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Beating guidance in distributions per share, solid operational results


EPP, the leading retail landlord in Poland, published its financial results for full-year of 2017. During the period, the distributable income was at €76.6 million, exceeding the forecasts. At the same time, the company kept building its strong presence in Poland’s key cities, while EPP-owned properties enjoyed growing footfall and increasing sales. The value of asset portfolio rose by 29%, to EUR1.95 billion.

Last year EPP closed €334 million-worth deals and announced an acquisition of M1 portfolio valued at €692 million. The acquisition of M1 portfolio means that by 2020 EPP’s portfolio will include 12 additional properties. The first tranche that covers M1 shopping centres in Czeladź, Cracow, Łódź and Zabrze, was completed in January 2018.

CEO Hadley Dean explains that the pleasing results are driven by continued solid macroeconomic conditions in Poland and growth in consumer spending. “Footfall in our centres is up 4.6% compared to an increase of 3% in the prior year with sales up an impressive 7% compared to 3% in 2016.” Retail vacancies declined to 1.41% compared to 1.63% in the prior year.

When looking at entire EPP’s portfolio, it is worth noting that Pasaż Grunwaldzki in Wrocław which recorded 8,8% footfall growth last year. It was followed by Galeria Amber, with 8.1% footfall growth and Galaxy (7.1%). In terms of sales growth, the biggest dynamics was recorded in Galeria Amber (12.5%), Galeria Echo (9.7%) and Pasaż Grunwaldzki (6.3%).

During the year 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 2017. Three further offices are in the process of being sold.

At the end of last year, EPP had over 1,500 units leased, out of which 1,428 related to retail, while 94 – office properties. In addition, EPP also grows as an employer – last year 72 new people joined the company.

2017 also saw a successful launch of extensions of Galaxy and Outlet Park located in Szczecin.
Commenting on trends in retail Dean explains that retailers are adapting to meet the challenges of e-commerce. – We have seen the growth of click & collect and the omni-channel environment whereby consumers engage both online and in-store. We are well placed to support our tenants in adapting to this as convenience of location and desirability of the shopping center drives willingness of the consumer to engage with retailer.

Dean stressed that EPP’s goal is not only to create typical shopping malls, but also to create destinations which will become the destinations of exciting family trips, meetings with friends, places where one can have an excellent meal, see a good movie, do shopping and simply have a good time.
Leveraging the scale gained through its acquisitions EPP is well placed to optimize costs and support retailers to adapt to the changing retail environment.

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 – In doing so EPP will look to unlock the potential of food halls, click and collect and exploring extensions and refurbishments at existing centers.