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. Last Updated: 07/27/2016

Moscow Office Dents Rodamco Profits

LONDON - Rodamco Europe, due to be acquired by Unibail Holding to create Europe's largest real estate investment trust, said first-quarter profit rose 58 percent on higher property valuations.

Net income increased to 386 million euros ($526 million), or 4.31 euros per share, from 245 million euros, or 2.74 euros, a year earlier, the Rotterdam-based company said in a statement May 8. Net asset value, a gauge of performance used by real estate investors and analysts, rose 6 percent to 81.01 euros per share.

Rodamco agreed last month to an 11.2 billion euro takeover by Paris-based Unibail that will create Europe's largest shopping mall operator with outlets in 14 countries. Chief executive officer Maarten Hulshoff, 59, had been selling small retail outlets and residential properties to focus on shopping centers in major European cities.

"The Unibail takeover looks like a done deal," said Dick Boer, an analyst at Kempen & Co. with a "neutral" rating on the shares. He expects Unibail to make a formal offer for Rodamco within the next 10 days.

Rodamco reiterated that it expected its net direct profit, which reflects the company's operational performance mainly from rental income, to rise by at least 3 percent this year.

Direct profit was crimped by higher interest rates, plus additional costs of introducing a new computer system and opening new offices, like in Moscow, Hulshoff said in an interview. That was even as rental income increased 7.4 percent to 170 million euros, lifted by acquisitions, higher rents and new openings.

The indirect profit, which reflects chiefly the increase in property values, added 290 million euros to net income, reflecting the "continued very strong demand" for retail- related property assets from real estate investors, he added.