CAPE TOWN - JSE-LISTED EPP, Poland’s biggest retail landlord, exceeded its guidance by reaching distributable earnings of €5.56 cents (R18) a share, the company said yesterday.
Its earlier guidance was between €4.75 and €5.25 cents for the 12 months to December 31, 2020. Most Reits have either revised guidance downwards, have not met their targets due to the impact of Covid-19, or have refused to provide guidance in the uncertain environment.
The higher distributable earnings, combined with a strong retail rebound in Poland and promising economic prospects, boded well for EPP’s future, chief exeuctive Tomasz Trzósło said in a statement yesterday.
However, the board opted not to distribute a dividend for the second half of its financial year to reinforce its capital structure given Covid-19 challenges.
Poland’s Covid-19 vaccination programme and eased lockdown limitations currently allows 96 percent of EPP’s gross lettable area to operate.
Portfolio occupancy was stable at 96 percent and continued to attract new store openings by leading brands including Primark, Pepco, Dealz, Sephora, Levi’s and Carrefour, he said.
EPP saw a strong retail rebound post each of the three lockdowns implemented by the Polish government.
Its shoppers also preferred a physical shopping experience to e-commerce. While online sales increased during lockdown periods, they declined sharply when restrictions were lifted.
Poland reported a relatively small drop in gross domestic product (GDP) of 2.8 percent in 2020 and was viewed as one of the most attractive investment markets in Europe, and was expected to achieve rapid GDP growth of 8 percent combined in the next two years.
Retail spending was driven by stable low unemployment rates and consistently rising wages.
Poland had administered 3.3 million Covid-19 vaccine doses to 5.7 percent of its population by February 27, 2021.
Polish retail faced two closure periods in 2020, lasting more than 10 weeks in total, during which landlords could not legally enforce rent payments.
Legislation allowed tenants not to pay rent during lockdowns in exchange for extending their leases by six months, plus the amount of time the tenant’s store was closed. This had a material €40 million impact on EPP’s net operating income.
The value of total investment properties reduced to €2.13bn due to valuations falling 8.4 percent on a like-forlike basis. On the back of the property devaluation, EPP’s net asset value per share decreased to €1.09.
EPP shares closed 1.85 percent lower at R10.06 on the JSE yesterday.