Polish mall Covid footfall fear
● The new CEO of Poland’s largest shopping centre owner, EPP, which has listings in Luxembourg and Johannesburg, says his biggest concern in the next three months is the potential effect a second wave of Covid-19 infections could have on footfall to the group’s malls.
Tomasz Trzóslo, who took over as CEO from Hadley Dean earlier this year, said the group had recovered well, with footfall up dramatically compared with earlier this year and that he wants to keep this momentum.
While the Polish government has indicated it does not intend implementing another lockdown in its efforts to reduce infection rates — which are on the rise in that country and the rest of Europe — Trzóslo said the fear of infection could keep people away from malls and affect foot traffic.
“We have been on a fantastic path of recovery since May. We started with footfalls that were below 50% of what they normally were,” he said.
“Now, just over a week into October and footfalls are above 90% on a like-forlike basis.”
Trzóslo said that to ensure foot traffic continues to improve, the company is working hard to make customers feel safe, making sure its strict hygiene protocols are observed in its 25 centres in Poland.
“We are really paying a lot of attention to sanitary measures in the shopping centres. The staff and security are obliged to pay attention to anyone trying to enter who doesn’t want to wear masks.
“We provide a lot of cleaning and sanitary measures in the shopping centres because we do want people to feel safe in the shopping centres,” he said.
“We believe that we are having decent success in that, so hopefully even if the infection rates in the country grow, people will still feel safe in the shopping centres and continue to visit shopping centres.”
Trzóslo said that, with winter coming, everyone in Poland and elsewhere in Europe expects a second wave of Covid-19 infections.
“In the last two weeks, the infection rates have doubled in Poland and maybe a bit more. It still has one of the lowest levels in Europe. The trend, though, is similar to the other countries in Western Europe. We do estimate that the infection rates will continue to grow.”
But he said he believes the risk of a second lockdown in Poland is “minimal”. “Maybe it’s not zero, because you never know what the governments may or may not do, but the Polish government has consistently been repeating over the past couple of weeks that they do expect the rates [of infection] to increase materially — but they are determined not to do the lockdown.”
Apart from that concern, Trzóslo said EPP, which released half-year results at the end of September, is “managing the portfolio well” and is benefiting from being based in a country with “good fundamentals and significant growth prospects”. Poland has one of the fastest-growing economies in Europe.
He also said the group is committed to reducing its loan-to-value (LTV) ratio from the current 51.7% in the next 18 months. An LTV ratio measures as a percentage the value of the loans a property portfolio has against its underlying value.
Evan Robins, a fund manager at Old Mutual Investment Group, said Poland has done very well in terms of managing Covid-19 so far, but there is always the risk of rising infections — as is the case in the rest of Europe — bringing more pressure to bear on landlords there.
He said another worry for the market is that EPP’s “gearing is high” and that the group needs to reduce it.