GTC delivers record profits in 2005

Record net profit for GTC in 2005 – USD 140m

Operating profit up by nearly 290%, reaching USD 196m

GTC to accelerate expansion, and to invest in additional countries in 2006

USD 180m invested in new projects in 2005. At least USD 600m to be invested in 2006-2008
Financial results
In 2005 Globe Trade Centre delivered record profits. Following strong 3Q 2005 results, and the best quarter in the company’s history, the fourth quarter brought an even better performance.

Operating revenues in 2005 reached USD 95.6m, which translates into a 70% increase from 2004. Such high revenue dynamics resulted from increased occupancy levels in existing buildings, and the successful leasing of property completed during the year: Galeria Kazimierz in Krakow, GTC House in Belgrade, as well as the sale of houses in Phase 2 of Osiedle Konstancja.

The Company’s profit levels showed even stronger momentum. In 2005 the operating profit was USD 195.8m vs. USD 49.5m in 2004. Net profit grew by nearly 290%, reaching USD140.1m at the end of the year. “Last year was the best in the company’s 11-year history. Diversification of our investments in the region, combined with efficient development and the accumulation of prime real estate property, proved to be the right strategy, and contributed to the achievement of such high growth,” said Eli Alroy, the Chairman of the GTC Supervisory Board.

Net cash used in investment activities in 2005 grew by 200% to USD 180m, which illustrates the scale of the accelerated level of investment. As part of the expansion during 2005 GTC successfully consolidated its stakes in its Central & Eastern European subsidiaries (in Hungary, Romania, Serbia and Croatia), by purchasing shares from minority shareholders. GTC now holds 95-97% of shares in these subsidiaries.

In 2005 the company continued its diversification strategy through the selective sale of assets. The Allianz Building was 100% leased for 10 years, and subsequently sold to the Allianz Group. In addition, GTC booked a profit from the sale of its 5% stake in Orbis S.A.
At the end of the year, GTC agreed to sell to a renowned partner – Quinlan Private – its 50% interest in Galeria Kazimierz – the prime shopping centre in Kraków. The transaction will be finalised and booked in 2006.

Accelerated expansion and entry into additional countries

In 1H 2006 the Company will book revaluation profits from newly completed buildings: America House (27,000sqm) and Topaz (11,000sqm) in 1Q 2006; and Centerpoint II (23,000sqm) in 2Q 2006.

GTC’s strategy provides for further expansion in Central and Eastern Europe. “By 2008 we will have invested at least USD 600 million in pipeline projects. I would like to emphasize that this is a minimum, and that all new projects acquired may significantly increase this amount. Our goal for 2006 is to begin investments in additional countries: Slovakia, Bulgaria and Ukraine,” said E. Alroy.

GTC will engage in joint ventures with reputable partners. Such partnerships, where GTC would be managing the development process, will allow for faster growth of the new project pipeline, and on the other hand will further diversify GTC’s assets across the region.

In order to accelerate its regional expansion even further, GTC will convene a meeting of shareholders to approve a capital increase (without pre-emptive rights), which will be executed if and when it is considered appropriate.

The capital increase may amount up to 1.8 million new shares. Such funds will finance the acquisition of more new projects, either acting alone or through joint ventures with reputable partners. GTC will be able to seize more real estate opportunities, and at a faster rate, in the booming markets of Central and Eastern Europe.

GTC continues its expansion in the Budapest office market

GTC Hungary – a subsidiary of Globe Trade Centre S.A. has acquired Spiral Commercial Centre, the owner of a 14,000 sqm plot of land in a prime location in Budapest, for approx. 11 million euro.

The site is situated in a prime location in Budapest’s District XIII. Its proximity to the city centre and easy access to important public and commercial facilities, as well as to public transportation, give Spiral Project an attractive commercial location.

On the site acquired GTC plans to develop a multi-phase project which will include 4-5 office buildings. Current plans provide for the construction of B+/A- class office space, combined with retail and service units on the ground floor, underground parking space for 440 cars and a multi-storey car park for 290 vehicles. In total, the investment will offer more than 53,000 sqm of gross office and commercial space. Construction of the first building should start in mid-2006.

GTC Hungary will finance 60% of the acquisition through a bank loan from the Hungarian Foreign Trade Bank.

Completion of the Spiral Project, together with existing office buildings – Center Point I (18,600 sqm net) and Center Point II (23,000 sqm net) – will give GTC Hungary more than 80,000 sqm net of net rentable space in total.
In addition to these investments, GTC Hungary is developing a residential project in Budapest called Riverloft Apartments, where 60% of the units have already been sold, and also the Bird Hill residential estate in District XI.

Globe Trade Centre S.A. owns 97.48% of GTC Hungary’s share capital.