During the period EPP successfully concluded EUR 262 million in acquisitions boosting the portfolio to €1.7 billion.
Net profit for the period totalled € 39.6 million with distributable income of € 36.6 million ahead of the € 35.5 million target.
EPP’s retail focused portfolio consisted of 13 retail and 9 office assets located throughout Poland and 2 retail development sites in Warsaw. The high quality modern assets offer attractive and secure yields ranging from 6 to 7% fully let. Vacancies for the period stood at 1.6% for the retail portfolio and 2.8% for offices.
CEO Hadley Dean attributes the solid results to positive Polish macroeconomic conditions which are helping fuel a boom in retail. “Poland has one of the lowest unemployment rates in Europe, annual GDP growth of 4% and stable inflation which have contributed to retail sales increasing 6% year-on-year in June.” With increased consumer spending power and an underserviced market there remains room for growth in Polish retail. “This is evidenced in our centres with demand for space from international retailers.” While the Polish retail sector is currently largely unaffected by e-commerce EPP is adapting to changing shopper trends. Shoppers are not only looking for shops but also an experience which includes food as well as entertainment. “EPP malls have introduced gaming areas and ‘relax rooms’ and we have noticed that food is the new fashion, and fitness is the new food. We are adapting accordingly.”
In July 2017 EPP further realised its aim of becoming the leading retail landlord in Poland with the EUR 55.4 million acquisition of Galeria Solna in Inowrocław, North West Poland. The 24 000m² centre is located in a regionally growing city with a large catchment area which aligns with EPP’s strategy of acquiring dominant regional centres. “This is another step in achieving our goal of doubling the portfolio by 2020,” says Dean.
Looking ahead Hadley Dean explains: “We continue to execute our investment strategy and both acquisitive and organic growth opportunities underpinned by our active asset management, which leverages our platform with retail tenants to achieve economies of scale, ensure we remain on track for solid growth.” Leveraging its portfolio reach is expected to be further enhanced by the development of the two Warsaw retail development sites. “In addition, driven by solid economic fundamentals Poland’s economic health is expected to continue being a key driver of ongoing retail growth.”
The share closed trade yesterday at R20.90. EPP is a Dutch-based company dual-listed on the Luxembourg Stock Exchange.