Atrium European Real Estate has posted a pre-tax profit of €80.3 mln for the first nine months of 2016 compared to a loss of €8.8 mln for the same period in 2015.
The Vienna-listed CEE retail landlord and developer indicated that the results show the company's core CEE markets are holding up but the weaker Russian market continues to act as a drag on performance, albeit at a slower pace.
The year-on-year pre-tax profit increase of €89.1 mln was primarily driven by a €9.3 mln revaluation compared to a €69.1 mln devaluation during the same period last year that mainly due to the Russian portfolio and a €11 mln decrease in finance expenses.
Earnings before interest, taxes, depreciation and amortisation (EBITDA), excluding revaluation and disposals, in the first nine months of 2016 came to €111.4 mln, down from €122 mln in the same period last year, mainly as result of lower income in Russia and a €6.9 mln increase in administrative expenses.
Group net rental income, excluding Russia and on a like-for-like basis, increased by 1.5% to €102.1 mln. But Russia is pressing on group income, which came to €146.4 mln in the first nine months of the year compared with €155 mln in the same period last year. EPRA like-for-like group rental income was €129.8 mln (9M 2015: €135.5 mln).
'The third quarter saw a continuation of the robust performance in our core markets of Poland, Czech Republic and Slovakia but the group-wide performance is still impacted by the situation in Russia,' said Atrium CEO Josip Kardun (pictured).
'We have also made further progress with the repositioning of our portfolio during the period and are pleased to announce today that we have approval to invest approximately €60 mln in two further redevelopment and extension projects in our core market of Poland. These will be undertaken at our Atrium Reduta centre in Warsaw and Atrium Biala centre in Bialystok, and further demonstrate our commitment to increasingly focus on upgrading our existing portfolio so that it can continue to deliver sustainable income growth over the long term.'
Kardun said he was cautiously optimistic as a result of the positive impact of portfolio asset management efforts. 'The business is in significantly better shape than it was 12 months ago, benefiting from a much strengthened balance sheet and an improving economic backdrop,' he said.
'While we cannot ignore still existing uncertainty in Russia and the impact it continues to have on the company's results as a whole, the successful optimisation of the group's portfolio and its significant weighting towards higher-quality income from our core countries has given the board sufficient confidence to provide shareholders with both the €52.7 mln special dividend paid in September, and maintain the dividend at €0.27 per share for 2017.'
Atrium's portfolio of 62 standing assets are valued at €2.6 bn, compared to 77 assets valued at €2.7 bn at end-2015. In the largest trade since then, Atrium completed the sale of 10 retail assets in the Czech Republic for €102.6 mln in February 2016, reflecting an 8% premium to fair value prior to the receipt of initial offers.
