All GTC retail projects under the wings of two real estate agencies

GTC has signed an agreement with JLL and Cushman & Wakefield who will team up with GTC as Leasing and Marketing Agencies of all the Group’s retail investments in Poland. This is an innovative solution to assign two agencies to all projects of a single developer. The contract has been signed for commercialization of Galeria Polnocna, Galeria Wilanow and Galeria Jurajska as well for lease agreement extensions.

GTC develops and actively manages a broad real estate portfolio of various projects from different sectors, including retail properties. Since its establishment, the Group has developed 12 shopping malls with a total net leasable space amounting more than 1 million sq. m. GTC has developed such prestigious projects as Galeria Mokotów (Warsaw), Galeria Kazimierz (Cracow), Galeria Jurajska (Częstochowa), Avenue Mall (Zagreb), and Harfa (Prague). GTC currently manages 7 retail projects with a total commercial space of over 234 000 sq. m.

“At GTC, we not only focus on managing the core retail properties, but also wish to accelerate the development of the company in the sector. Signing leasing agreements with both JLL and Cushman & Wakefield was a strategic decision to involve such prestigious advisors and work together for the overall success of our retail investments” commented Jacek Wachowicz Chief Investment Officer.

JLL is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. In response to changing client expectations and market conditions, JLL assembles teams of experts who deliver integrated services built on market insight and foresight, sound research and relevant market knowledge.

 “We are proud that we can share our knowledge and experience with GTC, working on the largest and most prestigious developments in Poland. Our cooperation started in 1998, when JLL was responsible for leasing first project of GTC in Poland – Galeria Mokotów” said Anna Wysocka, JLL Head of Retail Poland.

Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Its 43,000 employees in more than 60 countries help investors optimize the value of their real estate by combining global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory.

“GTC as one of leading international developers is well recognized by investors and fashion brands. Galeria Północna and Galeria Wilanów will be iconic shopping destinations in North and South of Warsaw. Galeria Jurajska is already an established dominant shopping center in Częstochowa with regional catchment. It is our privilege to support GTC with Cushman & Wakefield’s international experience” said Renata Kusznierska, Head of Retail Agency at Cushman & Wakefield in Poland.

GTC_Galeria Jurajska

GTC_Galeria Północna_wizualizacja

GTC_Galeria Wilanów_wizualizacja

GTC augments accomplishments through acquisitions, developments and active asset management

Q1 2016 results

Q1 2016 HIGHLIGHTS

  • NOI at €21m (€20m in Q1 2015); NOI margin at 76% (74% in Q1 2015)
  • Revaluation gain of €7m driven by progress in projects under construction
  • Profit before tax at €19m (€4m in Q1 2015)
  • FFO improved to €11m (€9m in Q1 2015)
  • Net LTV at 43% (39% as of 31 Dec. 2015) driven by raising investment loans and cash deployment
  • Interest cover at 3.6x (3.0x as of 31 Dec. 2015)
  • Completion of refinancing of three office buildings: University Business Park, Pixel and Globis Poznań

PORTFOLIO UPDATE

  • Acquisition of Pixel office building
  • Acquisition of land plot for office development in Budapest CBD
  • 90,000 sq. m NLA under construction in three projects
  • 126,000 sq. m NLA in advanced pre-construction phase
  • 25,500 sq. m of office and retail space newly leased and renewed, including 13,000 of Romtelecom lease prolongation in City Gate
  • Occupancy level kept at 92%
  • Total property at €1,389m
  • EPRA NAV at €797m (€779m as of 31 Dec. 2015) corresponding to an EPRA NAV per share at €1.73 (+0.04 / share)

GTC continues to grow through the acquisition of the Pixel office building in Poznań and more acquisitions that will come in the second quarter of 2016 . We are reinforcing our income-producing asset base and strengthening our financial results.” – said Thomas Kurzmann, GTC’s CEO. “Over 90,000 sq. m of commercial space under construction  scheduled for completion in 2016 and 2017 and four more development projects of approximately 126,000sq. m of commercial space currently in the planning phase, will significantly contribute to the net asset value of the company.” – Mr Kurzmann added.

FINANCIAL HIGHLIGHTS

Total revenues improved to €31m in Q1 2016 compared to €30m in Q1 2015 mostly due to increase in rental and service revenue following the acquisition of assets as well as sale of residential land.

NOI improved to €21m in Q1 2016 compared to €20m in Q1 2015 mostly as a result of the acquisition of Duna Tower and Pixel office buildings, partially offset by the sale of Kazimierz Office Center, Galleria Buzau, Jarosova and Avenue Mall Osijek in 2015. NOI margin was up to 76% compared to 74% in Q1 2015.

Administrative expenses, excluding provision for a stock based program remained unchanged at 2.6m in Q1 2016.

Net profit from the revaluation of the investment properties and impairment of residential projects amounted to 7m in Q1 2016 and was mainly driven by projects under construction: Galeria Północna, University Business Park and Fortyone.

Net financial expenses decreased sharply for the fifth consecutive quarter to €6m in Q1 2016 from €8m in Q1 2015 mainly due to deleveraging activity, restructuring of loans and repayment of loans related to sold assets. The decrease was also supported by a change of hedging strategy announced by the company, following the low Euribor environment and resulted in a decrease in average borrowing cost to 3.4% in Q1 2016 from 4.2% in Q1 2015.

Profit before tax was at €19m in Q1 2016 compared to €4m in Q1 2015 mostly due to the improvement in operating results, recognition of profit from the revaluation of investment property under construction, combined with significant decrease in net financial cost for the fifth consecutive quarter.

Tax provision was €2.3m in Q1 2016 and consisted of €0.8m of current tax expenses and €1.4m of deferred tax expenses.

Net profit was  €16m in Q1 2016, as compared to €8m in Q1 2015.

FFO up to €11m in Q1 2016 from €9m in Q1 2015 mostly due to a significant decrease in interest and hedging expenses as well as an improved rental margin.

The value of the properties was up to €1,389m as of 31 March 2016 compared to €1,324m as of 31 December 2015 due to the acquisition of Pixel, investment and recognition of valuation gain on projects under construction. 78% of the total portfolio consists of income generating assets, whilst 10% of it represents investment property under construction.

Total bank debt and financial liabilities was at €743m as of 31 March 2016 compared to €717m as of 31 December 2015 driven by loans related to assets under construction. The weighted average debt maturity was 3.4 years and the average cost of debt is down to 3.4% p.a.

Cash and cash equivalents were at 118m as of 31 Mach 2016 compared to €169m as of 31 December 2015, mainly due to the acquisition of Pixel and a land plot in Budapest in the amount of €44m (including acquisition cost) and investment of €19m mainly in Galeria Północna, University Business Park and Fortyone.

Loan to value ratio was at the level of 43.2% as at 31 March 2016 compared to 39.4% as at 31 December 2015.

EPRA NAV was up to €797m as of 31 March 2016 from €779m as of 31 December 2015 corresponding to an EPRA NAV per share at €1.73 (+0.04 / share)

Interest coverage was at 3.6x as at 31 March 2016 compared to 3.0x as at 31 December 2015.

KEY ACHIEVEMENTS

Further acquisitions to strengthen GTC’s position in the region

With the latest acquisitions and a buyout, GTC has successfully strengthened its position in the region. The Group acquired a modern A-class office building, Pixel, in Poznań and two modern A-class office buildings in Bucharest – Premium Plaza and Premium Point – that together increase GTC’s portfolio by 29,000 sq. m of net leasable area. Earlier this year, GTC successfully consolidated the ownership structure of City Gate, one of its landmark office buildings in Bucharest by buying out its minority partner, Bluehouse Capital (GTC now owns 100% of the equity). GTC also invested into its  future growth by buying a land plot for office development in the central business district of Budapest.

Very strong leasing activities with over 25,500 sq. m of office and retail space newly leased and renewed

In the first quarter of 2016, GTC worked intensely on leasing its portfolio in order to keep an already impressive overall occupancy of 92%. In total it leased or renewed over 25,500 sq. m of office and retail space across the region, with the most significant achievement being the prolongation of Romtelecom’s lease in City Gate (13.000 sq. m.).

Accelerated development

The works on the second phase of Fortyone, a GTC investment in Belgrade, started in November 2015 and the practical completion of the building is planned for the beginning of September 2016. So far, construction works on building B are almost finished. Meanwhile, benefiting from the strength of the office market in Belgrade, GTC started the construction of the third phase of this office project in April. The project’s last building, offers 10,800 sq. m of A-class office space and is scheduled for completion in the first half of 2017.

The construction of Galeria Północna is moving at the planned pace. With tens of thousands of cubic meters of concrete and thousands of tons of steel, the building is already reaching its top level. The construction work started in July last year and the opening of the shopping mall is scheduled for the first half of 2017.

The second building of the University Business Park office complex developed by GTC in Łódź received an occupancy permit in April. This modern, A-class investment situated in the very heart of the city offers tenants the flexibility and growth opportunities within one office park as their business expands. Upon completion of the second phase, the University Business Park offers its tenants 39,200 sq. m and 600 parking spaces in two seven-story buildings. The long list of prominent tenants of the complex includes Fujitsu, Aegon, Impel Catering, Samsung Electronics Poland, Accenture, Mobica and PKP Informatyka.

Signing loan agreements to finance University Business Park, Pixel and Globis Poznan and further financial cost reduction

Alongside the expansion of development activities GTC successfully raised loans to finance the acquisition of the Pixel office building and the construction of University Business Park II. Moreover, GTC successfully refinanced Globis Poznan building. Additionally, GTC’s hedging strategy is optimized as is reflected in its reduced financial cost in the first quarter of 2016.

Q1 2016_GTC_Results_Press release