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Mid Year Results
St Helier Jersey / Channel Islands -
First half 2020 results and update on trading as COVID restrictions ease
Jersey, 5 August 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, announces results for the six months ended
30 June 2020 and provides an update on trading in light of the COVID-19
pandemic.
Update on COVID-19 situation
Recovery gaining traction as restrictions ease
* As of today, 92% of the Group's GLA and base rental income for Poland, Czech
Republic and Slovakia is open. Including our shopping centres in Russia, 87%
of the Group GLA is open*.
* With restrictions beginning to ease in May, recovery in our centres continues
to build gradually towards pre COVID-19 levels as consumers gain confidence in
the public health measures that have been taken.
* Russia started easing restrictions later, six of our centres in Russia have
opened during the course of June and July and now only one centre remains
closed.
* Footfall reached 73%[1] in the first week of July vs the same week in 2019
whilst June monthly sales were 77%1 vs. last year, the positive trend
continued in July.
Focus on proactive tenant engagement has ensured stable occupancy of 95.4%
* Short term tenant support given in exchange for lease prolongations and
incorporation of other favourable lease terms amendments.
* EPRA occupancy at the end of June remained strong at 95.4% with an average
lease term of 5.3 years. The average lease duration is expected to extend upon
completion of tenant negotiations.
Rapidly implemented cash preservation measures preserved balance sheet strength
* Significant reduction in non-essential capital expenditure of approximately
EUR15 million, as well as a EUR3 million reduction in operational costs and
EUR2 million in administrative costs in 2020.
* Approximately EUR60 million of planned investment in redevelopments for 2020
are postponed to 2022/2023.
* Successful EUR217.8 million buy back of the Company's 2022 bonds and EUR200
million tap of notes due in 2025, resulting in extending the Group's average
debt maturity to five years and bringing its average cost of debt to 2.9%.
Next debt maturity is in October 2022.
* A voluntary scrip dividend alternative for each of Q2, Q3 and Q4 2020 dividend
distributions, with EUR9.9 million of cash conserved in relation to the Q2
dividend following a 38.9% participation by shareholders.
* Strong liquidity and financial flexibility with EUR95 million cash and EUR200
million unutilised credit facility as of today, coupled with low leverage of
36.1%. Fitch reaffirmed the Company's rating at BBB (stable) and Moody's
confirmed Baa3 rating, changing the outlook from under review for downgrade to
negative.
Key financial and Operational figures for the period
In EURm 6M 2020 6M 2019 CHANGE
%/ppt
Net rental income 71.4 92.4 (22.8)
("NRI")
EPRA Like-for-Like 52.2 60.9 (14.2)
NRI
EBITDA 61.6 81.5 (24.4)
Company adjusted
EPRA earnings per 9.8 15.4 (36.4)
share (EURCents)
Occupancy rate (%) 95.4% 97.0%[2] (1.6)
Operating margin 90.0% 95.8% (5.8)
(%)
Net equivalent 6.5% 6.4%2 0.1
yield
* Group NRI decreased by EUR21 million. Excluding the EUR12 million impact of
COVID-19 (relating mainly to the rent and service charge relief imposed by the
government in Poland for the lock down period) and a EUR10 million impact of
net disposals, NRI increased by EUR0.7 million.
* On a like-for-like basis, NRI decreased by 14.3%. Excluding the impact of
COVID-19, Like for like NRI increased by 1.0%.
* EBITDA and Company adjusted EPRA earnings per share decreased by 24% and 36%
respectively. Excluding the impact of COVID-19 and disposals they were stable
at EUR83 million and 15.4 EURcents.
* Operating margin decreased by 5.8ppt to 90%, affected by the government
imposed service charge relief for the lockdown period in Poland of 3.7ppt, as
well as tenant support and redevelopments.
* Collections for the first half of 2020 were 76%. In Q1 they were at 97% while
the Q2collections are 53%.
* The Company recognised a 3.3%[3] or EUR88 million devaluation of income
producing assets which is primarily due to yield expansion across the
portfolio from 6.4% as at 31.12.19 to 6.5% at 30.06.2020, the balance is the
temporary cash flow impact of COVID 19 tenant support. Warsaw and Prague
demonstrated more resilience with a 2.7% devaluation. The devaluation for
Russia was 7% reflecting the currency trends in the first half of the year in
addition to the above.
* The Group continued its portfolio rotation and repositioning strategy in the
first six months of 2020 with a total of EUR75 million transactions including
the sales of the Atrium Duben shopping centre in Slovakia in January and five
assets in Poland in July.
* The third quarterly dividend for 2020 will be paid (as a capital repayment) on
30 September 2020 to shareholders on the register as at 9 September 2020, with
an ex-dividend date of 8 September 2020. The election date for a scrip
dividend will start on 10 September 2020 and end on 22 September 2020.
* A circular setting out further details on the election being offered to
shareholders pursuant to the scrip dividend alternative including the election
instructions and information on the exchange ratio, will be posted to
shareholders before the start of the election period, and will be available on
the Company's website.
Liad Barzilai, Chief Executive Officer of Atrium Group, commented:
"The COVID-19 pandemic has had and continues to have an impact on our business.
With lockdown measures easing since early May and 87% of the portfolio now open
for business, we are continuing to see a recovery towards pre COVID levels. The
quick actions that we took, including proactively engaging with our tenants and
shaping our debt maturities, coupled with the quality of our portfolio and the
strength of our balance sheet have put us in a good position to tackle these
challenges. We also take confidence from the fact that the governments in our
key countries of operation responded quickly and decisively, leading to lower
infection and fatality rates and in turn, an earlier easing of restrictions.
"The crisis has accelerated many of the trends that were already impacting our
sector and have been the driving force behind our strategy and portfolio
repositioning over the past years. However, humans are inherently social
creatures and we remain firm in our belief that our portfolio of urban centres
serving their local communities' needs still has an important place in the
future for both retailer and consumer alike. We remain committed to our strategy
of diversifying into the residential for rent sector, in our key markets of
Poland and the Czech Republic, which continue to benefit from strong underlying
fundamentals despite the current global crisis. Finally, I would like to
reiterate that the health and safety of our employees, customers and consumers
remains our paramount priority in these difficult times."
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/Ellie Sweeney/ Andrew Davis: 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 EUR2.5 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 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.
[1] Excl. Russia which has opened later and where one centre remains closed
[2] As of 31 December 2019
[3] Excluding 5 assets classified as held for sale sold in July 2020
*25 of Atrium's 26 assets are now open and trading
Further inquiry note:
(MORE TO FOLLOW) Dow Jones Newswires
August 05, 2020 02:50 ET (06:50 GMT)
