EPP, Poland’s biggest retail landlord reports that there is a growing demand for retail space, especially from fashion retailers.
“Although demand comes from various retailers, fashion is leading. Other retailers include accessories, electronics, as well as health and beauty,” says Tomasz Trzósło, CEO of EPP.
He points that the pandemic has had a huge impact on men’s fashion, partly related to remote working. However, with people returning to the office, this has created demand.
In its first six months of 2021, EPP’s distributable earnings and distributable earnings per share increased by 54%, to €33.2 million and 3.66-euro cents, respectively.
EPP benefits from operating in one of the most resilient economies in Europe. The local market is rapidly returning to pre-pandemic economic growth levels, with forecasted GDP growth of 4.9% in 2021 and 5.6% in 2022.
Low unemployment and increasing wages are further stimulating consumer spending, thereby driving Poland’s outperformance of average EU retail sales growth, according to the company.
The company’s net loan-to-value (LTV) ratio of 55.8% is well within the debt covenant levels set by credit providers, of 67%. “Given the significant operational improvements and our established track record, we believe that we can deliver our initiatives to reduce LTV in the next 6 to 12 months,” says Trzósło.
Since reopening after Poland’s fourth lockdown ended at the beginning of May, EPP shopping centres’ good operational performance resulted in net property income of €59.2 million for the half-year – 12% higher than for the same period in 2020.
EPP’s retail portfolio
EPP’s retail portfolio comprises 26 properties, located in key areas in Polish cities with the highest consumer demand and growth potential.
The company signed 204 leases for nearly 70,000m2 of space during the pandemic, while its retail occupancy remained stable at 95.4%. The average debt collection ratio was 93% year-to-date in June 2021.
According to Trzósło, top performing retail tenants included fashion and accessories, household goods and appliances, health and beauty, electronics and speciality goods.
Trzósło says they’ve seen a booming residential sector in Poland with a number of homeowners renovating, thus household goods and appliances performed well in July 2021.
“Once restrictions were lifted, customers started returning swiftly to our shopping centres, with brick-and-mortar remaining the most attractive purchasing channel for Poles by far,” says Trzósło.
In August, shopper numbers in 2021 reached 84% of 2019 levels. Additionally, the figures indicate that shopping nowadays is more purposeful, and customers are spending more each time they go to the shops.
EPP welcomed new retail brands to their malls, including Apple reseller iSpot and Xiaomi Store, health and beauty stores and a number of fashion and accessories retailers.
Edited by Gudrun Kaiser