DJ EANS-News: Atrium European Real Estate Limited / Successful asset rotation and strong operational results
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Evolved strategy driving diversification into residential for rent sector
Annual Report
St Helier Jersey / Channel Islands -
2019 Financial results
Successful asset rotation and strong operational results
Evolved strategy driving diversification into residential for rent sector
Jersey, 26 February 2020, Atrium European Real Estate Limited (VSE/Euronext:
ATRS), (the "Company" and together with its subsidiaries, the "Atrium Group" or
the "Group"), a leading owner, operator and redeveloper of shopping centres and
retail real estate in Central Europe, reports its financial results for the year
ended 31 December 2019 and the outcome of its strategy review.
KEY FINANCIAL FIGURES FOR THE PERIOD
2019 2018 CHANGE
EURm EURm %/ppt
EPRA Like-for-Like NRI excl. Russia and held for sale assets 56.4 55.1 2.4%
EPRA Like-for-Like net rental income 81.7 80.8 1.1%
Net rental income excl. Russia 140.9 139.8 0.8%
Net rental income 176.4 178.9 (1.4%)
EBITDA¹ 153.6 156.4 (1.8%)
Company adj. EPRA earnings per share¹ (EURcents) 28.0 29.3 (4.3%)
Profit after taxation for the year 84.4 60.6 39.3%
Net Equivalent yield (in %) 6.4 6.4 -
Occupancy rate (in %) 97.0 96.6 0.4%
Key geographies delivering positive results in 2019
* Group like-for-like net rental income ("NRI") increased by 2.4%, with growth
of 2.0% in Poland and 3.0% in the Czech Republic (excluding Russia and assets
held for sale), reflecting a higher quality, more sustainable portfolio income
profile. Group like-for-like NRI increased by 1.1%
* Overall NRI was broadly flat as the positive contribution from redevelopment
completions and Warsaw acquisitions was offset by disposals
* Strong occupancy rate of 97.0% at year end and stable operating margin of
94.2%, reflecting the ongoing appeal to occupiers of the Group's dominant
urban centres
* EBITDA¹ and EBITDA margin remained stable at EUR154 million and 87%
respectively (EUR156 million and 87% in 2018)
* Company adjusted EPRA earnings¹ per share was 28.0 EURcents, 4.3% lower than
in 2018 due to phasing of asset rotation as part of the Company's strategy
* Strong, proactively managed balance sheet to support growth with a 35.1% net
LTV, access to a EUR300 million revolving credit facility and EUR127 million
cash as at 31 December 2019
Execution of asset rotation further improved our portfolio profile:
* 85% of the portfolio, by value, is now located in Poland and the Czech
Republic, with 54% in the capital cities of Warsaw and Prague
* At 31 December 2019², the average asset size of the portfolio increased to
31,100 sqm and the average property value stood at EUR101 million, compared
with 28,800 sqm and EUR86 million respectively as at 31 December 2018,
reflecting the ongoing successful portfolio rotation towards dominant urban
assets
* The valuation of our income producing assets was stable during 2019
* Acquired King Cross Shopping Centre in Warsaw in June 2019 for a consideration
of EUR43 million
* Sale of two shopping centres in Poland for EUR298 million in July 2019, at
c.3% above book value
* Since year end, in January 2020, the Company completed the sale of Atrium
Duben in Zilina, Slovakia for EUR37 million, in line with book value
* Transaction signed in December 2019 for the sale of a portfolio of five
secondary assets in Poland at around book value of EUR36 million. Expected to
complete in the first half of 2020
* Progress in monetising the land bank with a EUR28 million disposal in Poland
during January 2019, at fair value, which represented 13% of the total land
portfolio
* The EUR400 million redevelopment programme (EUR160 million spent up to
31.12.19), which is on schedule aims to add up to 50,000 sqm to the portfolio
in phases by the end of 2023
2020 dividend:
* The Board decided to maintain the Group's annual dividend, payable as a
capital repayment, at EURcents 27 per share for 2020, demonstrating its
continued confidence in the Group's prospects and its evolving strategy. The
dividend will be paid in equal quarterly instalments and will continue to be
reviewed quarterly.
* The first quarterly dividend of 6.75 EURcents per share is due to be paid as a
capital repayment on 31 March 2020 to shareholders on the register as at 24
March 2020, with an ex-dividend date of 23 March 2020.
Green financing framework:
* Atrium has launched a green financing framework which integrates the Company's
sustainability commitments with its financing activities
* The framework was approved by the Board in February 2020. For more information
see https://www.aere.com/Files/OtherDocuments/AEREGreenFinancingFramework.pdf
[https://www.aere.com/Files/OtherDocuments/AEREGreenFinancingFramework.pdf]
Strategic review outcome:
On 10 December 2019, the Group announced that the Board and management had been
undertaking a strategic review to identify further growth opportunities to
deliver strong, long term sustainable income returns to shareholders. The
strategic review focused on, amongst other things:
* leveraging the operating platform in Poland and the Czech Republic;
* continued execution of the Company's asset rotation and completion of its
redevelopment pipeline focusing on dominant assets in major cities;
* densification of core retail assets; and
* diversification into other classes of real estate, focusing on residential for
rent
The strategy is underpinned by strong macroeconomic fundamentals and
urbanisation trends in major cities in our core geographies, particularly in
Warsaw where there is a lack of good quality modern apartments for rent to
satisfy the rising levels of demand. In line with this, the Company has entered
into an agreement which gives it the option, subject to the relevant approvals,
to acquire the controlling stake in a future residential building with c. 900
apartments in the heart of Warsaw. Over the next five years it is envisaged that
the Group will create a portfolio of c. 5,000 residential for rent units,
focused on Warsaw and Prague.
(1) Adjusted for EUR6m in 2019 and EUR2m in 2018 for transaction costs in
relation with the recommended cash acquisition by Gazit Globe and in 2018:
EUR4.5m fee in relation with the takeover of Atrium Dominikanska management
contract
(2) Excluding assets classified as held for sale
Liad Barzilai, Chief Executive Officer of Atrium Group, commented:
"Today's results once again reflect the ongoing tangible success of the asset
rotation strategy we have been executing over the last few years, providing us
with a portfolio of faster growing dominant assets focused in Warsaw and Prague,
which continue to benefit from urbanisation and a strong macro backdrop.
"As we move into a new decade and continue to respond to the structural trends
that are driving consumer habits, including shopping and living, we will be
executing our evolved strategy. This strategy will build on our expertise,
leverage the quality of our existing portfolio and de risk against potential
volatility of our cash flow as we diversify into the residential for rent
sector. This will see the shape of our portfolio evolve towards a platform of c.
5,000 high quality residential units for rent, mainly in Warsaw, which will
complement the leading retail destinations that we now own as a result of our
successful repositioning strategy."
Further information can be found on the Company's website www.aere.com or for
Analysts:
Molly Katz: mkatz@aere.com
Press & Shareholders:
FTI Consulting Inc.: +44 (0)20 3727 1000
Richard Sunderland/Claire Turvey: atrium@fticonsulting.com
[atrium@fticonsulting.com]
About Atrium European Real Estate
Atrium is a leading owner, operator and redeveloper of shopping centres and
retail real estate in Central Europe. Atrium specializes in locally dominant
food, fashion and entertainment shopping centres in the best urban locations.
Atrium owns 26 properties with a total gross leasable area of over 809,000 sqm
and with a total market value of approximately EUR2.6 billion. These properties
are located in Poland, the Czech Republic, Slovakia and Russia, and with the
exception of one, are all managed by Atrium's internal team of retail real
estate professionals.
In January 2020 Atrium announced a new strategy to diversify its portfolio by
investing in and managing residential for rent real estate, with a primary focus
on Warsaw.
The Company is established as a closed-end investment company incorporated and
domiciled in Jersey and regulated by the Jersey Financial Services Commission as
a certified Jersey listed fund, and is listed on both the Vienna Stock Exchange
and the Euronext Amsterdam Stock Exchange. Appropriate professional advice
should be sought in the case of any uncertainty as to the scope of the
regulatory requirements that apply by reason of the above regulation and
listings. All investments are subject to risk. Past performance is no guarantee
of future returns. The value of investments may fluctuate. Results achieved in
the past are no guarantee of future results.
Further inquiry note:
For further information:
FTI Consulting Inc.:
+44 (0)20 3727 1000
Richard Sunderland
Claire Turvey
(MORE TO FOLLOW) Dow Jones Newswires
February 26, 2020 00:50 ET (05:50 GMT)
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