Another record year for GTC

GTC achieved in 2007 a record profit of EUR261m
Operating profit rose 38% to EUR 323 m
Q4 2007 profit amounted to EUR 60m

Globe Trade Centre S.A. (GTC) posted in 2007 record profits of EUR 261m (an increase 32% YoY). The operating profit grew 38% to EUR323 m. The company achieved development margin of 120% on new buildings completed in 2007. GTC’s total portfolio of completed, under development and pipeline projects reached 2.1m sqm of net commercial and residential space.

In Q4 2007 profit reached EUR60m, posting an impressive gain of 376% compared to Q4 2006. Completion of new office buildings in Poland and Serbia comprising 46 000 sqm net rentable area (NRA) contributed vastly to these results, bringing EUR69.3m revaluation gain. Buildings in Warsaw (Platinium Business Park and Okęcie Business Park) and Kraków (Edison) were valued based on the yields of approx. 6%, while 19 Avenue office in Belgrade was valued at a yield of 7.6%.

In 2007 GTC completed nearly 100 000 sqm of net space. In addition to office buildings finished in the fourth quarter, the company delivered Newton office building in Kraków and luxurious houses in the Phase 3 of Osiedle Konstancja in Warsaw. In June Avenue Mall in Zagreb was completed, attracting 800 000 shoppers every month after the opening.

Efficient cost control and strong leasing momentum resulted in achieving impressive margin on cost for the properties completed in 2007 – 120%. Also the operating margin was impressive: in 2007 gross operating margin on rental revenues increased to 79% from 71% in 2006, mainly due to the rebalancing of office portfolio, through replacement of mature properties such as Mokotów Business Park, with more efficient, newly developed class A office buildings.

The sale of Mokotów Business Park, America House and Lighthouse building affected the operating revenues in 2007, which slightly dropped to EUR73 m from EUR 80.9 m in 2006. However, as operating margin improved, the gross margin from rental operations grew 9% to EUR 41.2m.

The sale of completed properties is part of GTC’s strategy of asset diversification, allowing to capitalize on old investments and raise funds for new investments. In 2007 GTC divested two major office developments, each comprising approx. 27 000 sqm of NRA. America House in Bucharest was sold for EUR120 m , reflecting a record 5.55% yield, and Lighthouse Building in Prague was valued at EUR76.5 m based on the 5.65% yield.

GTC’s is increasing its portfolio of retail projects, leverging on the success of already completed shopping malls and Galleria brand name. Galeria Mokotów, Galeria Kazimierz and Avenue Mall are attracting in total on average 2.4 million clients per
month.
The pipeline of 17 new retail projects includes developments in Romania, Czech Republic, Bulgaria, Serbia and Croatia. The construction of the largest GTC’s investment – Galeria Jurajska in Częstochowa (48 000sqm NRA) has already started and is scheduled for completion in H2 2009.

The leasing momentum in GTC’s office buildings is strong – all existing buildings are 100% let, and new projects are nearly fully leased upon completion. Office markets in major Polish cities (Warsaw, Kraków, Wrocław) and Bucharest look particularly attractive, with vacancies ranging from 1% to 3%. GTC is expanding to ther Polish cities (Łódz, Katowice) as well developing new office projects in Prague, Budapest, Bucharest, Zagreb and Belgrade – the pipeline of new office projects includes in total nearly 700 000 sqm of NRA, of which majority is going to be completed in the next 3-4 years.

In 2007 GTC’s residential projects enjoyed strong demand from buyers, as 60% of apartments offered for sale have been already sold. New projects in Belgrade (Park Apartments), Bucharest (Rose Garden and Felicity 1&2), Prague (Prague Marina1 and Green City1&2), Warsaw (Konstancja 4), Budapest (Sasad Resort 1) and Bratislava (Vinohradis1) are to be completed in 2008-2009, however both revenues and profits will be recognised only upon completion and hand over of keys. Total residential portfolio of the company includes approx. 9 000 apartments (GTC’s part excluding partners) under
various stages of development. The projects are situated in very attractive locations, targetting mostly middle upper segment.

The financial strength of the Company and its ability to raise new financing is one of the main drivers of GTC’s expansion. GTC is well postioned to execute its 2008-2009 expansion plan, providing for investment of EUR1.5bn in land acqusition and development of new projects. The Company prudently uses the financial leverage – the long term debt to total
assets ratio was 33%, while cash position amounted to EUR346m at the end of 2007. Such an excellent financial standing, together with well-established relations with the largest banking groups in Europe, allows to obtain project financing at favourable terms.
In 2007, the amount of bank loans, for which terms and conditions were agreed or final contracts were signed, exceeded 350 million EUR. The loans bear margin ranging from 100 to 150 bps, depending on the country. In April 2007, the Company issued bonds worth 800 million PLN – the largest tranche of debt securities sold by a Polish company in the domestic market to date.

GTC strengthened its position in all three sectors of operation. In 2007 GTC acquired nearly 700 000 sqm of net building rights of commercial and residential projects. Currently the portfolio of completed, under development and pipeline projects
reached almost 2.1m sqm of net office, retail and residential space. The investment schedule provides for completion of more than 1.5 million sqm of net space in 2008-2010.

GTC voted the CEE Developer of the Year 2007.GTC`s Eli Alroy elected the CEE Real Estate Industry Professional

Globe Trade Centre S.A. received the prestigious Central & Eastern European Real Estate Quality Award for the CEE Real Estate Developer of the Year 2007. Chairman of the GTC`s Supervisory Board Mr. Eli Alroy was elected the CEE Real Estate Industry Professional of the Year 2007.

The ceremony took place on February 27th 2008 in Warsaw Hilton Hotel. The Quality Awards Jury includes professionals from across the sector – financiers, developers, agents and consultants. The event’s participants included the representatives of the real estate industry from CEE countries and guests from all over the world.

In the category of the CEE Developer of the Year 2007 GTC was ranked as number one among other nominations such as Echo Investment, Ghelamco, ING Real Estate Development, Orco Property Group, ProLogis, Quinlan Private Golub and Trigranit Development. GTC had already been awarded in 2004 when the company was voted both the CEE Developer of the Year and the CEE Outstanding Company of the Year.

“Our expansion in CEE countries continues with great momentum. We are looking for more investment opportunities in the entire region. The success of GTC would not be possible without hard work and dedication of our managers and employees, as well as support of the shareholders ” – says Eli Alroy, the Chairman of the Supervisory Board of GTC.

Eli Alroy was awarded a personal prize as the CEE Real Estate Industry Professional of the Year 2007 for his outstanding contribution to the real estate business in the region, his vision and leadership.

CEE Real Estate Quality Awards are given to projects, companies and individuals active in property investment and development throughout the Central and Eastern European region that in 2007 have demonstrated the highest level of quality and planning, leadership and execution. They are assessed against a detailed set of criteria by experts’ panel with wide professional knowledge and experience. This year CEE Real Estate Quality Awards were given for the fifth time.

GTC to develop a modern shopping mall in Osijek in Croatia

GTC plans to repeat in Osijek a success of Zagreb’s Avenue Mall.A shopping mall will offer a 26,000 sqm of modern retail space.GTC is involved in management or development of 20 shopping malls in the region

Globe Trade Centre expands its portfolio of retail projects in Croatia. The company has recently purchased a plot in Osijek, in the Eastern part of Croatia.

Osijek is the 4th largest Croatian town with population of over 120 000 thousand inhabitants. The catchment area within 30 minutes drive is estimated at 530 000 thousand people.

The site is located less than 2 km from the historical city centre, by the ring road which is Ojsijek’s the main communication route leading to the centre of the town. The plot is provided with a direct access from the road and an excellent public transportation connections.

On the 4 hecatre site GTC will develop the first modern shopping centre in Osijek, comprising 26 000 sqm GLA. The completion of the project is scheduled for IV Q 2009.

GTC has a vast experience in the development of shopping and entertainment centres. In August 2007 the company has opened Avenue Mall in Zagreb, which has immediately become the city’s main shopping destination. Avenue Mall accommodates over 130 shops of biggest international brands like ZARA (first shop in Croatia), Bershka, Marks & Spencer, Esprit, Benetton, Calvin Klein and many others.

In Poland GTC has constructed two successful, modern shopping malls: Galeria Mokotow in Warsaw and Cracow’s Galeria Kazimierz. Such GTC’s great experience in development of retail projects will be also applied in making successful a shopping centre in Osijek.

GTC invests actively in the retail sector in the region. In addition to completed investments – Galeria Mokotow, Galeria Kazimierz and Avenue Mall, the company is developing, individually or in cooperation with partners, 17 shopping malls in Poland, the Czech Republic, Croatia, Romania, Serbia and Bulgaria. The GTC’s part of all20 retail projects comprises 650,000 sqm of net rentable area. Main anchor tenants in GTC’s retail projects include Zara, Peek and Cloppenburg, H&M, Marks & Spencer, Alma Market, Koznum and Cinema City.

GTC`s office investments in Cracow attract international tenants

Next 10 000 sqm. completed in the office complex situated in Armii Krajowej Avenue.100% of office space in Edison building rented – IBM and Ahold’s accountancy center are to open their offices.The total cost of all GTC’s investments in Cracow is estimated at EUR 200m

Globe Trade Centre S.A. – the company listed on the Warsaw Stock Exchange won other prestigious tenants for its office investment in Cracow – Edison building. Thanks to the new object completed in December 2007, the number of modern office space realized by GTC in Cracow increased by another 10 000 sqm.

IBM – the international IT concern will occupy 3 000 sqm in Edison building. The company also rents office space in adjoining objects of the complex – Galileo and Newton. In total it is 14 500 sqm of office space where about 1 600 people work.

The leasing agreement sign by GTC with Accounting Plaza (Ahold’s accountancy center) concerns another 3 000 sqm of office space. The company will create about 350 places of work in Edison building.

Other tenants of Edison are, among others: Citibank and Ergomed. The building has already been rented in its entirety.
Edison is the third building, after Galileo and Newton, consructucted within GTC’s office complex at Armii Krajowej Avenue and Przybyszewskiego street intersection in Cracow.

Cracow is one of the key cites on the map of GTC’s activity in Poland. In the office sector the company is to develop the fourth building in Armii Krajowej Avenue –Pascal. The company has also started the construction of Kazimierz Business Center (more than 15 000 sqm NRA, construction scheduled for completion in Q2 2009) in close vicinity of Galeria Kazimierz also created by GTC and completed in 2005.

GTC’s investments (completed, under realization and planned) concerning the construction of business centers, retail center and apartments in Cracow will cost in total more than EUR 200m.

GTC has a huge experience in creating a high-class, effective office spaces for international corporations. Long-term relations with exacting tenants helped GTC to know better their needs and fit the investments to the best international standards. In Poland GTC invests in the construction of office building in Warsaw, Cracow, Wroclaw, Katowice and Lodz. Out of Poland GTC’s office investments are realized in Prague, Budapest, Bucharest, Belgrade, Zagreb and Sofia.

The biggest tenants cooperating with GTC in the region are: IBM, Exxon Mobil, Raiffeisen Bank, Hewlett Packard i Grupa Allianz.