• Rental revenues in H1 2010 increased to EUR 61.2m (+41% y-o-y)
• GTC achieved EUR 49.6m profit from operations (+226% y-o-y)
• Positive revaluation gain of EUR 13m in Q2 2010 after 5 consecutive quarters of negative revaluations
• GTC held EUR 203m in cash and short-term deposits
Globe Trade Centre S.A. (GTC) has released its H1 2010 results. The company achieved EUR 78m in revenues from operations. Total assets exceeded EUR 2.7bn. Net profit in H1 2010 was EUR 2.8m.
Total revenues from operations decreased by 7% year-on-year, mainly due to lower income from residential sales. Residential sales in H1 2010 were EUR 16.7m (down from EUR 40m in H1 2009), with a decrease in the number of apartments and houses available for sale.
Rental income increased 41% y-o-y to EUR 61.2m, driven by income from newly completed buildings and improved occupancy rates. The operating margin on rental activity was maintained at 78%.
The gross margin on operations increased 16% y-o-y, to EUR 48.3m.
In Q2 2010 investment property was revalued by independent external appraisers. As a result, a profit from revaluation of EUR12.6m was recognised in H1 2010. The main positive contributors were office buildings in Warsaw (due to yield compression and higher occupancy), Galeria Mokotów in Warsaw (due to increased income) and City Gate in Bucharest (improved occupancy and lower yield upon completion).
Profit from operations in H1 2010 increased to EUR 49.6m (+226% y-o-y).
Financial expenses were EUR 34.4m (vs EUR 20.7m in H1 2009).
“While GTC maintains a low interest rate on its loan portfolio, one-off financial costs and tax provisions have impacted the bottom line, as a EUR 2.8m profit was recorded in H1 2010. The one off financial cost resulted from classification of Topaz and Nefryt buildings as “Assets held for Sale”. The tax provision relates mainly to appreciation of assets in local currency, which may reverse once the euro exchange rate will be less volatile, as well as impact of interest expenses for which deferred tax assets can not be recognized”explains Erez Boniel, CFO and Management Board member.
“GTC has a strong balance sheet, with EUR 203m in cash and short term-deposits, while 50% of the debt matures in 2015 or later,” added Erez Boniel. “Our lenders are confident in GTC’s financial capacity, and we continue to successfully raise financing for new projects.”
In H1 2010 about EUR 100m in new financing was secured for projects in Warsaw (Platinium Business Park 4), Osijek (Croatia), Burgas (Bulgaria) and Bratislava.
According to Hagai Harel, GTC Management Board member in charge of international business development: “GTC managed to capitalize on long-term relationships with its strategic partner, the European Bank for Reconstruction and Development, as well as the region’s major commercial banks, in order to encourage them to provide financing on attractive terms for our retail projects under development in Osijek and Burgas.”
The high quality of the asset and GTC’s reputation as a developer allowed the company to conclude the largest pre-let office transaction in Poland in 2010, as the entire fourth building (about 13,000 sq m NRA) in Platinium Business Park in Warsaw was leased to Aviva Group. GTC has recently secured financing for this project.
There is also strong interest from tenants in pre-leases in the fifth building at PBP, as well for the third building at Okęcie Business Park in Warsaw. GTC plans to start construction of those two buildings in Q4 2010.
H1 2010 was also a turnaround time for GTC in terms of new acquisitions and disposal of assets.
The company signed a joint venture agreement with Polnord S.A. for development of a modern shopping centre in Wilanów, one of the most affluent residential districts of Warsaw. Under the agreement, Polnord contributed the land, and each partner holds a 50% stake in the company. GTC is in charge of managing development of the project on behalf of the partners. Also in H1 2010, GTC agreed with an international investor on the main terms for sale of two GTC office buildings in Warsaw: Nefryt and Topaz (combined NRA of about 27,000 sq m).
Eli Alroy, Chairman of the GTC Supervisory Board, said: “These transactions are the first purchase and sale of assets since the beginning of the crisis in 2007. This clearly reflects the improvement seen in the real estate market and indicates that GTC is back on track with its core business strategy: re-cycling capital through asset sales and selective acquisition of new projects.”
In 2011 and 2012 GTC plans to complete about 250,000 sq m of net office and retail space that is currently under construction. In 2010 major completions include office buildings in Katowice, Łódź and Budapest (GTC Metro) as well as shopping centres in Prague and Stara Zagora (Bulgaria).
Currently GTC holds 515 000 sqm of net rentable office and retail space.
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 515 000 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.