UBS Bank recommended buying GTC shares

UBS Bank has initiated research coverage of Globe Trade Centre S.A. with a BUY recommendation and a price target of EUR 17 (PLN 65).

In the report dated October 18, UBS Bank recommended buying GTC shares with a price target of EUR 17 (PLN 65). UBS Bank has initiated coverage of five Central & Eastern European real estate companies.

GTC is UBS’s top pick among Warsaw-listed real estate companies, and reflects the analyst’s preference for development activity backed by an extensive project pipeline, a clear strategy and excellent track record, exposure to SEE/CIS markets, and low leverage.

“We believe that these are the key factors required to deliver attractive growth in the current market conditions,” said Andrzej Kasperek, author of the report.

According to the UBS Bank report, GTC offers good exposure to the retail, office and residential markets in the Central & Eastern Europe (CEE) and Southeastern Europe (SEE) regions. UBS believes that GTC is well positioned to benefit from the high and sustainable growth in the CEE and SEE property markets. The bank’s analyst expects the company to achieve 27% (CAGR 2007-10E) growth in adjusted net asset value, with a EUR 1.7 billion development pipeline and a EUR 1.4 billion residential sales program being the main internal drivers of this strong growth.

In UBS Bank’s opinion, GTC management’s excellent track record gives the analyst confidence that the investment program will be carried out. “We see like-for-like rental growth and further yield compression as additional value drivers,” Kasperek wrote.

He is also optimistic about the prospects of the real estate markets where GTC has a good position. The key drivers of the region’s attractive growth outlook are the strong macro environment, the favorable supply/demand momentum, and the continuing flow of funds. “While we are positive about CEE, we think that the SEE and Commonwealth of Independent States (CIS) regions have the best growth potential,” the analyst said.

UBS Bank thinks that real estate sector valuations have become attractive following significant underperformance since the beginning of the year. In their opinion, the fundamentals remain solid, particularly in the CEE region, creating an attractive entry point for investors.

Lighthouse Building in Prague Sold

Lighthouse Holdings s.a., an affiliate (31.6%) of Globe Trade Centre S.A., has sold its 87.5% ownership interest in Lighthouse Vltava waterfront towers s.r.o. to a fund managed by Deka Immobilien GmbH. The transaction was based on a valuation of EUR 76.5 million for the Lighthouse building, representing a yield of 5.65%.

The Lighthouse Building is located on the banks of the Vltava River in the Holešovice Prague 7 District, a few minutes from the city center. The building offers 27,000 sq m NRA and has attracted such renowned tenants as VZP (the Czech health insurance company), DIRECT insurance company, Iscare Clinic, Sixth, Pharmaswiss, Deltax Systems, Konica Minolta, Impact-Corti, LMC and others. The location of the building and the covenants in the lease agreements make the Lighthouse Building a prime investment-grade product in Prague.
Jones Lang LaSalle acted as commercial and marketing adviser for GTC in this transaction.
Globe Trade Centre S.A. is developing in the Czech Republic – together with its partners, Deutsche Bank and BSG Group – a portfolio comprising approx. 500,000 sq m of office, retail and residential space.
At the end of September, GTC Romania sold to a fund managed by IXIS AEW Europe its 100% interest in America House, a Class A office building in a prime location in Bucharest. The valuation of the building was based on a yield of 5.55%.
The transactions in Bucharest and Prague have confirmed the top investment-grade quality of GTC’s assets, as well as indicating further appreciation in value of commercial property in the region.