Positioned for growth

The EUR 169.5 mln acquisition of the Promenada shopping centre in Warsaw in December has put Atrium European Real Estate right back into the spotlight. Although the company is somewhat reticent when it comes to sharing the details of its strategy, it is still clear that in Poland at least Atrium has major expansion plans. The transaction marked the end of a busy year for the Jersey-based closed-end investment company, which armed with a new name (it was founded in 1997 as 'Central European Land Limited' before being renamed Meinl European Land Limited' in 2002) and under a new management, has been trying to improve its operational efficiency as well as its financial performance.
"Our goal is to become one of the largest commercial real estate companies in the CEE region. As the market improves we are now focusing on acquisitions of shopping centres. We would like to be present in all of Poland's major cities, where we would like to buy big retail projects," explains Katarzyna Cyz, Atrium's CEO in Poland. Atrium's January 2011 monthly statement revealed that the company's portfolio market value had reached over EUR 2.2 bln (including projects and land worth EUR 688 mln), with properties in the Czech Republic, Hungary, Latvia, Poland, Romania, Russia, Slovakia and Turkey. At the end of Q3 2010, Atrium's Polish portfolio accounted for 40.9 pct of the firm's market value, followed by Russia with an 18.1 pct share. The firm's Q3 2010 financial results, the last available before going to press, showed a profit before tax of EUR 120.3 mln, whereas in 2009 the company posted a loss of EUR 374.5 mln. Weighted average occupancy stood at 94.7 pct.
Following the Promenada acquisition, Atrium purchased a 22,500 sqm plot next to the shopping centre in another EUR 10.5 mln transaction. The company, which negotiated the purchase of the plot simultaneously with those for Promenada's acquisition, is now planning a further extension of the 53,840 sqm shopping centre on the new site. "We think 20,000 sqm of retail space could be easily absorbed. There is also considerable tenant interest. As a result we are planning to expand the upscale brands," says Katarzyna Cyz. The firm is also expanding outside Warsaw. In November 2010 the first phase of the Galeria Mosty mall in Płock was completed (9,900 sqm), bringing Atrium's total number of operating shopping centres in Poland up to 18. The word on the market grapevine is that in 2013 Felicity, a shopping centre in Lublin, which was initially scheduled for completion in late 2008, will finally be opened. In the wake of the credit crunch the company was forced to rethink this somewhat over-the-top scheme, cutting the number of stores in half to 150. The new Felicity is to be a 75,000 sqm shopping centre, a hypermarket, and an 11,200 sqm DYI store.
Trimming the fat
Meanwhile, Atrium is continuing its efforts to rationalise its development pipeline and improve its portfolio. In January two sales were announced: 422 flats in Ufa, Russia, to the local municipality for app. EUR 15 mln; and in Turkey the firm signed an agreement to sell a plot in the city of Samsun on the Black Sea coast for EUR 18.3 mln. At the end of 2010, Multi Corporation agreed a deal with Atrium to sell Multi's remaining 50 pct stake in the 54,000 sqm Forum Koszalin shopping centre in northern Poland, which was opened in 2008. Additionally, Multi is expanding the Turkey Retail Fund by acquiring Forum Trabzon in Turkey from Atrium. These transactions are part of a Framework Settlement Agreement with Multi, which covers five projects in Turkey, Poland and Bulgaria. Further on, Multi is also selling to Atrium its minority holdings in undeveloped land in Sofia (the planned site of the Forum Sofia shopping centre), the TEM development in Istanbul and the Balcova Gayrimenkul project in Izmir in Turkey. All of these projects were put on hold after the outbreak of the financial crisis at the end of 2008.
Mladen Petrov