Pre-close business update for Q2 2020
NSI N.V. (Euronext: NSI / NL0012365084) - Regulatory news
NSI N.V. announces that as per yesterday, June 15, it has received 94.1% of rent invoiced for Q2 2020. The total amount invoiced for the quarter is approximately € 25.4 mln. The 5.9% in rent not (yet) received includes 0.7% in rent still expected to be paid by the end of June, 1.9% in waived rent, almost entirely related to a rent holiday for all flex customers at HNK for the month of May, 1.0% in deferred rent and 0.5% in rent lost due to bankruptcies. This leaves 1.8% of rent still in discussions, the majority of which should be resolved before the end of Q2 (in most cases by way of giving a partial rent free for Q2 in exchange for a contract extension).
The high percentage of rent received this quarter serves as a testament to the improved quality of the portfolio as a result of asset rotation in recent years. We have been in an active dialogue with all our tenants during these unprecedented times and we recognise that for some rent payment this quarter has been a genuine burden. This is mostly visible in the retail segment, where just over 70% of the invoiced rent has been paid. Positively, the recent relaxation of coronavirus-related measures in the Netherlands have resulted in a change in sentiment amongst many retail operators that make us believe that rent collection in the retail segment will probably be better for Q3.
One-off costs related to Coronavirus
We have completed the implementation of all coronavirus-related measures to ensure a safe return to the office for our customers. These measures relate to all our multi-tenant office buildings and HNK’s and have resulted in a cost of approximately € 0.4 mln. Whilst it would have been possible to charge some of these costs back to tenants, we have decided to absorb these costs. This will be a one-off charge in Q2 which will negatively impact EPRA EPS.
Leasing activity & Occupancy rate
We have experienced a small number of coronavirus-related lease terminations and tenant bankruptcies in Q2. These represent a total annual rent of € 0.4m or 0.5% of our annual rent roll. As a result, we expect to end the quarter with a vacancy rate of approximately 7.9%, marginally up on Q1.
We have seen some corporates put leasing decisions on hold temporarily. We continue to work hard managing our remaining vacancy and already have a good pipeline of future lease contracts set to start in H2 2020.
We have received Q2 valuations in concept from our valuers and the initial data appears to suggest a 3-5% fall in capital values for the portfolio. This is still subject to change. In any case, we expect the valuers to add a material uncertainty clause to their valuation given the lack of transactions in the market at present.
Further details will be provided with the H1 interim report, due Monday 13 July 2020.
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.