Retail Estates: EPRA earnings up 7.9% in the first half, rental guidance raised
In the first half of fiscal year 2026-2027, ended September 30, 2026, Retail Estates' EPRA earnings attributable to the group rose 7.86% to €49.03 million. Over the same period, net rental income increased 3.65% to €75.35 million.
The gap between the two growth rates is due to lower property costs, which amounted to €5.19 million compared with €8.28 million a year earlier. This decrease more than offset the increase in financial expenses.
The Belgian out-of-town retail property company also raised its net rental income forecast for the year to €150.5 million, from the €149 million announced previously. It maintained an expected gross dividend of €5.25 per share.
Lower property costs add five points to the operating margin
Property costs fell by €3.09 million year on year. According to the company, this decrease mainly results from lower technical costs (€2.38 million less), as well as savings achieved across almost all cost items.
As a direct consequence, the operating margin (operating result before result on portfolio, relative to net rental income) increased by 5.03 points to 85.24%. The EPRA cost ratio, including vacancy costs, fell by 17.96% to 12.64%.
Part of this movement reflects a change in spending priorities. The company is concentrating its investments on its strategic assets and reducing maintenance on properties with more limited long-term prospects.
Structural improvement expenses that meet the capitalization criteria are now recorded as investments rather than as expenses. Routine maintenance remains recognized in profit or loss. The company puts the positive effect of this accounting treatment at €0.09 per share on EPRA earnings, an effect visible for the first time this half-year.
Indexation and occupancy lift like-for-like rents
On a like-for-like basis, gross rental income rose 2.56%, compared with 2.20% a year earlier. This increase is mainly explained by rent indexation (€1.74 million), partly offset by rent concessions (€0.28 million) and a slight negative effect from lease renewals (€0.09 million).
On a like-for-like basis, the Netherlands recorded growth of 2.61% and Belgium of 2.53%. The occupancy rate reached 97.62%, up from 97.40% twelve months earlier but slightly down from 97.82% at March 31, 2026. In total, 29 new leases or renewals were concluded.
France, where the group made its first acquisition, remains marginal in the accounts. The acquisition concerns the L'Oseraie shopping centre in Osny, bought for €29 million and generating €1.95 million in contractual annual rental income. It contributed €0.87 million to rental income for the half-year.
Nicolas Beaussillon, chief executive officer, justified this choice: “In Belgium and the Netherlands, we now hold significant market shares and growth opportunities are limited. France, on the other hand, offers that potential.”
The cost of debt rises, rental guidance is raised
Net interest charges increased from €10.26 million to €12.08 million. The weighted average interest rate rose from 2.05% to 2.57% over one year, and the company expects a gradual increase to 2.75% during the fiscal year. The interest coverage ratio therefore fell from 7.09 to 6.24.
Per share, EPRA earnings increased by 6.54% to €3.26. This growth is lower than that of overall earnings, due to the increase in the weighted average number of shares.
Net profit attributable to the group reached €70.76 million, compared with €47.15 million a year earlier. This amount includes a positive change of €13.40 million in the fair value of hedging instruments, an item with no effect on cash.
The debt ratio rose from 40.39% to 42.11% since March 31, due to the dividend payment and the French acquisition.
The company retains an investment capacity of €150 million within its 45% target. It has also signed a US private placement of $150 million, intended to refinance €100 million of bonds maturing during the fiscal year.
The increase in EPRA earnings therefore relies more on cost control and on the accounting treatment of structural works, which reduces expenses, than on rental growth. At the same time, the cost of debt continues to rise.
