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Atrium posts strong operational performance in 2019

Atrium European Real Estate Limited (“Atrium” or the “Group”) announced its results for the year ended 31 December 2019. Highlights include:

Group like-for-like net rental income (“NRI”) increased by 2.4 percent, with growth of 2.0 percent in Poland and 3.0 percent in the Czech Republic (excluding Russia and assets held for sale), reflecting a higher quality, more sustainable portfolio income profile

Strong occupancy rate of 97.0 percent at yearend reflecting the ongoing appeal to occupiers of the Group’s dominant urban centres

Progress continues in executing the Group’s strategy to focus the portfolio on prime shopping centres in capital cities in Poland and the Czech Republic:

– At 31 December 2019, the average asset size in the portfolio was 31,100 sqm¹ and average property value stood at €101 million, compared to 28,800 sqm and €86 million respectively at 31 December 2018, reflecting the ongoing successful portfolio rotation towards dominant urban assets

– Acquired King Cross Shopping Centre in Warsaw in June 2019 for a consideration of €43 million

– Sale of two shopping centres in Poland for €298 million in July 2019, at c.3 percent above book value

– Since the period end, in January 2020, completed the sale of Atrium Duben in Zilina, Slovakia for €37 million, in line with book value

– Transaction signed in December 2019 for the sale of a portfolio of five further secondary assets in Poland at around book value of €36 million. Expected to complete in the first half of 2020

– Progress in monetising the land bank with a disposal in January 2019 of €28 million land at fair value, this land represents 13% of the total land value

– The €400m redevelopment programme (€160 million spent up to 31.12.2019) , which is on schedule and aims to add up to 50,000 sqm to the portfolio in phases by the end of 2023

Following the strategic review announced by the Group on 10 December 2019 the Company entered into an agreement giving it the option, subject to the relevant approvals, to acquire the controlling stake in a future residential building with c. 900 apartments in the heart of Warsaw. Over the next five years it is envisaged that the Group will build a portfolio weighting of up to 40 percent in residential for rent assets focused on Warsaw and Prague.

Strong performance of the Polish portfolio in 2019

The market value of Atrium’s 15 income producing properties in Poland is €1.7 billionn (2018: 22 properties, €2.0 billion), now representing 65 percent of its total €2.6 billion income producing portfolio of 26 assets in CEE

7.1 percent increase in GRI from the Polish portfolio to €108 million (2018: €101 million) and 6.2 percent increase in NRI to €102 million (2018: €96 million)

EPRA like-for-like GRI and EPRA like-for-like NRI in Poland increased by 2.3 percent and 2.0 percent to €38.8 million (2018: €37.9 million) and €37.1 million (2018: €36.3 million) respectively (excluding assets classified as held for sale)

Strong increase in the EPRA Occupancy across the Polish assets to 97.6 percent (2018: 96.2 percent)

(1) Excluding assets classified as held for sale

Liad Barzilai, Chief Executive Officer of the Group, commented: “Today’s results once again reflect the ongoing tangible success of the asset rotation strategy we have been executing over the last few years, providing us with a portfolio of faster growing dominant assets focused in Warsaw and Prague, which continue to benefit from urbanisation and a strong macro backdrop. As we move into a new decade and continue to respond to the structural trends that are driving consumer habits, including shopping and living, we will be executing our evolved strategy. This strategy will build on our expertise, leverage the quality of our existing portfolio and de risk against potential volatility of our cash flow as we diversify into the residential for rent sector. This will see the shape of our portfolio evolve towards a platform of 5,000 high quality residential units for rent, mainly in Warsaw, which will complement the leading retail destinations that we now own as a result of our successful repositioning strategy.”

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