Eurocommercial Properties N : Halfjaarlijkse financiële verslaggeving

Portfolio, split by country, at 30 June 2023*

Belgium

France

Italy

Sweden

Property value	Property value	Property value	Property value
€563m	€814m	€1,661m	€751m
No. of properties 1	No. of properties 8	No. of properties 8	No. of properties 7
15%	21%	44%	20%
of portfolio	of portfolio	of portfolio	of portfolio

• Figures based on proportional consolidation as set out in Note 2 of the Consolidated Interim Financial Statements.

Contents

01	Highlights	14	Statement of consolidated direct,
02	Operational & financial review		indirect and total investment results and
07	Funding		Statement of adjusted net equity
10	Country commentary	15	EPRA performance measures
11	Environmental, Social and Governance	19	Consolidated interim financial statements
12	Responsibility statement	25	Notes to the interim financial statements
		36	Other information

Eurocommercial Properties N.V.	1
Half Year Report 30 June 2023

Highlights

Performance and business highlights

• Consistently strong retail sales during the first six months of 2023 resulted in overall sales turnover growth of 9.2% compared to the same period in 2022, and 11.7% compared to the pre-pandemic 2019.
• Solid like-for-like rental growth of 8.2% due mainly to rental indexation.
• Continued strong tenant demand resulted in 6.7% rent uplifts on renewals and relettings from 235 lease transactions signed during the 12-month period ended 30 June 2023.
• EPRA vacancy rate at 30 June 2023 remains around its long-term historically low level of 1.5%.
• Occupancy cost ratio (OCR) was 9.5% at 30 June 2023.
• Rent collection rate reached 98% for the first half of 2023.
• Property values remain stable over six months with increased rental income balanced by higher yields and the overall EPRA net initial yield increased from 5.5% to 5.7%.
• SEK 1.9 billion (circa €160 million) four-year green loan with Nordea secured in Q2 2023 on four properties in Sweden, thereby completing the 2023 refinancing programme.
• Acquisition of remaining minority interest in Woluwe Shopping which is now 100% owned.
• Since 17 May 2023 the Company is also listed on the Milan stock exchange.
• Loan to value ratio (on the basis of proportional consolidation) at 41.8%. Net debt to EBITDA at 8.1x, and ICR at 3.9x.
• Net earnings €1.22 (direct investment result) per share for the six months to June 2023 compared to €1.21 for the six months to June 2022.
• Total cash dividend of €1.60 per share for the year 2022. In accordance with the Company's new dividend policy, an interim cash dividend of €0.60 per share was already paid in January 2023. A final cash dividend of €1.00 per share was paid in July 2023.
• Eurocommercial's shareholders representing 19.6% of the issued share capital opted to receive a stock dividend (1 new share for every 24 shares held) instead of the final cash dividend of €1.00 per share, which raised an additional equity amount of €10.4 million in July 2023.
• Direct investment result guidance for the full year 2023 confirmed between €2.25 and €2.35 per share.
• The Company intends to offer shareholders the possibility of opting for a stock dividend instead of a cash dividend for the 2023 interim dividend scheduled for January 2024.

Eurocommercial Properties N.V.	2
Half Year Report 30 June 2023

Board of Management's commentary

Consumer spending across our four markets has continued to be very robust during the first half of 2023 despite rising living costs, high inflation and increasing interest rates. The portfolio saw strong retail sales growth of 9.2% compared to H1 2022, while footfall increased 6% over the same period. All retail segments showed positive sales growth with the outstanding performers being F&B (23.0%), sport (14.8%), home goods (12.7%) and health & beauty (11.1%). The important fashion and shoe sector also reported a solid 5.6% growth. Our 24 shopping centres continue to benefit from their carefully selected retail mix including groceries and necessity based retail, together with a broad range of services to meet the everyday needs of their communities.

Rental growth for the 12 months to 30 June 2023 was 8.2% due mainly to significantly higher rental indexation. 98% of H1 rents have already been collected, indicating that there has been a full pass through of indexation to our tenants who are generally trading well from an affordable rental base and a low OCR, which still averages only 9.5%. Our leasing teams continue to report healthy levels of tenant demand for our shopping centres, negotiating 235 lease renewals and relettings during the 12-month period ended 30 June 2023, providing an overall rental uplift of 6.7%. H1 alone saw an uplift of 7.1% from 112 lease transactions.

Our 30 June valuations decreased by 0.2% since the properties were last valued six months previously. Despite significantly higher net operating income, this relatively small decrease in value was due to a weaker Swedish krona and to the adoption by the valuers of higher initial or exit yields and higher discount rates with the overall EPRA net initial yield increasing from 5.5% to 5.7%. Higher yields are a reflection of an investment market with relatively low transactional volumes and characterised by cautious investors, pricing uncertainty, increasing interest rates and rising borrowing costs.

In what is a challenging financing environment, we were pleased to announce the completion of our 2023 refinancing programme already in June following the refinancing of the SEK 675 million (circa €57 million) loan on Bergvik shopping centre, Sweden. This new facility with Nordea Bank qualifies as a green loan and is structured as an additional line to the existing loan with Nordea signed in March 2023. These loans amounting to SEK 1.875 million (circa €160 million) have been extended to mature in July 2027 and will be hedged for at least 70%.

The average interest rate as per 30 June 2023 increased to 2.9% from 2.4% at 31 December 2022, as a result of the steady and significant increase in both the Stibor and Euribor rates, which impacted the unhedged part of the loan portfolio. The Company therefore expects its interest expenses to increase during the year but to remain at acceptable levels, with an average overall interest rate for the portfolio slightly above 3%, providing there is no change to current market circumstances.

Assuming no major deterioration in the macro-economic environment, in particular further spikes in interest rates, we confirm the guidance provided with the publication of the 2022 annual results in March 2023 and expect the direct investment result for the year 2023 to be between €2.25 and €2.35 per share.

Operational & financial review

Retail sales

During H1 2023, our four markets continued to see strong retail sales growth which overall was 9.2% higher than H1 2022 and 11.7% above pre-pandemic H1 2019.

All our 24 shopping centres contributed to the sales growth which was positive across all retail sectors with particularly strong performances from health & beauty (11.1%), home goods (12.7%) and sport (14.8%). The outstanding performer was again F&B (23%), building on the resurgence we reported in

Eurocommercial Properties N.V.	3
Half Year Report 30 June 2023

Q1 and with a broad range of new brands, concepts and formats establishing in our centres. Footfall also continued its upward trend and was 6% higher than in H1 2022.

Like-for-like retail sales by country*

			H1 2023/H1 2022	H1 2023/H1 2019
	Overall		9.2%	11.7%
	Belgium		15.0%	10.8%
	France		6.6%	3.7%
	Italy		12.1%	12.8%
	Sweden		5.3%	16.5%
* Excluding extensions/redevelopments.
Like-for-like retail sales by sector*
			H1 2023/H1 2022	H1 2023/H12019
	Fashion & Shoes		5.6%	-1.3%
	Health & Beauty		11.1%	16.0%
	Gifts & Jewellery		4.7%	11.4%
	Sport		14.8%	25.1%
	Home Goods		12.7%	42.3%
	Books & Toys		3.6%	6.3%
	Electricals		3.9%	6.9%
	F&B (Restaurants & Bars)		23.0%	22.5%
	Hypermarkets/Supermarkets		6.2%	17.7%
	Services		23.0%	16.1%

*Excluding extensions/redevelopments.

Rental growth

Like-for-like (same floor area) rental growth for the twelve months ended 30 June 2023 was 8.2%, mainly resulting from rental indexation.

Rental growth

	Like-for-like rental growth
Overall	8.2%
Belgium	9.3%
France	2.8%
Italy	10.3%
Sweden	9.4%

Like-for-like rental growth is calculated based on 12-month data and excludes the impact of acquisitions, disposals and development projects to provide an accurate figure for comparison. It includes the impact of indexation, turnover rent, vacancies and leasing activity.

Renewals and relettings

Strong leasing activity has continued over the last 12 months with 235 leases renewed or relet, achieving an overall uplift of 6.7%. 173 of these transactions were lease renewals signed with existing tenants, achieving a 6.3% rental uplift. The remaining 62 lease contracts were signed with new retailers establishing in our shopping centres, improving the tenant mix, and producing a higher rental uplift of 7.9%, confirming the strong demand from new brands to open in our centres. H1 alone saw an uplift of 7.1% from 112 lease transactions.