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.”