Q2 2013 Financial Highlights
Gross margin from rental activity back to 72% (70% in Q1 2013; 74% in Q2 2012). Earnings before taxes, share based provision, revaluations and share of associates up to €4m (€3m in Q2 2012) as a result of a decrease in administrative and financial expenses. Rental and service revenues at €30m (€33m in Q2 2012) reflecting sale of Platinium Business Park (€2m) and softening of rental rates in office segment in Poland and Hungary. Net loss on revaluation of investment properties and impairment of €44m mainly related a decrease in expected rental rates in retail sector in Romania, Bulgaria and Croatia as well as softening of rental rates on new leases in office segment in Poland and Hungary and a moderate shift in yields in Poland. Financial expenses down to €12 (€16m in Q2 2012) mainly due to a decrease in debt level following the repayment of bonds and loans related to Platinum Business Park.
H1 2013 Financial Highlights
Earnings before taxes, share based provision, revaluations and share of associates up to €7m (€3m in H1 2012) from increased efficiency in asset management, decrease in financial expenses and cost cutting. Rental and service revenues at €60m (€64m in H1 2012) reflecting primarily the sale of Platinium Business Park (€4m). Administrative expenses, after eliminating the stock based program provision, decreased by 21% to €6m (€7m in H1 2012) due to cost cutting initiatives. Net loss on revaluation of investment properties and impairment of €70m mainly related to change of zoning of Galleria Bucharest land site following changes in law and a decrease in expected rental rates in retail sector in Romania, Bulgaria and Croatia as well as softening of rental rates on new leases in office segment in Poland and Hungary and a moderate shift in yields in Poland. Loan to value stable at 56% (56% in H1 2012). Cash flow from operations after interest payment at €10m (€11m in H1 2012) despite sale of Platinium Business Park which generated €3m in H1 2012. Cash and cash equivalents and deposits of €116m.
H1 2013 Operating Highlights
- New leases and lease extension for 39,000 sq m of office and retail space
- Occupancy at 91% (89% in H1 2012)
- Tender for construction of Galeria Białołęka opened
“Despite the fact that our investment portfolio was devaluated, mostly due to challenging conditions in SEE markets, especially Romania and Bulgaria, we managed to build a strong foundation for growth in Poland, the strongest market in the region, by entering into cooperation with new anchor tenants and signing numerous new leases and lease extensions in Krakow, Katowice, Wroclaw and Lodz. In addition, we continued our efforts towards obtaining building permits for Galeria Białołęka and Galeria Wilanów as well as Ada Mall, which are our priority and will drive our growth in the near term” – said Alain Ickovics, GTC S.A. Chairman of the Management Board. “We are on track in our asset disposal plan and expect to achieve important steps and communicate them later this year.” – added Alain Ickovics.
Financial overview
Rental and service revenues decreased to €30m in Q2 2013 and €60m in H1 2013 from €33m in Q2 2012 and €64m in H1 2012, as a result of disposal of Platinium Business Park project in Warsaw and softening of rental rates especially in the office segment in Poland and Hungary. Margin on rental activities was at 72% in Q2 2013 (74% in Q2 2012) and 71% in H1 2013 (73% in H1 2012). As of June 2013, GTC’s completed buildings were leased in 91%, therefore further rental revenue growth is probable. Revenues from sale of residential properties decreased to €3m in Q2 2013 and €6m in H1 2013 from €5m in Q2 2012 and €10m in H1 2012, respectively, mostly due to a decrease in available inventory and softer demand in various markets. Gross profit from operations was €21m in Q2 2013 and €42m in H1 2013 compared to €25m in Q2 2012 and €47m in H1 2012 mostly due to the disposal of Platinium Business Park and one off write downs on the fit out contributions related to new tenants in certain assets. Selling expenses decreased to €1m in Q2 2013 and €2m in H1 2013 mainly due to a decrease in sale and leasing activities. Administrative expenses decreased by €1m to €4m in Q2 2013, due to decrease in provision for mark-to-market of phantom shares program. Administrative expenses decreased by €5m to €4m in H1 2013 mainly due to reversal of provision for mark-to-market of phantom shares program and cost cutting initiatives. On a like-for-like basis, after eliminating the stock based program provision, administrative expenses decreased by 21% to €6m in H1 2013. Net loss on revaluations of investment property and impairments of residential projects was €44m in Q2 2013 and €70m in H1 2013 and is attributable to a change of designation of Galleria Bucharest land following a change of law in Romania and expansion of yield in office sector in Bucharest as well as a decrease in expected rental rates in retail sector in Romania, Bulgaria and Croatia as well as a decrease in rental rates on new leases in office segment in Poland and Hungary and a moderate shift in yields in Poland. Financial expenses decreased to €12m in Q2 2013 and €25m in H1 2013, which was mainly due to a decrease in interest on financial liabilities following a decrease in the debt level due to repayment of bonds and loans. Net loss amounted to €48m in Q2 2013 and €74m in H1 2013. This is attributable mainly to a loss on revaluation of investment properties and impairment of residential projects coupled with tax charge. The value of the property portfolio was at the level of €1,714m (including €1m of assets held for sale) and loan to value was at the level of 56% as at 30 June 2013. NAV per share stood at €2.4 as at 30 June 2013 compared to €2.7 as at 31 December 2012.
Key achievements
Important leases and renewals
GTC continues to benefit from company’s ability to deliver high quality office space and to provide tailored solutions for companies representing variety of business sectors. In the first half of 2013, GTC signed a number of new lease agreements for office space (over 20,000 sq) and extended leases for more than 19,000 sq m during H1 2013.
New lease agreements for 20,000 sq m
- IBM has become a new tenant in Katowice Francuska Office Centre. The company has leased 3,200 sq m office space, boosting the office complex occupancy to 76%. The agreement is one of the largest office lease transaction in Katowice market concluded in last few years
- New tenants in University Business Park in Lodz, boosting occupancy to 81%: Accenture leased 1,700 sq m, Mobica has leased nearly 1,200 sq m with further extension option, Samsung Electronics Poland leased 1,100 sq m with further extension option, PKP Informatyka leased nearly 900 sq m
- Marketing and advertising agency Event has become a new tenant of Korona Office Complex (500 sq m)
- DFDS logistics company leased 1,600 sq m in Globis Poznan
- Canon leased 3,100 sq m in Marina Office Center (Prague), boosting occupancy to 76%
- Askent leased 3,600 sq m in Galleria Stara Zagora (Stara Zagora, Bulgaria)
- New tenants in retail centres across the region (4,000 sq m) (Quicksilver, LPP, Giacomo Conti in Galeria Jurajska; Matras, Cukiernia Sowa,Organique in Galeria Kazimierz)
Significant renewals and extensions for 19,000 sq m
- IBM has extended the lease agreement for approximately 3,000 sqm office space in Korona Office Complex (Kraków)
- Medicover has extended the lease agreement for 1,400 sqm space in the Globis Wroclaw
- Arvato Poland, GPC and UWI Inwestycje have extended their leases for a combined total of over 3,000 sq m in Globis Poznan
- Pandora has extended its lease for 1,100 sq m in Corius office building in Okecie Business Park (Warsaw)
- Genpact has extended its lease of over 3,000 sq m in Edison office building in Korona Office Complex (Kraków)
- E.ON Romania extended its lease for 2,400 sq m in City Gate (Bucharest)
- ROCHE extended its lease for 1,400 sq m in GTC Square (Belgrade)
- Australian Embassy extended its lease for 1,600 sq m in 19 Avenue (Belgrade)
- Lease extensions for 1,600 sq m extended in retail centres across the region (LPP, Tatuum, Wojas, Douglas in Galeria Jurajska)
New developments
Galeria Wilanow:
- GTC should receive an environmental opinion in August
- Term sheet with Cinema City is signed
- Galeria Wilanow opening is scheduled for 2016
Galeria Bialoleka:
- A tender for construction was opened
- Land acquisition is in progress
- Term sheet with Cinema City is signed
- Galeria Bialoleka opening is expected in 2015
Ada Mall:
- Land assembly in the final stage
GLOBE TRADE CENTRE S.A. (GTC) is one of the leading developers in Central, Eastern and Southern Europe. The company was established in 1994 in Warsaw, Poland. Currently GTC operates in Poland, Hungary, the Czech Republic, Romania, Serbia, Croatia, Slovakia, Bulgaria, Russia and Ukraine.
GTC develops projects and manages completed properties in three key sectors of real estate: office buildings and parks, retail and entertainment centers and residential. To date, GTC has developed approximately 950,000 sqm of net commercial and 300,000 sq m of residential spaces. The company currently manages a combined 602,000 net sq m of completed and operational commercial space (of which the Group’s proportional interest amounts to 548 thousand sq m). GTC also holds an impressive portfolio of investment projects at various stages of development. Those will facilitate the construction of 1.1 million sq m of commercial space and 615,000 sq m of residential space. GTC S.A.’s total assets exceed EUR 1.9 billion.
GTC S.A. is listed on the Warsaw Stock Exchange on the prestigious WIG20 index. The company’s shares are also included in the international Dow Jones STOXX Eastern Europe 300 and the GPR250 index, which comprises the 250 biggest and most liquid real estate companies of the world. Also, GTS S.A. is listed on the FTSE EPRA/NAREIT Emerging Index. GTC S.A.’s shareholders include many of the biggest Polish and international institutional investors.
