Valuation write-downs of €79m (£68m) pushed Plaza Centers’ (PLAZ) reported results into the red and reduced its book value by nearly a quarter. That reflects a dismal property market in Eastern Europe, where the Israeli company develops shopping centres. With investors and lenders too worried about problems in the eurozone to engage with emerging Europe, transaction volumes in the region fell by 35 per cent.
Plaza Centers has continued to build malls through the downturn, but does not want to sell them until market conditions improve. That means it has seven operational shopping centres, which are performing reasonably enough. Their overall occupancy rate rose from 85 per cent to 88.5 per cent over the year, and gross revenues increased by 77 per cent to €41.6m as a result of two new openings.
The problem is that Plaza also has a further 26 development projects. These are held at the lower of cost and net realisable value, and the company’s valuers, Jones Lang LaSalle, have aggressively reduced their assumptions of the latter. Because the group has €357m of net debt, these write-downs have a disproportionate knock-on impact on book value.
PLAZA CENTERS NV (PLAZ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 32p | MARKET VALUE: | £ 93.6m | |
| TOUCH: | 29-34p | 12-MONTH HIGH: | 60p | LOW: 21p |
| DIVIDEND YIELD: | nil | TRADING PROP: | €781m | |
| DISCOUNT TO NAV: | 75% | - | - | |
| INVESTMENT PROP: | €14.5m | NET DEBT: | 79% | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 226 | 72.6 | 23.0 | nil |
| 2009 | 202 | -68.5 | -23.0 | nil |
| 2010 | 196 | 12.9 | 3.0 | nil |
| 2011* | 169 | 14.0 | 0.3 | 8.42** |
| 2012 | 126 | -89.4 | -28.2 | nil |
| % change | -25 | - | - | -100 |
*Restated to reflect the disposal of the US operation **Exceptional €30m dividend paid in September 2011 | ||||
