Poland helps cushion EPP
• Country s economy is set to grow at 1.1% ’
JSE-listed EPP, the largest retail landlord in Poland, says its exposure to Eastern Europe s largest ’ economy has helped it weather the pandemic better than competing property groups. CEO Tomasz Trzoslo said shoppers are returning to EPP s malls and the ’ company is clawing back losses on rental discounts to tenants.
JSE-listed EPP, the largest retail landlord in Poland, says its exposure to Eastern Europe s largest ’ economy has helped it weather the pandemic better than competing property groups.
The distributable earnings per share of the group, which owns assets worth 2.6bn € (R51.7bn) including 25 malls, declined to 2.38c in the six € months to June, a 59% fall from 5.80c, in line with guidance. Cinema operators, restaurants and other non-essential retailers were unable to trade in this time during the hard lockdown.
Polish malls could not operate properly during the country s ’ lockdown, which lasted from March 14 to May 7. Polish landlords were forbidden to charge rent and only 21% by gross lettable area of EPP s malls were in ’ operation.
But CEO Tomasz Trzóslo said shoppers are returning to EPP s ’ malls and the company is clawing back losses on lockdown rental discounts to tenants.
Independent research shows that Poland s economy is set to ’ grow at 1.1% in 2020 while other European countries are in for GDP contractions, with the EUUK average expected to be a 0.3% contraction, Trzóslo said.
The country has been supported by EU donor funds as it continues to house a thriving business outsourcing sector for Western Europe.
In the first seven months of the year, Poland received 11.78bn in EU funds and paid € 3.41bn to the EU. Polish companies received about 70bn, 15% of its GDP, in € stimulus from the private and public sector in response to the pandemic.
DEFERRALS WERE OFFERED TO TENANTS WITH THE AIM OF EXTENDING LEASE PERIODS AND INCREASING LONGTERM RENTALS
Its unemployment rate is expected to fall from about 6% to 3.5% by the end of 2021.
Covid-19 cases have eased in Poland, a European countries with fewer cases than many others. Up to Monday, there were 18,524 active cases in the country compared with 27,380 in Germany, 415,405 in France and 50,323 in Italy. Poland s total
’ reported cases of Covid-19 so far in 2020 is about 89,962.
Since July collections have stood at more than 90% on discounted rentals, while average rental collections from March to June were at 79%.
In line with EPP s strategy, “’ discounts or deferrals were offered to tenants with the aim of extending lease periods and increasing long-term rentals. The company has not and will not entertain turnover-only based rentals,” EPP said.
Trzóslo said EPP, which is also listed in Luxembourg, will put a hold on new acquisitions for a year to 18 months and is unlikely to raise capital in 2021. The company aims to shorten the 20% discount to net asset value at which its share price is trading.
Its board elected not to distribute a dividend for the first half of the financial year to December and will assess the payment of a second-half dividend when it finalises its full-year results, which is expected in March 2021.
Net property income fell to 52.7m in the six months to € end-June. Distributable earnings per share fell to 2.38c. € Occupancy remained at 97.3% while footfall was at 69% of that in 2019 by end-June while it had improved to 85% up to September.
EPP s loan-to-value (LTV) ’ ratio increased from 50% to 51.7% over the period, but it remained well within covenant levels of 68%. EPP aims to decrease LTV to below 40% within the next 18 months, largely through asset sales.
The share price gained 2.08% to close at R4.90 for a market capitalisation of R4.4bn.