ANNUAL REPORT 20141 OVERVIEW 2014 Highlights
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PLAZA CENTERS 2014 ANNUAL REPORT PLAZA CENTERS Who we are We are a leading Central and Eastern European property developer focusing on western-style Contents shopping and entertainment centers, with a Who we are diversifi ed platform of operations in India. Overview Who we are . 1 2014 highlights . 2 The Plaza Centers Group is a leading emerging markets developer Market in the United States. (For more information visit Our strategy . 4 of shopping and entertainment centers, focusing on developing new www.elbitimaging.com.) Feature developments . 6 centers and, where there is signifi cant redevelopment potential, Debt restructuring . 8 Competitive strengths . 10 redeveloping existing centers, in both capital cities and important The Group has been present in real estate development in emerging Our markets . 14 regional centers. The Group has been present in the Central and markets for more than 19 years, initially pursuing shopping Our portfolio at a glance . 15 Eastern Europe region (“CEE”) since 1996 and was the fi rst to and entertainment center development projects in Hungary and Development focus . 16 develop western-style shopping and entertainment centers in Hungary. subsequently expanding into Poland, the Czech Republic, Romania, Current portfolio . 18 The Group has pioneered this concept throughout the CEE whilst Latvia, Greece, Serbia, Bulgaria and India. To date, the Group has building a strong track record of successfully developing, letting and developed and let 33 shopping and entertainment centers in the Business review selling shopping and entertainment centers. Since 2006, the Group CEE region and India, of which 27 were sold with an aggregate President and Chief Executive Offi cer’s statement . 28 has extended its area of operations beyond the CEE into India. In gross value of circa €1.2 billion. 21 of these centers were acquired Operational review . 31 2012, Plaza identifi ed, with its joint venture partners, a window of by Klepierre, a leading player in the continental European shopping Financial review . 36 opportunity for investment in the US as a result of the dislocation center property market, which owns circa 180 shopping centers in Valuation summary by Cushman and Wakefi eld . 38 of the property market, specifi cally within the retail sector. In 2010, 16 countries in continental Europe, with a property portfolio value taking advantage of its qualities and experience in identifying of €21 billion as of year end 2014. Four additional shopping and Management and governance opportunities, managing and exiting assets, gained over the years, entertainment centers were sold to the Dawnay Day Group, one Management structure . 39 the Group completed another signifi cant sale of 49 US-based assets, of the UK’s leading institutional property investors at that time. Board of Directors and Senior management . 40 mainly to a joint venture between Blackstone Real Estate and DDR One shopping center was sold in 2007 to Active Asset Investment Directors’ report . 42 Corp. in a transaction valued at US$1.47 billion, which refl ects a Management (“AAIM”), a UK commercial property investment group. Corporate governance . 46 ROE for the Group of nearly 50% in a period of little over 18 months. The transaction had a completion value totaling approximately Risk management . 53 €387 million, representing circa 20% of all real estate transactions Remuneration report . 62 During 2014, Plaza successfully completed the restructuring process completed in Hungary in 2007. Kragujevac Plaza was sold in 2014 Statement of the directors . 65 midway through the year, with resounding support from its creditors. to New Europe Property Investments plc (“NEPI”), a publicly traded Financial statements This was followed by the completion of a successful rights offering, commercial property investor and developer in Eastern Europe, which provided Plaza with a €20 million capital injection and marked holding 26 income producing assets. Independent auditors’ report . 66 an important fi nal step in the restructuring process. A third listing Consolidated statement of fi nancial position . 67 Consolidated statement of profi t or loss . 68 on the Tel Aviv Stock Exchange and the recent upgrade in Plaza’s Consolidated statement of comprehensive income . 69 credit rating from the Israeli division of Standard & Poor’s (from Consolidated statement of changes in equity . 70 “D” to “BBB-”, on a local Israeli scale, with a stable outlook), have Consolidated statement of cash fl ows . 71 further underlined the achievements of the year and strengthens the Notes to the consolidated fi nancial statements . 73 Company’s position. This annual report is not intended for Dutch statutory fi ling purposes. Additional information Throughout 2014, Plaza continued operational improvement The Company is required to fi le an annual Company’s offi ces . 138 and portfolio repositioning. These are clearly expressed by report containing consolidated and Company Advisors . 139 signifi cant headway made with the disposal of Kragujevac Plaza fi nancial statements prepared in accordance for €38.6 million and successful disposal of non-core sites in with the Netherlands Civil Code – such a report Romania (Targu Mures and Hunedoara) for €4.7 million in line with will be submitted in due course to the Dutch the Company’s strategy to pay down debt and shed the portfolio of Serbia authorities and will be available for non-core assets. At the same time Plaza improved occupancy and shareholders’ inspection at the Company’s turnover were recorded across the Company’s existing shopping and offi ces in Amsterdam. entertainment centers in CEE, with the overall portfolio occupancy Since 1 November 2006, Plaza Centers N.V.’s shares have been level increasing to 94% as of year-end, refl ecting successful asset traded on the main board of the London Stock Exchange under the management initiatives at Torun Plaza, Riga Plaza, Suwalki Plaza ticker “PLAZ”. From 19 October 2007, Plaza Centers N.V.’s shares and Zgorzelec Plaza. During 2014 NOI increased by 3.5%. are also traded on the main list of the Warsaw Stock Exchange under the ticker “PLZ”, making it the fi rst property company to achieve The Company is an indirect subsidiary of Elbit Imaging Ltd. (“EI”), an this dual listing, and as of 27 November 2014, Plaza Centers N.V.’s Israeli public company whose shares are registered for trade on the shares are also traded on the Tel Aviv Stock Exchange under the Tel Aviv Stock Exchange in Israel and on the NASDAQ Global Select ticker “PLAZ”. PLAZA CENTERS N.V. ANNUAL REPORT 20141 OVERVIEW 2014 highlights Signifi cant headway in the repositioning of portfolio, disposing of a number of non-core assets and successful completion of the restructuring process. 2014 highlights Asset and operational highlights Total assets Net Asset Value (NAV) • Net Asset Value decreased by 44% to €153 million (31 December 2013: €274 million) primarily as a result of the • During the period, Plaza made signifi cant headway in the 2014: €466 million 2014: €153 million impairment of assets, mainly in Romania, Greece and India. repositioning of its portfolio, disposing of a number of - Net Asset Value per share of £0.17 (31 December 2013: £0.79), 2013: €586 million €m 1500 2013: €274 million €m 1200 non-core assets: a decline of 78%, attributable to dilution (increase in the - In the fourth quarter of 2014, 18 months ahead of schedule, 1000 number of shares by 130%) and the abovementioned 1200 Plaza successfully completed the disposal of Kragujevac Plaza impairments. in Serbia for €38.6 million, in line with the asset’s last reported 800 900 book value. Following the repayment of related bank debt of • Losses in the period of €120 million (31 December 2013: 600 c. €28.2 million, 75% of the net cash proceeds (c. €12.4 million, loss of €218 million), stemming from a non-cash €89 million 600 including the released restricted cash deposit of c. €2 million) 400 impairment of trading properties and equity accounted investees were distributed to the Company’s bondholders as an early (31 December 2013: €186 million of impairments), and an overall 300 repayment of the bonds, in line with the Company’s stated 200 net fi nance cost of €36 million (2013: €39 million). restructuring plan. - Basic and diluted loss per share of €0.39 (31 December 2013: 0 0 - Successful disposals of non-core sites in Romania, at Targu 2007 2008 2009 2010 2011 2012 2013 2014 2007 2008 2009 2010 2011 2012 2013 2014 loss per share of €0.73). Mures (September 2014) and Hunedoara (December 2014), • Consolidated cash position at year end (including restricted bank for €3.5 million and €1.2 million respectively, consistent with Profi t (loss) after tax the assets’ last reported book values. deposits, short term deposits and held for trading fi nancial assets) Consolidated cash position* of €41.7 million (31 December 2012: €33.7 million) and current • Improved occupancy and turnover were recorded across the 2014: €(120) million cash position of circa €39.5 million (€7 million restricted). Company’s existing shopping and entertainment centers in 2014: €41.7 million 2013: €(218) million the CEE, with the overall portfolio occupancy level increasing 2013: €33.7 million €m 300 €m 250 • Gearing increased to 74% (31 December 2013: 64%) as a result of to 94% as of 31 December 2014. 270 impairment losses and fi nance costs incurred during the year. - At Torun Plaza, Poland, occupancy increased to 92.5% 240 200 (2013: 89%). An additional 4,100 sqm of GLA was opened 210 Key highlights since the period end during the year, and asset management initiatives contributed 180 150 to a 21.2% increase in turnover and 6.3% increase in footfall 150 • On 24 February 2015, the Israeli credit rating agency which is a compared to 2013.