Q3/9M 2015 HIGHLIGHTS
- After successful restructuring GTC focuses on growth
- Capital increase completed with 34% oversubscription
- NOI at €59m in 9M 2015 (€61m in 9M 2014); NOI margin at 75% in 9M 2015 (74% in 9M 2014)
- Stabilized value of commercial assets
- Significant decrease in financial expenses, net to €22m in 9M 2015 (€31m in 9M 2014)
- Profit before tax at €22m in 9M 2015 (loss of €59m in 9M 2014)
- FFO up to €28m in 9M 2015 (€22m in 9M 2014)
- Net debt down to €613m (€698m as of 31 Dec. 2014)
- Net LTV down to 50% (54% as of 31 Dec. 2014)
- Interest cover at 2.9x (2.1x as of 31 Dec. 2014)
- Total property at €1,232m; 82% income generating
- Average occupancy rate at 90%
- First phase of FortyOne office building in Belgrade completed (10,300 sqm)
- Almost 92,000 sq m of office and retail space under construction
- Galeria Północna in Warsaw
(retail; 64,000 sq m)
- University Business Park in Łódź
(office; 19,600 sq m)
- Second phase of FortyOne project in Belgrade (office; 8,000 sq m)
- Galeria Północna in Warsaw
The successful execution of the capital increase with proceeds of EUR 140 million now enables GTC to use its expertise in its core markets to realise growth through new developments and selective acquisitions. – Thomas Kurzmann, GTC’s CEO said. Over the past months we have successfully continued with the implementation of turnaround measures. In addition to the loan restructuring executed earlier this year, we continue to make significant progress in the disposal of non-core assets, but more importantly we focus on growth. The completion of the FortyOne office building in Belgrade represents the first milestone in the execution of our development pipeline – and there are more projects to come. With the commencement of Galeria Północna construction in Warsaw, one of GTC’s prime shopping mall projects, University Business Park in Łódź or the second phase of the FortyOne project in Belgrade, we move full steam ahead with delivery of our development projects. Additionally, we remain focused on growth through acquisition of value add income producing properties and attractive land plots for future development projects across the CEE and SEE regions. – Mr Kurzmann added.
Total revenues were at the level of €28m in Q3 2015 compared to €31m in Q3 2014 and at €88m in 9M 2015 compared to €95m in 9M 2014, mostly due to disposal of Kazimierz Office Center and non-core assets, as well as slow down of residential sales due to significant decrease in the available inventory.
NOI was at the level of €19m in Q3 2015 compared to €20m in Q3 2014 and €59m in 9M 2015 compared to €61m in 9M 2014, mostly due to sale of Kazimierz Office Center and non-core assets. NOI margin remained stable at 75% in 9M 2015 compared to 74% in 9M 2014.
Gross profit from operations was at €19m in Q3 2015 compared to €21m in Q3 2014 and €60m in 9M 2015 compared to €61m in 9M 2014.
Administrative expenses, excluding provision for stock based program, remained unchanged at €2m in Q3 2015 compared to €2m in Q3 2014 and declined to €7m in 9M 2015 compared to €9m in 9M 2014, due to cost management.
Net Financial expenses decreased sharply to €6m in Q3 2015 compared to €9m in Q3 2014 and to €22m in 9M 2015 compared to €31m in 9M 2014 due to deleveraging activity and restructuring of loans
Profit before tax was at €11m in Q3 2015 compared to €9m in Q2 2014 and at €22m in 9M 2015 compared to a loss of €59m in 9M 2014.
There was no tax provision Q3 2015 compared to €4m of tax in Q3 2014, as a result the tax provision went down to €5m in 9M 2015 from €8m in 9M 2014.
Net profit of €11m in Q3 2015 compared to €5m in Q3 2014 and net profit of €17m in 9M 2015 compared to a net loss of €67m in 9M 2014, due to improved operating results combined with no movement in the valuation of investment property and impairment of residential projects.
FFO up to €28m in 9M 2015 compared to €22m in 2014 mostly due to a significant decrease in interest and hedging expenses.
Value of the properties at €1,232m as of 30 September 2015 compared to €1,293m as of 31 December 2014 due to the disposal of Kazimierz Office Centre. 82% of total assets are income generating.
Total bank debt and financial liabilities down to €714m as of 30 September 2015 from €811m as of 31 December 2014. The weighted average debt maturity was 3.7 years and the average cost of debt is down to 3.6% p.a.
Loan to value ratio was at the level of 50% as at 30 September 2015 compared to 54% as at 31 December 2014.
NAV (IFRS, before minority) per share stood at €1.3 as at 30 September 2015 compared to €1.4 as at 31 December 2014.
Interest coverage was at 2.9x as at 30 September 2015 compared to 2.1x as at 31 December 2014.
Focus on growth
After successful completion of the restructuring process, it is now visible that GTC’s portfolio is stabilized and provides a firm foundation for further growth. Its financing structure is solid with room to extend debt maturity and further improve financing cost. Optimized and efficient management structure is in place to manage and implement the new strategy. These features combined with the successful capital increase allow GTC to pursue its growth strategy and proceed with the acquisition and development activities according to its plan.
Successful completion of capital increase to fund acquisition and development program
Following the shareholders’ consent, GTC issued 108,906,190 series K shares with pre-emptive rights at PLN 5.47 per share. The share offering was more than 34% oversubscribed. The proceeds from the share issue will fund the development of GTC’s promising projects, including Galeria Wilanów in Warsaw, University Business Park in Łódź and the second phase of the FortyOne project in Belgrade. Acquisitions and development projects will enable GTC to further increase its real estate portfolio value and financial results. Additionally, GTC has carefully selected a number of potential acquisition targets that meet its investment criteria. The company plans to invest in properties with value-added potential that can be realized through its regional platform and asset management skills. The acquisition targets are located in Poland and capital cities in the CEE and SEE region. GTC plans to acquire assets in the office and retail sectors.
Completion of FortyOne office building (Belgrade, Serbia)
In October GTC officially opened the first building in its new office complex in Belgrade – FortyOne. The building of over 10,000 sq m has already reached 88% of occupancy.
Almost 92,000 sq m of office and retail space under construction (Poland and Serbia)
GTC returned to development path and has almost 92,000 sq m under construction in one prime retail project and two modern office projects. Following receipt of a building permit, GTC commenced construction of Galeria Północna,
a 64,000 sq m modern shopping centre. The centre is located in the north-east part of Warsaw, and will attract customers from Białołęka and surrounding districts. As of today Galeria Pólnocna is 36% pre-leased, has financing in place and its construction work progresses as planned.
Furthermore, GTC commenced the construction of University Business Park building II following pre-leasing of 9,000 sq m. The building is a modern, class A office complex of 19,600 sq m, situated in the centre of Łódź. The complex offers tenants flexibility and growth opportunities within one office park. The University Business Park features a restaurant, café and other amenities. The tenants will move in April 2016.
In Serbia, very good leasing results of FortyOne office project and an increasing interest from the tenants encouraged GTC to commence the development of the second phase of this project. The LEED Gold certified building, of over 8,000 sq m will be completed in the third quarter of 2016.The FortyOne project is one of the most modern office parks, comprising three buildings, in New Belgrade.