Message from the CEO

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OdisseasAthanassiou

Dear Shareholders,

Year 2017 was the 4th consecutive year of historic record growth in our operating performance as we increased total EBITDA by 22.5% to €41.4 mil., reaffirming LAMDA Development’s leadership in the retail real estate sector. This spectacular growth is primarily attributed to the acquisition from HSBC of the remaining 50% share capital of Lamda Olympia Village S.A., the company owner of The Mall Athens, in July 2017 at an amount of €85mil. Without the said acquisition, growth would had been 3,2% on a like for like basis.

In April 2017 we established a new subsidiary namely Lamda Malls S.A., in to which we contributed our 100% subsidiaries Lamda Domi S.A. and Pylea S.A., the owner companies of shopping malls Golden Hall and Mediterranean Cosmos respectively. At the same time, we proceeded with a strategic partnership agreement with Värde Partners, which will further enhance our position.

Performance in 2017

The average occupancy of our shopping centers approaches 100% with commercial interest for retail spaces remaining vibrant. It must be noted that the overall performance to date (2018) is further improving, as in q1 2018 customer visits and shopkeepers’ turnover show an impressive increase of 6.7% and 7.8% respectively.
Net Consolidated Results depicts losses of €48.3 mil. versus €3.2 mil. losses in 2016. Despite the €11.7mil. value gains from fair value adjustments of our shopping malls, the losses were not offset and were mainly attributed to, the land plot sale in Serbia, as well as, other similar land plot sales - in the context of our announced strategy to divest from such properties abroad -, a an assessment by the Company’s management in relation to the fair value loss from an ownership reversal, which is very likely to realize, of an office building previously owned and sold by our subsidiary Lamda Olympia Village SA., as well as, to the increased deferred taxes due to revaluations.
As a result, total NAV reached €395.1 mil. (€5.08 per share), versus €403.7 mil. in the previous year while the group cash position reached €114.4 mil.
Consolidated total debt stands at €478 mil. at an average interest rate cost of 5% and net loan to value ratio of 42.5%, reflecting a sound capital structure.

Significant Developments in 2017

Undeniably 2017 was significant year for Lamda Development.

In April 2017, in accordance with our strategy towards strengthening our position in the retail real estate sector, we established a new subsidiary, Lamda Malls S.A., in to which we contributed the full participation in our subsidiaries that own Golden Hall and Mediterranean Cosmos Shopping Centers.

At the same time, we agreed on a strategic partnership with Värde Partners initially with Värde acquiring 31.7% stake of Lamda Malls and thus, committing significant amounts for new investments in Greece, growing Lamda Malls to a very large and important retail real estate company with international standards practice implemented in the domestic market.

The said agreement is a milestone for our Company as it marks new growth prospects, and lead us to a new era of investments and strengthens our vision for innovative actions in the retail real estate sector.

In July 2017, the Company signed an agreement with “IRERE PROPERTY INVESTMENTS LUXEMBOURG” former “HSBC PROPERTY INVESTMENTS LUXEMBOURG SARL” for the transfer from IRERE and acquisition of the 50% of the share capital of Lamda Olympia Village S.Α. by the Company. The transaction was completed at 17.07.2017. The Company now holds the 100% of LOV share capital. The total value for the 100% of the Shopping Center “The Mall Athens”, amounted to €381.2 mil. at the date of the acquisition. Taking into consideration the bank loan of €193mil., the liabilities and other assets of Lamda Olympia Village SΑ owner of The Mall Athens, the Company acquired the 50% of LOV share capital at the amount of €85 mil.
During Q4 2017, the sale of the land plot "Kalemegdan" in Belgrade was concluded, at the price of €25 mil. This sale, as well as other land plot sales made in the Balkan area totaling €34 mil, are part of the company’s previously announced strategy, which is the concentration of its activities in the Greek market, with focus on the company’s further growth in the area of shopping centers and retail real estate assets via the joint venture in Lamda Malls SA, as well as, on the largest real estate project in Europe, the redevelopment of the Hellinikon.

Significant Developments in 2018 to date

The permitting process for the development of the remaining IBC building (Western Part) is rapidly progressing, as the joint ministerial decision was issued this May and we expect to commence construction works in the forthcoming months. Our plan includes - amongst others - an Olympic Games Museum, an aquarium and a large family entertainment venue, which is anticipated to enhance the family entertainment standards in Athens. The investment will reach the amount of €25 mil. and it is expected to create more than 500 new jobs opportunities.
During Q1 2018, the Presidential Decree, which granted approval to the Integrated Development Plan of the Hellinikon, was published. The approval of the Integrated Development Plan (IDP) by means of a Presidential Decree, which first underwent examination by the Council of State, is the first step towards the transfer of the shares and the commencement of the Project’s implementation.

Going Forward

Our company with a rich track record of investments in the domestic market, of a total amount of €300 mil., even during the period of the economic crisis and uncertainty, with various projects, such as, the acquisition of the remaining 40% ownership of Mediterranean Cosmos in 2010 for an amount of €80mil, the acquisition in 2013 of the usufruct right of the IBC building (Golden Hall) for €81 mil., the successful Share Capital Increase €150 mil. in July 2014, the winning bid for the development of the Hellinikon signed in November 2014, and the acquisition in July 2017 of the remaining 50% of The Mall Athens of an amount of €85 mil.

Specifically, the development of the Hellinikon will be the largest urban development in Europe, with a total budget of €8 bil. and will have an unprecedented positive impact on employment and tourism in Athens, while generating a highly positive environmental impact given the 2 million sq. m. of Metropolitan Park to be constructed.

With regard to our share price performance in the Athens Exchange in 2017 the stock price increased by 44% and significantly outperformed the ATHEX Composite Share Price Index, which grew by less than 25%.

Dear Shareholders,

Despite the well-known difficulties on our domestic economic environment, we have proven our resilience and persistence in taking up the challenges, opportunities and risks always with a positive view towards future.

We remain confident that, based on our long built know-how, dominant position in the retail real estate sector in Greece and our strong international partnerships, that we shall continue adding value and growth to our shareholders.

Our major shareholder, Latsis Group, continuous to provide its overwhelming support and, together with all shareholders support, we are confident that we shall continue to succeed attaining our common goals.

Once again, I take this opportunity to thank our employees for their hard work, exceptional performance, commitment and enthusiastic support in sharing this common vision.

On behalf of the management and the employees, I want to thank you for the trust you have placed in us.

Odisseas Athanasiou,

Chief Executive Officer