Strong earnings result despite COVID-19 impact

Q3&9M 2020 FINANCIAL HIGHLIGHTS

  • Investment grade rating of BBB- from Scope Rating
  • Gross margin from rental activity at €32m in Q3 (€33m in Q3 2019) and at €91m in 9M (€94m in 9M 2019), despite impact of Covid-19 amounting to €2m in Q3 and €10m in 9M
  • Operating profit: profit before tax and fair value adjustments up to €21m in Q3 (€15m in Q3 2019) and at €52m in 9M (€53m in 9M 2019)
  • FFO I increased 5% to €54m (€52m in 9M 2019), FFO per share at €0.11
  • EPRA NAV at €1,174m as at 30 September 2020, EPRA NAV per share at €2.42 (PLN 10.95 at EUR/PLN 4.5268)
  • Solid financial metrics
    • LTV at 45% (44% as of 31 December 2019)
    • WAIR at historical low of 2.5% (2.6% as of 31 December 2019)
  • Cash and cash equivalents amounted to €139m as of 30 September 2020

Q3&9M PORTFOLIO HIGHLIGHTS

  • OFFICE: RESILIENCE CONTINUES
    • Occupancy remained strong at 94% as at 30 September 2020 (95% in December 2019)
    • No collection problem
    • Spiral office building sold in October 2020
    • New lease agreements for a total of 10,000 sq m signed in Q3 2020 including:
      • Extension and prolongation of Barry Callebaut lease in UBP B, Łódź (6,000 sq m)
    • Additionally, Generali signed a pre-lease in Matrix B, Zagreb for 2,500 sq m
    • Commencement of construction of Sofia Tower 2
  • RETAIL: GRADUALLY RETURNING IN Q3 2020, BEFORE SECOND WAVE OF COVID-19 IN NOVEMBER
    • Occupancy remained strong at 93%
    • Footfall at 76% in September 2020, down to 69% in October following increased number of infections
    • September sales on average at 87% vs last year, down to 83% in October 2020 following increased number of infections
    • Still higher conversion and average basket
    • Expected further decline as Polish malls practically closed between 7 and 27 November 2020
    • Loss of rental revenues due to impact of COVID-19 of €10m in 9M 2020
    • Collection rate at 92% in 9M 2020
    • Temporary discounts in return for material extensions allowed to keep the WALT at 3.7 years as of 30 September 2020 (4.0 years at 31 December 2019)
  • Retailers continue to expand: largest Sinsay in Poland signed in Galeria Północna (2,700 sq m)

“The third quarter of 2020 showed some improvement, before we saw a second wave of COVID-19. The office sector remained resilient, while the retail sector was gradually returning to its pre COVID state with tenants’ turnover achieving on average 87% of 2019 numbers. We kept our occupancy rate virtually unchanged as our team responded effectively to the challenges of COVID-19. On the financial side new completions during last 12 months allowed us to offset a decrease in revenues resulting from pandemic situation and lead to 5% increase in FFO underpinned with strong collection rates. We commenced Sofia Tower 2, a class A office building above our Mall of Sofia shopping mall and we closed sale of Spiral in October looking forward to the next opportunities in the region to grow further our office portfolio. All our efforts and healthy Groups situation were confirmed with investment grade rating BBB- by Scope Ratings which we did in preparation for green bonds issue on Hungarian market.” – commented Yovav Carmi, GTC’s President of the Management Board.

Generali signs lease for Matrix B in Zagreb

  • Matrix B is an A-class office building which is part of GTC’s Matrix Office Park in Zagreb and is due to be completed in Q4 of 2020.
  • Recently, both buildings of Matrix Office Park received LEED Platinum certification which is yet another confirmation of GTC’s commitment to developing sustainable buildings.

The GTC Group celebrates another success on the CEE market as its Croatian office has signed a lease agreement with Generali, an international insurance company for over 2,500 sq m of modern office space in Matrix B.

“Zagreb is a relatively small and still developing market. The newly signed lease agreement, especially in the COVID-19 pandemic environment, demonstrates very good progress and shows evidence of office demand in this market. Matrix Office Park is a green champion and our great pride in terms of implementation of innovative ecological solutions in our developments” – said Yovav Carmi, President of the Management Board at GTC.

The agreement with Generali assumes the lease of over 2,500 sq m of A-class office space with dedicated parking lots in both, underground and outdoor parking space. Generali plans to move in at the beginning of May 2021.

“We have put a lot of effort into creating a state-of-the-art office building which provides top quality office space to the Croatian real estate market in all aspects of modern planning, ranging from aesthetics to energy efficiency. Our tenants appreciate this special care put into creating our developments that meet their most stringent standards. We are satisfied seeing that our hard work has been recognized by a company such as Generali” commented Arn Willems, Country Manager at GTC Croatia.

Matrix B offers 10,700 sq m of outstanding A-class office space. The tenant portfolio includes, among others, Olympus, BASF, Spaces (Regus) and L’Oreal. Matrix A and Matrix B were granted LEED Platinum certification in February 2020 and in October 2020, respectively. This is yet another confirmation of GTC’s pro-ecological business mindset and further increases the already over 80% level of owned properties within its portfolio that have been awarded a green certificate.

GTC SA achieves investment grade rating of BBB- from Scope Ratings ahead of green bonds issuance

A German rating agency Scope Ratings has assigned a first-time issuer rating of BBB-/Stable to Globe Trade Centre S.A. and its subsidiary GTC Real Estate Development Hungary Zrt.  GTC Group  also announces green bonds issuance within the framework of the Bond Funding for Growth Scheme  launched by the National Bank of Hungary. The senior unsecured debt rating is BBB-. The outlook on the ratings is stable.

When substantiating the rating, Scope underlined GTC’s unique position in the CEE and SEE market, as well as healthy property portfolio and pipeline.

“The achievement of the investment grade rating for GTC SA is a historical milestone for the company and reflects our unique position in CEE and SEE market, diversification of our high quality portfolio in attractive locations and overall credibility.” – said Yovav Carmi, President of the Management Board of GTC.  

“With an investment grade rating GTC Group will be provided with an access to international capital markets as we will diversify bond investor base by offering green bonds under Bond Funding for Growth Scheme. This will provide us an access to unique sources of long-term financing. The new funds will enable further growth of the asset portfolio. Issuance of green bonds will confirm our approach towards environmental and sustainability topics thus creating an important new benchmark” – added Ariel Ferstman, CFO and Management Board member  of GTC.  

According to Scope, GTC’s risk profile benefits from the company’s market position as one of the largest publicly listed real estate companies in CEE and SEE, managing approximately 715,000 sq m office and retail space. The agency also underlines, that GTC’s portfolio predominately comprises relatively new properties (weighted economic age of under 10 years). This, combined with 340,000 sq m development pipeline, supports healthy tenant demand. It attracts international, blue-chip tenants with investment grade credit quality, keeping occupancy rates at around 95%.

GTC’s financial risk profile outlook for GTC is Stable, reflecting the agency’s view that the company’s portfolio will continue to grow profitably, with the impact of Covid-19 on cash generation addressed by reduced capital expenditure and the suspension of dividends.

The rating has been published ahead of the Group’s contemplated green bonds issuance under the MNB Bond Funding for Growth Scheme which was implemented by the National Bank of Hungary (MNB) to increase the liquidity of the local bond market. The issuer would be GTC’s subsidiary, GTC Real Estate Development Hungary Zrt. The senior unsecured bond as well as all future debt of GTC Real Estate Development Hungary Zrt. will be irrevocably and unconditionally guaranteed by GTC SA. Proceeds of the contemplated issue are expected to be earmarked to refinance property loans and to finance redevelopment, construction and acquisition of LEED/BREEAM certified assets and will be allocated in line with the Guarantor’s Green Bond Framework. GTC is planning to close the issuance of the green bonds still this year.

Scope is a privately-held rating agency based in Berlin. It specialises in the analysis and ratings of financial institutions, corporates, structured finance, project finance and public finance. The company is registered in accordance with the EU rating regulation and operating in the European Union with ECAI status.

Neither this press release nor the ratings issued by Scope constitute a recommendation to buy, hold, and/or sell securities and/or other financial instruments issued or relating to the Company and/or make any other investment and/or forgo any of these actions.
Neither this press release nor the ratings issued by Scope constitute investment advice and/or financial advice, nor do they address the appropriateness of any given investment for any specific investor, in particular retail investors. Each potential investor should seek and obtain professional advice in respect of his/her investments.
This press release is neither an offer of securities for sale, nor a solicitation of an offer to purchase/subscribe for securities, in any jurisdiction.

GTC completes the sale of Spiral

  • GTC has sold one of its Hungarian assets, Spiral, an A-class office building with a total leasable area of 30,541 sq m.
  • The development is located 5 minutes from the city centre next to Váci út Corridor and just a few hundred meters from Nyugati Railway Station.

The leading real estate investor and developer in the CEE region, GTC, has released information that they sold their Spiral, an A-class office building located in Budapest, Hungary. The sale will generate EUR 41m of free cash.

Spiral provides a total of 30,541 sq m of leasable office space situated next to Váci út Corridor, one of the most popular office destinations in Budapest. The building was completed in 2008 and offers six floors of offices and four underground parking levels. The building has a single office occupier leased to the Hungarian National Asset Management Inc and the remaining space of 1,896 sq m is leased to a restaurant and a fitness centre operator.  

We believe the time has come to refresh our portfolio in Hungary by selling mature assets in order to make room for new, exciting acquisitions and developments. The sale of Spiral is in line with this strategy and will provide net cash to finance new acquisitions, as well as implementing our new development projects such as the Pillar and Center Point 3 office buildings. said Yovav Carmi, President of the Management Board of GTC.   

GTC will continue to hold four substantial modern office buildings located in Budapest: Center Point 1 and 2 with lettable area of 40,900 sq m, Duna Tower offering 31,300 sq m of office and GTC Metro of 16,200 sq m. The Pillar office building, presently under construction, is fully pre-leased and this is a remarkable result in the Hungarian market. Pillar is GTC’s latest highly visible landmark development.