Announcement - Business update following the Corona outbreak
NSI N.V. (Euronext: NSI / NL0012365084) - Regulatory news
Current global events are unprecedented and we understand investors are looking for information in these uncertain times. At NSI we always strive to be as transparent as possible and therefore have deemed it appropriate to provide additional information on the current state of the business.
Our primary concern has been the health of our tenants and employees. In recent weeks we have made great efforts to take precautions and to inform our tenants regularly about the safe use of our buildings. At the time of writing all our buildings are open. However, many users are answering calls from the government to work from home if possible.
The entire NSI team is fully operational, working from home since last week Wednesday. Access to systems and documents is flawless and communication via video calls is also working well. Last week a trial for remote/home-working was performed to test our IT systems, to prepare for any potential steps from Government that would limit access to our office. The trails were well-timed and have now become the new reality.
Net contracted rent from Retail at the end of February 2020 is €4.0 million, or 6.7% of NSI’s total annualised net contracted rent. Of the total Retail rental income Supermarkets represent 23.0%, Drugstores 2.5% and F&B 11.2%. SME income is 18.3% of the Retail income. Revenues that can be classified as potentially short term income across our entire flex office business (i.e. Managed offices, Meeting rooms, Memberships, F&B at HNK) are 5.5% of NSI’s total gross rental income.
We appreciate that the current situation will probably affect our tenants, one way or another. The Dutch government has already announced measures to support SME and freelancers. If these proof insufficient NSI will review potential further support of tenants on a case-by-case basis. We will continue to monitor the situation, however, at this stage it is too early to predict the full impact of these events.
Operationally the business has so far this year performed in line with budget, with an EPRA vacancy rate as per Wednesday 18 March of 7.0%. A total of approximately €700k (annual contracted rent) of new leases has already been signed that will start later in the year and which are therefore not yet included in the vacancy rate.
FINANCING AND LIQUIDITY
On the 6th of March NSI irrevocably agreed on the acquisition of a €34 million office asset in Amsterdam-Sloterdijk. Transfer of the asset is expected to complete before the quarter end, at which time we will provide more detailed information.
NSI has also agreed to issue a new €40 million 10-year note next week to a new US institutional investor at a margin in line with earlier issues. This will extend the average maturity of our debt, lower the average cost of debt and diversify the maturity profile and investor base.
We continue to move forward with the preparatory works on the development pipeline. The costs related to this are limited in 2020. It is worth highlighting that at this stage none of the large development capex plans are committed. The refurbishments at Lange Voorhout in The Hague and Donauweg in Amsterdam are progressing according to plan. The remaining cash out on these two projects is circa € 5 million.
The net effect of the above acquisition, the disposal of all three assets held-for-sale (as per year-end) during the current quarter and the Q1 earnings will result in a very comfortable LTV of circa 28% at the end of March.
The liquidity position at the end of March will be even better in comparison with the end of 2019, with circa €280 million of cash and committed undrawn credit lines available for the business. We have no major loan maturities until 2023. A small €25 million secured loan is due in July 2020. As planned, subject to AGM approval, on 19 May we will pay the earlier communicated final dividend of € 1.12 per share. As usual, we are offering shareholders the option to take the dividend in shares.
BERND STAHLI, CEO at NSI, COMMENTS:
At NSI, as a team, we fully acknowledge these are extraordinary times; primarily our thoughts are with everybody’s health. At NSI we have used the last three years to turn the business around and, as such, we are well-prepared to face the uncertain and undoubtedly challenging period ahead. The assets are in the right locations and are operationally performing well, the balance sheet is strong and a highly valuable asset in the period ahead and we have the team that can genuinely make a difference. We will continue to focus on servicing our customers and will continue to be good shepherds of the capital that our investors have entrusted us with.
NSI N.V. (Euronext: NSI / NL0012365084) is a specialist commercial property investor and the only listed real estate investment trust (REIT) focused on well-located offices in economic growth regions in The Netherlands. The NSI team aims to maximise returns for its shareholders through pro-active management of its investment portfolio, value-add initiatives, and disciplined asset rotation. The portfolio, with a value of over one billion euros, is underpinned by a strong balance sheet, with significant capacity to fund both internal and external growth. By investing in attractive space and a high level of services for its customers, NSI can generate sustainable and growing revenues to support an attractive level of dividends. For more information visit our website: www.nsi.nl.