CAPE TOWN – JSE-listed EPP, Poland’s biggest retail landlord, is adopting a cautious approach about another outbreak of Covid-19 in the country.
Chief executive Tomasz Trzóso said yesterday that existing Covid-19 measures such as sanitising, rotational working from the office and the hiring of additional security to ensure masks were worn, would remain in place at its centres for now.
Trzóso said although the current infection levels were fractional compared with some European countries, the Polish government anticipated a rise as had been evidenced in the past few days.
He said management would begin new initiatives to continue bring the centres back to normal operating activity levels.
EPP’s net operating income fell to 52.7million (R1.05billion) from 64.2m in the six months to June 30, after landlords were not allowed to enforce rent payments during a seven week lockdown until May 3.
EPP’s total investment in properties and joint ventures were reduced to 2.4bn as valuations declined 3.9percent.
However, the balance sheet showed a strong capital and liquidity position, including cash on hand of 177m.
Capital and liquidity preservation measures remained in place.
This included retaining the second half 2019 dividend and drawing additional corporate facilities in the first half of 2020. The first half dividend was passed, while the group waited for more certainty to return to the market.
Loan-to-value increased marginally from 50 to 51.7percent, but was within covenant levels of 68 percent.
A deleveraging strategy would be amplified in 12 to 18 months. Assets – the group owns 26 retail centres and six office buildings – would be reviewed to identify assets for release into joint ventures, or sold outright.
Trzóso said they had already noticed investor interest in the market, but a measured approach to asset recycling would be adopted so more confidence could return and potential disposals could be concluded with suitable partners at the right price.
He said they had revised their 2020 full-year earnings per share guidance upwards from 4 to 5 euro cents per share to 4.75 to 5.25c, assuming no further significant changes occurred in the market.
For now, a capital raise was not being considered due to the generally weak stock market conditions, he said.
During the lockdown, income was sacrificed to support retailers, but most leases were extended in return, and greater long-term sustainability had been gained.
As at September footfall had returned to an average 85percent of pre-Covid levels.
In the first two months of the period pre-lockdown, EPP’s portfolio grew sales by 4.2percent, footfall up by 2.1percent and a 98percent collection rate.
However, during the lockdown, only 21percent of gross lettable area was operational.
Poland was expected to be one of the least impacted economies by Covid-19 in the next 18 months with more than 1.1percent gross domestic product growth forecast for 2020-2021.
Mobility statistics showed that a significant part of the economy was returning to usual activity. Occupancy was stable at 96percent and a longer weighted average lease termination of 4.7 years was concluded.
EPP shares rose 2.08percent on the JSE yesterday to close at R4.90.