Rachel Lavine, Atrium European Real Estate

Atrium European Real Estate is a leading owner-operator and developer of shopping centers in Central and Eastern Europe with a €2.1 billion portfolio of 155 primarily food-anchored retail properties and malls in strong locations. Here Chief Executive Officer Rachel Lavine tells Denisa Ivankova from Real Estate Publishers how Atrium achieved its excellent results in 2011 and outlines the company’s plans for the future.

What is Atrium involved in at the moment?

“Atrium European Real Estate is the only listed company focused 100% on retail in Central and Eastern Europe and Russia. We own 155 income-producing properties with a total value of €2.1 billion, we manage 1.2 million m² of gross lettable area and we own €580 million of development land as of June 30, 2012.

“We are focusing only on shopping centers with supermarkets or hypermarkets as an anchor. We believe this is the right anchor for any shopping mall, as it is the main attraction for consumer flow in Eastern Europe. It also makes our shopping centers quite resilient, taking into consideration that we are talking about daily necessities.”

How was the past year for your company and what are your plans for the year to come?

“2011 was a very good year for us; we bought three shopping centers in Warsaw, in Prague and one in Szczecin in Poland, we bought two plots and we sold part of our non-core land at or above book value.

“For 2012 our aim has essentially been to maintain the momentum of 2011, although we can all see that the transaction market is not that active. So instead we are investing a lot in our relationships with our tenants, we are doing a lot of activities that drive value within the shopping centers, and we are busy with small extensions to shopping centers that have been successful.

"The company took the decision to invest €200 million over the next three or four years mainly in redevelopment and in a number of selected development projects. By redevelopment I mean extensions, in which the development risk is quite remote, because there is a supermarket already on site, the shopping center is working and the tenants are there."

“On the capital and debt side, we continue to improve our capital and debt structure, for example by buying in our more expensive and short-term debt; we are putting our efforts to improving the rating agencies’ rating criteria, because our main focus is to receive investment-grade ratings. We also have to increase the leverage on our balance sheet because it is quite low with a net LTV of 12%.

"I think that 30% is a better but still conservative target. Of course we would like to buy A-properties in what we call A-countries, namely Poland, Czech Republic and Slovakia. By A-properties I mean big shopping centers with the right anchor tenants and tenant mix, in central locations and in big cities. Unfortunately today there is little transaction activity in the market.”

Do you think it will go up again? What do you predict for the region you are active in?

“It’s hard to predict what is going on, although Eastern Europe is in a better shape than Western Europe right now, as we can also see from the IMF forecast. The forecast that was published last July for the Eurozone was -0.3% for 2012 and +0.7% for 2013, while for CEE it was +1.9% for 2012 and +2.8% for 2013. The difference is pretty high.

“The situation in Eastern Europe should be better, but naturally there is quite a big dependence on Western Europe; for example, the financial institutions that are active in Eastern Europe are mainly Western. The entire situation is not allowing a lot of investment activity, so what we are trying to do is to make the best out of our shopping centers, as we always say that retail is detail. We try to develop really strong relationships with our tenants to make sure they are in a good shape as well, and we are constantly trying to extend the reach of these relationships further. In our region, Russia and Poland are considered two of the most desirable places for retail to expand.

What can you tell us about your presence in Russia?

“As you can see from our latest figures, we presented huge growth in Russia in 2011. We have seven income-producing properties; two in Moscow, one in St Petersburg and the rest in large regional cities. We are very lucky because we have managed to attract many international brands, so we are now talking about international shopping centers.

"The Russian economy is very stable at the moment and growing, but most importantly our strong performance is because we took advantage of the recession in 2009 and signed new agreements with tenants which we are benefiting from today. I hope the market will recover, so we will be able to be as active as we were in 2011, which was a great year for us. We are still growing organically at a good pace, basing our growth on the acquisitions we made in 2011.

“For the time being, our mandate is CEE and Russia. Within the CEE there is a big difference between the main countries, which are Poland, Czech Republic and Slovakia and the rest of Eastern Europe, which is let’s say Romania, Bulgaria, Hungary, where the situation is quite tough. Of course we would like to grow in the A-rated countries. In Russia we are not in the market for buying new properties, but we are definitely extending and restructuring our shopping centers and trying to attract more tenants to them.”

Related Features