Nepi raises R1.14bn to finance projects in Romania

Posted On Tuesday, 05 August 2014 17:08 Published by
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Nepi completes another oversubscribed book build as it raises equity of about R1.14bn to finance projects in Romania where it owns shopping malls.

Martin Slabbert

Nepi is part of the Resilient stable of JSE-listed property companies. It is seen as Resilient's European offshore rand hedge for investors, because it pays out distributions in euros.

 Last week, Nepi announced a 15% increase in distributions to 12.93c a share for the six months to June. "The proceeds of the equity raise will be used to partially fund the company's future development and extension pipeline, as well as acquisitions," Nepi said.

CEO Martin Slabbert said the company's recent performance had been helped by strong leasing strategies. Market dominance meant many tenants had opened stores in Nepi-owned centres. Nepi also made various acquisitions in the past six months, which boded well, said Mr Slabbert. "The group has made significant progress in the construction and leasing of developments commenced prior to December 31 2013.

Mega Mall in Bucharest, Vulcan Value Centre in Bucharest and Shopping City Targu Jiu retail developments are substantially let, and should be completed as scheduled," he said. "A strip mall was completed and opened in Vaslui, also in Romania, and phase 1 of The Office in ClujNapoca is nearing completion at a lower cost than originally estimated," he said.

Investec Asset Management analyst Peter Clark said Nepi had done well and investors had been won over by a strong track record. "The capital raise this morning was significantly oversubscribed. Nepi does benefit from the ease at which they are able to raise capital as they are able to do accretive transactions.

"The dynamics remain attractive for Nepi where they are able to fund transactions with a low cost of capital compared to return on investments. It is, however, important to note their impressive track record over the last few years which has enabled them to raise capital with ease," Mr Clark said. Nepi's pipeline extended to countries which neighboured on or were close to Romania, such as Hungary and Slovakia.

Nepi's competition may be Rockcastle Global Real Estate Company, which has chosen Poland as its major European target as it moves towards the direct property market and away from a focus of owning equity stakes in property funds. Grindrod Asset Management chief investment officer Ian Anderson has spoken highly of Nepi.

He said it was a strong stock for offshore investing because of its forecast of 15% earnings growth for this year, next year and 2016. Nepi has market capitalisation of R29.5bn, making it one of the 10 biggest property companies on the JSE. Nepi's share price has gained just under 20% in the year to date, closing at R96.70 yesterday. Note their impressive track record over the last few years which has enabled them to raise capital with ease

It is a strong stock for offshore investing because of its forecast of 15% earnings growth for this year, next year and 2016

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