EPP to sell off all office assets

Also considering sale of minority interests in core retail portfolio to fund its developments

EPP, THE LISTED dominant retail property owner and developer in Poland, plans to sell all of its office assets by 2020 together with some non-core retail assets to fund its planned developments.

Hadley Dean, the chief executive of EPP, said on Friday that the firm might also consider selling minority interests in some of its core retail portfolio to fund its developments.

Dean added that from a liquidity perspective EPP had secured sufficient funding until the end of next year, but going to the equity markets now to raise funding could be quite punitive if they were raising equity at 9 percent and selling assets at 5.5 percent.

“What we would be looking to do is to sell some of our non-core assets and recirculate some of the cash into developments to give future growth.

“We need to increase our distribution per share,” he said.

Dean said its non-core retail assets were its smaller centres under 25 000m2 and it had identified two retail assets for outright sale.

He said EPP aimed to be out of the office segment by 2020. Dean said EPP had released €160 million (R2.81 billion) towards the end of last year with the sale of three offices in Poland – Tryton Business House, West Gate and A4 Business Park.

He said they were now in the process of selling Malton Office Park in Poznan, all three phases of the O3 Business Campus in Krakow and Symetris I and II.

Dean said these disposals were in the final stages of negotiation and would release a total of of €250m.

Apart from extensions to its existing portfolio, EPP is developing two retail centres in Warsaw, the 82 122m2 Galeria Mlociny that would have an estimated value on completion of €412m and was scheduled to open in April next year and the 110 000m2 Towarowa 22, which is still subject to rezoning and planning approval and would cost an estimated €420m to develop, including the land costs.

Towarowa 22 has the potential for an additional 45 000m2 of gross lettable area of mixed use for residential, offices and a hotel.

Dean said EPP currently owned just under 700 000m2 of prime retail in 19 dominant shopping centres in Poland with an average size of 38 000m2.

He said EPP would by 2020 have more than 1 million square metres of gross lettable area and own 28 shopping centres, with 40 percent of the population of Poland within a 30 minute drive from our shopping centres.

Dean said the total portfolio value had grown from €1.2bn in August 2016 to €2.1bn in August this year.

EPP on Friday reported a distribution growth a share of 12 percent to 5.82 eurocents for the six months to June from 5.19 eurocents in the prior period.

Dean said EPP was on track to achieve its distribution a share guidance for the full year of 11.6 eurocents to 11.8 eurocents.

After the close of its half-year, EPP acquired the 45 300m King Cross Marcelin shopping centre in Poznan for €91.1m.

Shares in EPP rose 2.11 percent on the JSE on Friday to close at R20.80.