WOOD Flash – Atrium: 1Q21 – gradual reopening of retail across CEE, new hybrid bond boosts equity

With non-essential shops across the CE3 closed for much of the quarter, Atrium’s 1Q21 did not bring any major revelations. However, trading is restarting currently across CEE (non-essential stores in Slovakia reopened on 19 April; on 4 May (today) in Poland; and reopening is scheduled for 10 May in the Czech Republic), so we believe the coming weeks should bring better visibility on the level of footfall and turnovers. By far, the most important development since the start of the year is the latest round of financing, which was concluded last week, during which Atrium raised EUR 350m of hybrid perpetual bonds. The proceeds will be treated as equity in the balance sheet. This move brings the LTV down to 27% (from 39% as of the year-end), and offers Atrium significant room for acquisitions, before it gets near to its internal LTV target of 40% again. On our estimates, if Atrium exits its non-core assets (Russia, Slovakia, selected properties in Poland and the landplot in Istanbul), Atrium could buy up to EUR 1.0bn of assets before hitting the LTV target. If invested into residential, this could bring Atrium very near to the envisaged 40:60 split between resi and retail, which it is targeting by 2025E. We believe the residential for rent (resi4rent) segment is attractive and, given the limited presence of institutional residential landlords in CEE so far, Atrium could secure an early-mover advantage.