JSE- and Luxembourg Stock Exchange-listed retail-focused Netherlands-based property company Echo Polska Properties (EPP) posted distributable earnings of €76.6-million for the year ended December 31, translating into distributions of €0.11 a share.
In line with the company’s strategy to become a leading retail landlord, EPP successfully concluded €334-million worth of acquisitions during the year and, in December, announced the €692-million acquisition of the M1 portfolio.
This transaction will be concluded in three tranches and will result in EPP owning 27 shopping malls with almost one-million square metres of gross lettable area across Poland by 2020.
EPP’s net asset value (NAV) – excluding deferred tax – for the year increased by 39% to €928-million, equating to NAV per share of €1.32, which is 16% higher than the previous year.
The capital structure of the business also improved with the loan to value reducing from 52.7% to 47.4% at the end of 2017. Total assets increased 29% to €1.95-billion.
EPP CEO Hadley Dean on Thursday said the pleasing results were driven by continued solid macroeconomic conditions in Poland and growth in consumer spending.
“Footfall in our centres is up 4.6%, compared with an increase of 3% in the prior year, with sales up an impressive 7%, compared with 3% in 2016.”
Retail vacancies declined to 1.41%, compared with 1.63% in the prior year.
Further progressing its strategy of becoming a retail focused property company EPP made a number of acquisitions in Poland during the year including the Blackstone portfolio of three shopping centres in Kłodzko, Zamość and Włocławek as well as Galeria Solna in Inowrocław.
Dean comments that “the acquired assets have performed exceptionally well during the year, reporting strong footfall and growth in tenant sales”.
EPP also progressed in its stated strategy of reducing its exposure to offices with the sale of three offices – A4 Business Park, West Gate and Tryton Business House – in December. Three further offices are in the process of being sold.
Proceeds from the office disposals were used to fund retail acquisitions such as the M1 acquisition.
Looking ahead, Dean remains upbeat about growth prospects in Poland while highlighting that the year ahead will be one of continued focus on integrating new assets into the portfolio.
“We will focus on bedding down our acquisitions and fully integrating them into our market leading asset management systems,” he said. In doing so, EPP will look to unlock the potential of food halls, click-and-collect and exploring extensions and refurbishments at existing centres.