CEE shopping centre developer Atrium European Real Estate reported lower earnings and rental income in the first six months of 2015 as the downturn in Russia continued to take its toll.
CEE shopping centre developer Atrium European Real Estate reported lower earnings and rental income in the first six months of 2015 as the downturn in Russia continued to take its toll.
The first-half performance was impacted by rental discounts provided to tenants in the group’s Russian portfolio which were granted to protect occupancy levels, as the economic situation remained ‘challenging’, Atrium said on Friday.
Gross rental income fell to €103.6 mln from €106.9 mln in the year-earlier period, with net rental income down at €97.9 mln against €103.1 mln a year ago. Excluding Russia, the group’s NRI increased by 5.3%.
Atrium’s operating margin in its core markets of Poland, Czech Republic and Slovakia stood at 98% at end-June, while the group margin including Russia was lower at 94.5% .
Commenting on the results, Atrium’s CEO Josip Kardun said the focus during the first half of 2015 was on continued operational and financial improvements, while at the same time reweighting the asset base towards larger scale, dominant shopping centres in the company’s core markets.
‘The outlook for most of our countries, and our core markets, in particular, remains robust. In Russia, by contrast, the situation remains fundamentally challenging and it is still too early to predict any notable, positive momentum.
‘Overall, looking ahead, Atrium expects to benefit from the good prospects for consumer spending and the persistently healthy appetite shown by retailers and investors alike for its core markets, especially as the group’s asset management initiatives and portfolio rotation start to bear fruit, and the forthcoming expiries of long lease durations allow for stronger rental growth in the medium to long term.’
Atrium’s standing investments portfolio comprised 82 assets at end-June compared to 153 at end-December. However, it grew in value by 7.4% to €2.7 bn after accounting for the disposal of 72 non-core properties in the Czech Republic for €69 mln, a number of acquisitions in the Czech Republic and Poland, and the inclusion of the Atrium Felicity shopping centre development in Lublin, Poland, which opened in March 2014.