First quarter 2011 highlights

  • Completed commercial space increased to 544,000 sq m
  • Rental revenues up to EUR 24m (+2% y-o-y)
  • Profit from property portfolio revaluation, net of EUR 14m
  • Net income almost doubled to EUR 8m up from EUR 4m in the corresponding period of 2010
  • Investments of EUR 60m compared to EUR 63m in the corresponding period of 2010
  • Completion of Avenue Mall Osijek
  • Start of construction of Platinium Business Park V with 50% pre-let

“We started 2011 at GTC dynamically. We opened Avenue Mall Osijek with approx. 90% of the space let. We also commenced construction of Platinum Business Park V with more than. 50% pre-let. We signed a number of lease agreements for a total of close to 15,000 sq m. I believe it is a good start of the year, but we want to do more – especially on the Polish market.” – says Eli Alroy, the Chairman of Supervisory Board.

Financial overview

Rental revenues increased by 2% to €24m over the corresponding period of 2010 which comes from assets that were completed after 31 March 2010 and from an increase in rental rates in the shopping centers in Poland. Some of the buildings are still under occupied as at 31 March 2011 thus not the full rental revenue is generated by those assets.

Revenues from sale of residential properties decreased by 40% to €4m in the first quarter 2011 from €6m in the corresponding period of 2010 resulting from a slowdown of sale of residential properties coupled with an increase in discounts for the apartments.

Service revenues decreased by 4% to €7m over the corresponding period of 2010 resulting from sale of Topaz and Nefryt office buildings in November 2010.

The gross margin (profit) from operations decreased by 9% to €23m from €25 m in the corresponding period of 2010, mainly due to sell of Topaz and  Nefryt office buildings in Q4-2010.

“Despite the reduction in revenues resulting from sale of Topaz and Nefryt, we managed to keep the same level of rental income thanks to increase in the asset base – said Erez Boniel, CFO and Member of the Management Board of GTC. “We continue to enhance the platform with new assets while  expecting to benefit from a yield compression with the renewal of the growth cycle”.

Positive revaluation of investment property, net of EUR 14m brought the value of the group’s investment properties to EUR 2.45 bn. Positive impact comes mainly from revaluation of well performing retail sector in Poland.

Profit from operations improved significantly to EUR 29m from EUR 18m in the corresponding period of 2010, due to an increase in assets value.

GTC maintains favourable structure of debt maturity, with about 50% of debt expiring in 2017 or later. The average cost of debt financing remains  attractive at 5.5% (6.1% in the corresponding period of 2010. This provides the company further comfort in realising its development plan.

Net income almost doubled to EUR 8m from EUR 4m in the corresponding period of 2010.

Investment was at the level of EUR 60m as compared to EUR 63m in corresponding period of 2010. GTC will continue to develop its pipeline according to its previous plan to deliver additional 67,000 sq m this year, which will bring the total completions for the year of 88,000 sq m, to be followed by another 130,000 sq m next year.

Recent developments

New lease agreements

In the last few months the group signed a number of lease agreements for its office and retail space, including:
Ruch in Francuska Office Centre for 2,434 sq m of office space
Bankruptcy Management Solutions, Tax Care and Pharmena in University Business Park in Łódź for 850 sq m of office space
Egis Pharmaceuticals in Okęcie Business Park 3 for 1,700 sq m of office space
– H&M in Avenue Mall Zagreb for 1,840 sq m of retail space
– Pure Health and Fitness in Galeria Stara Zagora for 1,100 sq m of retail space
– Bank Millennium in Francuska Office Center in Katowice for 800 sq m of mixed office and retail space
– 6,129 sq m of retail space let in Avenue Mall Osijek in the first quarter of 2011 to various retail tenants, including Muller, Jysk, Deichman and many more.

Completions

On 7th of April, GTC and the European Bank for Development and Reconstruction (EBRD) opened the Avenue Mall in Osijek, the entertainment and  shopping centre of the eastern part of Croatia. The catchment area for Avenue Mall Osijek is estimated at 500,000 inhabitants.

Avenue Mall Osijek offers nearly 27,000 sq m NRA and 80 retail units. The mall is 90% leased, while the rest of space is subject of advanced negotiations. Development of Avenue Mall Osijek is co-financed by the EBRD and Raiffeisen. The EBRD is also a 20% shareholder in the investment.

Avenue Mall Osijek is the 10th shopping centre in the GTC’s portfolio.

Commencement of new projects

On 31 March 2011 GTC obtained a valid building permit for the 5th building at Platinium Business Park in Warsaw. GTC plans to complete construction of Platinium Business Park V in the second quarter of 2012. The new development is already over 50% let.

Construction of the 11-storey Platinium Business Park V, with a lease area of 11,000 sq m began in April of this year.

Among the tenants for Platinium Business Park V who have already signed agreements with GTC is K2 Internet and Starcom.

GTC targets to obtain LEED Gold certification for Platinium Business Park V in the new build category. LEED certification is awarded only to projects  meeting the highest standards set by the US Green Building Council.

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