WOOD Flash – Atrium: FY17 – another special dividend of EUR 0.14/share (ex-div tomorrow), FY17 FFO in line

Atrium published its FY17 results this morning (21 March), reaching FFO I of EUR 116m for 2017, on our reconciliation, very close to our full-year estimate, while surprising us with the announcement of yet another special dividend, of EUR 0.14/share (the stock goes ex-div tomorrow). Overall, we perceive the results as in line. We see Atrium as fairly valued at the current levels. We believe that the FFO expansion, driven by the continued like-for-like growth of rental income (driven by the benign macro) and savings on the overhead costs, could be offset by the introduction of real estate taxes in Poland and rental income lost due to disposals. Atrium continues to trade at an appealing FFO and dividend yield (of 7.5 and 10%, respectively). However, following the longer-term derating of its European retail real estate peers (EPRA Retailers have underperformed EPRA Europe by 34% over the past 3Y), the discount at which Atrium trades to its peers is not as high as it used to be (on the Bloomberg consensus, most continental retailers trade at around a 7-8% 2018E FFO yield).
Combined with Atrium's defensive characteristics, we believe that investors' preference may remain for those companies offering higher growth prospects, in the near term. That said, we remain happy HOLDers of Atrium, as we continue to like the yield Atrium offers, and believe that, if a correction materialises, Atrium may outperform its CEE RE peers, exactly because of the defensive profile and the portfolio repositioning, both of which may be among the factors that are holding the stock back currently, in our view.