Deutsche EuroShop: Prolonged lockdown impacts earnings - reopenings give cause for optimism for the second half of the year

• Revenue: €104.9 million (-6.5 %)
• EBIT: €70.5 million (-10.2 %)
• Consolidated profit: €36.8 million / €0.60 per share
• EPRA earnings: €54.3 million / €0.88 per share
• FFO: €54.3 million / €0.88 per share

Hamburg, 12 August 2021 - Shopping center investor Deutsche EuroShop today presented its results for the first half of 2021.

People are returning to shopping centers

"Since the remaining store closures in Germany were lifted at the beginning of June, footfall has risen again significantly. By the end of July it had reached around 77 % of pre-coronavirus levels," said Wilhelm Wellner, CEO of Deutsche EuroShop. "Centers and stores are not and have never been coronavirus hotspots. We expect stores to remain open even if the pandemic situation worsens, and we are doing our part to stem the spread - not only with comprehensive hygiene concepts and testing centers, but also with vaccination campaigns in our shopping centers."

As footfall has improved, so has the revenue from tenants. In June 2021, it averaged 85 % of pre-crisis levels. The key operating figures thus show a clearly positive trend, although they still have significant ground to make up in some areas, as they did after the first lockdown in 2020 and as they do now just after the full store openings.

Wilhelm Wellner: "To mitigate the negative impact and after-effects of the lockdown phases on the bricks-and-mortar retail trade, it is therefore necessary to continue with the temporary support offered to many of our tenants in order to safeguard the properties' continued existence. For our main market of Germany, the recent significant improvement in government support programmes has also provided some relief for retailers. As it stands, our occupancy rate is 93.8 %, compared with 95.4 % at year-end 2020. One focus of our activities is to fill these vacancies resulting from the coronavirus with attractive concepts, and a number of specific approaches are already underway in this area."

10 % decline in earnings due to prologued closure phases

The negative impact of the pandemic is reflected in the key financials for the first half of 2021. Revenue and EBIT were significantly lower than in the first half of 2020, at €104.9 million (-6.5 %) and €70.5 million (-10.2 %) respectively, which had already been affected - albeit to a lesser extent - by the business closures during the first lockdown.

Earnings before taxes and valuation gains/losses (EBT before valuation) also fell by 10.2 % to €55.7 million. EPRA earnings and funds from operations (FFO) adjusted for measurement and special effects were both €54.3 million lower, down 9.2 % and 9.3 % on the previous year.

Liquidity further improved, financing for 2021 successfully concluded

The collection ratio has continued to improve as the reopenings have progressed, already reaching 94 % for the month of July. Group liquidity also improved further (€268.1 million), bolstered among other things by lower capital expenditure due to the closure periods.

"We were able to successfully conclude all pending refinancing of our loans for the current financial year at attractive conditions. A total of four loans with a combined volume of €191 million have been extended or replaced with our banking partners," explained Olaf Borkers, Member of the Executive Board of Deutsche EuroShop.

Return to issuing an FFO forecast

The end of the lockdown represents a major milestone on the road to the normalisation of economic life, although the bricks-and-mortar retail trade continues to face particular challenges, resulting in increased uncertainties in terms of business performance. Based on the current situation, Deutsche EuroShop expects funds from operations (FFO) of €1.70 to €1.90 per share for the 2021 financial year (2020: €2.00).

This assumes that the pandemic situation will be brought under lasting control without renewed store closures or significant restrictions on center operations, a continued uptick in private consumer spending over the course of the year and an associated further recovery in tenant revenues and the collection ratio. These forecasts are also based on the assumption that the government coronavirus support programmes promised in Germany will be granted to a significant proportion of affected tenants and paid out promptly.
 

Full quarterly statement
The full quarterly statement is available as a PDF document and in ePaper format. It can be downloaded from www.deutsche-euroshop.com/ir

Webcast of teleconference

Deutsche EuroShop will hold a conference call for analysts in English at 10 a.m. on 13 August 2021, which will be streamed live at www.deutsche-euroshop.com/ir

Deutsche EuroShop - The shopping center company

Deutsche EuroShop is the only public company in Germany to invest solely in shopping centers in prime locations. The SDAX-listed company currently has investments in 21 shopping centers in Germany, Austria, Poland, the Czech Republic and Hungary. The portfolio includes the Main-Taunus-Zentrum near Frankfurt, the Altmarkt-Galerie in Dresden and the Galeria Baltycka in Gdansk, among many others.