GTC begins construction of GLOBIS Wrocław

GTC constructing modern office building of 14,500 sqm NRA in the center of Wrocław
Building to be completed in the first half of 2008.

Globis Wrocław, a wholly-owned subsidiary of Globe Trade Centre S.A. (GTC), is beginning construction in Wrocław of a class A office building – GLOBIS. It is GTC’s first investment in the city, offering approx. 14,500 sqm of high-standard office space with retail/service backup.

GLOBIS Wrocław is located in the city center, on ul. Powstańców Śląskich, directly adjacent to the newly constructed Arkady Wrocławskie shopping mall and numerous commercial and residential investments going up in the vicinity. The new office building will have 12 floors – 11 with 1,200 sqm office space and 850 sqm ground floor with services for tenants of the building. The office space is planned either for a single-tenant or multi-tenant use. The design and the shape of the building will allow for efficient layout of the office space and plenty of access to natural light, creating comfortable working conditions.

“Wrocław is a city with great potential,” says Piotr Kroenke, General Manager of GTC. “More and more prominent companies are opening offices and factories here. Thanks to the commitment and support of the local authorities, new investments are expanding at a fast pace. We are confident that GLOBIS will attract the interest of the growing group of Polish and international companies seeking comfortable office space in a prestigious location for their business. With its attractive location and the high technical standard of the building, GLOBIS is sure to meet the needs of the most demanding tenants.”

The architectural design for GLOBIS Wrocław was developed by Studio EL, the Wrocław architectural firm led by Edward Lach. He designed a compact, elongated building with contemporary architecture, extending along ul. Powstańców Śląskich. The crowning feature of the building is the glass corner element where the main entrance is planned. There will be underground parking for 200 cars.

Construction works have already begun, and completion is scheduled for the first half of 2008. The cost of the investment will be over EUR 20 million.

The general contractor is the renowned international construction firm HOCHTIEF, which previously carried out the construction of GTC’s Globis office building in Poznań.

Project management has been entrusted to the Polish office of GLEEDS, a firm specializing in construction and real estate consulting. Gleeds has offices all over the world. Its Polish office has been in business since 2000 and is working with GTC in development of the NEWTON office building in Cracow.

The agencies IK Development and Knight Frank are handling letting of space in GLOBIS Wrocław. IK Development is a local Wrocław real estate office specializing in letting of commercial real estate. Knight Frank is part of the international real estate consulting firm.

Wrocław is one of seven cities where Globe Trade Centre does business in Poland, alongside Warsaw, Cracow, Poznań, Katowice, Łódź and Częstochowa. In October of this year, a GTC subsidiary acquired 1.3 hectares of land in Wrocław on ul. Karkonoska, between the city center and the Special Economic Zone in Kobierzyce. GTC plans to build an office complex of 30,000 sq m on the site.

GTC achieves its highest ever profits

Q3 2006 net profit reaches USD100m. Operating profit increases 126% in the third quarter 2006. Pace of investment is gaining momentum – 580,000sqm of net building rights acquired in 2006

In Q3 2006 Globe Trade Centre S.A. (GTC) achieved record profits of USD100m, a 134% increase from Q3 2005. For the first three quarters of 2006 the Company generated profits of USD234m.

Operating profits amounted to USD124m in the third quarter of 2006, representing a 126% increase year-on-year.

Rental revenues in Q3 2006 grew by 16% year-on-year to USD20.8m, despite the loss of a portion of revenues from Galeria Kazimierz, following the sale of a 50% interest to Quinlan Private in April 2006.

Residential revenues booked in Q3 2006 amounted to USD2.45m. In 2006 GTC signed contracts or received paid reservation agreements that secured the sale of a total of 280 apartments with a value of more than USD 50m. The apartments are located in: Sasad Resort (Budapest), Green Dream Residence (Bucharest) and Park Apartments (Belgrade). However due to the Company’s compliance with accounting practises these pre-sale revenues were not accounted for in GTC’s financial statements for Q3 2006. Revenue from these projects, as well as profits, will be booked upon completion of the projects.

GTC has significantly increased its activity in the residential sector. With a portfolio of 4,300 apartments, representing 465,000sqm of net space, the Company shall benefit from the region’s booming residential markets.

On 10th October 2006 GTC’s subsidiaries concluded an agreement for the sale of MBP to Heitman European Partners III for USD287m, making it one of the largest office transactions in the region.

The sale of Mokotów Business Park is part of GTC’s strategy to rebalance its Polish property portfolio, divesting mature assets in Warsaw and accelerating the acquisition of new projects in other large Polish cities.

Today GTC is active in seven cities in Poland: Warsaw, Kraków, Wrocław, Poznań, Czestochowa, Łódz and Katowice, with approx. 280,000sqm of net space under various stages of development.

In Q3 2006 GTC posted a revaluation gain of USD115m. It included an expected profit from the sale of Mokotów Business Park (USD40m pre-tax), as well as revaluations of other completed properties. A revaluation of Galeria Mokotów contributed USD40m, due to expansion of the rentable space, increase in average rental rates and the application of the current market yield. Furthermore, increased occupancy levels and rental income resulted in the higher valuation of three office buildings: Galileo in Kraków, Globis Poznań and GTC House in Belgrade.

Additionally, the revaluation of the Czech office portfolio resulted in profits from GTC’s associate company in the Czech Republic contributing USD5.2m to the third quarter results.

In Q3 2006 GTC commenced its presence in Ukraine – the ninth country in which GTC is active.Recently GTC finalised a joint venture agreement with theEuropean Bank for Reconstruction and Development, according to which the EBRD will take a 10% equity stake in GTC Ukraine.

Earlier this year, GTC also entered two new markets: Slovakia and Bulgaria.

In 2006 GTC significantly increased the pace of new investments. 17 projects, with total building rights of 580,000sqm of net space, have been acquired this year.

The Company now employs 125 highly skilled professionals, and has a structure with the necessary capabilities and capacity to execute the growing pipeline of new real estate projects.

In 2007 GTC expects to have 45 construction sites in the region at various stages of progress, comprising of a total of 650,000sqm NRA.

Deutsche Bank joins GTC as partner in residential projects

Globe Trade Centre will develop residential property in Romania and Hungary together with Deutsche Bank affiliate. Total residential portfolio of GTC reached 8,000 apartments

RREEF Opportunity Funds, a member of the Deutsche Bank Group, will become a minority shareholder of GTC’s special-purpose companies developing the apartment complexes Rose Garden (49.9% share) and Felicity (29.9% share) in Bucharest, and Sasad Resort (49.9% share) in Budapest.

RREEF Opportunity Funds is responsible for acquiring and managing high yield, opportunistic real estate equity investments on behalf of its clients and currently has more than €3.6bn in assets under management. We believe that cooperation between GTC and one of the largest and strongest banks in the world will create a powerful brand on the residential market in Bucharest and Budapest,” said Hagai Harel, a member of the GTC management board.

Under the joint venture agreement, GTC’s share in the capital will be 50.1%, but it share in the profit may reach 75%, depending on the project’s performance. In addition, similarly to all GTC’s joint venture, it will manage the projects on behalf of all partners and will receive management fee.

Gaining such a well-known and attractive partner is in line with GTC’s strategy, which provides for joint ventures with prominent partners in real estate development in Central and Eastern Europe. Several weeks ago EBRD joined GTC Ukraine as a 10% equity partner.

The joint venture will involve three developments: Rose Garden and Felicity in Bucharest, and Sasad Resort in Budapest.

Rose Garden is a development of eleven modern apartment buildings being built in a popular residential district to the north of Bucharest, with convenient access to the city center. At Rose Garden, 900 apartments and penthouses of various sizes are being built, with a total area of 80,000 sq m, and 3,000 sq m of commercial space. Residents will have available for their use a playground for children, a park with rose gardens, and parking for more than 1,000 cars.

Felicity is a residential complex located in the Baneasa district, on the way from the city center to the Bucharest International Airport, where up to 130,000 sq m of residential space will be develop on a 10-hectare site.

Sasad Resort is a development of low-rise luxury apartment buildings, located in Budapest’s prestigious New Buda, in District XI. 90,000 sq m of high-standard residential space in a green environment will be built. The development will include a tennis court, fitness club, and playground for children. The first phase of the investment has already attracted great interest from buyers: 120 of the planned total of 270 apartments have already been sold.

In all of these investments, the first phase of construction will be completed in 2008.

Globe Trade Centre is benefiting from the residential boom in the region, investing in middle to upper class housing developments in Poland, Czech Republic, Hungary, Romania, Serbia, Croatia and Slovakia. The Company is involved in residential projects comprising in total approx. 8,000 apartments, while GTC’s share in this portfolio includes nearly 4,300 units.

Katowice – the seventh city on GTC`s investment map in Poland

Globe Trade Centre S.A. (GTC) is continuing its expansion in major Polish cities.
The company has acquired land in Katowice for development of over 50,000 sqm of office and residential space.

100%-owned subsidiaries of GTC have acquired sites in the center of Katowice. The first of them, on Mikołowska Street, has an area of 2.6 hectares. The development planned for the site will include an office center or office & residential complex with a total area of over 40,000 sqm

The second site, with an area of approx. 0.7 hectare, is located on Francuska Street, near the newly constructed District Court office and close to public administration buildings and regional banking headquarters. GTC plans to construct an office building with 11,000 sqm of net space on the site.

The combined value of both transactions amounts to PLN 30 mln.

“GTC’s investment in Katowice is the next step in execution of GTC’s expansion strategy in Poland’s largest cities,” says Mariusz Kozłowski, Investor Relations Manager and Member of the Management Board of Globe Trade Centre S.A. “While increasing and diversifying our investment portfolio here in Poland, we are also at the same time dynamically developing our business on other markets of Central and Eastern Europe.”

Katowice is the seventh market for GTC in Poland, after Warsaw, Cracow, Poznań, Wrocław, Częstochowa and Łódź.