19 March 2020 - Sierra Balmain

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19 March 2020
GOVERNMENT / STATE NEWS
The PM alongside President announced the “Anti-crisis shield” scheme of PLN 212bn available in different forms.
The details are being now formulated into legal documents now. So far Ministry of Finance presented proposed
support (yet to be finalised):
    • Possibility of reverse settlement of tax losses (PIT and CIT)
    • Commercial real estate tax for March – May 2020 to be deferred till 20 July 2020
    • Softening of income tax regulations on bad debt
    • Softening of regulations for advance tax payers
    • Allowing local authorities (“Gmina”) for real estate tax exemptions (if loss reported)
    • Possibility of abolition for tax control during crisis time
    • And some others

Details available at:
https://www.gov.pl/web/finanse/rozwiazania-mf-w-pakiecie-dzialan-tarczy-antykryzysowej

Bank Gospodarstwa Krajowego (a state development bank) has started works on launching additional help package
for companies. Details to be published soon

Other state actions:
   • Introduction of smartphone quarantine smartphone app
   • Increase on contactless payments from PLN 50 to PLN 100 – to be introduced on Thursday / Friday but may
        not be available across whole Poland
   • NBP (Polish Central Bank) to buy polish gilts to reduce economic risk

Wig20 increased by +4.86%.

INDUSTRY
Napollo (Owner/Manager): First publicly announced rent reduction of 10% in March and 14-day rental holiday in
April for all closed (under ordinance of the Minister of Health from March 13th) premises.

Złote Tarasy (Unibail-Rodamco-Westfield): Landlord forcing tenants to re-open, despite the Ministry’s ordination –
which in fact cause disputable interpretation of “can-open” stores.

The above news fuelled the industry WhatsApp discussion (led by Retail Institute) to the next level: views on the
approached were shared (at least by some) and a conference called is being organised on Friday 12:00 CET among
the Landlord to discuss the issue. It is known that already some Landlords issued the notice to apply penalties to
tenants who should operate under Ministry’s ordinance.

PRCH will take part in videoconference between Council of Entrepreneurs (Rada Przedsiębiorców) and Commissioner
for small and medium-sized enterprises that takes place on Friday 10am CET.

C&W indicate courier companies with efficient warehouse system to be winners of current situation (by 2023 should
be handling up to 850 mln parcels worth up to PLN 12 bln).
RETAILERS AND SMALL BUSINESS MATTERS
Vistula Retail Group: expecting online sales at 24% of revenue for Q1 (vs 15.5% last year)
CCC Group: expecting online sales at 45% of revenue in March (vs 25% last year)

The management board of Żabka Polska, the owner of the largest chain of convenience stores in Central and Eastern
Europe, decided to transfer over €1 million for activities addressing the epidemiological threat.

CIVIL NEWS AND REACTIONS
Epidemiological status in Poland data from 17:55 on 19.03.2020
Number of confirmed cases SARS-CoV-2: 355
Number of fatalities: 5
Number of recoveries: 1

OTHER
   UK
     •   The pound sterling against dollar has fallen to its lowest level since 1985.
     •   Michel Barnier (EU’s Brexit negotiator) has been tested positive for coronavirus
     •   Schools to be partially closed from Friday
     •   London Underground: 40 stations to be closed
     •   The interest rates decreased from 0.25% to, the lowest in 325-year history, 0.1%

     Poland
     • Volkswagen Commercial Vehicles, Groupe PSA and FCA suspend production cars in their factories in Europe,
         also in Poland.

     CHINA
     • No new cases of coronavirus officially reported in region of Wuhan city

     WORLD
     • Cursed Olympics every 40 years: 1940 cancelled due to WWII, 1980 many countries boycotted the
       competition in Moscow, 2020 Coronavirus….

COMMUNICATION RECOMMENDATIONS
TBC

 2
20 March 2020
GOVERNMENT / STATE NEWS
The legislation regarding “Anti-crisis shield” scheme of PLN 212bn is not ready yet.

One of the deputies in Ministry of Agriculture is infected by coronavirus.

Eurodeputy Adam Jarubas has confirmed to be tested positive for the virus.

WSE opened higher today and seems to close in the green at the end of the week. Wig20 is still increasing today.

The Monetary Policy Council decided to set the NBP interest rates at the following levels (entered into force on 18
March 2020):
    • reference rate at 1.00% on an annual basis;
    • lombard rate at 1.50% on an annual basis;
    • deposit rate at 0.50% on an annual basis;
    • rediscount rate at 1.05% on an annual basis;
    • discount rate on bills of exchange at 1.10% on an annual basis;

Other state actions:
   • Smartphone quarantine app already available on Google Play and App Store. The app may only be used by
        those sent to quarantine.

INDUSTRY
The newly established Polish Trade and Services Employers’ Association presented its postulates.
Details are available at: https://www.across-magazine.com/polish-companies-unite-and-establish-the-polish-trade-
and-services-employers-association/

Unibail-Rodamco-Westfield confirms that the group now has €10.2 bn in cash on hand and undrawn credit lines,
which provides it with the liquidity needed to cover all expected funding needs even under an extreme “stress test”
scenario.

RETAILERS AND SMALL BUSINESS MATTERS
InPost resigned from collecting signatures by couriers. Pickup is possible by providing just sms code and courier
leaves the parcel at safe distance. Parcels at self-pickup points will be distributed 7 days a week.

Agata S.A., the various furniture lines provider with 29 big-box stores in Poland, decided to donate 1 million PLN for
the purchase of medical equipment to fight coronavirus pandemic.

CCC plans to issue up to 13.7mn stocks (no subscription right) to raise additional PLN 400-500mn.

CIVIL NEWS AND REACTIONS
Epidemiological status in Poland data from 16:15 on 20.03.2020
Number of confirmed cases SARS-CoV-2: 411
Number of fatalities: 5
Number of recoveries: 1
OTHER
   EUROPE
   • Netflix and YouTube are slowing down in Europe to keep the internet from breaking.
   • Spain, the second most visited country in the world in 2018, is closing all hotels.
   • UK is shutting its schools from Monday - with some exceptions.
   • Prince Albert II of Monaco has tested positive for coronavirus.

     WORLD
     • Next day of no new cases of coronavirus officially reported in region of Wuhan city.
     • California has issued a "stay at home" order to residents.
     • US stocks kicked the day off in the green on Friday.

COMMUNICATION RECOMMENDATIONS
TBC

 4
21 March 2020
GOVERNMENT / STATE NEWS
The legislation regarding “Anti-crisis shield” scheme of PLN 212bn is not ready yet.

On 20th March, the government issued new ordinance of Ministry of Health, which amends the previously
published (13th March) document. The document more precisely explain which stores can and which
cannot be open during the period of pandemic. It should help legal interpretation for disputable “can/must
not - open” matter.

INDUSTRY

The news from industry WhatsApp: PRCH was not directly involved in the minister’s 20th March ordinance,
however have looked at the initial government document of support for business – which may include
“rental holiday” for tenants who are forbidden to open during this time – that info will be confirmed once
the full support package will be produced!

Meanwhile, Ingka Centres sent the letter to tenants stating that no penalties will be accounted for tenants
changing their opening hours or not opening at all – however full rent, service charge and marketing fee
will be waived for tenants who are subject of operational limitation under government’s ordinance.

Representatives of newly created Association of Retailers are very active in the local news calling for
support from Owners of shopping centres. There some case of comments from Retailers which may be
misleading for general public, indicating the shopping centres to be closed.

C&W is organising webinar of 23.03 at 10:00 CDT for discussion of current situation.

PINK is organising webinar on 25.03 at 11:00 CET relating on lease, transactions, financing and tax issues.

Retail Institute actively seeks for comments from the industry to publish a letter to government seeking
help from Owners and Manager of shopping centres.

RETAILERS AND SMALL BUSINESS MATTERS

CIVIL NEWS AND REACTIONS
Epidemiological status in Poland data from 18:00 21.03.2020
Number of confirmed cases SARS-CoV-2: 525
Number of fatalities: 5
Number of recoveries: 1
OTHER
EUROPE
    • UK – pubs are closed from Friday evening !!!!!!!

COMMUNICATION RECOMMENDATIONS
TBC

6
23 March 2020
GOVERNMENT / STATE NEWS
The legislation regarding “Anti-crisis shield” scheme of PLN 212bn is not ready yet. A meeting of the National Security
Council on the "Anti-crisis shield" took place yesterday.

The timeline of government legislation (according to PRCH info):
    • Tuesday (24.03) – government approves the law
    • Friday (27.03) – the Parliament approves the law
    • Next week – Senate / President
    • 1st April (apparently not a joke) – date of enforcement of the law

According to Puls Biznesu, some of the proposed solutions that apply to RE are as follows (yet to be confirmed):
    • A 90% reduction of rent in retail properties bigger than 2,000 sq m, if the tenant's activity has been restricted
         by law. This does not apply to service charges. The tenant is also not responsible for the breach of the lease
         agreement.
    • Prolongation of the lease agreements concluded before the entry into force of the Act, and which expire
         after that date, until June 30 if the tenant makes such a declaration (it does not apply to tenants with
         overdue payments).
    • Prohibition of termination of lease agreements until 30 June (non-residential premises - this does not apply
         to the situation when termination is related to the violation of the contract by the tenant).
    • Payment date of the perpetual usufruct fee for 2020 to be deferred until June 30.
    • Allow goods to be delivered to shops on Sundays but trade ban on Sundays remained.
    • Introduction of the possibility to hold meetings and votes of the boards and supervisory boards of sp. z o.o.
         and S.A.
Draft of the act is available at: https://static.pb.pl/atta/3588-projekt-ustawy-o-tarczy-antykryzysowej.pdf

Jaroslaw Kaczynski, the leader of the ruling party, the conservative Law and Justice (PiS), recently said that there are
no reasons to change the election date at the moment (the May 10 presidential election). PiS supports the
incumbent president, Andrzej Duda.

State of Epidemic was declared in Poland on Friday.

Wig20 dropped by -5,57%.

INDUSTRY
The landlords call was held today led by PRCH in order to finalise the position of LL against proposed law:
In summary:
            • The postulates submitted by the Government are only from the side of tenants, no point of view of
                landlords
            • It is worth considering the solution adopted in Germany - If the tenant goes bankrupt, the
                government will pay the landlord 80% of the rent due from the tenant
            • Unanimous support for the restoration of trade on Sunday
            • A proposal to support employee subsidies
            • Proposed settlement with the VAT / CIT cash register method
            • Rents should not be reduced - only deferred, eg until 2021, where they would be repaid in
                instalments
•   Unanimous consent to extend the lease agreements with tenants for the time of closing the
                 premises during quarantine (what if new contracts for these premises have already been signed?)
             •   Lack of consent to exempt tenants from rent
             •   Consent to bypass the issue of service chargers in the postulates
             •   Shift of interest on loans
             •   Postulate change towards banks - change from bank to bank may be required to restructure the loan
             •   Add bankruptcy protection for debts incurred during the crisis
             •   Restore trade on Sunday

PRCH is now presenting the Landlords position to the government. In parallel there was another group created to
discuss the issue and act against proposed plan. The decision makers of the biggest investors in Poland are using
political channels (incl. foreign embassys in Poland) to fight against the solutions proposed in the new law.

PINK sent comments to Ministry of Development's proposal concerning a special law called the "Anti-Crisis Shield".
Details available at https://stowarzyszeniepink.org.pl/lib/hkeglk/2020_03_22PINK_uwagi_do_tarczy-k84i6luo.pdf

RETAILERS AND SMALL BUSINESS MATTERS
After a bad PR of LPP buying all protective masks in Poland to secure the employees in China, LPP decided to donate
PLN 1 million to purchase protective masks for isolation hospitals.

Vapiano declared a cash flow insolvency.

CIVIL NEWS AND REACTIONS
Epidemiological status in Poland data from 16:45 on 23.03.2020
Number of confirmed cases SARS-CoV-2: 692
Number of fatalities: 8
Number of recoveries: 1

OTHER
   UK
     •  Full list of retailers (so far) that have temporarily shut their UK high street stores:
             o John Lewis, Clarks, Ikea, Arcadia Group (Topshop, Topman, Dorothy Perkins, Burton, Miss Selfridge,
                  Wallis, Evans), New Look, River Island, H&M Group (Weekday, Arket, Monki, Cos, H&M Home, &
                  Other Stories, H&M), Inditex (Zara, Bershka, Stradivarius, Pull & Bear, Massimo Dutti, Zara Home), TK
                  Maxx, Reiss, Selfridges, Harrods, Fenwick, Liberty London, Harvey Nichols, The Body Shop, Boden,
                  Michael Kors, Gap, Oasis and Warehouse, Monsoon, Oxfam, The British Heart Foundation, Lego,
                  Abercrombie & Fitch, Apple, Calvin Klein Sweaty Betty
     EUROPE
     • German Chancellor Angela Merkel goes into self-quarantine.
     • The EBRD has launched an emergency package worth an Initial €1 billion to support companies in its
        countries suffering because of the crisis.
     • Energy assets are getting cheaper on European stocks.
     • Italy shuts down all non-essential manufacturing activities.
     • Amrest closed 143 restaurants in Spain.

     WORLD
     • Similar to the previous week stocks get off to a rocky start to the week, despite National Bank’s rescue
       efforts.
     • 7 Korean companies received the governmental approval to export their COVID-19 test kits.
     • Stocks are deep in the red in the US.

COMMUNICATION RECOMMENDATIONS
TBC

 8
24 March 2020
GOVERNMENT / STATE NEWS
The government declared that the date of enforcement of legislation regarding “Anti-crisis shield” shall be
April 1 (even if legislation process will take longer).

The government act amendment was planned to delivered today, but was delayed – hopefully by the wise
voice of the industry!

The government introduced tough measures today including restrictions on movement and limit of gatherings to
two people, social distancing.

Wig20 +3.24 %

INDUSTRY
PRCH held a call with Ombudsman of Small and Medium-sized Enterprises, who supports positions of the shopping
centre industry regarding regulation of the rent during the crisis period.

Also Minister of Development has received a letter with postulates of landlords through PRCH which includes:
    a) statutory support of employees and employers,
    b) changing proposed 90% of rent reduction to deferral of the rent and then spread in equal instalments over
       12 months (unless landlord and tenant agree different payment plan),
    c) introduction of cash accounting VAT and CIT method,
    d) flexibility in lease extension during the period
    e) security against bankruptcy
    f) Sunday trade ban to be removed up to 2021
    g) Clarification of state of epidemic definition
    h) the epidemic state should also limit of operations in the building of retail sale of less than 2,000 sqm

Rafal Sonik (Gemini Holding) along other Polish investors are very active against proposed government amendment
to the act. At the same time, other group of investors is directly contacting the office of the Prime Minister to abolish
the idea of state regulated rent discount – all of the investors are speaking the same voice through different
channels.

Retail Institute publishes the report why shopping centres need urgent support from the government:
https://einstitute.com.pl/raport-dlaczego-centra-i-sieci-handlowe-potrzebuja-pilnego-wsparcia-od-rzadu/

NEPI Rockcastle, a leading Central and Eastern European real estate investment group, has donated this month
150,000 EUR to the Red Cross international organization to support efforts to prevent the spread of COVID-19
epidemic.

PwC conducted online survey across the world (between 15-17 March!) regard general sentiment of market
participants: “there is a general assumption that the pandemic will have a negative impact on the real estate
industry. A majority of 74% assumes negative effects while 24% are not sure about the consequences”.
RETAILERS AND SMALL BUSINESS MATTERS
Uber is going to give 10k free rides for medical staff in Poland. First special codes have already been
distributed to medical institutions.

Grocery stores decided to implement a technical break during a day due to health and safety reasons.

CIVIL NEWS AND REACTIONS
Epidemiological status in Poland data from 13:30 on 24.03.2020
Number of confirmed cases SARS-CoV-2: 749
Number of fatalities: 8
Number of recoveries: 1

OTHER
   UK
   • Restriction on movement in UK introduced on Monday evening – choose wise, there are only 4
      options: necessity shopping, daily outdoor sport, any medical need or help a vulnerable person,
      travelling to and from work (if cannot be done from home)

   WORLD
   • Stocks are in the green across the world today, but still negative long term trend
   • Japan's Prime Minister and International Olympic Committee (IOC) agreed on Tuesday to postpone
     the Olympics until 2021.
   • WHO warned today that the United States has the potential to become the new epicentre of the
     coronavirus pandemic due to a “very large acceleration” in infections there.

COMMUNICATION RECOMMENDATIONS
TBC

 10
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