CEE shopping centre owner Atrium European Real Estate reported operational earnings rose 11.3% to €80 mln in the first six months of the year following a strong increase in rental income from the company’s Russian malls.
The 20.5% growth in net rental income (NRI) from the Russian activities marks a reversal of the downward trend in recent years and helped lift overall NRI on a like-for-like basis by 6.8% to €95.5 mln. Excluding Russia, like-for-like NRI grew 2.7%.
In its interim earnings report, Atrium said the general sentiment in Russia is slowly improving after the recession ended and that the Russian activities had benefitted from lower inflation and a stronger rouble during the period until June. However, concerns linger as the volatility of the rouble was again evident in June. Together with the development of oil prices and additional US sanctions, a high level of uncertainty dominates the outlook for the second half of the year, the company said.
In 2016, Atrium saw earnings per share slip 6% following a 15% decline in NRI from the company’s Russian operations. Despite efforts to beef up the company’s portfolio in Czech Republic and Slovakia, Russia remains the second-largest source of income with a 22% share of the portfolio in terms of GLA as at end-June 2017. Poland remains by far the biggest market with a share of 48%.
Improvements across all territories
The value of the group’s portfolio of 60 standing investments edged up slightly over the six-month period to €2.6 bn as at 30 June 2017.
Occupancy levels were down slightly at 96.2% from 96.6% at end-2016, while EPRA Net Asset Value (NAV) per share also slipped over the six-month period to €5.40 (€5.52). As at 30 June, net LTV was 30.3%.
Commenting on the results, the company’s CEO Liad Barzilai said they reflected improvements across all Atrium’s key operating metrics and that like-for-like NRI grew in all its territories. ‘We have already made solid progress in our implementation of a more efficient cost and management structure and are on our track to meet our target €10 mln of savings before the end of 2018.’
The company’s redevelopment programme focussed on improving and extending is existing assets is progressing well, he said. Atrium is adding around 53,000 m2 of GLA to its flagship Warsaw centres Targowek and Promenada, with the first phases at both already complete.
‘This solid operational progress, coupled with the redevelopment programme, give me confidence for the year ahead and beyond,’ Barzilai said.
Coinciding with the H1 earnings presentation, Atrium also announced that it had promoted Scott Dwyer, CEO of Atrium Poland, to the role of group COO, effective from 1 October 2017.
