by Property Forum | Report

Atrium European Real Estate published an update on trading for the three months ended 31 March 2020 and an update on trading in light of the COVID-19 pandemic. A progressive reopening has been launched from 4 May in Poland and is planned from 11 May in the Czech Republic and 3 June Slovakia, although it is too early to say when the company’s assets will return to full operation.


Q1 2020 results

  • EBITDA and company adjusted EPRA earnings per share decreased by 25% and 39% respectively due to the impact of COVID-19 and the phasing of asset rotation. Underlying EBITDA and Company adjusted EPRA earnings per share were stable at €41 million and €0.075.
  • Atrium closed Q1 2020 with an occupancy rate of 96.4%.
  • The company maintains strong liquidity and financial flexibility with €330 million cash as of today and low leverage of 34.5%

Update on trading since COVID-19

Since mid-March, government-imposed trading restrictions in the company’s areas of operations were introduced at all shopping centres with only grocery stores/supermarkets, pharmacies/drugstores and other necessary services allowed to operate. These exempt stores comprise 21% of GLA and 16% of base rental income

Poland

  • The Government imposed rental and service charge relief as an option for tenants during the period of closure, subject to a mandatory lease extension of six months plus the length of time the unit was under enforced closure
  • On 4 May, restrictions were eased and all shopping malls were able to reopen
  • The restrictions have been lifted on the majority of the tenants although a number of services such as cinemas, gyms, entertainment and F&B are still restricted. These restrictions are expected to be eased further in late May
  • 75% of GLA is open in Poland and this is expected to grow as tenants ramp-up operations

The Czech Republic and Slovakia

  • Rents for the closed period can be deferred until the end of 2020
  • Shopping centres are expected to open in the Czech Republic on 11 May and in Slovakia on 3 June

Atrium’s action plan

  • Operations: significant reduction in non-essential capital expenditure of approx. €15 million to €11 million for 2020 and a €3 million reduction in operational costs
  • Redevelopment pipeline: €50 million of planned investment in redevelopments for 2020 postponed to 2022/2023
  • €2 million reduction in 2020 of administrative costs
  • The Company is committed to supporting its tenants on a case-by-case basis with an emphasis on its’ smaller tenants

Liad Barzilai, Chief Executive Officer of Atrium Group, commented: “COVID-19 has changed the global economic outlook for at least this year and this will inevitably impact our business. There is no doubt that the short-term implications of these restrictions will bring commercial and financial challenges which we will need to navigate over the remainder of the year.”