CAPE TOWN - Nepi Rockcastle’s share price increased 3.4 percent to R87.50 on Friday morning after the owner of shopping centres in central and eastern Europe announced a capitalisation issue to shareholders for the six-month period.
The shares closed the day at R84.51. A capitalisation issue is extraordinary, as many real estate investment trusts are struggling through the Covid-19 pandemic environment and most have deferred dividend payments. The capitalisation issue was proposed at 4.2920 ordinary shares for every 100 ordinary shares held.
“The rationale for the capitalisation issue is to ensure Nepi Rockcastle maintains a strong balance sheet and ample liquidity, while also returning value to shareholders during the present operating environment,” chief executive Alex Morar said in a presentation on Friday.
He said the capitalisation issue was expected to have a small impact on net asset value, but he expected the group would continue to generate further value in the future. Distributable earnings per share were expected to contract 30 percent for the full financial year.
Morar said the six months to June 30, during which non-essential retailers were forced to close during the Covid-19 pandemic, had been the most challenging in the group’s history.
However, strengths such as a balanced portfolio of properties, conservative financial management and good employees helped it to overcome the challenges. Ninety-six percent of total gross leasable area was now functional, while tenant sales were gradually returning to prior year levels.
Nepi Rockcastle intended to accelerate the digital transformation of its operations and the transition to a more integrated, omni-channel business model.