €15.5 mln in value, limiting the depreciation of the overall Dutch portfolio to €400,000.
In total, the value of the premium city high street portfolio, excluding acquisitions and disposals, rose 1.2% or €13.4 mln. De Groot: ‘With an occupancy rate close to 100%, a like-for-like gross rental growth of 0.5% and a value increase of €13.4 mln these assets performed very well again. This reinforces our conviction to continue focusing exclusively on the best retail assets in the popular high streets of the bigger European cities.’
The share of premium city high street shops in the overall porfolio, valued at €1.6 bn, has risen to 75%. Besides the Netherlands, the biggest absolute value gains were booked in France, where the value of the premium city high street segment (excluding acquisitions and disposals) rose €21.4 mln. The biggest relative gains in value were posted in France (7.2%) and Spain (6.5%).
Vastned posted net profit of €26.4 mln last year, down more than 50% on the €65.5 mln booked the previous year. This reflects an indirect loss of €19.7 mln in 2016, compared to an indirect profit of €16.3 mln in 2015.
