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 percent and 39 percent 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 percent.
The company maintains strong liquidity and financial flexibility with €330 million cash as of today and low leverage of 34.5 percent.
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 percent of GLA and 16 percent of base rental income.
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 percent 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.”