Atrium holds on despite devaluation of Russian portfolio

CEE listed shopping centre specialist Atrium European Real Estate saw its EPRA earnings per share decrease 8% to €0.33 in 2015, largely as a result of devaluations across its Russian portfolio.

Excluding the impact of Russia, EPRA earnings per share reported a 0.8% growth to €0.24 cents in 2015, reflecting the stability of the business across the rest of its Central and Eastern European portfolio.

Net rental income fell 3% to €197.9 mln in 2015, from €204 mln in 2014, primarily due to rental discounts provided in Russia. Here, the company's portfolio reported total writedowns of €143 mln in 2015, which largely offset the positive portfolio revaluation seen across the rest of the group’s CEE assets (€44.3 mln).

‘We had a difficult situation in Russia where the portfolio dropped around 10% of its value,’ CEO Josip Kardun told PropertyEU in an interview. ‘But we believe most of the value correction in Russia is behind us and the other CEE countries are performing well, with Poland and Czech Republic also reporting some value increases. Our cost of debt dropped to 3.7% over the year and we have no big debt maturities coming up, so we have continued to make the company financially sound.’

The group saw its profit after taxation swang to €4.8 mln in 2015 compared to a loss of €57.8 mln in 2014. EPRA net asset value per ordinary share came in at €5.64, down from €6.08 at year-end 2014. The company is proposing an annual dividend of €0.27 per share for 2016.

‘We continued to make significant progress with our strategy of repositioning our portfolio towards larger format dominant centres and higher quality income in our region’s strongest economies, with the improvements to our Czech portfolio being particularly noteworthy. These activities helped mitigate, but not fully compensate for, the negative impact of the ongoing situation in Russia on the Group’s wider performance,’ added Kardun.

Atrium reduced the number of assets in its portfolio by half over the past year, in line with its strategy to focus on larger malls. It currently owns a total of 77 assets valued at €2.7 bn. It hopes to drop the number of assets to 60 in 2016, while maintaining the same portfolio value, added Kardun.

‘We were very successful with our sales programme in 2015, and we are looking to continue to sell smaller assets this year, with €200 mln of properties planned for disposal, largely in Poland. At the same time, we are focusing on redevelopment and extensions to continue to improve the performance of our assets.’