A Gateway to a New Europe
NEPI Rockcastle is the premier owner and operator of shopping centres across Central and Eastern Europe, with a presence in eight countries and a portfolio of 57 retail properties. RLI spent some time with company COO Marek Noetzel to learn about their positioning in the market and how they are continuing to grow their presence.
Founded in 2007, NEPI Rockcastle is listed on the Johannesburg Stock Exchange (“JSE”), Euronext Amsterdam (“Euronext”) and A2X. They employ over 600 people and operate a portfolio with a gross asset value of €7.8bn.
Last year the company recorded its best ever results, surpassing even the performance of 2019, prior to the outbreak of the pandemic. The 2024 results encompassed a record low vacancy rate, at around two per cent and higher footfall, solidly positioning NEPI Rockcastle for 2025 and beyond.
The business has started the year focusing on fine-tuning its portfolio through four pillars of growth.
The first of these pillars is acquisitions and continued investment into new properties such as Magnolia Park in Wroclaw and Silesia City Center in Katowice in Poland. The second is organic growth, or the extraction of additional value from their existing portfolio. Next is development, as the company continues to undertake greenfield construction projects such as Promenada Craiova in Romania, which opened in 2023 and others in the pipeline. Finally, the fourth pillar is transitioning the portfolio towards net zero where NEPI Rockcastle is installing photovoltaic panels across their assets, together with greenfield solar projects, with the goal of producing around 70 per cent of the energy the company and its tenants consume – from renewable sources.
NEPI Rockcastle’s long-term vision is underpinned by the growth opportunities within its portfolio and earnings accretive acquisitions across Central and Eastern Europe (CEE). One of the company’s prime targets is to be present in all the capital cities of the countries in which they operate.
“Each market is different, each one of our properties is unique and the more effort and resources we pour into our shopping centres, the more we receive back from them,” explains Marek Noetzel, COO of NEPI Rockcastle. “For example, with Paradise Center in Sofia, Bulgaria, we totally modernised the shopping environment and you can see through the performance of our tenants that the project is more appealing to consumers. Tenants also want to modernise and reinvent themselves and this all comes together to produce a better performing overall centre.”
One of NEPI Rockcastle’s main growth drivers has been their ability to build up strong relationships with tenants, because of the company’s extensive network of shopping centres across CEE, which helps brands to establish a presence across multiple locations, while only dealing with a single operator. A good example of this is beauty brand Rituals, which NEPI Rockcastle worked alongside with for their first store opening in Romania, situated in Mega Mall in Bucharest. Other examples include JD Sports and Primark, with whom they have launched stores in Poland and Hungary.
Noetzel said it is a continuous challenge to keep the tenant portfolio mix fresh by signing up new brands and so it’s necessary to keep a keen eye on who the leading retailers are in the market today, because retail is forever changing and you cannot become complacent. If you do not follow market trends closely, you won’t see the changes that are coming and then you’ll risk losing your competitive advantage.
When looking for new properties, it is essential that a location has excellent key performance indicators (KPIs) and the potential for growth. “When we search for new properties we need to be confident that there is some additional value in the site to be unlocked with our asset management proposition and capabilities. Since the company’s inception we believe we have excelled at identifying value-add opportunities and how to realise these for the benefit of our shareholders,” says Noetzel.
NEPI Rockcastle manages between 1,200 to 1,400 individual leasing agreements a year, which means they are in constant contact with their tenants, providing the shopping centre owner with important insights into the businesses of these brands, deepening the relationships and the understanding of how to grow collaboratively through close partnerships.
In the last few years, the company has organised ‘Retailer Days’, annual forums aimed at strengthening the exchange of knowledge between its management teams and those of its tenants on innovation in their respective businesses and on market trends, as well as networking and personal relationships.
“We feel this is of paramount importance because if you do not understand the complexities of their businesses and what drives tenants’ decision-making, how are we going to operate a successful business?”
We asked Noetzel what NEPI Rockcastle’s corporate goals are for the coming years and what role does he envision the company playing in shaping the future of retail real estate in Europe?
“We want to further significantly increase the value of the portfolio – the four pillars I mentioned earlier are at the core of a five-year strategy to become an even more key player for all our stakeholders within the markets in which we operate. We would also like to be more visible in the international capital markets. I feel our business brand is not well enough known in relation to our size. NEPI Rockcastle is the third largest listed retail property company in Europe and we need to work harder to improve awareness of this standing and our market-leading position in CEE in the future.”
