• Operating revenues increased by 36.5% y-o-y to EUR 156.4m
• EUR 139.4m net loss in 2009 resulted from negative revaluation of investment property and land
• High cash and deposits position – EUR 215m as of 31 December 2009
• Long-term debt to total assets maintained at a moderate level of 54%
• Only 5% of debt matures in each of the next 2 years, while 56% of debt matures in 2015 and onwards
Globe Trade Centre S.A. (GTC) has published its 2009 annual financial statements. Rental revenues increased 33.5 % y-o-y to EUR 96.2m. Such strong rental growth reflects the quality of GTC’s office and retail assets and its resilient performance despite an adverse economic environment. Gross margin from operations grew to EUR 85.2 m (+36% y-o-y). Total assets were EUR 2.6bn, while the value of investment property reached nearly EUR 2bn at the end of 2009.
Profit and Loss
The margin on rental operations increased to 77% (from 74% in 2008), mainly due to higher occupancy in newly completed projects.
Residential sales income increased to EUR 60.1m (+42% from EUR 42.5m in 2008), as a result of successful delivery to buyers of residential units sold in 2008 and 2009. Gross margin on sales was maintained at about 20%.
Negative trends in rents and expansion of investment yields resulted in a EUR 172.3 m revaluation loss in 2009.
“GTC revalues its investment property portfolio in a transparent manner, in order to present its market value as assessed by independent appraisers,” explained GTC Finance Director Erez Boniel. “Due to yield expansion in 2009 and a decrease in estimated future rental values (ERV), mainly in 4Q 2009, GTC has provided for an accounting loss in its 2009 financial statements. This has no impact on the operating income and our cash flow. GTC continues to maintain a high cash balance and moderate leverage, and benefits from the distant maturity of its debt.”
Finance and Investment
GTC continued to secure funding at low cost. Throughout 2009 the company raised more than EUR 400m of new loans for project and investment financing, capitalising on its excellent track record and long-established relations with leading European banks. The average cost of the existing debt on GTC’s balance sheet stands at 6.1%.
In August 2009 Galeria Mokotów, GTC’s flagship shopping centre in Warsaw, was granted a refinancing loan in the amount of EUR 205m.
Eli Alroy, Chairman of the GTC Supervisory Board, said: “GTC’s operational results confirm its ability to perform efficiently in an economic downturn. GTC’s management team proved that even in such difficult times the company is able to raise new financing and complete large-scale, investment-grade projects. We believe that CEE property markets will start recovery in 2010, both in terms of tenant demand as well as investment transaction volume. GTC is in the leading position to benefit from the positive trends in Poland and other countries in the region.”
In 2009 GTC successfully completed numerous prime commercial assets.
In July 2009 Kazimierz Office Centre in Cracow was delivered, with more than 90% of the space leased, mainly to State Street (12,000 sqm) and Ernst & Young (1,000 sqm).
Galeria Jurajska, the first modern shopping centre in Częstochowa, with 49,000 sqm of retail space, opened in October 2009. Galeria Jurajska was 95% let upon completion and boasts an impressive tenant mix, including such names as Peek & Cloppenburg, Zara, H&M, C&A, Reserved, Cinema City and Alma Market.
In 4Q 2009 GTC completed City Gate, a landmark office complex in Bucharest. It comprises two Class A office towers with a total net rentable area of 44,000 sqm. City Gate has attracted such renowned tenants as Millennium Bank, Romtelecom, Rompetrol, Microsoft and Hoffman-La Roche. Currently the complex is more than 80% leased, with advanced negotiations for the remaining 20% of the space.
In December 2009 GTC handed over the third building in Platinium Business Park in Warsaw. 80% of the space has been leased so far to reputable tenants such as TUI, CBRE Facilities Management, Panasonic and Artegence among the others.
In total, GTC has completed to date an office and retail portfolio of 455,000 sqm of net rentable area. In addition, GTC has 240,000 sqm of office and retail space under construction, as well as 90,000 sqm of residential space, scheduled for completion during 2010–2011.
In 2009 GTC seized the opportunity to increase its share in two large projects. In City Gate the share of GTC was increased to 59%, while in the retail project Galleria Burgas the company bought out its minority shareholder and now holds a 100% stake. The total cost of those two investments was approximately EUR 12m.
GTC will further use its liquidity and secured debt facilities to explore new opportunities in the markets where it is currently operating, both in terms of consolidation of its current assets as well as new acquisitions.
In 2010 the company plans to start construction of office buildings in Warsaw and Bucharest, and shopping malls in Osijek, Croatia, and Burgas, Bulgaria. Together with the completion of buildings under construction and potential acquisition of new projects, GTC will invest EUR 200m to 300m during 2010.
GLOBE TRADE CENTRE S.A. (GTC S.A.) is one of the leading developers in the New Europe and was established in 1994 in Warsaw. Currently it 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 sector.
GTC has developed about 750 000 sqm of net space and currently is the owner of completed commercial property with a combined net area of about 455 000 sqm. GTC also holds an impressive portfolio of investment at various stages of development which will facilitate the construction of 1.8 million sqm of commercial and residential space. GTC’s total assets exceed EUR 2.6 billion.
GTC’s shares are listed on the Warsaw Stock Exchange on the prestigious WIG20 index. The company’s assets are also included in the international MSCI index and Dow Jones STOXX Eastern Europe 300 index, as well as the GPR250 index which comprises the 250 biggest and most liquid real estate companies of the world. Among GTC’s shareholders are many of the biggest Polish and international institutional investors.