Maia, Portugal, November 5th 2009
Sonae Sierra recorded a Direct Result of €55.8 million in the first nine months of 2009, a growth of 18% versus last year
• Direct Income grew 2% to €225.1 million in the first 9 months of 2009
• Net Operating Margin grew 4% to €131.2 million in the same period
• Loop5 development was finished and successfully inaugurated
• Distinguished with three awards in the third quarter
• Successful sale of 10.5% of the Equity of Parque D. Pedro Fund
Sonae Sierra Equity Holders' Consolidated Result in the first nine months of 2009 was negative of €94.4 million compared with a Consolidated Result of €4.8 million in the same period of last year.
The variation in the Equity Holders' Consolidated Result continues to be driven by the Indirect Result that is adversely affected by the continuous increases in market capitalization yields in Europe. This is caused by the negative climate in the property markets of most of the developed countries where the Company operates. This context led to an upwards shift of the capitalization yields applied in the valuations carried out on assets in those countries, this increase implying a reduction in the value of the corresponding property.
We have started to observe a reduction of the pace in the increase of the yields and, at the same time, there were again operational improvements in the Portuguese and German portfolio, but still insufficient to compensate the yield effect.
In Brazil, it should be highlighted the continuous improvement of the operational activity, as well as, the yields decrease in some assets.
In the same period Sonae Sierra's Direct Result reached €55.8 million (+18%), compared to the €47.3 million in the same period of 2008 due to the combination of three factors: (i) increase in the portfolio; (ii) the cut cost efforts implemented by the Company in 2009; and (iii) the lower interest rates.
The Shopping Centre Operating Income is 9% above the first nine months of 2008 mostly due to the increase in the portfolio - the openings of 2008 in Europe: Freccia Rossa, Plaza Mayor Shopping, Gli Orsi and Pantheon Plaza; and the opening of Manauara in 2009, in Brazil. On a L4L basis Total Rents (Fixed Rents and Turnover Rents) are 0.4% above the same period of 2008.
The Company's Net Operating Margin reached €131.2 million in the first nine months of 2009, 4% above the same period of last year.
Value Metrics
The Company measures its performance, in a first instance, on the basis of changes in Net Asset Value (NAV) plus dividends distributed. The Company calculates its NAV on the basis of the guidelines published in 2007 by INREV (European Association for Investors in Non-listed Real Estate Vehicles), an association of which the Company is a member.
On the basis of this methodology, the NAV of Sonae Sierra, as of the 30 September 2009, was €1.24 billion, corresponding to a NAV per share of €38,24.
Further to this, the Company uses a second set of value metrics, the Net Operating Margin (NOM) generated by its service activities. In the nine months of 2009, the figures were:
The activities Asset Management and Property Management show an adverse performance, basically as a consequence of the value decrease of the existing portfolio and lower letting services.
The Developments' NOM presented has two main components: (i) the operational activity related with the supply of development services to the projects and (ii) the value added, in the period, to projects during the development phase and the value created on the openings of the last two years.
As a result of the decrease in value of the shopping centres inaugurated in recent years, and the reduced level of services delivered due to the slowdown in the development activity, the Developments NOM show a loss of €62.1 million.
One shopping centre inaugurated and two more under construction
Sonae Sierra's growth and expansion strategy continues although the company has adjusted the development timings to the evolution of the financial and retail markets.
Following the successful opening in Brazil, of Manauara Shopping (Manaus) last April, the company has inaugurated last 9 of October Loop5 (Weiterstadt), representing an investment of €265 million, the shopping centre had more than one million visits in just two weeks which give us a strong confidence for it´s future performance.
At the end of the first nine months of 2009, the Company continued to develop two new shopping centres and has in the development pipeline a total of 12 new projects in Portugal, Italy, Germany, Greece, Romania and Brazil.
In Portugal, Sonae Sierra is currently developing LeiriaShopping (Leiria), an investment of €75 million, schedule to open in the Spring of 2010 and in Italy the Company has just started the construction works of Le Terrazze, in La Spezia.
Three new Awards in the third quarter of 2009
In September the company's was distinguished with the "Best Retail Developer" award for Portugal and Spain, by the readers of 'Euromoney' magazine, an international publication acknowledged as a leader in information about banking and finance. For this Award, the voters of the "Real Estate Awards" considered the companies with the highest innovation capacity and ability to create prime investment opportunities in the retail sector.
Finally, also in September, in the Portuguese Real Estate Fair SIL the project of the Colombo Towers, two office towers developed in Centro Colombo, were considered the best office project in Portugal.
Sonae Sierra's Consolidated Profit and Loss Account, and Consolidated Balance Sheet
Sonae Sierra's Consolidated Profit and Loss Account, and Consolidated Balance Sheet by business
Sonae Sierra, www.sonaesierra.com, is an international shopping centre specialist, with a passion for bringing innovation and excitement to the shopping and leisure centre industry. The Company owns 52 Shopping Centres in Portugal, Spain, Italy, Germany, Greece, Romania and Brazil, with a total Gross Lettable Area (GLA) of more than 2 million m2. Sonae Sierra has 2 projects under construction and 10 new projects in different phases of development in Portugal, Italy, Germany, Greece, Romania and Brazil. In 2008, its centres welcomed more than 429 million visits.