KSA’s Cenomi Centers reports 64% growth in net profit
Cenomi Centers, one of the largest developers of shopping malls and complexes in the Kingdom of Saudi Arabia, published its financial results for the three months and nine-months period ended 30 September 2023. The company delivered a strong performance in the first nine months of 2023, achieving SAR1.7 billion in revenue, up 3.3% year-on-year (y-o-y), EBITDA of SAR1,244.1 million up 10% and increase in net profit by 64% y-o-y to SAR1,018.7 million.
Results were driven by the growth in net rental revenue as well as the profit from land sales and a positive valuation impact. During the quarter Cenomi Centers agreed the sale of land at auction in Granada district of Al Ahsa spanning over 29k sqm amounting to SAR62.5 million that resulted in a profit of SAR40.5 million to be recognised in Q4-23. This is part of the company’s non-core asset sale program, which is expected to unlock nearly SAR2 billion of value.
In the first nine months of the year, visitor footfall surged by 23.5% y-o-y to 95.2 million, with a year-end trajectory set to deliver the highest ever number of visitors underlying the continued attractiveness of Cenomi Centers assets. Occupancy rates continue to moderate and reached 90.3% as at September’23 (91.4% in Q2-23), while net rental revenue year to date increased 5.4% y-o-y to SAR1.56 billion.
With strong market fundamentals across the Kingdom, the company is benefiting from strong supply/demand dynamics to achieve price increases in both new leases and renewals. The company is proactively rotating tenants to curate the optimal mix of brands and experiences on offer to its visitors. As new tenants complete fit-outs and occupancy levels rebound, revenues and profitability will better reflect the positive momentum in the business.
During Q3-23, net profit increased by 11.1% to SAR293.6 million while revenue marginally dipped by 1.1% to SAR567.7 million and EBITDA decreased 8.9% to SAR341.2 million. Results in the quarter were impacted by lower occupancy rates and higher operating costs including one-off costs impacting this quarter while positive one-offs inflated the Q3-22 comparison base.
The company remains committed to grow its portfolio, as demonstrated by the advancement of its construction pipeline. Construction of U Walk Jeddah is complete, and the centre will open in December 2023. Additionally, construction of the flagship developments, Jawharat Riyadh and Jawharat Jeddah is progressing according to plan with the former achieving a 35% completion rate and the latter 26% completed. Both are expected to open in the first half of 2025.
“Our vision is to consistently set the benchmark in Saudi Arabia as the largest and most innovative mall developer and operator. We aim to redefine the essence of retail excellence, a commitment reflected by the record number of visitors, over 95 million nationally, who have made Cenomi Centers their preferred lifestyle destination. To that end, we have crafted a robust five-pillar strategy that is guiding us towards new heights. Our product pipeline is well under way to deliver on our strategic pillars of Growth and Product Excellence with the launch of U Walk Jeddah on the 15th of December. The momentum continues with six more premier assets advancing steadily, and our flagship destinations in Riyadh and Jeddah are slated to welcome visitors in the first half of 2025,” stated Alison Rehill-Erguven, CEO, Cenomi Centers.
The company’s portfolio of assets welcomed 95.2 million visitors in the first nine months, a 23.5% increase over last year. During the quarter, the company launched several initiatives and activities to support footfall, including Saudi National Day celebrations, and a first-of-its-kind ‘The Garden’ activation within Al Nakheel Riyadh and Jeddah Park. This programme resulted in 31,512 additional visitors.
Demand for prime retail space remains strong. Cenomi Centers onboarded 160 brands and renewed 883 contracts as of September 2023. Drawing on the international expertise of its management team, the company is attracting renowned brands including the introduction of the first Starbucks Reserve in Jeddah, and expanding M&S Food’s footprint in Riyadh, with additional brand deals in the pipeline.
September 2023 like-for-like occupancy rates closed at 90.3% (91.4% in Q2-23) as the company continued to proactively evolve its category mix and take a more stringent approach with tenants. The tenant rotation programmes are advanced and represent circa 3% of GLA, of which 50% have already signed proposals with new tenants and 32% have been handed over for fit-out. Demonstrating the Company’s ongoing efforts to shift its merchandise mix, the gross leasable area (GLA) mix is now 63% retail and 37% non-retail (including entertainment, F&B and others).
Cenomi Centers has initiated a range of strategic efficiency initiatives seeking synergies through the regionalisation of its organisation, supply chain management activities, improved facilities and property risk management and the rationalisation of its IT infrastructure and systems. The company is actively progressing the development of a digitisation platform to enhance collaboration with its tenants and ensure increased transparency. This platform is anticipated to launch prior to the conclusion of the current fiscal year.
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