COMPANY PRESENTATION NOVEMBER 2019
CONTENT Results highlights 3 Company overview, CE as an opportunity 9 Changing retail environment 15 Value creation - redevelopment pipeline 22 Summary 28 2
RESULTS HIGHLIGHTS 9M 2019 3
A CE PORTFOLIO FOCUSED ON QUALITY URBAN ASSETS IN WARSAW AND PRAGUE €2.7bn €1.7bn €0.5bn POLAND AND CZECH 85% Poland Czech OF THE PORTFOLIO €1bn €0.4bn standing investment WARSAW AND PRAGUE 53% 5 assets Warsaw 2 assets Prague portfolio THE GROWTH DRIVER 850,000 >95% sqm GLA Occupancy €133m 95% Operating margin 9 month NRI 4
CONSERVATIVE BALANCE SHEET WITH STRONG BBB €5.06 €300m LIQUIDITY AND INVESTMENT Fitch BBB- GRADE RATING unutilized RCF EPRA NAV Moody's and S&P 33.5% 73% Net LTV Unencumbered assets c.3% €300m unutilized RCF Cost of debt Moody’s and S&P 5
ASSET ROTATION + REDEVELOPMENTS DIFFERENTIATION IN CHANGING RETAIL ENVIRONMENT Net rental income broadly fmat with +€2M Lease expiry excl. Russia (30/09/2019) (% of ARI) (in million €) 135.0 133.4 41.5% Excl RU RU + € 2.0m 104.7 106.7 18.1% 14.7% 12.4% 9.7% - € 3.6m 3.6% 30.3 26.7 2019 2020 2021 2022 2023 >2023 9M 2018 9M 2019 5.4 YR WALT LFL NRI +1.6% in Poland and Czech +1.1% +2.7% -3% 30/09/2019 Poland Czech Russia NRI broadly fmat as pick up from acquisitions and redevelopments offsets disposals 60% Renewals 2023 & beyond Repositioning plan continues in Poland and completed in Czech Russia was mainly affected by 2 large tenants exiting the market and the subsequent retenanting required 6
COMPANY OPERATIONAL INDICATORS 9M 2019 9M 2019 9M 2018 Change (in €m) (in €m) (%/ppt) Net rental income excl. Russia 106.7 104.7 1.9% EPRA Like-for-Like NRI excl. Russia 45.0 44.3 1.6% Net rental income 133.4 135.0 (1.2%) EPRA Like-for-Like NRI 61.4 61.2 0.3% EBITDA 1 116.8 118.3 (1.3%) Company adj. EPRA earnings per share (in € cents) 21.3 22.4 (4.7%) Net equivalent yield (in %) 6.5 6.8 (0.3%) Occupancy rate (in %) 95.9 96.9 (1.0%) Operating margin (in %) 94.6 97.4 (2.8%) 7 ¹ Adjusted for the transaction costs in relation with the recommended cash acquisition by Gazit Globe Ltd., €5m
SIGNIFICANT LIQUIDITY TO SUPPORT GROWTH, €200M CASH AS AT 30/9/2019, €300M RCF UNUTILIZED Debt maturities LTV 4.6 years (net) (in million €) average maturity Bonds Bank Loans 460 294 37.9% 33.5% 163 133 30.1% 114 28.7% 2020 2022 2025 2026 2027 31/12/2016 31/12/2017 31/12/2018 30/09/2019 Borrowings Financial Performance Indicators 73% (as at 30/09/2019) unencumbered Bonds €887m standing investments Cost of Debt EPRA NAV per share Loan €300m € 1.2bn €5.06 C. 3% Total Debt €5.03 31/12/2018 8
COMPANY OVERVIEW, CE AS AN OPPORTUNITY 9
CE AS AN OPPORTUNITY Key economic indicators (2019F) CE fundamentals outperform western Europe, retail spent growth is more Poland and Czech - Strong economies, favourable labour market that fuel consumption than double Over the past 20 years Polish GDP has Poland Czech Western Europe US grown > 350% Poland was the fjrst country in the region to be classifjed as ‘developed market’ by FTSE Russell CEE region is the largest benefjciary of EU funds, €330bn were invested in the region GDP growth 3.8% 2.9% 1.3% 2.3% from 1996 to 2015 Retail spend growth 4.7% 4.5% 2.0% 3.8% Unemployment 3.6% 3.1% 4.9% 3.8% Wage growth 4.2% 4.5% 1.9% 5.2% Source: IMF, Trading Economics 10
STRATEGY IN ACTION - A PORTFOLIO FOCUSED ON QUALITY 30.09 Portfolio Market Number Of Number Average Asset Average 2019 1 value Assets Of Countries Size In GLA Asset Value € 2.7 31 4 27,400 € 85 1 Excl. Atrium Duben (disposal signed in July 2019) sqm bn m € 2.6 153 7 8,900 € 17 31.12 2014 bn sqm m €0.5bn €0.7bn €40m prime assets secondary of land plots assets sold purchased monetised 11
STRATEGIC FOCUS AND FUTURE GROWTH: CE SIGNIFICANTLY ABOVE EUROPEAN AVERAGE Portfolio Repositioning - Strong Operational Excellence Strong Financial Profjle And Liquidity Macro Environment and Urban To Support Growth Demographic Growth 30 assets managed by our internal professional team 1 33.5% net LTV , 4.6 years average maturity, 3% cost of debt High quality assets in strong urban locations Strong, diversifjed range of retail and leisure operators €300m unutilzed revolving credit facility Focus on Poland and Czech – region’s strongest economies that are appealing to consumers 73% unencumbered standing investments Scaling up in Warsaw and Prague – over 50% of the portfolio Forging strong long term relationships with our tenants, WALT 5.4 YR Strengthening the portfolio through extensions and portfolio rotation, evaluating diversifjcations Strong occupancy and operating margin of 95.9% and 94.6%, respectively increasing experience and offer, adding 60,000 sqm in Warsaw by 2023 Deep expertise in CE retail market , 370 employees, pro active hands-on asset management CE- strong opportunity for mixed used 1 Arkady Pankrac is managed by an external manager 12
38% OF THE PORTFOLIO IS LOCATED IN WARSAW Atrium Targowek 179,000 5 prime sqm GLA assets € 1bn value in distinct catchment areas King Cross 95% Creating occupancy great places in a growing capital city Wars Sawa Junior Over €300m redevelopment programme +60,000 sqm GLA Atrium Reduta WARSAW THE HEART Warsaw Poland OF POLAND ¹ Nr of inhabitants 1.8m 38m Atrium Promenada Average monthly salary €1,585 €1,209 Unemployment 1.5% 3.6% 13 ¹ Central Statistical Offjce of Poland, GfK
16% OF THE PORTFOLIO IS LOCATED IN PRAGUE 70,000 sqm 2 prime assets €0.4bn value in distinct catchment areas Atrium Flora Providing Consistently high great occupancy levels of over 95% shopping destinations in Prague Arkady Pankrac Arkady Pankrac under refurbishment 2019-2020 PRAGUE THE HEART OF Prague Czech THE CZECH REPUBLIC ¹ Nr of inhabitants 1.3m 10.6m Average monthly salary €1,553 €1,342 Unemployment 2.2% 3.1% 14 ¹ Czech and Prague Statistics Offjces
CHANGING RETAIL ENVIRONMENT 15
CHANGING RETAIL ENVIRONMENT E-commerce Less supply coming Shoppers expectation- Digitalisation Retailers changing penetration to CE market shop, socialise, enjoy, shop formats experience 16% penetration in Czech with Limited further competition Atrium engaged in Shopping Centres advantage- Exit non-core markets (Media no impact on footfall in our high with pressure on owners for entertainment and community human connection Markt, Castorama in Russia) quality centres constant improvement involvement programmes In parallel we are introducing Retailers rationalize their locations We bring e-commerce tenants Atrium focused redevelopment Opened Fifth Dimension innovation to retail- signage, and adopt a “fewer, larger store” (like e-obuwie) to brick and programme of €0.4bn in local community centre in interactive tools, omni channel strategy mortar store Warsaw and Prague Promenada to be rolled out to retailing other centres Creates opportunities for bringing Footfall to be converted to Dominant assets in strong new formats and offers revenue overtime urban location remain relevant Response to constant pressure (Uniqlo in Atrium Kazan, Russia) for retail to change and to changing customer needs Around 350,000 sqm of the Add food, beverage, new supply is expected in 2019 entertainment, local brands in Poland ¹ 7 new/upgraded food courts from 2016, one new cinema 16 ¹ Cushman & Wakefjeld report (April 2019)
DOMINANT ASSETS ARE MORE RESILIENT TO E-COMMERCE PENETRATION E-commerce penetration Poland On-line sales are rising but the increase is different across countries – Czec Rep 7.7% penetration expected in Poland UK in 2019 forecast 17.8% 16.8% 16.3% 15.7% 14.8% 14.5% Repositioning plan completed in 13.3% 13.3% 12.1% 11.2% the Czech Republic, 80% of the Czech 8.8% portfolio is now in Prague, 7.7% 7.2% 6.9% LFL NRI increased from 0.8% in 2015 6.2% 5.4% 4.6% to 2.7% in 9M 2019 3.9% 2014 2015 2016 2017 2018F 2019F Sources: Trading Economics CE Western Europe US Supply of shopping centers per capital within CE is signifjcantly lower with strong opportunities for growth Shopping Centre space (sqm millions) 15.9 109.7 674.2 Population (millions) 64.3 397.5 327.2 Shopping Centre per 1,000 capita per sqm 248 276 2,060 17 17 Source: Trading Economics, ICSC, Cushman & Wakefjeld European Shopping Centers 2019
POWERFUL SYNERGY BETWEEN PHYSICAL STORES AND DIGITAL CHANNELS + = Click Brick Powerful Synergy Stores drive online sales E-commerce penetration is expected to be 20% in 2022, but varies from country Opening a new physical store => to country + 37% in overall web traffjc High cost of building a brand and Closing stores causes a drop in the share acquiring new customers of web traffjc Online sales up Physical stores are but profjtability essential to the High purchase returns - Integration of the two channels drive is low success of retailers 20% e-commerce, 8% bricks and mortar better margins to retail High cost of delivery Brick and mortar provide customer experience = touch and feel Low margins Physical stores boost brand awareness 18 Source: ICSC, the halo effect report
Recommend
More recommend
