News

Echo posts double digit growth in distribution per share

Hadley Dean, Echo Polska
Hadley Dean, CEO of Echo Polska Properties.

Polish listed Echo Polska Properties have released their annual results for the year ended December 2017 with distributable earnings of €76.6 million translating into distributions of 10.87 eurocents per share, ahead of previously stated guidance. 

In line with the  strategy to become a leading retail landlord, the fund successfully concluded €334 million worth of acquisitions during the year and in December 2017, the company announced the €692 million acquisition of the M1 portfolio.

This transaction will be concluded in three tranches and will ensure that by 2020 EPP will own 27 shopping malls with almost 1 million square metres of GLA across Poland.

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 (LTV) reducing from 52.7% to 47.4% at year end. Total assets increased 29% to €1.95 billion.

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.

Progressing in its strategy of becoming a retail focused property company EPP made a number of acquisitions 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.” The acquisition of the M1 portfolio will add 12 properties to the portfolio by 2020 with the first tranche encompassing M1 Czeladź, M1 Kraków, M1 Łódź and M1 Zabrze were successfully completed in January 2018.

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. Proceeds from the office disposals were used to fund retail acquisitions such as the M1 acquisition.

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 centre drives willingness of the consumer to engage with retailer.” Leveraging the scale gained through its acquisitions EPP is well-placed to cut costs and better help retailers 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 centres.

The share closed trade yesterday at R17.17. EPP is a Dutch-based company dual-listed on the Luxembourg Stock Exchange.