Atrium confirms significant residential push to reshape portfolio

Atrium will face the future of retail by expanding into residential-for-rent, acquiring as many as 5,000 apartments in its core markets in the next few years, PropertyEU has learned.

As the CE-focused shopping centre specialist unveiled stable annual results, Atrium CEO Liad Barzilai said that residential was part of a strategic plan to diversify and strengthen its portfolio.

Atrium wants to acquire stand-alone build to rent (BtR) assets, examine how it can densify its existing portfolio with mixed-use elements, and explore partnerships with specialised developers, Barzilai explained.

BtR strategy
In the first instance, Atrium 'has signed an agreement that gives us an option to acquire a 900-unit apartment project in Warsaw on its delivery,' Barzilai said. 'The scheme is at a very advanced planning stage with a target completion of 2023.

'Meanwhile, we have also announced an acquisition target of 5,000 residential units over the next few years. That will comprise buying income-producing, probably stand-alone BtR assets; densifying by developing projects on and around our existing holdings; and creating opportunities to acquire BtR schemes from developers in our core markets,' he added.

The target residential stock is likely to be in Warsaw and Prague, with 'big potential particularly in Poland', he said. In terms of exploiting the potential of the firm's standing assets, Barzilai said: 'We want to go vertical, as it were, with our existing assets, assessing the possibility of adding different uses. That could be an office tower as well as BtR stock. We think we can add around 700 residential units to our current assets.'

Failed takeover
While 2019 was a dramatic year for Atrium, as a takeover bid from long-term shareholder Gazit Globe was rebuffed by other shareholders, the firm announced stable to positive results, including like-for-like rental income increasing by 2.4%, with growth of 2% in Poland and 3% in the Czech Republic.

Barzilai emphasised it was 'business as usual' for the firm. 'Gazit has been a major shareholder for the last 12 years, and, from our point of view, has been a supportive shareholder to management and will remain one,' he said. With regard to relations with the rebel shareholders who had blocked the deal, he added: 'We talk to our shareholders on an ongoing basis, regardless of the transaction, and will continue to do so.'

Positive results
Recent disposals mean that 85% of Atrium’s portfolio by value is now located in Poland and the Czech Republic, with 54% in the capitals of Warsaw and Prague. 'We have been pursuing a strategy that is quite clear. We have been selling non-core assets, in secondary and tertiary locations. The average asset size has increased fivefold as we focus on dominant, urban assets. This is a strategy we will be continuing,' he confirmed.

Atrium's results also underlined that the firm's €400 mln redevelopment programme was on track to add up to 50,000 m2 to the portfolio by the end of 2023.

Meanwhile, Barzilai said that the firm's stable asset values were providing a fillip to confidence moving forward.

'We are happy with the results - these very sold operational results display good leasing and good like-for-like growth. We are confident in our core geographies and in the improving Russian results. We're pleased with our asset rotation; we sold a lot of assets in line with our portfolio values. Our values have in fact remained flat, which goes hand in hand with the strong locations we are in.’

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