NEPI Rockcastle, one of the largest owners and operators of retail real estate in Central and Eastern Europe, has reported impressive results for the first quarter of 2025. According to its published report, the company achieved a Net Operating Income (NOI) of €152 million, highlighting its resilience and strategic efficiency amid ongoing macroeconomic uncertainty in Europe.
Rental Income Growth and Demand Recovery
A major driver of NOI growth was the significant increase in rental revenue. In Q1 2025, gross rental income rose by 12.3% compared to the same period in 2024. This was attributed to the recovery of consumer activity and high occupancy rates across the company’s shopping centers, which averaged over 97% across most markets.
NEPI Rockcastle noted that footfall is steadily returning across the CEE region. Strong performance was observed in Poland, Romania, and Bulgaria, where rental rates remained stable or showed moderate growth due to limited supply of high-quality retail space.
Diversified Portfolio and Geographic Strength
The company manages a well-diversified portfolio spanning 10 countries, including Poland, Romania, Slovakia, Hungary, the Czech Republic, Croatia, Bulgaria, Serbia, Lithuania, and Slovenia. Romanian and Polish assets contributed more than 60% of total NOI during the first quarter.
Top-performing assets included Mega Mall and Promenada in Bucharest, Bonarka City Center in Kraków, Arena Mall in Budapest, and Shopping City Timișoara. NEPI Rockcastle continues to invest in modernizing and expanding these properties, focusing on visitor experience, sustainability, and digital innovation.
Financial Strength and Risk Management
NEPI Rockcastle maintains a conservative financial strategy. As of the end of March 2025, the company reported a loan-to-value (LTV) ratio of 31%, ensuring financial flexibility and a strong balance sheet.
Total liquidity, including cash reserves and undrawn credit lines, stood at €555 million, enabling the company to respond swiftly to market opportunities. At the same time, refinancing activities in 2024 helped reduce debt servicing costs under more favorable borrowing conditions.
Net profit for Q1 reached €98 million, a 9% increase year-over-year. The rise in earnings reflects stronger rental income, high occupancy, and disciplined cost control on both administrative and operational fronts.
ESG Initiatives and Sustainable Growth
NEPI Rockcastle continues to drive its sustainability agenda, incorporating both environmental and social initiatives. By the end of Q1 2025, over 65% of the company’s shopping centers were certified under BREEAM or LEED standards, confirming their environmental efficiency.
This year, the company launched new solar panel installation projects across rooftops in Romania and Bulgaria. These installations are expected to reduce energy consumption from conventional sources by 18% over the next three years.
NEPI Rockcastle is also undergoing digital transformation through the implementation of smart building management systems (BMS), IoT-based energy monitoring, and digital portals for tenants, enabling faster maintenance requests and operational transparency.
New Tenants and Brand Refresh
In Q1 2025, NEPI Rockcastle signed 82 new lease agreements, including with major international brands such as Primark, LEGO, Mango Teen, and H&M Home. This indicates strong tenant confidence in NEPI’s properties, especially as retailers become more selective in their site strategies.
The company is also experimenting with flexible leasing formats, including pop-up shops, experiential retail zones, and e-commerce pickup points. These innovations aim to adapt to evolving consumer preferences and increase dwell time within malls.
An example is Galeria Wolnośc in Katowice, which introduced an omnichannel layout with augmented reality features and interactive digital content—an initiative that significantly boosted customer engagement.
Outlook and Strategic Priorities for 2025
NEPI Rockcastle reaffirmed its positive outlook for 2025. Management expects NOI to grow by 8–10% year-over-year, supported by stable occupancy and solid rental performance.
Key priorities for the remainder of the year include:
- Completion of ongoing renovations in Kraków, Cluj-Napoca, and Sofia
- Expansion of digital services for tenants and shoppers
- Enhancement of ESG programs in water conservation and waste management
- Sustaining high liquidity and reducing leverage
The company is also exploring expansion into new markets, particularly in the Baltics and Western Balkans, where consumption is rising and modern retail infrastructure is lacking.
Investment Appeal
Following the strong Q1 results, NEPI Rockcastle shares have been trending upward. Since the beginning of the year, stock value has increased by 6.8%, and analysts maintain a “buy” rating due to the company’s dividend yield, financial resilience, and growing demand for retail space in CEE.
Institutional investors are increasing their stakes in NEPI Rockcastle, further validating the company’s long-term strategy. Its focus on sustainability and digital modernization aligns well with global investment trends.
Conclusion
NEPI Rockcastle’s performance in the first quarter of 2025 underscores its strong position in the Central and Eastern European retail real estate market. With €152 million in NOI, a robust liquidity profile, and forward-looking investments in ESG and digital infrastructure, the company is well-positioned for continued growth. As demand for modern retail spaces recovers, NEPI Rockcastle remains a solid player offering stability, innovation, and long-term value for stakeholders.
