Strong growth momentum

9M 2016 HIGHLIGHTS

  • NOI increased by 10% to €65m (€59m in 9M 2015)
  • Revaluation gain of €39m (loss of €2m in 9M 2015) mainly driven by ongoing projects under construction
  • Profit after tax of €107m (€17m in 9M 2015), positively impacted by successful merger of GTC SA with its Dutch entities
  • 14% FFO improvement to €33m (€29m in 9M 2015)
  • €175m of new project financing raised
  • EPRA NAV increased by 8% to €837m (€779m as of 31 December 2015), corresponding to an EPRA NAV per share of € 1.82 [PLN 7.85] (€1.69 [PLN 7.29] as of 31 December 2015)

PORTFOLIO UPDATE

  • Total property value of €1,544m as of 30 September 2016 (1,324m as of 31 December 2015)
  • 16% growth in income generating portfolio to €1,222m (€1,052m as of 31 December 2015)
  • Total investment volume of €221m (thereof €152m of acquisitions)
  • Disposal of non-core standing assets successfully executed; ongoing land bank disposal; total sales of €29m in 9M 2016
  • 106,000 sq. m NLA under construction in four projects with over 82,000 sq. m to be completed in 2017
  • 160,000 sq. m in planning stage and another 39,000 sq. m in pre-planning stage
  • 94,000 sq. m of new lettings and lease renewals for office and retail space
  • Stable occupancy rate at 91%

“We are very pleased to report solid results for Q3 2016. Several new acquisitions of value accretive office buildings over the last 9 months have contributed to our NOI and will further boost results in the quarters to come. GTC has over 106,000 sq. m of office and retail GLA under construction. These projects will contribute significantly to the NAV growth in 2017. Additional 200,000 sq. m of retail and office developments at the planning stage, guarantee further growth over the next 3 years to come. With our strong cash position, we are ready for more acquisitions within our target markets.” – Thomas Kurzmann, GTC’s CEO said.

“We completed the disposal of non-core assets with negative cash flow stabilizing our asset base. A major simplification in the structure of our non-Polish holding structure combined with refinancing activities further decreasing interest cost increase significant the efficiency and profitability of our operations.” – commented Erez Boniel, GTC’s CFO.

KEY OPERATING ACHIEVEMENTS IN 9M 2016

 

Growth of the income generating portfolio through accelerated acquisitions and completions  In 9M 2016 GTC increased its income generating portfolio by expanding the company’s asset base by 16% to €1,222m through the investment of €152 million in value accretive office properties

GTC’s latest acquisitions successfully strengthened its position in the CEE and SEE regions

o   Pixel, an iconic and unique office building located in Poznań (Poland),o   Premium Plaza and Premium Point; two A-class office buildings in Bucharest (Romania)

o   Neptun Office Center, a high-rise office building in Gdańsk (Poland)

o   Sterlinga Business Center in Łódź (Poland) with 13,900 sq. m of leasable office

Growth of the property portfolio through accelerated development; Currently 106,000 sq. m under construction with over 82,000 to be completed in 2017, 160,000 sq. m in the planning stage and another 39,000 sq. m in the pre-planning stage   Completion of University Business Park B, a modern A-class office building in Łódź

Completion of FortyOne II, a modern A-class office building in BelgradeConstruction of Galeria Północna progressing as planned with the opening scheduled for summer 2017 (commercialization at 75%)

Construction of FortyOne III progressing as planned with the opening scheduled for Q1 2017 (pre-leased at 70%)

Construction of Artico, a modern A-class office building in Warsaw, according to the initial plan. Opening is scheduled for Q3 2017 (pre-leased at 100%)

White House, a modern A-class office building, is expected to be launched in early at the beginning of Q1 2017 after the completion of the pre-construction works

Ada Mall, a modern shopping center in Belgrade, is in the permitting stage with building permit expected by the end of the year; commercialization has already started

Budapest City Tower, a modern A-class office building in Budapest, concept design and all related  works in order to obtain a building permit  currently ongoing

Green Heart, a modern A-class office building in Belgrade, concept design and zoning process have commenced

Galeria Wilanów is in the building permit procedure

“X”, a modern A-class office building in Belgrade, concept design is being prepared

Avenue Park, a modern A-class office building in Zagreb is undergoing a design refreshment, building permit in place

 

Ongoing letting activity  Further improvement of overall occupancy currently exceeding 91%

During 9M 2016 newly leased or renewed 94,000 sq. m of office and retail space, including prolongation of 13,000 sq. m of Romtelecom lease in City Gate and 12,200 sq. m of IBM lease in Korona Office Complex

KEY FINANCIAL HIGHLIGHTS

 

Revenues Rental and service revenues increased by €6m to €85m in 9M 2016 due to the acquisitions of Duna Tower, Pixel, Premium Plaza, Premium Point, Sterlinga Business Center and Neptun Office Center
Net profit from revaluation and impairment €39m in 9M 2016 as compared to a loss of €2m in 9M 2015

Reflects progress in construction of Galeria Północna, University Business Park B and Fortyone II as well as profit from the revaluation of Galeria Jurajska and Galleria Burgas following an improvement in the respective operating results

Net financial expenses Decrease to €20m in 9M 2016 from €22m in 9M 2015 mainly due to refinancing activity, and the repayment of more expensive loans

Reduction also supported by change in hedging strategy that allowed to benefit from a low EURIBOR environment and therefore resulted in a decrease in the average borrowing cost to 3.2% in 9M 2016 from 3.4% 9M 2015

Taxation  Non-cash reversal of tax provision recognized at €36m in 9M 2016, resulting mainly form a merger of GTC S.A. with GTC Real Estate Investments Ukraine B.V. and GTC RH B.V. which reversed the temporary tax differences related to Euro denominated loans granted by GTC S.A. to GTC RH B.V.
Net profit  €107m in 9M 2016 compared to €17m in 9M 2015
Funds From Operations (FFO)  Increased to €33m in 9M 2016 from €29m in 9M 2015 as a consequence of the NOI improvement and a decrease in interest and hedging expenses
Total property value  At €1,544m as of 30 September 2016 (€1,324m as of 31 December 2015) due to acquisitions, investment into assets under construction and revaluation gain
EPRA NAV Up by 8% to €837m in 9M 2016 from €779m in 2015

Corresponding to an EPRA NAV per share of €1.82 [PLN 7.85] compared to €1.69 [PLN 7.29]

Financial liabilities At €827m as of 30 September 2016 compared to €717m as of 31 December 2015

Weighted average debt maturity of 3.9 years and average cost of debt of 3.2% p.a.

LTV at 45% on 30 September 2016 (39% on 31 December 2015) due to increase in loans of €175m related to acquired properties, construction and refinancing

Interest coverage at 3.6x on 30 September 2016 (3.0x on 31 December 2015)

Cash and cash equivalents  Decreased to €107m as of 30 September 2016 from €169m as of 31 December 2015, due to investment activities partially offset by an increase in loans€28.9m of euro-denominated bonds issued on the Polish market in November 2016

9m-2016_gtc_financial-results_press-release

QUIOSQUE – Another feminine brand in the Galeria Północna

To the group of tenants in Galeria Północna joined QUIOSQUE – polish brand with over 20 years of experience in the market. The offer of QUIOSQUE is addressed to women who want to feel elegant and comfortable, regardless of the occasion. The brand puts special emphasis on good quality materials and comfort, and their collection is a combination of classic design with modern trends. This is another tenant of the fashion sector, which has recently joined the centre’s portfolio in the past few weeks.

 

 Currently, we are finalizing the process of commercialization. Each week we sign agreements with new tenants who appreciate the commercial potential of North Warsaw. Recently, those were mainly fashion brands, which are lacking in this part of town- summarises Agnieszka Nowak, director of Galeria Północna.  The offer of Quiosque, combines elegance and comfort which will definitely meet the interest of our customers- she adds.

The first store of QUIOSQUE was opened in Bydgoszcz in 1992. Today, the brand has over 130 stores around Poland and it’s constantly expanding. Under the slogan ‘’We are different, we are beautiful” the brand offers clothes in sizes from 34 to 48. QUIOSQUE proves that any woman can look beautiful with any size and body type, and appropriately selected styles and colours of clothing can only emphasize the beauty. In each of QUIOSQUE’s salons, clients can count on professional advice on styling.

Our clients appreciate the versatility of our products. We design them so that small change of accessories would allow woman to wear the same dress to the office, a family celebration or an evening meetings. We also put a lot of attention to comfort. Our clothes must be perfectly tailored and we use only the best quality materials. Only then, they retain their immaculate appearance all day and gives modern women exactly what they expect. We are a polish brand and the majority off our collection is sewn in the country. Knowledge of the needs and expectations of polish women, allows us to compete with foreign companies – emphasizes Monika Kujas, PR Manager Quiosque.

During the lease transaction, firm GTC – to the developer of Galeria Północna –  gained advice from the property experts JLL.

We are pleased that a popular clothing brand Quiosque joined the group of fashion tenants in Galeria Północna, which is the most anticipated commercial facility in the capital of Poland – adds Ada Budynek, Junior Consultant in the Department of Retail Lettings, JLL.

 

Galeria Północna began to strengthen it’s portfolio of fashion brands TK Maxx and Orsay are joining the group of tenants.

By visiting TK Maxx in Galeria Północna, customers can benefit from the offer of exclusive brands in the so-called off-price model – which are up to 60% cheaper from it’s regular offerings. With over 2,200 square meters, customers have access to a huge selection of clothing, footwear and accessories for men, women and children as well as homeware and toys. To the group of tenants, also joined highly popular Orsay.

 

North Białołęka has been a white spot on the fashion map of Warsaw so far. Residents of this area of the capital and surrounding towns, previously had to travel to the other side of the Vistula in order to reach their favourite brands. With the creation of our centre this will now be on their doorstep – says Agnieszka Nowak, the director of Galeria Północna. TK Maxx and Orsay – brands that are highly popular and provide wide range of products – will highly compilment our portfolio of tenants. However this is not the end of out fashion offensive – she adds.

Tk Maxx attracts customers it’s unique business model, it’s availability to the most popular brands and current collections at exceptionally low price offerings.  The assortment of the store is replenished several times a week, and company representatives are purchase the highest quality of products from the current designer collections around the world. Through this approach, customers can enjoy different offerings every time they visit TK Maxx, and it also eliminates the predictability of shopping, changing the entrance to the store into real fashion feast.

Category Fashion newly built centre in Tarchomin, have also been filled with Orsay – a German clothing brand for women and well-known to polish female customers for nearly 20 years. With 640 stores in 28 countries, Orsay focuses on trendy and inexpensive apparel, that emphasise femeninity and allow women to individually match clothes according to their favourite style.

Galeria Północna is a natural choice for our brand. Thriving northern areas of Warsaw lack the development of this kind. One that will satisfy the growing commercial potential and respond to the high expectations of residents. We are certain, that our offer will perfectly fit with the nature of the centre and complement it’s portfolio with an extremely feminine, yet universal as well as elegant apparel – ephesizes Barbara Hus, Senior Expansion Manager.

At Galeria Północna it’s stores set to open include Frezer 21, H&M, Witchen, brands of LPP group as well as Vistula Group.

Decision of TK Maxx and Orsay confirms that the leading brands are able to see a great potential in the newly built Galeria Północna. TK Maxx is an excellent choice for those interested in the latest trends in fashion and interior design. Moreover, Orsay will enrich it’s offer of ladies apparel, who appreciate the classics, elegance and comfort. Galeria Północna responds this way to the client’s needs, which are seeking for diverse offerings, in one unique location – adds Agnieszka Olszewska, Senior Consultant in the Department of Retail Rentals, JLL.