Income and dividend
The board of Eurocommercial Properties N.V. announced today that as a result of higher earnings in the financial year to 30 June 2002 it proposes increasing the Company's annual dividend by 5% to € 1.40 per depositary receipt (10 ordinary shares) from € 1.33 in 2001. Shareholders will again be offered the option of taking new shares from the Company's share premium reserve if they wish, instead of the cash dividend. The price for these shares will be announced on 1 November 2002.
Net property income for the year rose to € 66.6 million from € 57.6 million largely as a result of new property purchased. The overall net income after interest and other expenses of € 36.6 million for 2001/2002 represents an increase of approximately 10% over € 33.3 million last year.
Net asset value
Net asset value before income appropriation improved by 6% to € 22.09 per depositary receipt as a result of increased independent property valuations and after allowing for an appropriate increase in the provision for potential future capital gains taxes. The net asset value in June 2001 was € 20.87 per depositary receipt.
Property performance
The Company's property portfolio performed well over the year with a total return of 11.5%. The overall property occupancy rate is 99.9%. Average retail sales in the Company's shopping centres were up 4.2% on 2001 but individual centres have shown increases of up to 10%.
The Company's independently assessed property values increased 5.6% overall compared with 2001 and good capital gains were made on particularly office disposals.
Investment strategy
The Chairman Mr Jeremy Lewis commented that the Company had, as planned, significantly increased its exposure to the retail sector in its target markets and substantially reduced office holdings showing excellent capital gains. Retail properties now represent over 84% of the portfolio and country allocations are as follows:
France: 41%
Italy: 44%
The Netherlands: 10%
Sweden: 5%
Management teams have been augmented, particularly in Italy so that more direct leasing and management can be undertaken with advantages for both costs and market information. The Company has agreed in principle the acquisition of further shopping centres in its core markets, not withstanding a very tight market with strong demand and a limited supply of good investments.
Outlook
The outlook for European property markets is varied and depends very much on its sector and location. Office space oversupplies for example will continue to result in lower rents and values. Shopping centres however, in the wealthy western European countries, are expected to maintain their relative security and growth potential despite a slowing economic outlook. Stock market losses should not directly effect consumer spending in the Company's target countries particularly Italy and France where there is low private and institutional share ownership. The real key to shopping centre spending will be unemployment levels which have not increased to any significant degree, nor are they expected to in the short to medium term.
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