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Investing.com -- S&P Global Ratings has revised its outlook on NEPI Rockcastle to positive from stable, while affirming its ’BBB’ credit rating.
The rating agency expects NEPI to maintain its conservative financial discipline despite an ambitious growth strategy, with its reported loan-to-value (LTV) ratio staying below 35%. This translates to an S&P Global Ratings-adjusted debt to debt plus equity of about 37%.
NEPI supported its 2024 acquisitions and development pipeline with a €300 million equity raise and a €70 million scrip dividend to maintain its long-term target of a net LTV ratio under 35%. As of March 31, 2025, the company’s net LTV stood at 31.2%, compared to 32.1% at year-end 2024.
The company’s retail property portfolio is expected to expand to approximately €8.1 billion-€8.2 billion in 2025 and €8.5 billion-€8.6 billion by 2026, from €7.9 billion as of the first quarter of 2025. This expansion aims to enhance portfolio size and geographical diversification while maintaining solid operational performance.
S&P forecasts a significant increase in annual capital expenditure to €270 million-€280 million in 2025 and €340 million-€360 million in 2026, compared to €141 million in 2024 and €193 million in 2023. The agency also assumes €390 million-€400 million in dividend distributions over the next 12-24 months.
During the first quarter of 2025, NEPI reported 5.0% like-for-like growth in net operating income due to indexation and asset management initiatives that led to rental uplifts above indexation on new leases and renewals. The average standing vacancy rate for the company’s retail portfolio remains very low at 1.7%, in line with the end-2024 figure.
NEPI’s liquidity remains solid, supported by its large cash balance and undrawn credit lines. As of the first quarter of 2025, the company had €670 million of available credit lines maturing beyond 12 months, versus about €18 million of debt maturing over the same period. As of June, the company has extended additional lines, bringing the total amount to €690 million.
The positive outlook indicates that S&P could raise the rating within the next 12 months if NEPI’s operating performance remains resilient and the company executes its growth plans while sustaining its credit metrics in line with a higher rating.
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